The massive tidal wave of new capital that has flooded into the reinsurance markets has come too little too late, according to a report by reinsurance broker Benfield Group.

The report, entitled The Big Squeeze, states that "the influx of new capital after the WTC appears increasingly inadequate against the massive outflow caused by falling investment markets, reserve strengthening and escalating
catastrophe losses". It also notes that imperfect distribution of capital across the industry means that capacity varies widely across the market.

Nevertheless, Benfield Group predicts that a prolonged hard market looks "unrealistic" and says that rates "are already showing signs of weakening in many market sectors".

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