Rates for casualty reinsurance continue to soften, but they are less than declines in property catastrophe coverage.

Experts gathered at the Rendez-Vous de Septembre reinsurance meeting earlier this month — the traditional kickoff of the reinsurance renewal season — said intense competition in property catastrophe coverage has prompted reinsurers to move capacity to casualty lines.

Casualty rates are softening because there has been a shift of capacity out of property catastrophe business, said Martyn Street, a senior director at Fitch Ratings Ltd. in London.

The U.S. casualty market continues to soften in part because many underwriters have diversified into casualty as property catastrophe rates have fallen, said David Priebe, vice chairman of Guy Carpenter & Co. L.L.C.

But the pace of those declines, is slower than other lines in part because established players still dominate the casualty market, he said.

“Casualty insurance prices are falling. And ceding commissions have fallen in reinsurance too and may be reaching a floor,” said Greg Hendrick, CEO of reinsurance at XL Catlin Group P.L.C.

While cedents have attempted to broaden terms and conditions for property catastrophe business, there has been little change in casualty terms and conditions, said Jurgen Graber, a member of the executive board with responsibility for property/casualty business and coordinating global reinsurance at Hannover Re S.E.

It is difficult to predict what will happen to rates in casualty classes over the next year because so much depends on what happens to interest rates, said Ross Howard, executive chairman of JLT Re, the reinsurance brokerage arm of London-based Jardine Lloyd Thompson P.L.C.

It is likely that interest rates, and inflation, will go up at some point, which may prompt casualty buyers to look at new solutions, he said. Longtail lines of reinsurance, such as casualty, are particularly affected by interest rate changes as they affect investment returns used to offset underwriting.

“Rate movements in casualty classes are very hard to predict because interest rates are such an important factor,” said Mr. Howard. But “we all believe that interest rates are going to go up” at some point soon, he said.

For primary U.S. casualty business, there likely will be some rate increases, but reinsurance rates remain under pressure, said Matthias Weber, group chief underwriting officer at Swiss Re Ltd.

There is less rate pressure on small to midsize casualty business than on larger casualty business, said Mike Krefta, chief underwriting officer at Hiscox Re, the reinsurance arm of Hamilton, Bermuda-based Hiscox Ltd.