“You'll hear things like, 'We'll keep it net unless you're willing to pay some really high and egregious ceding commission for the right to write my reinsurance,' to which many of us are saying, 'Thank you very kindly, but we'll pass.'”

The “disconnect” between the reinsurance and primary markets “has gotten so bad that there are still contracts from May 1 that are not placed,” she reported. “There is increasing pressure on brokers to get deals done at terms that the reinsurance markets are simply not willing to accept.”

Commenting on conditions in the primary market, she said that since Jan. 1, ceding companies are more confident that their margins are good, which is leading them to be willing to decrease rates.

“It's also leading to the phenomenon where they're starting something new,” she said, referring to ventures into areas of insurance they haven't written before.

“Everyone argues that they're going to exercise…discipline, but when you have five or 10 new markets in someone else's backyard, you cannot help but have extreme competition on rates and terms and conditions,” she said.

Ms. Mitchell noted that primary market competition has “really started to accelerate”–particularly on large capacity risks on both the property-casualty side and excess and surplus lines business.

Rate drops for these risks were in the mid-to-high single digits through the end of January, but now they're “hovering around minus-20 percent–and everyone can point out the minus-50 or minus-60 percent risk.”

In addition, “we are just starting to see the softening of terms…Something that actuaries struggle with how to reflect, but can nevertheless be much more painful when they slip–and much more effective when they tighten,” in terms of the impact on loss costs, she said.

Steve Kelner, managing director of casualty for Swiss Re in Armonk, N.Y., said primary rate levels are now reminiscent of those at the end of 2001 and early in 2002 for most casualty risks.

“If pricing is at those levels, we've got an issue about maybe having inflation on the loss side,” he said, noting that “simple fundamentals” of actuarial work would suggest that pricing should keep pace with inflation. The cycle “feels like the same cycle, but with a different story behind it this time,” he said.

“There's always a new era–a new reason why there's not irrational behavior,” he added, noting that commentators point to Sarbanes-Oxley disclosure requirements (and its impact on reserving practices–perhaps making them more adequate), better systems and better data as factors distinguishing the current cycle.

“I don't buy it,” he said. “We've got the same cycle. We've got the same double-digit rate decreases since the second half of 2004. And each time we've gone through the cycle, we understate the impact of rate decreases.”

He added that “we talk about discipline, but I don't think we actually see discipline to the degree we should yet,” noting that industry forecasters “tend to converge toward means–and to estimate toward a nice staid number” of overall profit.

“No one's going to forecast terrible results. We don't do this,” he said. “We know that the forecasters aren't going to step back and say, 'Hey, current calendar-year results should really stink.' They're going to say they'll be a little worse than last year.”

While there are many public messages suggesting that “this is a sensible market,” Mr. Kelner noted, “I also see a lot of finger-pointing,” referring to the conversations he has with primary companies he visits on underwriting audits.

“Our rate change is minus-small number, but when we lose business, it's minus-big number,” they say, he reported, noting that he challenges them on this because they can't be winning new business at “minus-small.”

They respond, “Yes, but our underwriting is better,” he said.

“We had 160 underwriting audits last year, and nobody said their underwriting was worse,” according to Mr. Kelner. “Everybody said their rate change is minus-small number. But somebody is writing minus-big number business and it's not getting into the rate changes being reported.”

John F. Rathgeber, president and chief executive officer of Arch Reinsurance Company in Morristown, N.J., joined the drumbeat of negative commentary.

“We're in a pretty bad place right now. Ironically, it's because good results of the last two years [brought us here]. Capital in the industry is about 80 percent above where it was year-end 2001,” he noted.

Like Ms. Mitchell, he reviewed the shrinking reinsurance pool, supplying some numbers to underscore the impact of increasing primary company cessions.

“To top it off, interest rates are low. Even if we had the same combined ratio as last year, just the fact interest rates are 200-to-300 basis points lower has an effect on casualty [return-on-equity] of six-to-eight ROE points,” he said. (A basis point is 1/100th of 1 percent.) “It isn't a pretty picture,” he added.

“I'd say right now we're at the same point we were in 1997,” Mr. Rathgeber said, noting that it will take years to find out how results are actually going to play out.

“I do take some comfort that it seems like reinsurers haven't helped push the car over the cliff,” he added. “But we are in the passenger's seat. Ceding companies are driving the car, and we're still headed for the rocks.”