NU Online News Service, July 9, 2:55 p.m. EDT

The first half of 2010 has not been kind to reinsurers, who werejust beginning to enjoy some recovery from the financial fallout of2008, according to a reinsurance broker's report.

New York-based reinsurance broker Holborn issued its Mid-Year2010 Market report, observing that the reinsurance marketplacerebounded in 2009 from a combination of high level of loss activityand the financial market downturn.

Catastrophe experience last year was "benign to the worldwidemarket, with no individual event costing reinsurers over $1billion."

Equity and currency market recovery last year, along withimprovement in stock prices, meant capital improved to a pointwhere "most now have far more capital than at mid-year 2009."

However, the trend has flattened, Holborn said, aftersignificant losses in Chile from the Feb. 27 earthquake and the"significant liability exposure" from the Deepwater Horizondisaster in the Gulf of Mexico. Equity market volatility has notfurnished reinsurers with equity gains they have enjoyed, and astrong dollar has had a modest reduction to some reinsurers'capacity.

"We estimate this is the worst-ever first half for largereinsured losses," said Holborn.

While capacity remains abundant, prices remain soft, the brokercontinued. Companies are maintaining underwriting discipline, butceding companies are placing programs at improved terms, the brokersaid.

Holborn said the worldwide reinsurance industry is modestlyprofitable but volatile, shrinking organically and moving out ofthe United States.

Net earned premiums in 2009 were $187 billion with a combinedratio of 85 and net income of $26 billion.

The broker said that for 2010, the global reinsurance marketwill see lower underwriting profits driven by the soft market. Thesurplus will be lower based on falls in the British pound and Eurofor the first half of the year. Premium volumes will be lowerbecause any rate increases will not outpace the continuing softmarket.

Copies of the report are available by contacting Holborn at212-797-2285.