Personal insurance lines appear prepared for what challenges lie ahead this year, leading a key ratings service to forecast the segment to remain “stable” this year.

A.M. Best Co. said it is maintaining the outlook for the personal lines segment based on favorable risk-adjusted capitalization, generally adequate normalized underwriting performance and expectation of prudent pricing and risk-management.

The stable outlook represents A.M. Best’s view that most carriers can manage industry challenges – volatile weather, the economy, increasing loss cost trends and the uncertain regulatory environments – given their risk-adjusted capital positions, as well as the expectation that performance will be generally in line with prior years—assuming normal catastrophic loss activity.

The ratings service said it does not expect ratings actions for personal lines insurers to move “profoundly in one direction,” but rather that ratings upgrades and downgrades will be evenly split.

Despite the frequency of weather events of the past several years, volatile investment markets, macroeconomic pressures and ongoing competitive market conditions, carriers in the personal lines segment have shown resiliency, A.M Best said in a statement.

Carriers, who have built up significant capital in preceding years, have been proactive regarding pricing, risk selection and overall risk management, leaving them well positioned to handle these challenges, the ratings service said.

However, A.M. Best warns that those companies that fail to effectively position themselves in the market have experienced difficulties with unexpected deterioration in both operating results and risk-adjusted capitalization.