With 2012 preliminary results showing improvement in profitability in the sector, the property/casualty insurance industry should see continued strong net premium growth and a substantially improved combined ratio for 2013, analysts at investment manager Conning said in a new forecast.

The forecast improvement is based on sustained pricing increases and an expectation of a normal level of catastrophe losses, according to Conning’s Property/Casualty Forecast & Analysis.

“Stronger preliminary results for 2012 despite Superstorm Sandy—a 6 percent return on equity and a 103 percent combined ratio—reinforce that the effect of price increases and improved underwriting are taking hold throughout the industry, ” said Steven Webersen, managing director at the Hartford-based Conning.

Conning’s 2013 property/casualty forecast is for net premium growth to accelerate at a 4.6 percent rate over prior year based on continued rate increases.

For 2013 the firm predicts an improved combined ratio of 101 percent, assuming a normal level of catastrophe losses. However, low investment yields continue to work against the industry’s efforts to return to a reasonable return on equity, and maintain the pressure on underwriting and pricing to sustain profitability, the analysts said.

“Looking further out, we forecast property/casualty premium growth of 4.8 percent in 2014 and 4.9 percent in 2015,” said Stephan Christiansen, managing director at Conning. “We expect sustained rate increases to improve underwriting results to near breakeven by 2014. However, weak economic conditions and a record level of capital in the industry will inhibit further improvements in industry premium growth and pricing necessary to achieve underwriting profitability and a reasonable return on equity.”