JOHNSTON, R.I.—Net income for Factory Mutual Insurance Co., which does business as FM Global, increased by 14% in 2005 to $634.6 million, up from $557.7 million in 2004, the insurer announced Wednesday morning.

The mutual company’s policyholder surplus increased 18.8% to $4.40 billion in 2005, up from $3.70 billion a year earlier, and its combined ratio stood at 77.4% for last year, compared with 75.3% in 2004, despite record hurricane activity.

“Our focus has been on preventing losses, and last year was a great validation of that model,” said Shivan S. Subramaniam, the Johnston, R.I.-based insurer’s chairman and chief executive officer. “Most of our customers used our recommendations and reduced the impact of wind on their property,” he said.

Mr. Subramaniam said that while it’s “too early to tell” how the insurer will perform in 2006, “we have had superb performances over the past four years, and these have been years when there have been significant catastrophes. I don’t have crystal ball, but I would expect, with a normal level of catastrophes, we should have another very good year.”