Dear friend,

Refreshed from a Christmas and New Year break, even before I had time to get back to the office, I dived straight back into the slew of renewal season briefings.

What good did it do me this year?

Well, this season is when we will be able to safely look back and say that the pricing cycle clearly peaked as a whole, (that’s if it hadn’t already done so at some point in the middle of 2006 or even earlier).

I expect you already know the story by now, since this is a dead horse we’ve been happily flogging since writing that Katrina didn’t have to be a market-changing event back in September 2005.

Or you can read Willis-re’s excellent summary here:

1. Because most big diversified players can write half as much US wind as they did before KRW for roughly the same amount of money, that is precisely what they are doing.

2. This is leaving a nice theoretically highly-profitable gap for all the real underwriters, start-ups, bolt-ons, strap-ons and assorted financial exotica to exploit.

3. Meanwhile everyone else in the middle is busy dashing to diversify by class and by geography as fast as the planes can carry them to Zurich, Dublin, Singapore and beyond.

So far so crème brûlée.

But the difference now is that risk appetite is slowly coming back after near zero Cat losses in 2006 — and the rate rises are running their course — even for the most burnt-out crunchy bits on top of the global retro dung pile.

Globally more cover is being given for the same money or marginally less money is being charged for the same cover.

Overall reinsurance is a bit cheaper now than it was last year — that’s all you need to know.

How much cheaper is all down to the skill of your broker.

They can’t quite bring themselves to call it a soft market yet, but watch the language change over 2007.

I guarantee you that all the next talk will be about how the down parts of pricing cycles are so much flatter these days and how there is a lot of fat left in the pricing, (which incidentally is still way, way above the ‘technical’ rate).

Ho hum – a New Year, but the story remains the same!

PS. The weather forecast is the same as last year too!