Banks and insurers have been badlg burned by the economic firestorm they helped ignite. But at least one financial industry - reinsurance - has managed to sidestep the worst of the carnage. rnReinsurers, like just about everyone else, are suffering from lower profits and investment returns. For the most part, though, their business is in relatively strong shape because of rising demand for their services and their ability to raise prices in a weak economy. "If this is going to be a prolonged recession, then reinsurers definitely stand to profit," says Wilhelm Zeller, chief executive officer of Germany's Hannover Reinsurance, the industry's fourth-largest player in terms of gross premiums. rnZeller's optimism reflects soaring demand for the industry's services. Primary insurers are buying more reinsurance because their capital is tight and they are more averse to risk. The nonlife insurance sector in the U .S. lost about $90 billion in capital last year, close to 20 percent of the total available before the onset of the global financial crisis, according to Hannover Re.
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