NEW YORK (Bloomberg) — Some Bermuda and US commercial insurers may have their ratings outlooks lowered to "negative" by Standard & Poor's in the second half of this year as declining prices threaten to squeeze underwriting profitability,

"Our overriding ratings concern continues to be the deterioration in pricing," S&P analyst John Iten said yesterday in a statement. S&P reiterated its "stable" outlook for the industry, saying that cuts may come for some companies if rate declines continue at their current pace.

Industry rates for business policies fell 14 percent in the first-quarter as insurers offered price reductions to boost market share, according to a survey by the Council of Insurance Agents and Brokers. Lower rates for some coverage contributed to earnings declines in the first quarter at Ace Ltd. and XL Capital Ltd., both based in Bermuda, as well as at St. Paul, Minnesota-based Travelers Cos.

"We expect that margin deterioration will be more pronounced in 2008," the S&P statement said. There may be "meaningful declines in underwriting profitability" in late 2008 and in 2009.

S&P's "stable" outlook for the industry means the firm expects to make roughly an equal number of upgrades and downgrades to the insurers' ratings in 2008.