There are signs that business conditions for U.S. commercial lines insurers are improving, though a full-scale economic turnaround “is still a long way off,” Standard & Poor's Corp. said in a Thursday report.

Separately the rating agency said U.S. and Bermuda reinsurers continue to benefit from strong capital levels despite high investment losses.

In its U.S. commercial lines report, New York-based S&P said the sector's challenges include weak pricing; a sharp decline in the overall U.S. property/casualty insurance industry's net earnings; large unrealized losses on common stock holdings, which have led to a sharp drop in statutory capital; and “strongly negative” outlooks, which S&P said is a “reliable indicator” of future ratings actions.

S&P said it is maintaining its negative outlook on the sector for now.

The report says, though, that business conditions for U.S. commercial lines insurers seem to be improving, “albeit slowly,” with surveys indicating progressively smaller year-over-year price declines. Furthermore, the investment markets seem to be stabilizing.

“A turnaround is far from guaranteed, though,” says the report. “If more competitive pricing returns, if investment markets reverse course and again move sharply downward or if an active hurricane season drives higher-than-expected losses for many companies, then the sector outlook could remain negative for a much longer period,” S&P said.

In its reinsurance report, S&P said that aside from strong capital levels, other positive factors affecting U.S. and Bermuda reinsurers are conservative investment portfolios, the strong liquidity that most enjoy, significant cash or cash equivalents on their balance sheets, little debt coming due over the next two to three years, and large credit facilities that generally continue another one to three years.

The report said first-quarter reinsurer results were generally good, “supported by very strong underwriting performance and modest investment losses.”

Copies of the commercial lines report, “Midyear 2009 U.S. Commercial Lines Outlook: Is the Favorable Pricing Trend Sustainable in the Recession?” and the reinsurance report, “Midyear 2009 North American Reinsurance Outlook: Optimism Remains for U.S. and Bermuda Reinsurers as They Manage Losses on Both Sides of the Balance Sheet,” are available to RatingsDirect subscribers at www.ratingsdirect.com.

There are signs that business conditions for U.S. commercial lines insurers are improving, though a full-scale economic turnaround “is still a long way off,” Standard & Poor's Corp. said in a Thursday report.

Separately the rating agency said U.S. and Bermuda reinsurers continue to benefit from strong capital levels despite high investment losses.

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In its U.S. commercial lines report, New York-based S&P said the sector's challenges include weak pricing; a sharp decline in the overall U.S. property/casualty insurance industry's net earnings; large unrealized losses on common stock holdings, which have led to a sharp drop in statutory capital; and “strongly negative” outlooks, which S&P said is a “reliable indicator” of future ratings actions.

S&P said it is maintaining its negative outlook on the sector for now.

The report says, though, that business conditions for U.S. commercial lines insurers seem to be improving, “albeit slowly,” with surveys indicating progressively smaller year-over-year price declines. Furthermore, the investment markets seem to be stabilizing.

“A turnaround is far from guaranteed, though,” says the report. “If more competitive pricing returns, if investment markets reverse course and again move sharply downward or if an active hurricane season drives higher-than-expected losses for many companies, then the sector outlook could remain negative for a much longer period,” S&P said.

In its reinsurance report, S&P said that aside from strong capital levels, other positive factors affecting U.S. and Bermuda reinsurers are conservative investment portfolios, the strong liquidity that most enjoy, significant cash or cash equivalents on their balance sheets, little debt coming due over the next two to three years, and large credit facilities that generally continue another one to three years.

The report said first-quarter reinsurer results were generally good, “supported by very strong underwriting performance and modest investment losses.”

Copies of the commercial lines report, “Midyear 2009 U.S. Commercial Lines Outlook: Is the Favorable Pricing Trend Sustainable in the Recession?” and the reinsurance report, “Midyear 2009 North American Reinsurance Outlook: Optimism Remains for U.S. and Bermuda Reinsurers as They Manage Losses on Both Sides of the Balance Sheet,” are available to RatingsDirect subscribers at www.ratingsdirect.com.

There are signs that business conditions for U.S. commercial lines insurers are improving, though a full-scale economic turnaround “is still a long way off,” Standard & Poor's Corp. said in a Thursday report.

Separately the rating agency said U.S. and Bermuda reinsurers continue to benefit from strong capital levels despite high investment losses.

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In its U.S. commercial lines report, New York-based S&P said the sector's challenges include weak pricing; a sharp decline in the overall U.S. property/casualty insurance industry's net earnings; large unrealized losses on common stock holdings, which have led to a sharp drop in statutory capital; and “strongly negative” outlooks, which S&P said is a “reliable indicator” of future ratings actions.

S&P said it is maintaining its negative outlook on the sector for now.

The report says, though, that business conditions for U.S. commercial lines insurers seem to be improving, “albeit slowly,” with surveys indicating progressively smaller year-over-year price declines. Furthermore, the investment markets seem to be stabilizing.

“A turnaround is far from guaranteed, though,” says the report. “If more competitive pricing returns, if investment markets reverse course and again move sharply downward or if an active hurricane season drives higher-than-expected losses for many companies, then the sector outlook could remain negative for a much longer period,” S&P said.

In its reinsurance report, S&P said that aside from strong capital levels, other positive factors affecting U.S. and Bermuda reinsurers are conservative investment portfolios, the strong liquidity that most enjoy, significant cash or cash equivalents on their balance sheets, little debt coming due over the next two to three years, and large credit facilities that generally continue another one to three years.

The report said first-quarter reinsurer results were generally good, “supported by very strong underwriting performance and modest investment losses.”

Copies of the commercial lines report, “Midyear 2009 U.S. Commercial Lines Outlook: Is the Favorable Pricing Trend Sustainable in the Recession?” and the reinsurance report, “Midyear 2009 North American Reinsurance Outlook: Optimism Remains for U.S. and Bermuda Reinsurers as They Manage Losses on Both Sides of the Balance Sheet,” are available to RatingsDirect subscribers at www.ratingsdirect.com.

Copyright © 2009 Crain Communications, Inc.