With signs on the rise for recession late this year or next, the property-casualty industry can take comfort from the fact that it is fairly immune to traditional business cycles, said a Swiss Re economist.

The reinsurance giant's U.S. economic outlook published yesterday said the February plunge in the stock market coupled with the drop in orders for durable goods pushed the probability of recession in the United States up to 35 percent from 30 percent in January.

Swiss Re economist Arun Raha said the property-casualty sector is particularly immune to the ups and downs of the traditional business cycle.

While people may buy more cars and homes, they generally are replacing ones they already have and therefore will not be purchasing that much new insurance.

"P-C cycles have more to do with the cyclical availability of capital," he said.

According to the outlook, the economy could face what it terms a soft landing (flat or very little growth) or a mild recession.

Real Gross Domestic Product growth is expected at 2.4 percent this year and 3.1 percent next year, while core inflation is expected to decline to close to 2 percent by the middle of the year, allowing the Federal Reserve to ease the federal funds rate to 5 percent.

"If the soft-landing forecast comes to fruition, investment grade corporate bonds should have a fairly stable year," the outlook said.

Mr. Raha said that will be good for the property-casualty sector since most of their investments are in such instruments.

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Recession Signs Rise, But Insurers Look Safe

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