The property/casualty insurance industry was hit with $3 billion in catastrophe losses in the second quarter, an industry economist said Tuesday.

But investment income and increases in capital gains helped give the industry "a modest 4.7 percent gain" in the second quarter over a year earlier, said the Insurance Services Office Inc. and the National Association of Independent Insurers.In its review, incorporating 96 percent of the P/C insurance business, ISO and NAII's report found second-quarter net income rose slightly in the quarter, to $3.8 billion from $3.6 billion in the year-earlier period.

However, the second-quarter figure is a drop from the $5.3 billion in net income P/C insurers realized in the first quarter of this year, said Sean Mooney, senior vice president and economist for the Insurance Information Institute in New York.

Realized capital gains and investment income, however, jumped. The industry received $1.8 billion in realized capital gains, up from $400 million in 1994. Insurers also received investment income of $9.1 billion, up from $8.4 billion, due to higher income from stock dividends or bond interest, Mr. Mooney said.

The catastrophic losses seen in the quarter were mainly caused by thunder and hailstorms that hit Texas and Louisiana in May, causing an estimated $360 million in damage, according to Property Claim Services of Rahway, N.J.

Mr. Mooney said the underwriting loss for the quarter rose, to $5.4 billion

from $3.6 billion in the same period last year. In addition, the combined ratio, which measures the percentage of premium spent on claims and expenses, jumped, to 108.8 percent from 106.4 percent.

He said the strength of the stock market in the second quarter allowed companies to show gains by selling stocks.

"Some companies probably needed to liquidate assets to pay for catastrophe losses and hence showed a gain on selling these assets," he said.

Mr. Mooney said the gains were more striking in the first half of the year. Net income grew to $9.1 billion for the first six months, up almost four times

from the $2.4 billion reported last year. The 1994 results were affected by another catastrophe - the January earthquake in Northridge, Calif., he said.

The six-month combined ratio declined, to 106.3 percent from 111.2 percent for the same period last year. The industry's underwriting loss declined, to $9 billion from the $14.7 billion reported in the 1994 half year.

As in the quarter, the strong stock market pushed first-half net investment income, to $17.8 billion from $16.4 billion for the period in 1994.