Comment - Enjoying the ride.

(From Reinsurance)

Byline: Geoffrey Bromley, president of Guy Carpenter International (ex

Following the events of 11 September 2001, several (re)insurers and Lloyd's syndicates were formed in anticipation of the market upturn that was predicted. Additionally, existing players sought to consolidate or replenish their capital bases. Capital entered the market in rapid time - the majority, some $20bn, was raised in the last three months of 2001.

Reinsurers returned to the capital markets with renewed vigour during 2003. Significant amounts of capital have been raised for various reasons, including: reserve strengthening; to maximise opportunities to write highly profitable business; and protection against the actions of rating agencies.

Notable among the list of players raising Capital were Munich Re (EUR7.6bn), Scor (EUR750m) and several Bermudian operations, including Arch, Endurance, XL, Montpelier, Aspen Re, Axis and Renaissance Re (approximately $3.5bn between them). New capital flowing to Bermuda comes to approximately $10bn raised since the events of 11 September.

A number of players have left the reinsurance market, including CNA, Hart Re, and Trenwick. Some new companies have been formed, the most recent being the Bermuda-based Quanta Capital. Capital, however, continues to be eroded, especially due to prior year liability problems. But it does not seem unreasonable to suggest that each additional dollar of capital raised is adding to market capacity.

The Bermuda effect