ORLANDO, Fla.—U.S. property catastrophe reinsurance renewal rates in January will be flat to down, depending on the client's claims experience, observers say.

Property catastrophe rates may soften somewhat in light of the absence of major catastrophes this year, while casualty continues to remain highly competitive, said reinsurance officials discussing the state of the market at the Property Casualty Insurers Assn. of America's annual meeting Oct. 25-28 in Orlando, Fla.

“I think the reinsurance renewal season at Jan. 1 is going to be orderly and relatively stable,” said Kenneth LeStrange, chairman and chief executive officer of Pembroke, Bermuda-based Endurance Specialty Holdings Ltd.

Any hardening will be in “very specific lines of business,” such as aviation, he said. “I think when we look back at Jan. 1, we would see in the aggregate a modest softening of pricing in the reinsurance market of mid- to low-single digits for some. Areas that seem to be poised for some improvement in terms from the client point of view would be property catastrophe.”

Bryon G. Ehrhart, CEO of Aon Benfield Analytics in Chicago, said, “The market has seen an increase in supply and a slight increase in demand,” which will mean a somewhat softening market, although not a soft market, just as last year, the market hardened without becoming a hard market.

“I think it's going to be much of the same,” said Steven K. Bolland, president of New York-based intermediary Gill & Roeser Inc. There will probably be a “slight softening in terms, from what we've been hearing. There's more than enough capacity, and that's probably just going to depress prices a little bit. People are still trying to hold the line, although it is a very fragile balance at the moment between price and capacity.”

“It's a pretty benign environment right now,” said John Daum, New York-based executive director of brokerage Lockton Re, a unit of Kansas City, Mo.-based Lockton Cos. L.L.C.

“The reinsurers certainly don't see any opportunities to give back any rate in their underwriting and pricing practices, although I think some cedents, because of economic pressure and also just general competitive pressure, are looking to get some relief.”

Andrew Marcell, CEO of Guy Carpenter & Co. L.L.P.'s Americas broking operations, said rates will be “stable on the casualty side, and probably stable to down on the property cat side.”

“We see it as a very good renewal for our clients,” said Andrew M. Appel, CEO of Aon Benfield in Chicago. “Peak-zone property is probably down 5% to 15% in terms of rates, and capacity is slightly up as well,” he said.

Tal Piccione, chairman and CEO of intermediary U.S. Re Cos. Inc. in Pearl River, N.Y., said, “I think that there's going to be pressure on reinsurers to lower (property) prices here in the absence of any substantial losses, despite the fact that the industry has registered investment losses.”

However, “Reinsurers will attempt to resist any reduction in pricing beyond expiring levels, so at best they should see a flat renewal season,” said Mr. Piccione.

“It's a little boring,” said Rod Fox, CEO of TigerRisk Partners L.L.C. in Greenwich, Conn. “There seems to be ample capacity out there,” he said. There will be more competition on the property side. Casualty will slightly by market, but rates will be flat to down, with the “emphasis on down,” he said.

Patrick Mailloux, Armonk, N.Y.-based managing director with Swiss Re America Corp., said, “Obviously, property rates are in much better shape than casualty. They haven't come through 20-something quarters of rate decreases, so casualty, in my view, is where major work needs to be done from a rate-adequacy perspective.”

But the economy may prevent that, said Anthony J. Kuczinski, president and CEO of Princeton, N.J.-based Munich Reinsurance America. Worsening loss ratios, inflation risk and low interest rates “are strong enough reasons for the market to be firming in the casualty space, although we don't see it; and partly we don't see it because of the opposite impact of the economic downturn, which is affecting the amount of insurance that companies buy.”

Meanwhile, said William H. Eyre Jr., Philadelphia-based managing director of Towers Perrin's reinsurance brokerage, “At this year's PCI, my impression is that reinsurers are listening more closely to their cedents as to what has happened” to their business and “there isn't an urge on the part of the reinsurers to force prices up as much as the urge has been there in the past,” he said.

Neil Maidment, London-based chairman of Beazley Group P.L.C.'s group underwriting committee and head of its reinsurance division, noted that a year ago, people were talking about the financial crisis, American International Group Inc.'s nationalization, Lehman Bros.' failure, and illiquidity. “People obviously feel a lot more comfortable this year than they did last year,” he said.

But reinsurers continue to do relatively well compared with primary insurers, say observers.

William H. Panning, executive vp of Willis Re Inc. in New York, said reinsurers “have pretty much a common situation” and tend to look at their reinsurance activities “in a relatively similar way, whereas primary insurers, because they are themselves so diverse, end up having a wide variety of ways of looking at their reinsurance decisions,” which leads to less pricing discipline.