Bermuda reinsurers should record another year of strong resultsin 2008 and produce mid- to high-teens return on equity despitelower premium volume, according to an investment bank analysis.

Bank of America's equity research division said it isreiterating a positive view of the reinsurance sector after meetingthe management teams of most of the companies it studies. “Most areconfident they can write a reasonable volume of both property andcasualty business in 2008 that will generate targeted returns,” thebank said.

The analysis said that premium rates on U.S. catastrophereinsurance are expected to decline by 10 percent or less afterrising significantly last year.

In some cases the rate decreases will be offset by reductions inexposure. Of nine companies analysts met with, only one wasdisappointed by current property market conditions, Bank of Americasaid.

The analysis found less of a consensus on U.S. casualty businesswith some companies expecting similar decreases as on propertybusiness, while others have put through rate increases on quotes.Benign loss cost trends will somewhat offset the impact ofdeclining rates on line, the bank advised.

According to the analysis, reinsurers so far are remainingdisciplined in their underwriting and pricing, but it was notedthat this will be a late renewal season. Despite some reinsurancebrokers' attempts to secure rate decreases of 30 percent,reinsurers are holding firm declining to write business with thatmagnitude of rate reduction, the study found.

However, Bank of America said this will be a late renewal seasonwith only 25 percent of firm orders so far.

It said reinsurance buyers are focusing on price this renewalseason, and terms and conditions generally are holding. Somereinsurers are charging more for more liberal terms, it wasnoted.

Bank of America said it is maintaining a positive view on thesector and that p-c reinsurers continue to trade at an attractivevaluation.

The bank said strong underwriting margins on property andcasualty reinsurance and improved risk management should drive bookvalue growth. The industry has a strong reserve position, andinvestment income is growing.