Willis Re, the reinsurance brokerage member of London-headquartered insurance broker Willis Group, said reinsurers appear profitable in its first review of that marketplace for 2009.

The report, “Willis Re 1^st View, Conserving Capital,” said despite poor investment results for 2008, the majority were still profitable, and compared to the rest of the financial services industry, “reinsurance companies have performed well during a period of extreme turmoil.”

“The reinsurance market stands out as the only capital market operating smoothly, and buyers remain able to access large quantities of contingent capital,” said Peter C. Hearn, chief executive officer for Willis Re in a statement.

However, Mr. Hearn went on to say that reinsurers are under pressure to increase capital while losing money in their investments and dealing with catastrophe losses from last year.

Access to capital remains a challenge, but there are a “few encouraging signs of fresh capital being raised” though those signs remain “modest,” Willis Re said.

Lloyd’s outperformed the capital raise with access to a wide range of investors, “including private capital from names,” the firm reported.

Willis Re said the catastrophe bond market has reopened after the failure of Lehman Brothers, adjusting to the new reality. Some bonds are expiring, and existing investors will need to redeploy their funds, but it is not yet clear if any fresh capital has been attracted to the catastrophe bond market.

Buyers of reinsurance are seeking more information about reinsurers to ensure they are financially secure, Mr. Hearn noted, and reinsurers are increasing their disclosure. This has not prevented buyers from seeking diversification of their portfolio. At the same time, he pointed out, “capacity and price continue to play key roles” in their buying decisions.

Reviewing lines of business, the report says for casualty risks for the United States with better than average experience and no signs of loss development increases are slight. Those with more significant losses or loss emergence are seeing more significant increase, around 10-to-30 percent.

Property programs are experiencing increases, depending on location and extent of the programs. Catastrophe-prone areas are finding it difficult to get coverage, or it is very expensive if they do. Willis Re said for nationwide lines, reinsures are reserving capacity for renewal business but charging higher prices for new business.

The Northeast continues to see price increase in response to demand, but results are not in from Florida renewals, said Willis Re.

Increases range from 5-to-15 percent for risk-loss free accounts to 15-to-30 percent for catastrophe risks with losses.

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