In This Issue: U.S. Life Sector: Near-Term Rewards And Long-Term Risks: Higher interest rates, coupled with moderately positive equity-market movements, create the potential for double-digit increases in operating profits-admittedly from a fairly low base. U.S. Health Sector: Strong Vital Signs For The Sector: Annual medical cost increases are expected to be modest to flat with last year's 8% rise-and insurers are generally pricing rationally, albeit a bit more competitively. U.S. Commercial Lines: Sector Enjoying Exceptional Earnings: As the midpoint of 2006 approaches, many commercial insurers are generating exceptional earnings, and their balance sheets are in the best shape since the late 1990s. U.S. Personal Lines: Low Volatility Means Few Ratings Changes In 2006: The second half of 2005 may have been one of the most challenging on record for U.S. personal lines insurers, with more than $57 billion in catastrophic losses recorded. However, an analysis of industry trends in 2005 is currently pointing toward low volatility over the next six months. North American Reinsurance: U.S. And Bermuda Reinsurers Face Quite Different Prospects: U.S. reinsurers ended 2005 with a net loss of $2 billion and a combined ratio of 131%, and the overall Bermuda market-including primary insurers-reported a net loss of $2.9 billion and a combined ratio of 139%. | 
