as they must if they are to survive, according to ACE Bermuda president Dominic Frederico. He was speaking at the first afternoon session on Thursday at the World Insurance Forum.

He also said that Y2K insurance is a good example of the current mood of the market, in which "the issue is not the risk, it's the price.'' Mr. Frederico made his comments as a member of the panel assembled by David McManus, president of Arthur J. Gallagher & Co. (Bermuda) Ltd. to discuss excessive Risk.

In his opening remarks, Mr. Gallagher explained that the four-man panel, each member drawn from the large-risk business, would be asked a simple question: "What is it that winners do that followers are unwilling to do?'' The response was a how-to guide for managing a large insurance company from some winners who are out there doing it. Each panelist represents a company which has recently been involved in acquisitions.

John Stites, president of Travelers (Bermuda) Ltd., listed in bullet-point style the elements he perceives as central to managing a successful insurance venture: Survival; Scale and scope, which follow well-executed organic growth; Broadened skill and resources, necessary if the industry is to meet the needs of convergence; Service which "we need to dramatically improve, which means infrastructure''; and Innovation, "Shelf products are not going to work,'' Mr. Stites said. "We must design mass customisation.'' To this listing, Christopher Longo, president of Chubb Atlantic Indemnity Ltd., added "strong financial statements'' and, with greater emphasis, "creative and innovative approaches.'' Mr. Longo pointed out that greater than a billion dollars of capital is available in the excess liability area, affording customers "more choices than they have ever had before.'' Mr. Frederico added to the growing list the ability to acquire as a means of co-opting expertise, and "joint venturing to deliver non-traditional products.'' Ratings and stability, he said, also counted. But the key lay in strategic plans and goals. "That's what differentiates:'' Mr Frederico said, "commitment, planning resources and execution.'' XL Capital Ltd. president and chief executive officer Bob Cooney, speaking last, said that he agreed with the thoughts of his fellow panelists. But he saw another differential: "the shift away from a focus on products towards focussing on the customer.'' The provision of solutions through a single access point allowed companies to stop "looking to sell product any more, but to customise solutions by means of integrated, holistic structures.'' Mr. McManus then switched the topic to ask what the panel thought of the idea that insurance companies are not just in the business of facilitating, but of risk-taking. "We hear this,'' said Mr. McManus, "but is it real?'' Mr. Stites again went first, "In a soft market, monoline pricing hurts,'' he said. "In the business of basketing risks, such as operating, financial and insurance risks, the insurer's job, to the extent that there's an unmet need, is to find a hook.'' Mr. Frederico pointed to a number of airline/aerospace deals ACE and others had engineered as examples of just how real the convergence of markets was.

The new deals were "thought of, launched, accepted and, for two deals, bound,'' he said. He revealed "a concern that, as we branch out in a soft market, maybe it's a little too formulaic, and maybe we are still relying to an extent on a 1950s outlook. Formulas,'' he said, "don't give an exact idea on commodity or credit risks, for example.'' Mr. Cooney pointed to "the need for intellectual capital and talent'' as crucial. Mr. Longo agreed that partnering allowed larger companies an opportunity to extend their skill sets.

In answer to a question from the floor about a potential hardening of the continuing soft market, Mr. Stites admitted that "most of us are bleeding in the middle-market general liability area.'' He summarised a shared view when he concluded that "we need to do a better job managing customer relations. Making service a priority is what we have to do.'' The session had been brought forward to allow delegates to attend the funeral of ACE's Madeline Joell, who had also been an organiser of the World Insurance Forum.

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