The ratings agency, however, doesn't expect many upgrades anytime soon because of heated competition and very low interest rates, according to analyst Matthew Carroll.
As the economic downturn whittled down the base of people seeking insurance, competition over the smaller pool intensified. In addition, consistently low interest rates make profitability gains difficult for insurers, especially those with spread-based products or variable annuities, which often guaranteed higher rates than what is the current trend.
Carroll also noted insurers still face potential losses from commercial real estate.
However, the pace of S&P downgrades in the sector has slowed this year, and a smaller proportion of insurers have either negative outlooks or ratings on watch for downgrade. Only 6% of rated insurers have positive ratings outlooks.
S&P also said many life insurers have made significant strides in rebuilding capital and liquidity levels since the financial crisis.
It cited the economic downturn for pressuring life insurers' earnings, investment and capital, which resulted in the agency's negative outlook on the industry since October 2008.