NEW YORK (Dow Jones) ? Europe?s major reinsurers, just wrapping up a less-than-spectacular January renewal round, are still likely to boost premium rates when the crucial summer contract season comes along, analysts said yesterday.

Reinsurers ? which provide coverage to primary insurance companies looking to spread out their risk ? managed to edge rates up one percent to three percent when they renewed reinsurance pacts in January, the month in which European deals are signed for the coming year.

But they?re hoping for much higher rate hikes ? up to 100 percent ? when they negotiate deals in the summer, when US contracts are sealed, boosted by the catastrophic claims after last year?s storm season.

?The US July renewals will be stunning as they consist mostly of renewing disaster risks, and (rate rises) will be mostly north of 30 percent, maybe 40 percent,? said J.P. Morgan analyst Michael Huttner. ?Not all primary insurers have bought cover yet ? they are waiting to get lower prices, but they risk paying more (as the hurricane season nears).?

Andreas Frick, an analyst at Bank Sarasin, agreed: ?The renewal season in Europe has been satisfactory but, of course, in the US, the rates are expected to rise much stronger after last year?s record claims - which will automatically lead to higher insurance rates.?

Traditionally, about two-thirds of annual contracts are renewed in January, mainly in Europe. In April, contracts in Asia are renewed, while in July the sector zeroes in on the US, Australia and Latin America.

Swiss Re, which will become the world?s largest reinsurance company after the completion of the takeover of General Electric Inc.?s reinsurance operations, said this week that rate hikes averaged about one percent during the January renewals.

Hannover Re AG painted a similar industry picture, while Munich Re AG said it nudged up rates about 3.3 percent, as analysts cited a spill-over effect from expected higher rates in the US.

Smaller players with weaker financial credit ratings, such as Converium Holding AG or Bermuda-based Partner Re, have experienced a tougher market.

Both Converium Re and Partner Re said that more primary insurers are retaining risk on their own books ? and reaping the profits ? rather than ceding them out to reinsurers, reducing volume and lowering the possibility of rate hikes.

?The reason for this change in business behaviour is mainly due to the fact that insurers? balance sheets are stronger than in the past,? said Frank Schaar, Converium?s executive vice president for standard property and casualty reinsurance. ?And this trend is likely to continue into the future.?

Zurich Financial Services AG, one of Europe?s largest insurance companies, confirmed the process. ?We have retained more business on our own books,? chief executive James Schiro said.

PartnerRe Ltd. said earlier this month that it had written and bound approximately $1.79 billion of estimated non-life premium in the January 1 renewals, representing a two percent decline over total renewable expiring premium of $1.83 billion.

?As a result of shifting renewal patterns, the January 1, 2006 renewals are expected to represent less than 55 percent of the total annual Non-Life business bound by the Company, down from approximately 60 percent in previous years,? the company said.

PartnerRe president and chief executive officer Patrick Thiele said: ?Overall, we found the market to be healthy at January 1, but results varied by line and geography. A significant amount of business ? close to ten percent of our renewable premium ? left the reinsurance market as cedants retained more risk or converted from quota share to excess of loss treaties.

?Despite this, competition was reasonable in most areas. PartnerRe had a good renewal, writing $241 million in new business, while maintaining overall priced profitability. We attribute this success to our financial stability and security, and the Company?s professional and timely response in a transitional renewal period.?

Reinsurers agreed that they are taking less business in some cases, but they put much of this down to their efforts to be more selective by shedding unprofitable business and concentrating on high-margin contracts.

Analysts said the trend of lower reinsurance volumes is unlikely to occur this year in the US, mainly because of the increased desire for natural catastrophe cover in areas such as the Gulf, which saw insured losses of more than $60 billion last year.

Sarasin?s Frick said rates for insuring business-related sites such as oil rigs are likely to go up the most. But reinsurers are also likely to see strong rate increases for building insurance.

Munich Re said the January renewals showed rates for offshore energy insurance contracts in areas hit by the hurricanes rising 400 percent on the primary side, leaving room for sharp reinsurance rate hikes. Hannover Re said it expects rate increases of up to 100 percent for property and casualty policies in the area, while Willis Re, part of the Bermuda-registered Willis Group Ltd., forecast that prices in hurricane regions will rise 30 percent to 100 percent.

Reinsurers could also get a boost from ratings agencies, are asking for higher capital requirements to cover extreme-risk policies, analysts said. They are demanding stronger capitalisation for primary insurers to cover for natural disasters that occur once in 250 years, rather than for the current ?100-year? scenario.

?(This factor) should lift demand for reinsurance cover,? Munich Re management board member Torsten Jeworrek said.

Analysts warned, however, against over-enthusiasm.

?One shouldn?t expect miracles,? HVB?s Lucio Di Geronimo said. ?Reinsurers? clients have already accepted significant price increases.?

Also a potential factor capping some rate rises in the US is the presence of Bermuda-based reinsurers, who traditionally focus on high-risk but lucrative contracts.

?After any large loss event, the Bermudian reinsurance market always sees the inflow of billions of dollars of new capital,? said Rene Locher of Kepler Equities.

?Although we believe that the overall impact of the new money inflow will be limited, it might hurt pricing in certain business lines as many smaller Bermudian firms offer specialised cover,? he said.

Analysts and industry participants said another indication of how the summer renewals might go will come in April, the time when such deals in Asia are negotiated. Most people said they expect volumes to rise, but mainly because of business expansion there rather than because of major rate hikes.