After the nation's largest public personal lines writer suffered a billion-dollar third-quarter loss, it has undertaken extensive efforts to cut back catastrophe exposure and increase reinsurance.

For reinsurers, the property-catastrophe market continues to harden. “Additionally, increased retentions by primary companies and higher pricing in excess layers should result in solid earnings in this segment, even if the hurricane season is heavier than normal,” he wrote.

But despite rising property markets, many reinsurers appear either unwilling or unable to exploit such opportunities, with the notable exceptions of Everest Re and Renaissance Re.

“We believe investors should focus on the writers over the bystanders as the 7/1 renewal season approaches, and invest in the underwriters who have a history of managing aggregation risk as well as taking advantage of pricing opportunity,” he wrote.

Mr. Small sees the number of profitable growth opportunities for primary insurers shrinking. “Most insurers indicated national account business is under margin pressure and new business opportunities are mostly in the middle market,” he wrote.

With the balance sheet strength of the larger players, Mr. Small said such middle market business soon will be “competed away.”

He wrote that “we suspect we will continue to see anemic premium growth moving forward and anticipate that profitability will deteriorate as well.”