As a sign of the burgeoning capital being accrued by insurers and reinsurers catastrophe losses in the US were estimated at $2.6 billion for 1997, the lowest since the $1.4 billion in losses in 1988, the Insurance Information Institute reported.

Losses in 1997 were 64 percent below the $7.3 billion in 1996.

"Extremely low hurricane activity in the atlantic and Gulf coasts was a key factor leading to the decreased level of catastrophe losses,'' the organisation reported. "In addition to its good fortune in the area of catastrophes, the industry has benefited from a continued low level of claims activity, particularly in auto insurance.'' Consolidated net income after tax rose to a record $35.6 billion in 1997, a 46 percent increase over 1996 results. The figures are consolidated estimates for the entire US industry based on the reports of insurers that account for 96 percent of the country's property/casualty insurance business.

The industry's consolidated surplus -- assets minus liabilities -- increased $54.7 billion, or 21 percent, to $310.2 billion at the end of 1997.

Overall, premiums increased 3.4 percent in 1997, while claims losses fell four percent in the US market. The industry's rate of return was 11.5 percent for the year, up from 9.6 percent in 1996 and the highest since the 13.3 percent rate of return in 1988. Still the insurance industry rate of return was below the US average of 14 percent.

"The basic outlook for the industry remains favourable,'' the organisation stated. "However, a continued high level of competition is expected to depress profits in commercial insurance and there are the ever-present threats of a stock market collapse, and a high level of catastrophe losses as we move into the hurricane season.''