Reinsurers' policyholder surplus also rose, reaching $55.92 billion compared with $42.08 billion posted by a comparable group in 2002, according to RAA survey data, which was based on statutory underwriting results of 29 U.S. property and casualty reinsurers.

Joseph Sieverling, vice president at the Washington, D.C.-based Reinsurance Association of America, said the aggregate combined ratio for 2003 reflects a drastically improved loss ratio of 74 percent, along with a 27.2 percent expense ratio.

"Both the loss ratio and the combined ratio improved dramatically, while expense ratio is essentially flat," Mr. Sieverling commented. "The whole decrease in the combined ratio is due to a better loss experience?and that is clearly in line with everyone's expectations." (In 2002, a similar group of reinsurers reported 93.7 percent loss ratio and 27.6 percent expense ratio.)

The aggregate underwriting loss for reinsurers narrowed considerably, from a loss of $6.44 billion in 2002 to a loss of $563.51 million for 2003.

Mr. Sieverling explained that reinsurers had benefited from a favorable rate environment and that reinsurers had also become more selective in the risks that they assume as well as having more terms and conditions that limit reinsurer losses.

"Terms and conditions of the contracts have tightened substantially, and the rates have gone up?both of these factors have really contributed to much lower loss ratios in 2003," Mr. Sieverling said.

But despite a 20.1 point improvement in the aggregate combined ratio, there were also some disappointing trends. The RAA report showed, for example, that reinsurers posted lackluster growth in net premiums written during 2003.

In the RAA survey, the 29 U.S. reinsurers reported $30.63 billion in net premiums written for 2003?marginally higher than the $29.5 billion posted one year ago. "It increased by about a billion dollars in 2003, which is a relatively small increase compared to what we saw from 2001 to 2002, which was about a $5 billion increase," Mr. Sieverling noted. "I think you could say that rate increases have really slowed or probably came to a stop or, in many lines of business, have reversed."

The RAA survey also showed that the investment income has dropped substantially during 2003, down more than 10 percent to $ 5.62 billion in 2003 from $6.23 billion reported for 2002.