Property/casualty insurance rates will continue to increase this year, but at a slower pace than recently, according to Standard & Poor's Corp.

In the analysis “Is This as Good as It Gets?” S&P on Monday said it is maintaining a “stable” outlook for the property/casualty industry as a whole, including commercial and personal lines.

However, rate increases “will lose steam” in 2014 and fail to outpace loss-cost trends, according to S&P, which said it also expects more frequent and severe catastrophes will negatively affect property/casualty insurers' combined ratio.

S&P also said the industry will maintain “very strong capitalization and conservatively managed investment portfolios,” and that reserves for the overall industry are adequate.

“Reserve releases remained robust in 2013 despite our longstanding belief that the pace of reserve releases is likely to continue to diminish in the next couple of years,” S&P said.

Recent reserving troubles of QBE Insurance Group Ltd., Tower Group International Ltd. and Meadowbrook Insurance Group Inc. “are not indicative of industrywide reserving trends.” Instead, S&P said the three insurers' “casualties reflect the poor choices of their respective management teams.”

In fact, S&P said that it believes the industry has displayed improved enterprise risk management capabilities and underwriting discipline “since the last wave of reserve strengthening in the early 2000s, lowering our concerns about repeat offenders.”

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The industry faces challenges from issues such as the renewal of the U.S. terrorism insurance backstop program, heightened regulatory hurdles and inflation concerns. “Nevertheless, we believe that insurers are better positioned to identify and manage this uncertainty because of continued improvements in their enterprise risk management capabilities,” S&P said in the analysis.

While the numbers are not yet final, S&P said it expects property/casualty insurers' 2013 results to be the strongest year since 2007 for underwriting profitability. “Strong 2013 performance stems from U.S. insurers' diligent push for rate increases, lower catastrophes, and robust reserve releases, despite our long-standing view that the reserve cushion is diminishing. All in all, underwriting performance for 2013 is likely as good as it gets.”