Mr. Holzheu said that efforts by insurers to strengthen their balance sheets would continue and "old issues" such as asbestos claims would continue to be addressed.

Tightening capital is contributing to a harder market, he explained. On average, he said, commercial line rates are up 10-30 percent and personal line rates are up 6-9 percent.

According to Swiss Re, new capacity by global region was broken down as follows: U.S., 34 percent; and Europe, Bermuda and new Bermuda start-ups, 22 percent each.

More generally, the economy is showing signs of recovery, although consumer sentiment may well camouflage those improvements, according to a discussion by Swiss Re experts.

Chris Weihs, vice president-fixed income management, Swiss Re Asset Management, described a period of "symmetrical idiocy" during which the market could experience an "irrational downside" that matched the upside the market experienced in 1999 and 2000.

The "extremely negative" investor psychology coupled with issues of corporate governance and "outright fraud" is creating a "very cautious" environment, he continued.

Investors will look for consistent growth stocks and quality fixed income holdings, Mr. Weihs added. There will be continued wariness of technology and telecommunications stocks, he said.

William Yankus, managing director with Fox-Pitt Kelton, a Swiss Re investment banking subsidiary in New York, said that the insurance sector currently has strong fundamentals.

Although the current equities market will affect life insurers and asbestos remains an issue for some property-casualty insurers, there are a number of companies that have the potential for significantly enhanced earnings going forward, he added.

Despite this skittishness, Kurt Karl, chief economist, Swiss Re Economic Research and Consulting, said that an economic recovery is on track. He cited, for example, real income growth of four percent year over year and a three percent growth in consumption.

Concluding, Karl said that the U.S. is in recovery and a global economic recovery is beginning.