NEW YORK–The record catastrophe losses of 2004 and 2005 have resulted in a meaningful shift of insurance risk from reinsurers down to policyholders and the public, a leading property-casualty analyst said this morning.

Speaking at the Standard & Poor’s annual insurance conference here, Morgan Stanley property-casualty analyst William Wilt said efforts by Allstate and some regulators to develop public catastrophe funds are indicative of this new movement.

“What we have learned is that risk-sharing needs to include entities outside insurers and reinsurers,” he said.

Mr. Wilt joined Lehman Brothers life insurance analyst Eric Berg and J.P. Morgan Securities analyst Arun Kumar in looking at the insurance industry from both an equity and credit investor perspective.

If a storm-free 2006 is what you are wishing, be careful, since it could result in a precipitous drop in pricing. “If that happens, my advice would be to run away,” Mr. Wilt told his audience of industry professionals and executives.

But the analyst also noted that any drop in pricing now will have less impact since it would come from a relatively high platform of not only pricing but company book values.

“And terms and conditions are tight now, whereas a few years ago they were like Swiss cheese,” he said.

Mr. Wilt said he has noticed recently that at least in the property-casualty industry, purportedly investor-friendly moves like share buybacks and dividend payouts have not always paid off in the stock price.

Sometimes, increased business investment, whether in technology or other areas, will prove more profitable in the long run. “But it is not either/or–you have to do both,” he said.

Mr. Berg said he has taken a dim view of those companies who say they are losing top-line revenue because they are not willing to engage in the questionable underwriting practices. “How can everyone’s growth be affected because of irrational competition?” he said.