The soft market in the reinsurance industry appears to be hardening, with profits up once again and stock prices rising.

Now the question appears to be not if reinsurers will be able to raise rates, but by how much they will be upped by the end of the year.

Third quarter results for the industry appear to indicate an upward trend after a season without any major world catastrophe.

The world of reinsurance, insurance that insurers take out in case of disaster, appears to be on the up.

Last year was described as the year to end all years, with a string of catastrophes including hurricanes, storms, floods and tycoons.

The reinsurance companies were hit hard, and profits fell. But now the market appears to be rallying and companies have seen the bottom line back in the black.

Insurance companies also seem to be aware that they will have to pay more for their reinsurance after the string of disasters, particularly property catastrophe coverage.

"We are seeing positive signs of a market turn in nearly all of our property-casualty businesses and continued growth in our financial services segment,'' said Brian O'Hara, president and chief executive officer of XL.

James Stanard, chairman, president and CEO of Renaissance Re, with saw a jump in reinsurance premiums, said: "We are clearly positioned to benefit from further improvements in pricing that we are seeing in all areas of the catastrophe reinsurance business.'' Herbert N. Haag, President & Chief Executive Officer of PartnerRe, said: "For the first time in the last three years, the third quarter did not witness any major catastrophes.

"Nevertheless, improvements to our operating results were tempered by the continuing effects of the difficult pricing environment existing in 1999 and the first half of 2000. While we are aware of indications of better underwriting results by industry participants, we continue to observe a high frequency of losses, and we will remain cautious in setting reserves for business written in 1999 and 2000.

"Market conditions and pricing have clearly improved over the last six months, however, and we are seeing worthwhile opportunities in many lines and markets.'' Gerald L. Radke, Chairman, President and Chief Executive Officer of PXRE said: "Market development on prior-year European storm losses finally subsided this quarter, although the quarter was affected by several large risk losses and investment income volatility.

"We believe our diversified businesses are performing in line with expectations and that all indications point toward improved terms and pricing as 2001 renewals approach.'' Reinsurers in the black James Billett Jr, CEO and president of Trenwick, added: "We believe the new Trenwick, with its strengthened balance sheet, enlarged capital positions, greater business diversity, agility and underwriting discipline is exceptionally well prepared for realising the benefits of the improving market conditions in insurance and reinsurance.'' And Chairman and Chief Executive Officer of ACE Brian Duperreault, said he was pleased with the results."The platform we have built positions us to capitalise on the opportunities present in today's market,'' he said.

And the market watchers have reacted favourably to the good results posted last week.

Salomon Smith Barney analyst Marco Pinzon on Friday launched positive coverage on two Bermuda companies in the reinsurance world.

RenaissanceRe was allocated a top-notch `buy' recommendation with an $83 price target.

A step lower and tagged with an `outperform' grade was Everest Re which was afforded a $67 price objective.

Another stock watcher, US ratings agency Fitch gave new comer Max Re Ltd. a top financial strength rating with a stable outlook.

Fitch, an international rating agency formed through the merger of Fitch IBCA and Duff & Phelps Credit Rating Co., gave Max Re an `A' rating.

CHART 3Q Comp Net Income ACE Ltd $140.8M Annuity Life Re $10.9M Partner Re $50.9M PXRE $3.38M Renaissance Re $35.6M Trenwick 6.9M XL Capital $139.5M