S&P also warns if US commercial rates continue to fall at the current rate, the outlook may turn to negative in the second half of this year.

The ratings agency says a negative sector outlook means downgrades are likely to exceed upgrades for the industry in the next year.

“This year will be critically important to the insurance industry,” S&P said. “We will find out if the industry and its investors are truly capable of the discipline necessary to walk away from unprofitable business and allow markets to provide the pricing necessary to justify the commitment of risk capital to them.

“The verdict so far is inconclusive.”