The new Bermuda reinsurance operations created after huge U.S. hurricane losses did not affect 2006 renewal business, but their impact might be felt in the future, according to a reinsurance intermediary's report.

“The new markets arrived too late to exert significant influence on 2006 renewals, but their day may yet come as a counterbalance to the anticipated squeeze in capacity in the months ahead,” said the study by Benfield.

The company also found that the effect of $80 billion in U.S. storm losses was an uneven impact on pricing and capacity at 2006 reinsurance renewals.

London-based Benfield's 82-page report, “Swings and Roundabouts,” found that the hurricanes caused dramatic increases in reinsurance rates in the United States, particularly for property-catastrophe business in loss-affected areas, as well as in the non-marine retrocession and marine reinsurance markets.

Elsewhere, Benfield said, the hurricanes had a generally stabilizing influence, reversing the downward price trend.

“The immediate impact of the hurricane season fell short of the market-changing event some expected,” said Benfield's chief executive officer, Grahame Chilton.

“However, we believe that the market has changed,” he added. “Continuing development of 2005 losses, recalibration of catastrophe models and the shrinking appetite for peak exposures are some of the factors which will exert further upward pressure on pricing.”

Mr. Chilton predicted that “reinsurance capacity is likely to be significantly tighter for July 1 renewals and beyond, and this is likely to lead to a general re-rating across global markets.”

U.S. loss-affected property-catastrophe treaties experienced the most substantial price increases–more than 100 percent in some cases– according to the report.

Loss-free property business in the United States was up 10-to-20 percent, compared with price falls of up to 20 percent in January 2005.

In Latin America and the Caribbean, Western Europe, Australia and Central- and Eastern Europe, there were swings from price decreases in 2005 to either flat-or-low double-digit growth, Benfield reported.

The firm's worldwide post-renewal survey of brokers conducted during the past two weeks found that cost was the primary concern for 33 percent of reinsurance customers, with security and ratings (27 percent) and coverage, terms and conditions (23 percent) also significant issues.

A full copy of the 82-page report can be viewed online at www.benfieldgroup.com/research. Printed copies can be obtained by contacting IAR@benfieldgroup.com.

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