Dear friend,

Suddenly it's a busy day for reports.

In the morning a new Sigma and now a mid-year reinsurance report from S&P.

It's like being the father of five at the end of the school term.

Anyway - to S&P. Here's a worrying preface for anyone to read:

... current ratings are based on our expectation that reinsurers will be able to achieve better cross-cycle earnings this time around, and that future soft pricing cycles will be shorter and shallower than they have been in previous decades.

Wow - did I read that right?

Current ratings are based on an assumption that future soft markets aren't going to be as bad as in the past.

But given its track record, why would anyone assume that our industry is capable of meaningful change simply by taking its word for it? I meana the last hard marke twas pretty hard, right?

And that mini-dislocation in property Cat and offshore energy after 2005 was pretty sharp wasn't it?

I'm not buying any of this cycle shallowness theory.

If I were an anlyst I'd only give credit where credit is due but never, ever before I saw the results.

This industry should be on strict probation until proven to be a reformed character, never given the benefit of the doubt.

Here's a little test:-

Scroll down and look at the chart I have just cut and paste from the Sigma report.

Do you see the curves of the various reserve cycles getting any flatter?

Neither did I!

The other worrying thing is that our current ratings are hardly brilliant compared with the peak of the last hard market, are they?

This is not going to be pretty.

Hell hath no fury like a ratings analyst scorned!