Elliot Lane says major losses will keep it spinning

' Only mad dogs and Englishmen go out in the midday sun.

But it seems a number of insurers did not adhere to Noel Coward's witty warning. Sunning themselves in the baking heat on holiday has addled their brains.

According to a number of direct writers and large composites, the cycle is dead. That's right - over, gone, pushing up daisies. Can you hear the cuckoos circling while the waves lap their Canute-like desks? The cycle may have slowed so a trough has been averted - but rates are still undulating and the road is bumpy as hell.

This week ABN Amro released a report on the insurance sector in which it notes that "premium is vanity, profit is sanity".

Underwriters are having to work harder than ever to make a profit but it is still "attainable", the investment bank says.

There is a clearly a downward trend with some classes, and it names "big ticket" US property/casualty as competitive, non-US professional indemnity as tough, and describes margins in the private motor car business as "getting tighter".

Energy rates, however, are strong off the back of Hurricane Ivan and Suncor Energy losses ($2.6bn and $1.5bn respectively), while the OMG Cawse loss should help international rates.

Discipline in Lloyd's has been shown in the reduction in managed syndicate capacity, and Rolf Tolle's influence has definitely weeded out some of the suicide jockeys of the past.

As one leading Lloyd's insurer told me about Tolle recently: "He may put people's backs up because he can be very school-masterly with them, but at least he gets things done and has strong convictions."

But Lloyd's underwriters are still dragging the market down in places, particularly aviation.

Energy rates have remained strong because of major losses.

Five airline crashes in two weeks must be a wake-up call to aviation underwriters - and it will be interesting to see what happens during the October/November major airline renewal season.

2005 is predicted to be a major event year for hurricanes and although the market says it's prepared, it clearly isn't.

Direct larger property risks rates are under pressure and underwriters are chasing each other down just to keep the clients on the books.

It seems that the cycle might just be alive and well after all. IT