January reinsurance renewal pricing for U.S.property-catastrophe risks could be down by as much as 15-25% inthe United States and 5% in Europe and the U.K., according toresearch from Clifford Gallant, an equity analyst with Nomurainvestment bank.

Preliminary talks with brokers and underwriters indicate thatprices are falling faster than was expected a month ago, he states.Casualty lines are generally flat worldwide.

Gallant says prices are being pressured by the growing impact ofalternative capital, the impact of a relatively quiet loss year in2013 and growing industry capital surplus. In Europe, these forcesare being offset somewhat by flood losses in Central Europe andongoing concerns about casualty profitability.

Reinsurance premium volumes are down not only due to lowerrates, but because primary-insurer retentions are up as high as5-6%, Gallant says. “While a seeming economic oddity—shouldn’tinsurers buy more, not less, of cheaper protection?—competitivepressures amongst primary insurers, increasingly efficient buyingstrategies, and higher confidence in the underlying profitabilityof their own books have all contributed to the higher retentions,”says Gallant.