OREANDA-NEWS. U.S. Property/casualty insurers' operating earnings decreased in 2015, highlighting the competitive operating environment and low investment yields that challenge insurers' earnings growth potential, according to a new report by Fitch Ratings. Favorable reserve development and limited catastrophic loss activity helped to offset sluggish investment income.

Fitch's universe of 45 (re)insurance organization reported an aggregate a 7.2% decline in operating earnings to $47.3 billion in 2015. This result corresponds with a group operating ROAE of 7.6%, down from the 8.4% return generated in the previous year. An operating ROAE of 10% or higher is becoming more rare in the current marketplace. 17 companies in the group reported a full-year 2015 operating ROAE above 10%, with the personal lines and reinsurer sub-segments reporting double-digit returns in aggregate.

Each of the companies in the group reported a net profit in 2015, but net return on equity for the aggregate group deteriorated as the weakened investment market performance led to a significant decline in realized gains relative to the prior year. The group reported net earnings of $51.6 billion in 2015, down 9.6% from the net gain of $57.1 billion reported in 2014.

Underwriting performance deteriorated modestly as the group calendar-year combined ratio was 94.5% in 2015, versus 93.4% in the prior year. Maintaining or improving underwriting performance going forward may prove challenging as competitive forces are promoting flat to declining insurance pricing in many market segments.

Fitch maintains a stable rating outlook for each sector covered in this report (commercial, personal and reinsurance). Broad-based rating changes are unlikely in the next 12-24 months. U.S. personal and commercial lines have stable sector outlooks, while the reinsurance market sector outlook is negative as intense market competition and sluggish cedant demand resulted in a soft reinsurance market.