The outlook for the U.S. property-casualty insurance market remains “negative,” according to Fitch Ratings, which says the sector faces “significant challenges” this year.

The “negative” rating applies to both personal and commercial lines insurers.

The ratings service notes that the property-casualty industry experienced unprecedented investment losses in 2008 from the overall worldwide economic downturn. Underwriting results also deteriorated significantly relative to recent history as a result of increased accident-year losses and above-average catastrophe losses.

Fitch said in its analysis, “Near-term market fundamentals are not supportive of a return to strong underwriting profits and previous double-digit returns on surplus.”

It added that investment returns are expected to remain inhibited by low yields and recognition of other-than-temporary impairments into earnings. Underwriting performance is likely to suffer from deteriorating accident-year loss experience, and diminished favorable prior period reserve development this year, according to Fitch.