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September 8, 2009

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Swiss Re gains as reinsurance prices up

SWISS Re, the world's second-biggest reinsurer, said reinsurance prices were rising overall, lifting its shares nearly 3 percent.

The reinsurer also said yesterday it was well placed for the January 2010 renewals.

However, pricing was improving at a faster pace in property than in casualty, prompting the Zurich-based reinsurer to move capacity into the property line of business, Michel Lies, head of Client Markets, said in a statement ahead of the annual meeting of the reinsurance industry in Monte Carlo.

"We are observing a broad upward trend in overall reinsurance pricing, although this varies significantly between different lines of business," Lies said.

Kepler analyst Fabrizio Croce said first indications from the conference were comforting.

"The broad upward trend in overall reinsurance pricing - although this varies significantly between lines of business - is unexpected good news," he said.

Swiss Re shares rose some 2.8 percent to 46.48 Swiss francs (US$43.87) in early trading yesterday, outperforming a 1.2 percent rise in the DJ European insurance index SXIP and a 0.5 percent dip in shares of main rival Munich Re.

Lies said while prices on property lines of business are improving, long-tail industry segments, especially casualty, had yet to adjust to the lower interest rate environment and still did not adequately reflect years of premium cuts, and anticipated loss trends.

"We continue to steer capacity away from casualty into the more profitable property lines of business," he said.

Reinsurers have been unable to push through the higher prices they promised last year for the risk cover.

Reinsurance experts gathered in Monaco to discuss prices and conditions for renewing reinsurance deals in 2010 have been arguing over whether pricing will increase slightly, stay flat or even fall.


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