Dear Friend,

Here’s what’s happening in the market right now:

No-one is renewing their treaties yet.

The soft market is continuing in casualty lines.

Some big facultative property programmes incepting before 1/1 are getting 20% discounts.

Fitch and AM Best have warned that the market is patchy and any hardening of rates may not last for long, even in loss-affected areas.

And this is what it means:

Who would be a buyer today? With the first AM Best-rated class of 2005 players formally opening their doors this week and next, it is well worth waiting to see if they are going to be followers or leaders. No deal is better than a bad deal — and this year it might be worth giving the underwriting team the first couple of weeks in January off to make sure you are not at a competitive disadvantage.

Either this is proof that the famous reinsurance “pot” from which all claims are eventually paid is actually segmented and fractured into many smaller “pots”. And why shouldn’t it be so? After all, this is evidence of that greater financial flexibility, sophistication and resilience that the industry has been striving to achieve for so long.

Either that or hard market cheerleaders would say it is evidence of a “silo mentality” and a denial in some sectors of the enormity of the loss that Katrina and others represent. In this case it is down to the treaty renewal to set the tone for 2006. We will see.

The human factor is alive and well. Some underwriters are evidently rolling the dice on a headlong charge to book hefty fourth-quarter income. They are trying to make 2005 look like a better year than it would otherwise have been. Good brokers are taking advantage of this.

Great minds think alike!

Cancel the skiing holiday, it’s going to be a long, nail-biting renewal season, which might not end properly until February.