Swiss Re’s Chief Economist Kurt Karl stated that it’s increasingly likely that the Fed has engineered a soft landing due to moderate economic growth and falling inflation. He said it is unclear if the Fed will cut rates due to the stickiness of the unemployment rate. "However, I'm still thinking the Fed may cut rates because inflation is falling," said Karl. "In order to maintain the neutral monetary policy it would have to cut rates."
Thomas Holzheu, also a consultant with the company, said the U.S. P/C industry benefited from an unusually mild catastrophe season in 2006. He said the general expectation is that despite a quiet first quarter, experts predict this year's hurricane season to be again above the long-term average.
Holzheu noted the capital strength of the insurance industry is growing due to strong operating profitability, putting pressure on rates and resulting in a slow growth environment going forward. "We should see a continuation in moderating or softening pricing and this will spread also into property lines," said Holzheu.
Swiss Re is the world’s leading and most diversified global reinsurer, and provides reinsurance products and financial services that enable risk taking essential to enterprise and progress. Founded in Zurich, Switzerland, in 1863, Swiss Re operates in more than 30 countries and provides its expertise and services to clients throughout the world.