The findings of the reports show that overall commercial pricing is steady to down slightly driven by a softening casualty and professional lines market (excluding Construction GL), with non-CAT exposed property up slightly (9% - 11%), and CAT-exposed property up sharply (average of 54% but as high as 300% - 600% within 5 miles of the coast).

As insurers face the tightening reinsurance market that we have all heard about, they are raising rates substantially and offering less coverage, while shifting a larger part of their capital and focus to casualty business and to non or low-CAT property business in an effort to maintain total premium levels. This is softening the casualty market as mentioned above as more carriers compete for the same business.

There is a regional bias to the pricing results given that a large part of CAT-exposed business can be found along the coast and along fault zones. The tables below show property, construction, and business interruption pricing by CIAB region:

Expectations for the second half of the year follow the first-half actuals, with overall commercial pricing forecasted flat to up 5%, casualty pricing flat to slightly down, Non-CAT property up 4%, and CAT-exposed property up 84%. As some of you have witnessed, the increase in property pricing has prompted some companies/entities to purchase less than full coverage. Others with solid balance sheets and stable cash flows/income, like Wal-Mart, have decided to self-insure their CAT exposures. We will continue to see decisions like these, in addition to increased usage of securitization and CAT bonds to fill in capacity gaps, if the rest of the current storm season plays out like 2005. Conversely, if we see relatively minor activity for the remainder of the 2006 season, there should be some capacity relief, but probably not to the extent to return us to the pre-Katrina-Rita-Wilma world by January 1, 2007.

We hope you find this information to be both informative and useful for discussions with your insured's!

At Colemont, we continue to adapt to considerable market change. We are here for you during these challenging times and will do everything in our power to smooth market effects related to our mutual placements. We continue to have access to all key markets (both historical markets as well as new(er) markets) necessary to deliver the best available insurance programs to you and your insured's. We look forward to continuing to assist you with all of your placement needs now, and in the future.

Thank you very much for your continued business and support!
Have a wonderful day!