The clouds hovering over the U.S. property/casualty insurance market are likely to linger, a new report predicts. New York-based Fitch Ratings says its ratings outlook remains negative for both personal and commercial lines insurers.

According to Fitch, the two primary factors that sullied industry balance sheets in 2008, investment losses and poor underwriting results, remain in effect.

“Near-term market fundamentals are not supportive of a return to strong underwriting profits and previous double-digit returns on surplus,” the report states. “Underwriting performance is likely to suffer from deteriorating accident-year loss experience, and diminished favorable prior period reserve development in 2009.”

Likewise, the rating firm expects the ongoing financial storm to hinder the investment portfolio of insurers.

“Investment returns are expected to remain inhibited by low yields and recognition of other-than-temporary impairments (OTTI) into earnings,” the report states.

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