After declaring an undisclosed loss for the year to April 30, Bermuda-based CHA Insurance Co. (CHAI) intends to take a closer look at the Bermuda hotel market for future business.

Senior vice president of CHAI, Carla Ranum, would not publish company financial information, but indicated another loss for this past financial year.

She said, "We're growing the business and when it reaches a certain volume, then we will start seeing a profit. But because of the high reinsurance costs and administrative costs, it is difficult to see a bottom line profit.'' She noted, "The change and conditions the company was subjected to in the first two years of operations were not conducive to developing a strong, able company with continuity of operations and an ability to direct itself toward a niche market.

"We were a little off the road, but with the team we have in place now, you will start seeing a development in terms of what the company can offer. The problems included the original losses suffered by the company. And when the company was going back into the market, the marketing strategy was not in place.'' Four people are on staff and another underwriter is required.

And in terms of business diversification, she said, "There has been very little business effort directed in Bermuda and that is something that we want to change. We don't want to displace the carriers that are here, but we would like to get some of the local business.

"We need to ascertain the precise requirements of the various hotels here and develop a programme which meets their needs. We are not doing a broad brush-stroke type of insurance, but very niche oriented and in many cases tailored to the specific island needs and business needs of the hotels. The needs differ island to island.'' CHAI began writing business in the summer of 1995, but was almost immediately hit by significant claims in a year in which hurricanes caused widespread damage in the Caribbean.

The company was initially capitalised with $24 million, but after two hurricanes -- Luis and Marilyn -- hit the Caribbean in 1995, Ms Ranum said yesterday capitalisation is down to $15 million.

But she said there had been a lot of misconceptions in the market about the state of the company as a result of the losses, and a temporary decision to withdraw from the market.

"Some of the customers raised questions about the company and it did affect the ability to market in the Caribbean,'' she said. "It is one of the major marketing issues we have to confront, and we are doing that.'' But she would not say if premium writings have improved from the initial $1.2 million written by the company in its first year.

CHAI is concentrating more on tailor-making coverages for hotels in order to become more competitive in terms of price.

Ms Ranum said, "The company was not always competitive with the markets. It still has some difficulty because the Caribbean islands differ in terms of which carriers are writing in those islands and at what price. And some insures consider certain hotels flagship accounts and they would price them low to retain the business. It's hard to compete and while we will try to offer a competitive price, in some cases it is too low for us to put our assets at risk to write that business.'' CHAI's reinsurance protection has been altered. The limits are $100 million, on a per occurrence basis, and are reinstated at no additional charge after each event, including hurricane.

The exceptions include flood and earthquake for which a $100-million annual aggregate applies. As needed, the company will purchase additional reinsurance to protect itself from an accumulation of losses in any particular group of islands.

She added, "We've added on a liability programme which is incredibly broad and competitively priced, one of the most tailored liability programmes for hotels that I have seen. Many of the islands in the Caribbean never had the breadth of cover such as worldwide jurisdiction. For example, many didn't have cover for claims brought in the US, even though many of the hotel guests are US citizens.'' Formed through efforts of the Caribbean Hotel Association (CHA), the insurer was established here to offer primary "all risks'' commercial property insurance to member-hotels of the CHA. It was designed to address the hotels' need for less volatile, more rationally priced property insurance.

Sponsored by Centre Reinsurance (Bermuda) Ltd., Aon Corporation and the CHA, other shareholders include Bank of America, Chartwell Re, Western General and Fidelity Venture.

CHAI still can not write in Cuba, because of its US shareholders. Puerto Rico is another problem because of an inability to get a licence for five years.

They are looking for a partner there.

CARLA RANUM -- "We need to ascertain the precise needs of the various hotels here.''