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Big is best for reinsurers.

Larger reinsurers will be the winners in today's tough market according to separate analyses by rati...

Larger reinsurers will be the winners in today's tough market
according to separate analyses by rating agency Standard & Poor's (S&P)
and financial services firm Morgan Stanley Dean Witter.

S&P last month affirmed its negative outlook on the European reinsurance
market but noted that large reinsurers have higher levels of reserving,
allowing them to report better results in a down cycle.

Espen Nordhus at Morgan Stanley predicted a "powerful upswing" in
reinsurance prices and said that global, diversified groups would benefit

"Capital markets are difficult and there has been reinsurance underpricing
for a long time," said Mr Nordhus. "A lot of small players do not have the
capital to grow their business in the upswing. A lot of small players will
bleed pretty badly."

S&P said that it was likely to downgrade European reinsurers' financial
strength ratings despite the expectation that reinsurance rates would
continue to improve.

"Claims incidence over the past few years has taken its toll," said S&P
associate director Stephen Searby. "As a result there is no longer such a
sufficient level of reserve redundancies in the market in 2001 to cover
any significant loss events or adverse reserve development on earlier

Mr Searby said he did not expect the European market to return to
technical profit until 2002 at the earliest.
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