NEW YORK--While enterprise risk management and predictiveunderwriting models should theoretically dampen cyclical pricingswings, it's na?ve to think property-casualty insurance managementteams will universally follow their indications, executives saidhere.

Their comments came during a panel discussion at Standard &Poor's 2007 Insurance Conference.

Ramani Ayer, chairman and chief executive officer of TheHartford, said "tools are only one part of the game. Managementwill--management resolve--is the key differentiator in terms ofwhen we decide that terms are unacceptable and we'd better stopkidding ourselves."

He does not think, he said, that management resolve "is asfreely available or as widely distributed" as sophisticatedtools."

Mr. Ayer's comments followed opening remarks by S&P ManagingDirector Grace Osborne, who said that while the hard market is nowover, S&P's stable rating outlooks for all p-c sectors arepredicated on the idea that this cycle will be different becauseenterprise risk management "is much stronger this time around" andbecause financial discipline should play a larger role in avoidingruinous earnings impacts of soft market competition.

At a later session, Stephen Way, former CEO of HCC Holdings, whois now a partner for SLW International, LLC, a Houston-basedinvestment and consulting firm, said: "We can sit here all day andtalk about modeling....You have to separate the tools from whetherthey stop you from writing cheap business or...exceeding your PML[probably maximum losses] and risking your capital."

"Discipline may be more important than all the models in theworld," said Mr. Way, speaking on a panel of experts who describedpredictive underwriting tools and catastrophe models.

Mr. Ayer was one of several executives who initially expressedsome optimism about the beneficial impact of better tools. He alsosuggested that more transparent financial reporting--allowinginvestors to react to rapidly deteriorating performance--along withthe potentially disciplining force of "rating agency intrusiveness"could mean less severe cycle downturns in the future.

Mr. Way said there are limits to transparency, noting thatpublic companies typically report only on renewals. "They tell youhow disciplined they are--[that] they let the bad business gobecause they have better underwriting than everyone else"--butdon't discuss new business they're picking up at rates that may bedeclining 30 percent.

He also said that while tools could be valuable for smallstandard policies, they don't work for specialty business or largeaccounts. On that business, "brokers tell you what it's going forand then you can decide if you want to write it," he said.

At the earlier session, Stephen Lilienthal, chairman and CEO ofCNA in Chicago, said the most pronounced accelerations in softmarket conditions are currently in the large risk and specialtymarket segments.

Overall, he said, "ERM has made us better," noting, for example,that companies have become more diversified and "more segmented" intheir approaches to business, and that they use higher quality dataand have made smarter technology investments.

Still, Mr. Lilienthal said history paints a dimmer picture.During his 35-year career, he said, only 10 were in hardmarkets.

"I don't think we live in hard markets. We live in soft,competitive markets" sprinkled with hard-market "moments," hesaid.