As of mid-2014, worldwide pricing is softening in the reinsurance sector. At the same time, however, conditions have stabilized and even improved for most global insurers, Standard & Poors analyst Michael Vine concluded in a new industry report.

Among the key findings: 81 percent of Standard & Poor’s Ratings Services’ ratings on insurers around the world had a stable outlook as of the beginning of May 2014. That’s up from 73 percent over the same period a year ago. Vine noted in his report that the results reflect S&P’s “expectation that insurance ratings will be largely resilient to the risk environment outlook.”

Improved factors include “a gradual lift in interest rates from troublesome lows, and traction from slowly improving economic conditions, particularly in the U.S.,” Vine said in the report. Ratings stability is also more widespread compared to a year ago, he said, “as eurozone sovereign outlooks resolve, offset somewhat by Eastern Europe, and we assess greater capital and earnings certainty.”

As with many things relating to the insurance industry, the Standard & Poor’s report carries its share of worries about current and future market conditions, even with positive factors at play.

Vine noted in the report that “reinsurance sector risks have heightened after a long period of stability,” with earlier soft market-pricing conditions expected through the June/July renewal season. As well, factors such as regulatory uncertainty about the impact of global systemically important insurers and factors such as business conduct regulation still “pose strategic and operational challenges,” he said.

As far as reinsurance, Vine wrote “Standard & Poor’s believes that there will be a negative ratings trend in 2014.” Early signs of this include headline rates in the April 1 renewal that were down between 10 percent and 15 percent. S&P is also seeing preliminary signs of larger pricing decreases in U.S. property catastrophe rates looming for the June and July renewals. As well, market reports point to soft-market pricing conditions affecting rates in other casualty and specialty lines, according to Vine and S&P.

“This downward pressure on reinsurers’ top lines leads us to think there will be weakened profitability in 2014 and 2015,” Vine added in the S&P report. “In our opinion, these competition-related risks are the most prominent threat to the sector, usurping, for now at least, the macroeconomic risks we highlighted in September 2013.”

According to the S&P report, nearly half of S&P’s global reinsurance ratings “are materially exposed to these pressures.”

Of course, there is some regional variation. Negative indicators are at 10 percent (negative bias 3 percent) in North America, for example, and 11 percent (positive bias 1 percent) in Western Europe. Asia-Pacific’s negative rate hit 7 percent (neutral bias). But Standard & Poor’s detected a 20 percent negative rate (12 percent negative bias) in Central and Eastern Europe, the Middle East and Africa. For Latin America, the negative rate reached 19 percent (13 percent negative bias).