Poor investment returns didn’t keep the majority of reinsurers from posting positive results and underwriting profits, which outperformed other financial service industry sectors.

The reinsurance market “stands out as the only capital market operating smoothly, with buyers able to access large quantities of contingent capital,” according to the a report from Willis Re, the reinsurance brokerage arm of Willis Group Holdings.

“There is no doubt that reinsurers are being squeezed by investment performance, deteriorating Hurricane Ike losses and a growing need to increase prior year casualty reserves,” said Peter C. Hearn, CEO of Willis Re. “These pressures are also compounded by the extreme volatility of currency rates of exchange. However, despite these challenges, the increased demand for reinsurance which started at January 1 renewals, continues strongly…and shows no signs of diminishing.”

The report suggests that access to fresh capital remains limited mainly to Lloyd’s, which has outperformed in previous months and has access to a wider range of investors, including capital from private investors.

The catastrophic bond market has adjusted its products and reopened, according to the report, after stalling in the wake of the Lehman Brothers’ collapse last year.