NEW YORK—Standard & Poor's Corp. on Monday said it is maintaining its negative outlook on all North American insurance sectors except reinsurance, which it said weathered the financial crisis by minimizing its investment exposures.

The negative outlook that has been on most North American insurance lines, both personal and commercial, since August 2008, is expected to continue during the next six months, New York-based S&P said in its report, “Outlook Remains Negative for Most North American Insurance Sectors.” S&P said it expects downgrades will continue to exceed upgrades in the next six to 12 months.

U.S. commercial insurers continue to struggle on the asset side of their balance sheets as volatility in the global equity markets continues to chip away at capital bases, S&P said. Despite a market upswing in March, the rating agency said the sharp decline in equity values was the primary cause of a $19 billion decline in the property/casualty industry's statutory surplus, which fell to $437.1 billion in the past six months.

“Fortunately, most of the insurers we rate had strong capital adequacy for their respective ratings prior to the market meltdown thanks to years of very strong underwriting results,” S&P analysts wrote in the report. “Consequently, declining capital adequacy led to few negative rating actions.”

Net premiums written for North American commercial property/casualty insurers declined 6% in the past six months, according to the report. Further, S&P found that the economy has slowed a general upturn in pricing and that premium volume could decline further in a flat pricing environment.

Reduced underwriting profitability and current loss trends could negatively affect on the sector as well, S&P said.

As for reinsurance, S&P said a “relatively light catastrophe season and improved capital market conditions during the first half of 2009 have enabled most global reinsurers to post strong underwriting results and unrealized investment gains during that period.”

Among Bermuda reinsurers, S&P said many reported growth ranging from high single digits to midteen percentages in the first half of 2009. Improved premium rates for property and flattening premium rates for casualty contributed to its stable outlook for the sector, S&P said.