In a lot of the conversations we've been having at Reinsurance Towers over the last week - especially when talking to brokers- have featured bold claims that the recession is over.

Third quarter results on the whole were very positive for reinsurers and last month economic data showed that many of the world's economies (including the US but excluding the UK) are now officially out of recession. But can we really relax and assume the best?

Insurer results, while on the whole they have been improving, show that there are many cedents who aren't out of trouble yet. There's also the small matter of a bucket load of reserve releases which have been poured into reinsurers' results, making the picture look far rosier than they actually are.

Promises of hardening rates for 1/1 renewals are leading to some ambitious expansion plans from some reinsurers, if market sources are to be believed - especially in Bermuda. However with cedents still suffering from the recession, promises of solid reinsurance price increases may well fall short.

In turn, this might leave the half-enacted expansion plans with companies struggling to explain the investment community what the hell went wrong with the M&A/decision to add more lines/increase capacity/hire that director who'd been fired from a million-and-one other places.

But perhaps we're just too cynical...

Katherine Blackler

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