The report said the rate increases in the United States reflected the reaction to losses during the 2005 hurricane season, changing perceptions on North Atlantic storm activity, modeling changes and re-evaluations by rating agencies.

“This past year saw unusually hard market conditions for a number of cedents, reflecting unprecedented catastrophe losses,” said Tim Garner, managing director and global leader of Guy Carpenter's property specialty practice, in a statement.

Mr. Garner said, “Following the severe 2004 and 2005 hurricane seasons, changes by the modeling firms and the major rating agencies influenced the need for additional capital, which had a major impact on pricing and capacity.”

The report said that worldwide, insurers were hit with losses totaling $83.4 billion in 2005, of which $72.6 billion occurred in North America. Reinsurers suffered a disproportionate share of the losses, with estimates of $40 billion, globally, and more than half of the $38 billion of losses suffered through Hurricane Katrina were ceded to reinsurers.

Guy Carpenter said that the normal reinsurance share is estimated to be somewhere around one-third of total losses.

Despite the losses, the report said it is surprising that there was not a global property reinsurance hard market.

Part of the explanation, it found, lies with new capital that filtered into the market to take advantage of the potential hardening. Other distribution of risk strategies, such as reinsurance sidecars (investment loss vehicles dedicated to separating a risk from the rest of an insurers portfolio) and the purchase of catastrophe bonds also helped.

“One promising development was that reinsurers have been willing to differentiate between loss-impacted areas and those regions where conditions have remained relatively stable,” noted David Spiller, president and chief executive officer of Guy Carpenter. “This is a very positive sign for the future of the global catastrophe reinsurance market.”

Rates are expected to be stable-to-soft through most of the world, except in the catastrophe-prone regions of the United States and Mexico, through the rest of the year, the report said. However, a catastrophe for any one risk could see a breakdown in coverage.

“After two tumultuous years, a stable, boring season might be just what the industry needs,” the report said.

Guy Carpenter's report covers markets in 22 countries and four regions that account for 90 percent of the worldwide market for catastrophe reinsurance.

The report is available online through Guy Carpenter's Web site at www.guycarp.com. Printed copies are available by e-mailing the broker at [email protected].