Two major reinsurance brokerages reported falling prices in the reinsurance market and expectations the reductions will continue into 2008. One firm found underwriters are beginning to abandon underwriting discipline in pursuit of market share.

Reinsurance brokers Guy Carpenter & Company, LLC, a subsidiary of New York-based professional services firm Marsh & McLennan, and Willis Re, a unit of Willis Group Holdings, issued their reviews of the reinsurance market for the Jan. 1 renewals.

Both pointed to marked softening in pricing throughout the industry on renewals.

Guy Carpenter in its "Near Misses, Plentiful Reminders: Global Reinsurance Review January 2008" said property catastrophe reinsurance rates were down 9 percent across all markets at Jan. 1 renewals. Many renewals closed late as cedents held out for the lowest rate.

"Barring large catastrophe losses in 2008, we expect to see the downward drift in rates that we have seen recently continue through 2008 into 2009," said Chris Klein, Guy Carpenter's global head of business intelligence, in a statement.

Willis Re's report titled "1st View" said that while there was softening across the board, "the intensity of this competition varies by class, line and region."

Marine insurance saw only modest softening, while other areas such as U.S. property witnessed steep declines, the report said.

Peter Hearn, chief executive officer of Willis Re, wrote that while the reinsurance industry has seen "exceptional profitability," managing the cycle with underwriting discipline is another matter.

"The industry is showing signs of reverting to its historic pattern of feast or famine," he said.

The Willis report is available through www.willis.com.

Guy Carpenter's report is available at www.guycarp.com.

Special Reports /

Brokers Agree Market Is Soft, But Is Discipline Gone?

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