The high watermark for property-catastrophe reinsurance pricing was midyear 2006, experts agree, predicting that prices won't reach those levels this year.

"There is still capacity for national business as well as all the regions," said Charles Hewitt, executive vice president in the Boston office of London-based Benfield Group. The tightest areas are the Northeast and Florida, but it looks like the equilibrium price point in those peak zones is about the April 1, 2006 level, he said.

Reinsurers want to preserve business they got in 2006, and not force it away, he said. By midyear--after catastrophe model changes came through from various vendors--the industry was "dealing with crisis pricing. The market had run out of capacity. Reinsurers were selling something they really didn't have." So there was essentially "an artificial jump" in prices between April and July, he said.

In June and July 2006, 100 percent price hikes in property-cat reinsurance rates were widely reported.

Mr. Hewitt stressed that he doesn't believe covers coming up in April and May will see lower prices than last year. "I think we'll probably see reinsurers try to push the prices up a little....The April 1's are really going to tell us where the equilibrium is. But that's really what we're pushing for [April 1, 2006 price levels] as being the stability point."

Timothy Gardner, global leader of property at Guy Carpenter in New York, said he expects a flat or softening market later this year.

Noting that Jan. 1, 2007 cat reinsurance prices did not come up to July 1, 2006 levels, Mr. Gardner said some softening could come through in the July 2007 pricing "to get it to that parity level"--in other words, "to bring it back to January."

On average, Mr. Gardner said that Jan. 1 property-cat reinsurance prices for national accounts rose in the 20-to-50 percent range, while single- or multistate regional insurers saw their reinsurance bills rise in the 5-to-35 percent range.

Even if prices start to come off a little bit at midyear, "I think the moves will be minor," he said, as reinsurers move back to underwriting as usual. "They're asking, 'What managements do I like? Who's been able to demonstrate that they are executing on exposure management strategies?' Those are the people I'm going to back regardless of where they come up through the course of the year."

Separately, at the Property-Casualty Insurance Joint Industry Forum in New York yesterday, just under two-thirds of executives polled--64 percent--said they expect property-cat reinsurance pricing to ease in 2007.

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Experts: '07 Cat Reinsurance Pricing Won't Rise

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