Rates for most lines of property/casualty reinsurance are expected to soften further during upcoming renewals and the outlook for the global reinsurance sector remains negative, Moody’s Investors Service Inc. said Wednesday.

Moody’s said it expects soft pricing, overcapacity and low investment yields to continue affecting the reinsurance industry during the next 12 to 18 months.

“With premium volumes drifting lower and equity positions holding steady, we believe the industry has too much capacity, which is likely to manifest in increased price competition going forward,” James Eck, vp and senior credit officer at Moody’s, said in a statement.

In the absence of any catastrophic event, renewing reinsurance rates are expected to decline in most cases, said Mr. Eck, the lead author of Moody’s report on the reinsurance sector, published Wednesday.

Reinsurers’ profitability likely will be affected by the soft market, weak investment income and fewer prior-year reserve releases, Moody’s said in the report “Global Reinsurance Outlook.”

The industry remains overcapitalized, according to Moody’s.

“While share buybacks have helped keep the level of overcapacity in check, solving the overcapacity issue in this environment may require capital to leave the sector through consolidation,” Mr. Eck said in the statement.

The report is available to subscribers at www.moodys.com