Moody's has warned of possible rating downgrades if fierce competition in the commercial insurance market hits insurers' results.
The rating agency said that some deterioration in profitability on commercial lines business was likely, as competitive pricing began to feed through into companies' results.
But Stephen Hunnisett, a Moody's analyst, predicted that this may be partly offset by general pricing increases in personal motor business.
Moody's said the overall outlook for the UK property and casualty insurance sector remained stable, with few rating changes anticipated during 2007, "as many groups maintained an excellent financial position".
But it warned that rating downgrades were possible in the event that underwriting discipline was not maintained.
Moody's anticipated that the top five insurers would maintain their strong market positions, while opportunities for niche players would continue.
"Meanwhile, the consolidation of broker distribution should continue and may provide marginal benefit to insurers in the terms of underwriting expenses," added Hunnisett.