LONDON (Bloomberg) ? Swiss Reinsurance Co. and Munich Re, the world?s largest reinsurers, may face a decline in premium rates amid the mildest US hurricane season in four years.

After the worst Atlantic storm season on record in 2005 led to more than $65 billion of insured losses, reinsurers had forecast more of the same this year and raised rates 100 percent or more in affected areas.

While higher prices are fattening profits, they may be difficult to maintain in the absence of hurricane damages.

?The only way is down,? said Rene Locher, an analyst at Kepler Equities in Zurich, who has sell recommendations on the biggest reinsurers.

?I would expect to see a softening in reinsurance rates.?

Reinsurers, which help insurers shoulder risk, were expected to meet with customers such as Allianz AG in Monte Carlo yesterday to begin negotiating 2007 contracts.

They?ll convene again in the German town of Baden-Baden in October to complete agreements.

So far this year, just one hurricane has formed in the Atlantic.

That hasn?t happened since 2002, when the year?s first hurricane came on September 11, said Jack Beven, a specialist at the National Hurricane Center in Miami.

The last full season with just one hurricane was 1925.

Forecasters have scaled back estimates for the severity of this year?s storm season. Researchers at Colorado State University this month cut their Atlantic hurricane forecast to five from an earlier prediction of nine.

?After the short-term distraction of the hurricane season is over, we expect the pattern of newsflow for the reinsurance sector, including Swiss Re, to be fairly glum,? wrote Merrill Lynch analyst Brian Shea in a Sept. 6 research note.

?The January 2007 renewal season should reveal a clear pricing downturn.?

Merrill cut its rating on Swiss Re to ?sell? from ?neutral.? JPMorgan lowered its recommendation on the Zurich- based reinsurer to ?neutral? from ?overweight? on September 4.

That said, it?s still too early to say how this year?s storm season will turn out. The season starts in June and doesn?t end until November 30, and one big storm could swell claims.

Last year set a record for Atlantic hurricanes with 15, including Katrina, which flooded New Orleans and caused $40.6 billion of insured damages, according to the Insurance Information Institute.

Tropical Storm Florence may become this season?s second hurricane before it turns north and heads toward Bermuda, according to the US National Hurricane Center.

?Mother Nature has a cruel way of proving everyone wrong,? said Ann Godbehere, chief financial officer for Swiss Re, in an interview on August4.

Swiss Re will aim to maintain the current ?strong level of prices,? she said.

?There?s always pressure, that?s part of a competitive market.?

Hannover Re, the world?s fourth largest reinsurer, last week said rates may be lifted in storm-affected areas because more stringent capital requirements following last year?s claims have discouraged reinsurers from providing as much coverage.

Even so, that wouldn?t make up for declines in other business lines, said Ulrich Wallin, a member of Hannover Re?s management board.

This year?s calm season aside, Lloyd?s Chairman Peter Levene has predicted that global warming will bring more intense storms and increasing insurance claims, lifting reinsurance rates.

Swiss Re and Munich Re declined to discuss their rate forecasts ahead of the conference in Monte Carlo.

Profit at Swiss Re is set to double this year, while Munich Re earnings are likely to increase 10 percent, according to analyst William Hawkins of Keefe, Bruyette & Woods in London.

Reinsurance prices started rising after the terrorist attacks of September 11, 2001.

Following Katrina, prices for coverage of oil rigs in the Gulf of Mexico tripled in some cases, and property rates in vulnerable areas rose as much as 100 percent, said Fitch Ratings analyst Chris Waterman in London.

Overall, reinsurance rates rose as much as 5 percent in January contract renewals, and increases this July were even larger, he said.

?Reinsurance is cyclical, and pricing is very much at the peak of the cycle,? Waterman said. `From January 2007, we would expect rates that were impacted by the hurricanes to start to come off and non-impacted areas to accelerate in terms of downward movement.?