The U.S. personal-lines insurance sector==particularly the automarket==is entering a soft cycle in 2005, but this current softperiod is expected to be shorter-lived than previous ones, Standard& Poor's said in its new report.

S&P noted that at this point, the softening environment hasnot yet resulted in across-the-board rate cuts but has led to"looser underwriting standards in certain corners of the market."S&P offered its observations in a new report titled "U.S.Personal Lines Insurer Mid-Year Outlook: Market Continues To SoftenDespite Heavy 2004 Catastrophe Losses."

S&P credit analyst Polina Chernyak said the personal-linessector is at a crucial point where carriers could be tempted todiscount product offerings to build market share, a pattern lastobserved during the soft market in 1987-2001. "The concern is thatthis trend toward weaker operating results could soon reassertitself, especially given the higher yields available on investmentsas interest rates rise generally in U.S. financial markets," Ms.Chernyak said.