Moody's Investors Service believes that the outlook for personal lines insurance companies remains stable, the agency said in its annual report released Wednesday.

This outlook, according to Moody's, stems from the industry's strong risk-adjusted capitalization, increased surplus levels and reserves, and in spite of increased catastrophe losses.

"Through the first six months of 2005, personal lines insurers have reported strong results, reflecting continued favorable frequency trends, still-adequate pricing, and favorable reserve development on prior years' losses," said the report's author, analyst James Eck.