US commercial property/casualty insurers appear to be in rude health despite soft market conditions, says a report by Standard & Poor’s (S&P).

The report says earnings this year are likely to approach the record levels achieved in the US last year.

As well as forecasting a healthy bottom line on most insurers’ balance sheets the report notes reduced concern about reserve levels within the industry.

S&P attributes strong underwriting results to an unusually low year for hurricane losses in the US. It has maintained its stable outlook for US commercial lines, based on a forecast of a balanced level of upgrades and downgrades during the next 12 months.

But the report expresses concern about the continued soft market evident across all lines, deepened by an increase in the rate of deterioration of premiums. S&P predicts further pressure on margins next year.

The ratings agency also expresses some doubt over the ability of property/casualty underwriters to break out of a traditional cycle of vigorous price competition during soft market periods to engineer a “soft landing”.