The general consensus at the moment is that prices are moving quietly downward but are still disciplined, Mr. Bolland observed.

John Gilbert, chairman of Holborn Corp. in New York, said he saw an even larger price decline for property-cat risks during the midyear–a decline in the 8-to-15 percent range excluding Florida-exposed risks–while the casualty price decline was minimal.

Benfield Inc., a reinsurance intermediary, agreed that it is seeing “a little bit of slide” in pricing, but not much.

Chuck Hewitt, executive vice president of client development at Benfield, said he saw up to an 8-to-10 percent price decline in casualty reinsurance and a 3-to-5 percent fall in property-cat overall. “Minimum prices continue to hold, and that floor then creates discipline throughout programs,” he observed.

On the property-cat side, one reason that reinsurers are willing to write risks at lower prices is because carriers are doing good jobs of managing their catastrophe exposures. “As reinsurers see companies developing a better and more efficiently managed portfolio of catastrophe risks, they are willing to assume the risk for a little less money, because there is less uncertainty in it and it's a better managed book,” Mr. Hewitt said.

On the casualty reinsurance side, Mr. Hewitt observed, reinsurers are becoming more comfortable with the price adequacy generated on primary products. “Since about 2001, casualty prices have been driven up in primary policies and terms have tightened. We saw clearly in 2004 that there is a pricing adequacy,” Mr. Hewitt said. So now, reinsurers are saying, “We now have a product that looks well-priced, and that ought to flow through into the reinsurance in the form of lower rates,” he said.

Looking at specific lines, medical malpractice reinsurance prices are still pretty firm. “People are still trying to figure out what the right answer is for medical malpractice pricing. As long as that uncertainty is there, it will be firm,” Mr. Hewitt said.

Directors-and-officers reinsurance pricing seems to be somewhat stabilizing compared to the January 1 renewal. For workers' compensation, prices in some states are reflecting benefit changes that have been implemented to get a better control over loss costs.

The mood during the midyear renewal was rather quiet and subdued, as reinsurers, insurers and brokers are all quietly going about their business, “keeping their heads down, not making too many waves, hoping that all the investigations and publicity will soon pass,” according to Mr. Gilbert.

“It's been a pretty quiet renewal. People are hunkering down,” added Mr. Bolland.

Another issue reinsurers are keeping a close eye on, of course, is the Terrorism Risk Insurance Act, the federal backstop program whose renewal after the current expiration date of Dec. 31, 2005 is still in question.

“Everyone is hoping it will get solved. But people are putting endorsements in reinsurance: what happens if TRIA is, or is not, renewed? How do you handle the TRIA risk if TRIA is no longer there?” Mr. Bolland said.

Basically, the general rule has been that reinsurers have been filling the gaps in TRIA and they seem willing to continue to fulfill that role. “But they don't want to give [full] coverage for [terror] events even in the absence of TRIA,” said Mr. Bolland.

Chris O'Kane, chairman and CEO of Aspen Insurance Holdings, agreed that TRIA is one of the issues on review. “What happens if it's not renewed? We see some appetite to buy terrorism-specific covers because of this uncertainty–it's not a huge appetite but there are a few buyers,” Mr. O'Kane said.

“Most people continue to be very concerned that without a federal backstop, the industry will be unable to meet the society's needs.”

Flag: Midyear Renewal

The Price Is Right?

Reinsurance prices continued on a slow downward trajectory during the midyear renewal season.

o For property catastrophe: Gill and Roeser saw 5-to-10 percent price declines outside Florida exposed risks, for which rates climbed 10-to-20 percent; Holborn said non-Florida risks fell in the 8-to-15 percent range excluding Florida-exposed risks; Benfield cited 3-to-5 percent declines in property-cat overall.

o For casualty business: Gill and Roeser reported 5-to-10 percent price declines; Holborn reported minimal declines; Benfield saw 8-to-10 percent price declines.

o Med mal and terror coverage are wildcards.

During the midyear renewal reinsurers, insurers and brokers were “keeping their heads down, not making too many waves, hoping that all the investigations and publicity will soon pass.”

John Gilbert, Chairman, Holborn Corp.