Fitch Ratings Inc. on Monday upgraded its outlook for the U.S. property/casualty insurance sector to “stable” from “negative” as insurers rebound from significant catastrophe losses in 2017 to an expected underwriting profit this year.

In addition, revenue grew sharply with net written premium expected to increase by more than 10% for the sector in 2018, Fitch said in a report.

Looking forward, the premium growth rate will likely decline in 2019 but remain “relatively robust” at between 4% and 5%, the report said.

But property/casualty insurers continue to see competitive pressure on rates, despite recent rate increases, Fitch said.

The Chicago-based rating agency had rated the sector as “negative” since its 2017 outlook report released in November 2016.

“The rating outlook remains stable for the industry in both the personal and commercial lines sectors,” Fitch said in Monday’s report, noting that insurers remain strongly capitalized.

In addition, after reporting a market combined ratio of 104% in 2017, the combined ratio for 2018 is projected at 99%, despite losses from Hurricane Michael and the California wildfires, Fitch said.

The sharp increase in premium growth this year is due to underwriting exposure increases in the improving economy and price increases in auto insurance, property insurance and some other areas, the report said.

“A reduction in reinsurance cessions to offshore affiliates by several organizations in response to U.S. tax changes led to a sharper increase in net written premiums, relative to direct premiums, though direct premiums are also anticipated to grow by approximately 5% in 2018,” the report said.

The slowdown in growth projected for 2019 is due to “developing challenges” in claims trends and a likely reduction in favorable prior-year loss reserve development, Fitch said.

In addition, while catastrophe losses in 2017 led to some price increases, the market remains competitive, the report said. However, “improvements in risk management and loss recognition by insurers limits chances of any deep soft market similar to the industry’s late 1990s experience.”

Commercial property rates are likely to weaken first, fueled by abundant capacity and cheaper reinsurance, Fitch said.