The US property and casualty sector slumped in the first nine months of the year to deliver a $20bn underwriting loss after a trio of hurricanes pushed the industry combined ratio to the highest level in five years, according to rating agency AM Best.

Cat losses had already reached $38.4bn before the beginning of the fourth quarter, which brought Hurricane Nate in the Gulf of Mexico and wildfires that ravaged California.

The claims bill is almost double the figure from last year, climbing 89 percent, and higher than AM Best’s $36.1bn estimate for full year 2012, which includes Hurricane Sandy.

As a result, AM Best estimates that catastrophes added 9.8 points to the sector-wide combined ratio, a significant increase on the 5.4 point estimate the rating agency forecast last year.

The events pushed the industry’s combined ratio to 104 percent in the first nine months of the year, up 4.3 points from the same period in 2016.

Stripping out reserve releases for the latest period exposes a combined ratio that is even further in the red at 105.7 percent.

The underwriting loss calculated by AM best for the year so far is almost 10 times the $2.3bn deficit the rating agency reported this time last year.

It said that an 11.3 percent uptick in incurred losses for the period more than offset a 4 percent increase in net premiums earned.

“The industry benefited from a $2.5 billion increase in net investment income earned, which was negated by a $4.1 billion loss in other income, reflecting the impacts of a retroactive reinsurance contract entered into in February 2017 by AIG and National Indemnity,” AM Best said, referring to the Berkshire Hathaway subsidiary.

The rating agency said – for the first nine months of 2017 – the deal helped drive down the industry’s total pretax operating income by 65 percent to $10.8bn.

But, despite a $7.9bn decline in net income, industry surplus grew to $699.8bn during the period driven by $11.2bn in unrealized gains, mostly from Berkshire Hathaway-owned firms

Hurricane Irma generated about $25bn in insured losses, including $18bn in the US and $7bn in the Caribbean, Karen Clark & Company estimated today.

Included in the totals are losses to buildings and insured structures, contents, autos and business interruption, the company said.

The assessment excludes losses covered by crop insurers and the National Flood Insurance Program run by the Federal Emergency Management Agency, the catastrophe modelling firm said.

As one of the most powerful Atlantic hurricanes on record, Irma posed a much greater threat before being pushed west as it headed toward the US.

Had the track not made that shift before making landfall on the continental US and hit Miami, the insured losses might have been as much as $150bn, the company said, mainly driven by strong winds.

As it was, the storm’s track brought it ashore on the Gulf of Mexico side of the Florida peninsula, about 50 miles south of Fort Myers and took it inland.

Irma’s intensity weakened as it passed east of the Tampa-St Petersburg area.

The track spared both Miami and Tampa-St Pete from the worst of Irma’s wrath as even the Gulf storm surge brought on by the hurricane proved lower than anticipated. The cities on the central Gulf coast are among the most at risk from surge in the Sunshine State, the modeller said.

“Even the wind damage turned out to be relatively minor” after the storm’s rapid decay, the company said. “Direct wind impacts were mostly limited to mobile homes, light structures, signage, and spotty roof and window damage” in the parts of the Florida mainland that Irma passed over.

The modeller said most of the insured loss in the US occurred in Florida. In addition, losses occurred in parts of Georgia, South Carolina and Alabama, where Irma brought heavy rains.

But the storm’s strong winds in its northeast quadrant extended out over the Atlantic as well and led to higher than expected storm surge and flooding in cities such as Jacksonville, Florida and Charleston, South Carolina. Even in parts of downtown Miami surge driven flooding occurred.

In the Caribbean, Irma swept across islands with full destructive force brought against St Martin, Barbuda, Anguilla and the British Virgin Islands. Over 50 percent of property value was destroyed on the hardest hit islands, the company said.

While the storm spared much of Puerto Rico, the Florida Keys, especially east of Cudjoe Key where Irma made its first US landfall, were raked by 130mph winds and flooding. Irma’s greatest destruction in the US took place in the Keys.

The storm, which had sustained winds of as much as 185mph (1,270 kph) as it churned across the Caribbean, was one of the strongest Atlantic hurricanes on record and the most powerful ever to strike the Leeward Islands, the company said. It was the strongest storm to hit the Bahamas since Hurricane Andrew in 1992.