Also helping the sector, the report said, were healthy retained profits, an increase in unrealized gains and broadly positive currency movements as the U.S. dollar appreciated against the euro and Swiss franc.

At the time of the report's writing, researchers said loss estimates for Benfield's European Quarterly group from Hurricane Katrina were in excess of $2 billion.

The researchers said although its prior analysis and guidance has been blown away by Katrina, the catastrophe still appears to be an earnings event rather than a balance sheet event.

Benfield said that underwriter selectivity about risks, softening rates and corporate restructuring had led to a decline in premium income, with only Hannover Re showing an increase in gross premiums due to U.S. casualty and its life and health segment. Total gross premiums at Hannover Re increased 13 percent in the first half.

Examining pricing in the first half, Benfield said Alea reported European business premium rates were down 2-to-3 percent, on average, with rate reductions of 2-to-5 percent in the United States. Hannover Re said that first-half pricing was holding firm.

Among the six reinsurers, Swiss Re had the best combined ratio in the six-month period at 95.5, while Alea was highest at 105.9.

Examining pre-tax profit, Benfield said that Converium was the only group to report a loss, which was $16 million for the first half.

In addition to Hurricane Katrina, the report said reinsurers had been impacted by Hurricanes Dennis and Emily, as well as six aircraft crashes and flooding in Europe and India.

A full copy of the report can be viewed at www.benfieldgroup.com/research/industry_analysis. Printed copies can be obtained by contacting [email protected]

Benfield, an independent reinsurance and risk intermediary, serves insurance and reinsurance companies as well as government entities and global corporations.