LONDON (Reuters) ? Reinsurers appear to be ignoring calls by executives in the industry to keep prices high and instead are cutting premium rates to win new business, a report issued yesterday by a leading reinsurance broker stated.

The world?s largest reinsurers, including Munich Re and Swiss Re, have said they are willing to walk away from business that is underpriced in a bid to keep prices and, therefore, profits high.

But a report by Benfield Group said the recent round of contract negotiations for cover in 2005 ?saw a familiar disconnect between the avowals of continued discipline by senior reinsurer management and actual underwriter behaviour.?

Prices for cover dropped for many risks, Benfield said. ?A common theme ... was that in property and some casualty lines underwriters were willing to undercut their initial pricing in order to secure attractive business.?

The reason, it said, was a ?feel good factor? among reinsurers. Strong earnings, driven by high prices and relatively low losses in previous years, have eased the pressure on reinsurers? balance sheets. There is ample capacity in the market to write nearly all risks, the report said, and reinsurers have felt able to cut premium rates to win market share.

But a number of market players said they thought some risks were already being underwritten too cheaply before the latest round of price cuts, Benfield said. Even though 2004 was the costliest year ever for property insurers, with losses of over $40 billion even before the Asian tsunami, their reinsurers have emerged relatively unscathed, Benfield said. For that reason, reinsurers actually dropped the price for cover for property catastrophe risks in most parts of the world at the recent renewals, Benfield said.

In Western Europe, the cost of protecting buildings against hurricanes, storms and floods was on average five to ten percent lower than last year?s, while in Central and Eastern Europe, it was as much as 20 percent cheaper, the report stated.

Benfield said that based on current opinion and conjecture, insured losses from the Asian tsunami are likely to be limited, due to the low levels of insurance in the affected areas. The industry?s losses are so far estimated at less than $5 billion, it said.