A property catastrophe loss costing $30 to $50 billion would be required to change the direction of softening reinsurance rates, terms and conditions.

That is the main finding from broker Aon Re Global's regional expectations report for traditional property catastrophe treaty reinsurance renewals at June 1 and July 1, 2008.

The report reveals that rates are set to go down from between zero and 25 percent across the board, with the US regional personal lines taking the biggest drop of 15 to 25 percent, and Europe and Asia the least from zero to 10 percent. Meanwhile, capacity changes were all up, ranging from 10 to 15 percent for most regions, including most of North America and Europe.

The report concluded that the outlook for property catastrophe reinsurance market pricing is quite favourable globally, with many of the positive underlying fundamentals that created the buoyant capacity and price breaks at January 1 continuing to exist for the upcoming June and July renewals.

Aon Re expects that price reductions will continue to be prioritised higher than easing terms and conditions by cedents, but terms and conditions will continue to improve in line with those provided at January 1, 2008 renewals.

"We believe that at current pricing levels and with the capitalisation of the property and casualty reinsurance market, a ground-up property catastrophe occurrence loss in the range of $30 to $50 billion would be required to change the direction of property catastrophe rates, terms and conditions," the report stated.

"We estimate losses ceded to private reinsurers at $15 to $25 billion from such ground-up occurrence. This range continues to be well within the earnings and capital tolerances of property and casualty reinsurers."