ORLANDO, Fla.-The current hard property/casualty insurance market isn't going to go away any time soon.

That was the central message delivered by a panel of financial analysts during a discussion at the Professional Liability Underwriting Society's annual international conference in Orlando, Fla., earlier this month.

In fact, the hard market may last longer than is expected, despite the industry's spotty history of underwriting discipline, said one analyst.

"The cycle's likely to last longer than people anticipate," said V.J. Dowling, managing partner of Farmington, Conn.-based Dowling & Partners Securities L.L.C. Balance-sheet problems and European companies' interest in shedding their U.S. holdings will play a role in that, Mr. Dowling said.

He said that some reinsurance companies had become essentially worthless.

"I think we're going to see a lot more sales and a lot more closing down" of companies, Mr. Dowling said. That loss of capacity will help perpetuate hard-market conditions, he said.

Insurers' desire to improve combined ratios will also prolong the hard market, the panelists noted.

Jay Cohen, an analyst with Merrill Lynch & Co. Inc. in New York, speculated that some companies might understate their combined ratios in an effort to build up a financial cushion.

Mr. Dowling noted that insurers are saying they don't have reserve problems and that they're tightening terms and conditions and taking other steps to improve their positions but are still reporting combined ratio improvements of only a couple of percentage points.

That could mean there is a "a lot of sandbagging in terms of being very conservative," or that there are still some holes that need filling, he said.

Moderator Donald Watson, a former analyst who is vp of enterprise risk management for ACE Ltd. in New York, noted that, despite the influx of capital into the insurance market following the terrorist attacks of Sept. 11, 2001, some companies are still having trouble finding capital.

The message from the capital markets is simple-it's a tough market, and there are alternatives to investing in the insurance industry, said Ron Frank, managing director of Salomon Smith Barney in New York. In some cases, the capital markets don't see the talent in place at insurance and reinsurance companies to carry out the stated plans, he said.

"This should be an industry where people are allowed to die," said Mr. Dowling.

Analysts predicted tough times ahead for buyers of casualty reinsurance.

The property reinsurance market has been tightening, but the tightening is only beginning in casualty reinsurance, said Mr. Frank.

"Jan. 1 is going to be very tough on the casualty market," said Mr. Dowling.

The cycle turns when "everybody runs out of cash and everybody runs out of lies," said Mr. Frank.

Mr. Cohen added that risk managers "had a great buyers' market for years."

Mr. Cohen said the price increases for professional liability coverage are related to the general litigation climate in the United States, which he characterized as out of control. "Disclosure on our research reports is now often longer than the research report itself," he said.

During a question-and-answer period, Mr. Dowling was asked why he predicted that Jan. 1 would be so tough for the casualty market, when many casualty reinsurance programs had been recently oversubscribed.

He said that his prediction was based on a reduction in the number of players in the casualty reinsurance marketplace, as well as a growing willingness among underwriters to walk away if they can't get the prices they need.