Among the study's highlights:

o Property catastrophe: Preliminary estimates show prices rising for the first time in two years, to mid-1990s levels, with massive increases on some U.S. renewals. A reassessment of rating agency capital requirements, readjustment of catastrophe models and the rising cost of capital influenced pricing decisions, although there was no shortage of capacity.

o Risk Excess of Loss: Pricing changes in the per risk market, where reinsurers assume claims payment above what the primary insurer assumes, were less substantial. However, a number of reinsurers did seek to limit the amount of catastrophe limit provided on per risk treaties, with others excluding critical catastrophe in the renewal of worldwide risk excess of loss treaties.

o Pro Rata: For most reinsurers, the spreading of a percentage of a single risk among them remained a less attractive line of business than excess of loss. In terms of both the number of participants and capacity, this segment of the market was relatively stable in 2005.

o Retrocession: Retrocession programs with U.S. exposures generally experienced a total loss in 2005. Consequently, Jan. 1 renewals saw limited capacity and price increases in the region of 100 percent. Reinsurers also sought to separate U.S. and non-U.S. coverages.

o Rating Agencies: In the wake of the 2005 hurricane season, rating agencies immediately downgraded a number of reinsurers. They have since been aggressive in instituting stricter capital adequacy requirements and new measurement standards for catastrophic risk.

o New Market Entrants: In reaction to the 2005 losses, $8.5 billion of new capital entered the market, anticipating rising reinsurance rates. Though they did not play a major role at the time of the January 1, 2006 renewals, these new reinsurers are expected be a more significant factor later in 2006.

o Catastrophe Bonds and Alternative Risk Transfer: A record amount of nearly $2 billion of catastrophe bonds were issued in 2005, and this segment should continue to thrive in 2006. Meanwhile, the market for structured risk products remains challenging, with accounting and regulatory issues troubling buyers and sellers.

The report is online at www.guycarp.com.