Mr. Holzheu acknowledged that property rates have been moderating but also added that these prices are still remaining at a profitable level. Casualty rates, on the other hand, are still strong and are even continuing to climb in certain lines.

Mr. Holzheu also forecast that the industry overall will see profits from underwriting going forward and "this is due to a couple of fundamental, structural changes in the industry."

One major change, he explained, is that "a more systematic observation of the markets" has begun in earnest during the past few years, and that the industry now has a variety of pricing indices that make pricing information much more visible.

"All industry participants and analysts are very well-informed," Mr. Holzheu said. He also said that companies are clearly focusing on core businesses more than ever. "There are models in capital allocation and asset-liabilities matching that are standard now" that were not around five-to-seven years ago, he said.

Mr. Holzheu also commented that insurers are continuing to keep their focus on the underwriting bottom line because of the lukewarm investment results.

He acknowledged that the investment income generally has been improving, but commented this was driven more by strong cash flow rather than investment yields. The yields, hurt by record-low interest rates, have been coming down through 2003, Mr. Holzheu pointed out.

Going forward, interest rates are poised to rise this year and help boost investment yields, Mr. Holzheu said, but at the same time, during this upcoming phase of rising rates, the gain in yields will be suppressed by the negative evaluation impact on the bond portfolio, he said.

Mr. Holzheu also noted during his presentation that the property-casualty insurance industry still has plenty of hurdles to overcome before achieving sustainable underwriting profitability.

"There are still deficiencies in core reserves?the underwriting years of 1997 to 2001 are still deficient," he said. Additionally, "we still have long-term asbestos reserve problems that remain a balance-sheet drag on insurance companies. And then we also have growing exposures in certain liability lines such as directors' and officers', errors and omission, medical malpractice."

Mr. Holzheu also pointed out that what's important for insurers is to keep looking forward at the new exposures.

"The industry analysis has been very much focused looking back at the reserves deficiencies which basically address the underwriting of past years," he noted.

He argued that it's critical at this point in the market development to look at future exposures that are growing. Mr. Holzheu also noted that the industry is facing "a permanent trend of high-catastrophe exposures," driven by economic development and migration to high-risk areas of the country.

"There are growing man-made exposures, related to economic activities and socio-political factors," he said, and added to this, "terrorism still remains one of the key uncertainties for the industry," he said.