Property/casualty insurers will get a welcomed boost to their second-quarter earnings thanks to the rally in the bond and stock markets last quarter.

On Friday, Progressive Corp.'s (PGR) reported that second-quarter earnings rose 16% on investment gains and lower claim costs. Progressive is one of the first insurers to report earnings, and some analysts believe its investment results are telling for the property/casualty sector, which insure homes, cars and businesses. Progressive posted income of $250.1 million, or 37 cents a share. Most property/casualty insurers are scheduled to report second-quarter results over the next several weeks.

"Property/casualty insurers' book values will go up across the board because of the returns on their investments," said Paul Newsome, an analyst at Sandler O'Neill & Partners.

Daryl Jones, managing director at independent research firm Research Edge, said that Progressive's investments results "are indicative of the industry."

Many insurers have reported investment losses in recent quarters due to poor markets, and so a turnaround would be welcome. Property/casualty insurers' investment portfolios are typically conservative, and are invested heavily in high-grade corporate and municipal bonds, mixed in with some preferreds, equities and hedge fund holdings.

Analysts have expected that investment returns could be high for the quarter. A Barclays Capital report on July 1 analyzed key investment benchmark price performance in the second quarter to estimate potential investment gains or losses for non-life insurers. Eleven of the 15 major asset classes Barclays measures increased in the second quarter with an overall median increase of 9%, according to the report from analyst Jay Gelb. Only four asset classes declined in the quarter.

Gelb did note that the benefit of recovering investment portfolios have less impact than problems such as rating agency concerns and loss of business.

To be sure, not all are convinced property and casualty companies will follow in Progressive's footsteps. Donald Light, senior insurance analyst at Celent, said, "The underwriting side of the property/casualty business continues to be weak; it is unlikely many insurers will report good second-quarter earnings simply on the strength of their investment results."

-By Jessica Papini, Dow Jones Newswires; 212-416-2172; jessica.papini@dowjones.com