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So, how many catastrophe losses does it take to turn a soft market?

While some reinsurers and market analysts suggest that one large catastrophe could lead to a turn in the market, the majority say that given the current structure of catastrophe reinsurance protection, even a single megacatastrophe costing the insurance industry as much as $20 billion may not be enough to turn the reinsurance and property/casualty markets.

The only possible exception to the one-catastrophe rule, some say, would be if the catastrophe was totally unanticipated, such as a major earthquake occurring in New York City.

In fact, to some reinsurance executives, the only "catastrophe" likely to harden the market is a

human-made one, such as too many years of declining rates, a serious stock market correction or an unforeseen mass tort, on the scale of asbestos-related losses.

"I think we're in a very different situation now than we were even at the time of Northridge," said Jerry Karter, president and chief executive officer of SCOR U.S. Group in New York, referring to the 1994 California earthquake.

"Most reinsurers have much more control over their aggregates than at that time," he said. "So the chance of something hitting so hard that it represents a surprise-and therefore is unexpected in terms of the impact on results-is much less than it was at the time of Northridge and certainly at the time of Andrew, and certainly before that in 1989," when Hurricane Hugo hit, Mr. Karter said.

If multiple catastrophes occurred within a short period, that might create capacity demands on companies, some market observers say.

A series of cat losses would have a ripple effect in terms of diminishing reinsurers' willingness to write business and that could lead to firmer pricing, said John Wicher, managing director of San Francisco-based investment firm Russell Miller Corporate Finance Inc.

A single $15 billion to $20 billion catastrophe loss "might not do much, really, to turn the industry," because insurers' retentions have only been hit once, said Mike Smith, an analyst with Salomon Brothers in New York.

But, "if you have two $8 billion events, now you're talking," he said. "Now you've got an industry that has two retentions (to absorb). They're wounded deeply. Now their capital's been hurt on an individual basis. Now they do need cover" and must go back to their reinsurers, which will demand to be paid more, he said.

That increase in demand for reinsurance could trigger a turn in the cycle, he suggested.

One catastrophe, "be it ever so large," is unlikely to significantly impact the market, said Steven Bolland, senior vp with reinsurance intermediary Gill & Roeser Inc. in New York.

"I think the vast majority of reinsurance companies nowadays are very well aware of what their aggregates are and have a very good idea of what their maximum loss from any one catastrophe is going to be and they're underwriting based on those facts," he said.

At the same time, Mr. Bolland added, if there is a massive earthquake in New York, "People might go 'uh-oh.' "

The psychology of the market also must be taken into account, said Tal P. Piccione, president and CEO of reinsurance intermediary U.S. Re Corp. in New York.

"If we start to see what I call 'biting losses' that are in the $5 billion to $10 billion range in the catastrophe side, I think people are going to start to say, 'Gee, when is the next one coming?'" said Mr. Piccione, who added that much of the new capital that has come into the cat reinsurance market in recent years has not yet been tested by severe losses.

The catastrophe that ultimately turns the market may not even be one of Mother Nature's design.

Such an unexpected catastrophe might be "something similar to asbestos, or breast implants, or those kinds of casualty kinds of exposures that nobody has yet foreseen," said SCOR Re's Mr. Karter.

"That probably is more likely to do damage than any of the natural catastrophes that we're talking about, but the problem with those is, they're gradual, so maybe they're there, but you don't see it yet. It creates a very different reaction in the market," he said.

"I don't know that it has be a catastrophe per se. It could be just some large, negative driving force, like a stock market crash," said John L. Ward of Cincinnati-based Ward Financial Group. But, it "would have to be a monumental event or a series of events, in my view, to turn the cycle."

John Berger, president of F&G Re Inc. in Morristown, N.J., said he does not see any natural catastrophe turning the market around.

More likely, he said, a turn will be the result a serious stock market correction or a spike in interest rates. "I think the financial aspects are more likely to drive the equation than big property cats," he said.

"I think the bigger disaster is writing bad business and having that eventually surface," said William L. Munson, chairman, president and CEO of Morristown, N.J.-based Toa-Re Insurance Co. of America. "I think we saw that in the '80s with the liability crunch."

The only way the market is going to turn is if enough companies start to suffer, and people start withdrawing from the market in a wholesale way, "so there's truly a capacity shortage, and the only way that can happen is if prices keep going down," said Gary Ransom, senior vp at Hartford, Conn.-based insurance research firm Conning & Co.

The reinsurance market will turn "when the light bulb comes on and everyone realizes they need to increase reserves," he said, noting that this is unlikely to happen before the year 2000.

Steve Tirney, president and chief operating officer of Philadelphia-based PMA Reinsurance Corp., agreed, saying he thinks a market turn will "be the result of poor pricing."

"I think what we first started with was people being overly optimistic about their reserves for prior accident years. When that comes home to roost, I think that is going to change the market more than a catastrophe could," Mr. Tirney said.