The broker went on to say that both insurers and reinsurers have recovered financially from the economic crisis, but their products have "quite limited growth." Three consecutive years of declines for the United States, Germany, France and the United Kingdom mean that insurers "need to turn their efforts to generating demand from new products or innovations on existing ones."

Willis Re said reinsurers' 2010 underwriting "results are lower than the exceptional ones achieved in comparatively loss-free 2009. However, the results are "better than initially feared after the disastrous first quarter."

Reinsurance carriers may seek to "implement more aggressive capital management strategies through share repurchases, dividend payments and other similar measurers."

Among some of the factors influencing reinsurance supply, according to Aon Benfield:

o Extremely light hurricane losses.

o Growth in investor interest in catastrophe bonds.

o Continued favorable casualty reserved development.

o Declining quality of Florida homeowners insurers as they struggle to profit with inadequate rates and survive sinkholes.

o Low exposure growth.

Dominic Christian, co-chief executive officer of Aon Benfield, said, "Whilst negotiations around the [$60 billion] of externally transacted reinsurance premium renewing at Jan. 1 may be fairly described as being reasoned and assured, there has been on occasion real variability around program outcomes--treaty terms have remained robust, but pricing is less homogeneous than for some time."

"The global reinsurance industry faces tough prospects for 2011," said Peter Hearn, chief executive officer of Willis Re, in a statement. "Thin investment returns and declining back-year releases provide little cover for declining underwriting returns. In such an environment, any shock to reinsurers' capital base, either through underwriting losses or other capital events, is likely to result in a sharper reaction from reinsurers than primary companies will find easy to bear."