The outlook for the U.S. property/casualty sector is stable and not likely to change in the next 12-18 months, Fitch Ratings Inc. said in a report Thursday.

The industry is expected to generate “moderately” improved underwriting profits in 2019, and rising premium rates in many commercial lines should drive continued underwriting profits in 2020, Fitch said in its Fitch Ratings 2020 Outlook: U.S. Property/Casualty Insurance.

Rising claims cost uncertainty in casualty lines, however, creates the potential for future adverse reserve development, and competitive pressures challenge underwriters to produce adequate returns on capital.

Liability segments are seeing larger rate increases in response to deteriorating results and claims cost uncertainty, joining premium rates in weaker performing property and auto lines, which increased significantly in the last two years.

Premium growth should slow slightly in 2020 “as reductions in economic activity somewhat offset pricing improvement,” Fitch said.

Direct written premiums for the industry are projected to grow by nearly 5% in full-year 2019 and 4.4% in 2020.

Net written premiums, however, increased by 11% in 2018, but will slow to 2.5% growth in 2019 and rebound to a projected 3.9% in 2020 as net written premium growth continues to be blunted by multinational firms adapting to U.S. tax law changes by altering reinsurance cessions  to offshore affiliates, Fitch said.

The industry is on track to report a statutory underwriting profit in 2019 with a projected combined ratio of 98%, compared with 99% in 2018 and 104% in 2017, Fitch said.

Next year, pricing changes are likely to outpace loss costs to produce a projected 97% industry combined ratio for the year.

Catastrophes remain the industry’s wild card. Despite gains in modeling technology and managing aggregates, “catastrophe-related risks, particularly severe Atlantic hurricanes, remain the most prominent source of near-term underwriting volatility for the sector,” Fitch said.