OREANDA-NEWS. U.S. Property/casualty insurers' operating performance remained essentially unchanged in the first half of 2015, with $25.5 billion in aggregate operating earnings reported in both periods, according to a new report by Fitch Ratings. Favorable reserve development and limited catastrophic loss activity helped to offset sluggish investment income.

Annualized operating ROAE dropped slightly to 8.1%, from the 8.4% the prior period, due to modest growth in shareholders' equity. The net income ROAE for the group declined more significantly to 8.6% versus 10% in first half 2014 due to a reduction in realized investment gains

Underwriting performance remains favorable, as the group calendar-year combined ratio equaled the prior-year measure of 94.2%. Maintaining or improving underwriting performance going forward may prove challenging as competitive forces are promoting flat to declining insurance pricing in many market segments.

Generating an operating ROAE above 10% remains a challenge in the current marketplace. Only one third of the companies in the group reported a double-digit operating ROE in first-half 2015.

Fitch's Rating Outlook for each of the sectors covered in this report (commercial, personal and reinsurance) is Stable. Broad-based rating changes are unlikely in the next 12-24 months. Personal and commercial lines have stable fundamental sector outlooks while the reinsurance sector outlook is negative as intense market competition and sluggish cedent demand have resulted in a soft reinsurance market, although there are some recent signs that the market is stabilizing.

The full report, 'U.S. Property/Casualty Insurers' Midyear 2015 Financial Results' is available at 'www.fitchratings.com' under the following headers:

Sectors >> Financial Institutions >> Insurance >> Research.