Ace CEO Sees 'Hard' Insurance Market,Firm Rates Into 2004

   By Chad Bray

   Of DOW JONES NEWSWIRES

NEW YORK -- Property-casualty insurance rates should remain "hard," if not rise, in many lines into 2004, Ace Ltd.'s (ACE) top executive said Monday.

Speaking at a luncheon at the Association of Insurance and Financial Analysts' conference in Scottsdale, Ariz., Brian Duperreault, the Bermuda insurer's chairman and chief executive, said the U.S. property-insurance market has corrected itself in recent months. However, property-insurance rates continue to rise outside the U.S., especially in Europe, he said.

At the same time, casualty-insurance rates are rising in many lines, he said.

Terrorism coverage, now offered as a result of a federal terrorism backstop for insurers, isn't flying off the shelves, Duperreault said. A large number of clients are rejecting terrorism coverage at current prices, he said.

Those that purchase terrorism insurance are often doing so at the request of third parties, such as lenders, he said.

Capacity to write new insurance is shrinking as it has become more difficult for insurers to go to the market for new capital, Duperreault said. Secondary offerings, in particular, are very expensive, he said.

A number of insurers also are exiting lines of business because of weak balance sheets and higher perceived risk.

Meanwhile, Duperreault said the rising cost of asbestos litigation is a drag on the U.S. economy, describing it as offensive and excessive. He said it's having a negative effect beyond the world of insurers.

Reform of medical-malpractice insurance is needed, he said.

-Chad Bray; Dow Jones Newswires; 201-938-5293; chad.bray@dowjones.com

Updated March 3, 2003 3:51 p.m. EST