NEW YORK (Dow Jones) - The casualty insurance market should experience pretty good conditions - improving rates and tighter terms and conditions - in 2003 and 2004, Everest Re Group Ltd.'s (RE) chief executive said yesterday.

On a conference call with analysts, Joseph V. Taranto, who is also Bermuda-based Everest Re's chairman, said a spike in the severity of claims, including higher-than-anticipated court awards, and a recognition that pricing casualty markets were soft after the September 11 terrorist attacks has led to a correction in the entire market.

Taranto noted there are positive changes in rates and terms and conditions in a number of areas, including general liability, auto liability, workers compensation, directors and officers insurance, errors and omissions insurance and medical malpractice.

Rates are leveling off somewhat in a number of the areas that were directly impacted by the September 11 attacks and experienced dramatic prices increases in the past 18 months, including property-catastrophe insurance and aviation policies.

In some areas, rates are going down slightly, Taranto said. However, rate to exposure remains good in all areas, he said.

Also, a number of the positive conditions seen in the US in the past 18 months are being extended to the rest of the world, including the UK, Latin America and Canada, Taranto said. Everest Re is in a “great position” to capitalise on positive changes in the international market, he said.

Despite the improvement internationally, continental Europe hasn't improved as quickly as he would like, Taranto said. Its Brussels office remains quite small due to the lousy marketplace, he said. Its London operations also aren't doing a lot of continental Europe business due to market conditions, he said.

Everest Re also has a small amount of volume in Asia, Taranto said. The company is waiting for an improved market, he said.

Meanwhile, the Bermuda market is a tremendous source of growth for the company, Taranto said. New capital and a surplus of capacity there has made it the number one marketplace for reinsurance, he said.

“We're happy we opened an office (in Bermuda),” he said.

At the same time, major insurers are increasingly looking to a small number of accepted reinsurers for coverage, which is a positive for Everest Re, Taranto said.