However, the industry’s combined ratio climbed to 103.3 in the first quarter from 101.1 during the same quarter in 2010. First-quarter net income dropped to $7.8 billion from $8.9 billion.

“The deterioration in underwriting profitability as measured by the combined ratio is a particular cause for concern, because today’s low investment yields, together with the long-term decline in investment leverage that helped insulate insurers from the ravages of the financial crisis and the Great Recession, mean insurers need better underwriting results just be as profitable as they once were,” says David Sampson, president and CEO of PCI, in a statement.

The underwriting news could be worse when second quarter results are announced. ISO’s Property Claims Services unit says second-quarter catastrophes caused $14.7 billion in insured losses as of June 20 and losses from several other events need to be added to the amount, Murray adds. Additionally, the stock markets are down, which could mean capital losses on investments, he says.

“Yet these near-term negatives could have positive implications farther down the road to the extent that they erase some of insurers’ excess capacity and thereby hasten a turn in the insurance cycle,” Murray theorizes.

Industry surplus rose 1.4 percent to a record $7.8 billion at March 31. Sampson says insurers will have no trouble paying claims even if the hurricane season is as bad as predicted.

Add loss reserves and unearned premiums to surplus, and insurers had $1.3 trillion to pay claims, Sampson adds.