and to report its best ever profits, according to the company's president.

In an interview with The Royal Gazette yesterday, Mr. Michael Palm said the leading Bermuda-based finite risk reinsurer will almost certainly exceed the $187 million it earned last year.

And it could be the sixth consecutive year of record assets, earnings and shareholders' equity for the wholly-owned subsidiary of the Zurich Insurance Group.

Mr. Palm said Centre Re has spent the last two years branching out from its bread and butter finite risk business, capitalising on new opportunities as they progressed on their goal to offer a wider range of products available to a wider range of buyers in the insurance market.

Mr. Palm defended Centre Re's acquisition of Anglo-American Insurance Company this summer before the company was placed in run-off.

And he said the company has enough capital on its balance sheet to support its current liabilities, but it was clear that to protect its investment, any run-off of Anglo should preferably be done by the group. That was why Centre Re purchased Anglo for what Mr. Palm agreed was a nominal price, "not a large number in the context of insurance and reinsurance acquisitions''.

Mr. Palm said: "Centre Re has had a long involvement with Anglo-American, the most significant part of that involvement has been as a reinsurer, since the acquisition of Anglo-American by John Head & Partners. Very significant reinsurance support for Anglo-American has been provided by Centre Re.

"As that company has developed and the London market has developed, we and the previous owners, John Head's partnership, concluded that given the size of Centre Re's economic interest as a reinsurer, it made most sense for us to own this company and control how it was managed, whether or not it would continue to assume the premium, whether or not it would be re-capitalised, or on the other hand whether it would be placed into run-off.

"We purchased it with a view toward having as much control as we could have over the economic outcome of the contracts into which we entered into years ago.'' Mr. Palm added that many of Anglo-American's staff had been moved to Centre Re affiliate Zurich Re (UK), which had originally planned to take over the company.

The old corporate entity of Anglo is being run-off over a period of years. The group has entered into long-term reinsurance agreements related to the liabilities of Anglo.

"The ultimate outcome of those agreements remains to be seen, but if I had to guess today, I would expect that Centre Re would make a little bit of money as a result of its contracts with Anglo. It won't be as much as I had thought we were likely to make when I entered into those contracts four years ago.

"But I expect that on the whole it will be a relationship which produces some profit via the reinsurance contracts for Centre Re.'' Centreline Reinsurance's acquisition of Mendip Insurance and reinsurance company Ltd., this month, from Sedgwick Group plc, swelled the company's portfolio to probably more than half the Time & Distance reinsurance business in the Lloyd's market, adding another half a billion dollars in assets under management. It brings the total to more than $2 billion in assets under management.

Eighteen months ago, the company formed Zurich Reinsurance Centre (ZRC), a publicly traded company in the US, offering more traditional products. Centre Financial Services was formed and a subsidiary, Centre Trading Partners, in New York is in the business of finding innovative ways to provide access to the capital markets for the purpose of hedging risks.

They are looking at ways of packaging insurance risks in ways that are palatable to non-insurance investors, and gaining access to a deeper pool of capital. This is seen as a strategic, long term investment.

Mr. Palm said that over the next year, the company will place more emphasis on selling insurance products that have structures similar to the company's successful finite risk reinsurance products.

Centre Re's financial investments in insurance and reinsurance entities are typically done through Insurance Partners, a fund in which Centre Re is one of three corporate general partners and one of many limited partners to provide capital.

The move by Insurance Partners to invest in Continental Corporation will mean a link for Centre Re, with the fund expected to own preferred stock, strengthening Continental and providing profits for the fund.

OPTIMISTIC -- Centre Re president Mr. Michael Palm.