The personal lines segment of the property-casualty market appears to be stable after a rocky 2008.

A.M. Best Co., a ratings service, said it continues to maintain a “stable” outlook for this year for the segment. The outlook suggests that its ratings of insurers in this segment will not move “profoundly in one direction,” meaning the number of ratings upgrades and downgrades will be about even.

The ratings service bases its assessment on favorable risk-adjusted capitalization, generally favorable normalized underwriting performance and anticipation of ongoing underwriting discipline among those insurers who primarily write personal lines coverage.

“Although there was significant volatility in 2008 due to unprecedented catastrophic activity, uncertain investment markets and difficult overall economic conditions, the personal lines segment maintains generally favorable risk-adjusted capitalization,” A.M. Best said in a statement.

Insurers are expected to pay homeowners and businesses $25.2 billion for 2008 property losses from 37 catastrophes, including six consecutive tropical systems making landfall on U.S. coastlines, according to preliminary analysis by ISO’s Property Claim Services Unit. Storms making landfall along coastlines ranging from southern Texas to Virginia included Dolly, Eduoard, Fay, Hanna, Gustav and Ike.

The 2008 losses followed two low-loss years, which provided insurers with a chance to collect money after record losses of $62.3 billion in losses in 2005, when Hurricanes Katrina and Rita, as well as 22 other catastrophes struck. Twenty-three incidents in 2007 caused $6.7 billion in losses, while 33 incidents in 2006 led to $9.2 billion in losses.

The capital position of this segment reflects several consecutive years of surplus growth prior to 2008, which effectively cushioned the downward pressures experienced throughout 2008, the ratings service said.

While overall risk-adjusted capitalization remains favorable, the decline in capitalization in 2008 does mean that there is less room for further deterioration than in prior years, according to the ratings service. However, A.M. Best said it anticipates that given the recent economic and investment market trends, those carriers writing predominantly personal lines coverages “will approach this environment in a prudent manner, particularly from a pricing and risk-management perspective.”

The ratings service warns of potential problems this year, including the possibility of further deterioration in the economic climate, continued high levels of catastrophic activity and “the ever-present regulatory uncertainty in key markets.”