Fitch: P&C insurance market remains challenged

Fitch Ratings said in new report Thursday that the U.S. property and casualty insurance sector remains challenged following sharp performance and investment declines in 2008.

And barring a significant turnaround, the ratings agency expects the market will experience two consecutive years of negative premium growth.

"While some market observers professed that the 2008 underwriting losses and reductions in capital would spur a reversal of negative pricing trends, the broader primary insurance market continues to see premium rate declines in the first half of 2009," wrote analyst James Auden in the report.

The property and casualty industry experienced unprecedented investment losses in 2008 due to the overall worldwide economic downturn. Underwriting results also deteriorated significantly due to increased accident-year losses and above average catastrophe losses.

Fitch's rating outlook remains negative for the U.S property and casualty insurance industry for both personal and commercial lines insurers.

"While a modest recovery of bond and equity markets may lead to a reduction in unrealized investment loss balances for the first half of 2009, considerable economic and investment uncertainty remains," Auden wrote.

Here's how some shares of property and casualty insurers were performing in morning trading:

Allstate Corp., up 24 cents to $25.19.

Travelers Cos., up 12 cents to $43.89.

Chubb Corp., up 11 cents to $41.45.