CONSOLIDATION IN THE REINSURANCE INDUSTRY Wednesday February 17 2.15 p.m.-3.45 p.m., Mid-Ocean Amphitheatre Moderator: Graham Pewter On Wednesday, February 17, in one of the early afternoon sessions, delegates will have a chance to hear from a panel of experts where their industry might find itself in ten years' time.

In the Mid-Ocean Amphitheatre, Graham Pewter, president and chief executive officer of Commercial Risk Partners Ltd., will moderate a panel which will address "Consolidation in the Reinsurance Industry''.

Consolidation, in this context, has lately meant mergers and acquisitions.

Reinsurance, like insurance and the automobile and energy industries, is in the middle of an intense phase of consolidation. Bigger appears to better in the minds of the industry's top management. The same is proving true even among Internet companies which have never made a profit.

The Consolidation session will feature panelists Jacques Blondeau, chairman and chief executive officer of the SCOR Group; Gerald Radke, chairman, president and chief executive officer of PXRE Corporation; and Donald Kramer, who was himself appointed vice chairman of ACE Ltd. following ACE's acquisition of Tempest Re prior to its recent highly-publicised buy-out of part of the property and casualty business of the CIGNA group.

Of the three men, Mr. Radke may prove to have a different perspective from his fellow panelists. ACE and SCOR are among the majors; PXRE is a medium-sized specialist carrier, and therefore potentially one of a group of a primary targets for consolidation itself, sooner or later.

Given the world-wide phase of consolidation in the late 20th Century, to what extent can current market conditions be considered responsible for the wave of consolidation affecting the reinsurance industry? "The soft market is the key driver of consolidation, particularly in mature markets,'' was Mr. Pewter's response to the question.

"With a stagnant demand for, and an oversupply of, capacity, if you are a reinsurance company competing in mature markets such as the United States or Europe, the only way to compete, to extend your market position, is by acquisition or merger,'' he said.

With the focus on share price and performance among publicly-quoted companies, management operates under a virtual obligation to grow its figures on a quarterly basis if the company's share price is to be driven forward. That leaves management three basic options: introducing new lines of business, which is tricky in a soft market, returning capital to shareholders, an approach which managers are often reluctant to take, and the acquisition of another existing business.

A welter of acquisitions and mergers in any market leads, inevitably, to a reduction in the number of companies, which in turn has historically provided opportunities for newer, smaller companies to find and exploit niches in the market.

"Everything in the reinsurance business is cyclical,'' Mr. Pewter pointed out.

"As a greater percentage of market share is concentrated into a smaller number of hands, opportunities are thrown up for a specialist, highly-focused, flexible and innovative companies to compete,'' he said.

"One question for the panel will be whether an independent, highly-focussed, specialist reinsurer can compete with the subsidiary of a major specialist.

Arguments can be made either way.'' He explained that a subsidiary of a major insurer carries the credit rating and capacity, the "clout'', which an independent cannot hope to match.

Conversely, the independent can be more flexible, more "fleet of foot'', perhaps, than a better-connected competitor.

"I suppose we will learn the answer to that question over the next ten years,'' Mr. Pewter concluded.

Following short formal presentations in which he and his three panelists will set the scene, he promises to throw his discussion group open to questions and to have his experts address the question of where the reinsurance industry might find itself a decade from now.

Although the Consolidation panel is timed to coincide with a simultaneous panel discussion on the captive industry, Mr. Pewter's group look to have an interesting challenge at the 1999 World Insurance Forum.

Where the reinsurance industry will be in ten years, and how it will get there, could prove to be the most interesting discussion of the entire week.

`One question for the panel will be whether an independent, highly-focused, specialist reinsurer can compete with the subsidiary of a major specialist.' `One question for the panel will be whether an independent, highly-focused, specialist reinsurer can compete with the subsidiary of a major specialist.

Arguments can be made either way.'' Graham Pewter: Niche CONFERENCE CON