JOHNSTON, R.I.—Factory Mutual Insurance Co.’s net income dropped 16.2% in 2004 to $558 million, the insurer reported Tuesday.

The Johnston, R.I.-based industrial property insurer, which does business as FM Global, attributed the decline to a $316 million membership credit paid to policyholders.

The insurer’s combined ratio for the year was 75.3%, up from 66.4% in 2003. The insurer noted that its losses from last year’s chain of hurricanes were less than $100 million.

Premiums rose 4.5% to $4.1 billion, with a retention rate of 95.6%, which the company attributed to stable and competitive pricing.