News Analysis - Young Bermudians come of age.

(From Reinsurance)

Byline: Janina Clark.

The Bermudian 'class of 2001' - the (re)insurers set up on the island after the World Trade Centre attacks - all recorded massive year-on-year growth in net written premiums in the first half of this year, ranging from Endurance Specialty's comparatively meagre 171% to Arch Capital's phenomenal 393% (see Table 1).

Analysts Robert DeRose and Keith Lennox at rating agency AM Best describe the start-ups as now very much players in the market. "None of them had any problem in gaining business or market share," they point out. The companies' growth has been both organic and acquisitive, and three have already gone public. With no adverse loss development and a light catastrophe burden since they started, returns for their investors have been robust.

Allied World Assurance has an 'A+' (superior) rating from AM Best. Arch, Endurance and Montpelier are rated 'A' (excellent) and Arch is rated 'A-' (excellent). "An 'A' rating might not be the greatest rating for a reinsurer to have, but cedants look through the rating to the unencumbered capital and also have confidence in the quality of their management," says AM Best.

OUTSTANDING PERFORMANCE

Donald Thorpe, analyst at Fitch Ratings, describes the combined ratios of the start-ups as ranging from "very good to outstanding". He adds: "The class of 2001's underwriting results are as good or better than those of the established (re)insurers that either avoided the major legacy issues or put them behind them. And the class of 2001's results are significantly better than the established (re)insurers that are still dealing with legacy issues."