A competitive market is forcing reinsurers to cut rates, with profit unlikely to match gains made in 2007, according to Willis Re.

The reinsurer last week released 1st View, a report revealing sustained decreases in reinsurance rates during the first quarter.

It says the trend was initially evident during January renewals and is especially prevalent in smaller markets.

Among the reinsurance rate decreases, UK aviation and marine rates have declined by between 5% and 7.5%.

Willis Re says this is caused by an increase in the number of regional reinsurers and diversification among global reinsurers.

Depressed investment returns and softening rates are combining to erode reserves. Willis Re claims it is unlikely reinsurers will produce the strong returns seen last year.

The company expects increased acquisition activity as a result.