Amid the good news, an adjusted 1.8 percent rate of growth in net written premiums equaled the record low set back in 1998. (The actual reported growth rate of 0.4 percent was distorted by an individual insurer transaction ceding $6 billion in premiums to a foreign parent.)

The 1.8 percent growth rate is well off the peak of the hard market–a 14.3 percent premium growth rate recorded in 2002 after the post-9/11 spurt in pricing–and down from levels of 9.4 percent and 4.9 percent recorded in 2003 and 2004, respectively.

Michael Murray, ISO assistant vice president for financial analysis, said the softening trend was further confirmed by ISO's fourth-quarter MarketWatch data, which indicated a negative 1.5 growth in commercial lines pricing compared to the same 2004 period.

Overall, for all personal and commercial lines combined, the results published last week show that net premiums rose just 1.9 percent in fourth-quarter 2005, marking the slowest pace since a 1.2 percent increase in fourth-quarter 1998.

Separately, further softening evidence this year came from MarketScout, a Dallas-based online insurance exchange, which reported a 6 percent decline in commercial pricing during the month of March.

And the Council of Insurance Agents & Brokers reported few lines other than property-catastrophe showing any sign of hardening in the first quarter.

Robert Hartwig, chief economist for the Insurance Information Institute, said the sluggish growth for 2005 was the one major disappointment for the industry after the catastrophe losses. But he noted that an annual February I.I.I survey of analysts predicts a 3.8 percent average premium growth rate for all of 2006.

According to the ISO/PCI report, net income and surplus increased even though direct insured property losses due to catastrophes rose in 2005 to a record $57.7 billion–more than double the comparable 2004 figure of $27.5 billion, according to ISO's Property Claim Services unit. (Figures for catastrophe losses exclude those covered by the National Flood Insurance Program.)

Mr. Hartwig issued a cautionary note, pointing out that the industry's profitability came in well below the 14.9 percent return for the Fortune 500 group of companies last year. “Contrary to some media reports, the property-casualty insurance industry did not even come close to experiencing record profitability in 2005,” Mr. Hartwig said.

The industry's increasing underwriting savvy could be seen in the 92.7 combined ratio for the first six months of the year, which Mr. Hartwig noted declined 23 points from the comparable figure in 2001.

“The improvement in underwriting over the past several years is the result of a painful but necessary across-the-board effort by insurers to reassess risk,” he said.

Countrywide data for all lines often mask significant problems in specific markets and locations, Mr. Murray said. As an example, before reinsurance recoveries and excluding losses covered by residual market mechanisms, the hurricanes of 2005 caused $24.7 billion in insured losses to residential and commercial property in Louisiana.

“This is $3.1 billion more than all the premiums insurers charged for property insurance in the state during the 23 years from 1982 to 2004,” Mr. Murray said.

With 2004 black underwriting ink turning red last year, investment income played a crucial role in maintaining the industry's overall profitability.

Investment income rose by 15.8 percent in 2005 after adjusting for special dividends, which compares to just 2.4 percent growth in 2004.

Fifteen Federal Reserve rate hikes since June of 2004 drove much of the income rise. Mr. Hartwig said that the insurers' new propensity to invest in short-term maturities has accentuated those hikes, but warns the good times can't last forever.

“The current cycle of interest rate hikes has nearly run its course,” he said. “For insurers, this means that the era of easy gains on low-risk, short-term securities will be over.”

As for the 2005 fourth quarter, the industry's consolidated net income after taxes amounted to $14.1 billion, up $2.5 billion from $11.6 billion in the same 2004 period.

The industry posted a combined ratio for the quarter of 103.7, compared to 99.7 in the comparable 2004 period as catastrophe losses of $9.8 billion proved a sizable spike from the $0.5 billion in the prior-year period.

If the fourth quarter chart is done separately–to go on page 64–here is the flag and head.