A caution was issued to CEO's of insurance and reinsurance companies that taking a day off from the office could be a risk, because the industry is in the throes of massive and constant consolidation.

The warning came from ACE Ltd. vice chairman, Donald Kramer, the president and CEO of ACE's property catastrophe reinsurer, Tempest Re, during the second day of the International Reinsurance Congress.

"My message to CEO's is that things are happening so fast and furiously, so amazingly, that any CEO who takes the day off is really risking his job because his largest client could be merged, or his largest reinsurer could be merged or his company could be merged.'' Mr. Kramer used an analogy to explain the corporate dynamics of what has come to be known "merger-mania''.

He said, "Have you ever sat in an airport and while they were pulling away the boarding ramp, you were standing still, but you felt like you were moving.

"The fact is that in the insurance and reinsurance industry today, if you are standing still, the rest of the world is moving. You can't afford to not be aware of every trend and nuance, because alliances are being formed and re-formed faster than you can possibly keep up.

"It really does require not taking a day off and staying in touch because these are your customers and your suppliers, the people who you do business with. And they change almost hourly.'' But in the insurance/reinsurance industry, Japan and the US are not really in the consolidation game, which is being led by European firms.

But he said, "Bermuda is an interesting venue because Bermuda companies now have the capital. There are seven companies in Bermuda with surplus excess of $1 billion, and three of them have surplus excess of $2 billion.

"They are world class players financially, and they are reaching out. And interestingly, from the US vantage point, Bermuda has the "poison pill''. A US company taking over a Bermuda company loses its tax advantage or tax exemption.

"So Bermuda companies are likely to be the consolidators in the next generation, rather than consolidated.'' And while there has been discussion during the conference of the need for global regulation, Mr. Kramer pointed out the increasing interest being shown by rating agents is having a regulating effect of its own.

He said, "Rating agencies are playing more and more an important role in the operations of the insurance industry, effectively providing some constraints even in consolidation.'' He said that occurs because the rating agencies establish companies on "credit watch'' when there is an announcement of a merger.

"Today's reinsurance CEO,'' said Mr. Kramer, "has to be a very talented person who knows financial risks, strategic mergers and who understands the technical aspects of the business.

"He has to evaluate the changes, and not just stay on top of them, but also respond to them. They have to understand that this is no time to be negative.

I hear a lot of people at these meetings defending their positions. Instead, you have to listen and be aware.

"Size is important. Being global is important. Diversification is important.'' REINSURANCE CONGRESS CON BUSINESS BUC