It is now ten years since the world was left shocked and horrified by the deadliest terrorist attack in history. And in the aftermath of September 11, 2001, with financial markets in a state of paralysis, Bermuda came to the fore.During the extraordinary three months that followed the hijacked airliner attacks on the twin towers of Manhattan’s World Trade Center and the Pentagon in Washington, more than $11 billion in fresh insurance capital flowed into the Island, as a dozen or so new companies were established to fill the hole in insurance capacity.Some of the companies born during that period have gone on to become serious international players. The five stand-alone survivors who will shortly be marking their tenth birthdays Axis Capital, Arch Capital, Allied World, Endurance Specialty and Montpelier Re can certainly celebrate growth, both in terms of shareholder wealth and global expansion.Their founders recognised a once-in-a-generation business opportunity, to start up in a hard market across a broad range of business lines in a world that viewed their risks in a whole different way after the unthinkable had become reality. Almost every major line of business was impacted: property, aviation, terrorism, workers’ compensation, personal accident, life and business interruption all experienced substantial claims.“After 9/11, there was an across the board hard market, around the world,” recalled Brad Kading, president of the Association of Bermuda Insurers and Reinsurers. “It was a one-two punch, the capital loss from the World Trade Center claims coupled with the shock to the stock markets which caused European insurers assets to decline. The result was an incredible opportunity to enter the business with a clean balance sheet and attract new business at attractive prices.”Those elevated rates, coupled with a couple of quiet loss years after 2001, helped the Class of 2001 lay firm foundations. Axis, for example, started by its current chief executive officer John Charman with $1.7 billion, has blossomed into a company which had $5.3 billion in shareholders’ equity at June 30 this year.Mr Charman attributes much of that success to the favourable market conditions in the company’s early days that helped it to achieve prodigious growth. “Clients were so concerned about the solvency of existing carriers that they wanted new, unencumbered players to come in,” Mr Charman told this month’s Risk & Insurance magazine.“We achieved in two years what it took Ace and XL 15 years to do. That was the nature of the opportunity.”The influx of insurance talent that came with the new companies and the demand they stimulated for everything from real estate to restaurant meals sparked a boom in the local economy. The significance to Bermuda of the Class of 2001 was not limited to the industry itself.“This was the largest of the ‘Bermuda waves’ in terms of both capital dollars and number of new starts and catapulted Bermuda into the group of top three reinsurance jurisdictions and the cat risk capital of the world,” said Caroline Foulger, insurance leader and partner at PricewaterhouseCoopers in Bermuda.“This significant boost in both reputation and scale has been a key contributor to international business in Bermuda and the related economic growth of our country over the last ten years.”Other “waves” experienced by the Bermuda market have occurred in response to natural disasters, such as those after Hurricane Andrew in 1993 and Hurricane Katrina in 2005. The nature of the 9/11 attacks meant the Class of 2001 was different, Ms Foulger added.“While hurricanes and earthquakes can never be predicted with certainty on either timing or magnitude, they are known events that will happen at some point and can therefore be priced and underwritten,” she said.“9/11 caused perceptions of risk to fundamentally alter. This led to widespread premium rate increases across many lines at the same time as demand increased in the heightened consciousness of terrorism risk.”Before 9/11, the Bermuda insurance and reinsurance markets were significant, but the Class of 2001 made the Island a major-league industry centre. Their impact was rapid.“Nearly instantaneously, brokers and clients were introduced to a new group of companies focused on providing meaningful capital to capacity-strained product lines and they could all be accessed within the confines of a few city blocks,” said Frank D’Orazio, Allied World’s president, Bermuda and international insurance.“The Class of 2001 launched multi-line insurance and reinsurance platforms and quickly diversified their operations both geographically and by product discipline, bringing balance and additional scale to the Bermuda market.”Allied World, like all the Class of 2001 companies has expanded its global reach over the decade and now has 15 offices in seven countries. It changed its domicile from Bermuda to Switzerland last year and launched a syndicate in the Lloyd’s of London market this year.Mr D’Orazio pointed out that Allied continues to have significant operations on the island, which produce about a third of its revenue.Arch Capital had grown shareholders’ equity to $4.1 billion by the middle of this year and has no plans to leave the Island. Arch CEO Constantine Iordanou told Risk & Insurance magazine: “I don’t see Bermuda diminishing in its importance to world capacity. Certainly, it’s been a good home to us.”Endurance has also achieved both global growth and the diversification by business line which is a hallmark of most of the 2001 group. The company stands as an example of the opportunities these companies have provided to Bermudians.It is led by a local, CEO David Cash, and this week Endurance appointed another Bermudian high flyer, Stephen Young, to head its Bermuda catastrophe unit.Not all of the Class of 2001 companies have survived the decade. Investors in Olympus Re, which was set up by the White Mountains Group, saw all their capital wiped out by hurricanes Katrina, Rita and Wilma in 2005. And Goshawk Re, after being renamed Rosemont Re, also fell victim to US storm losses and went into run-off in 2006.But most have gone on to thrive and also to play their part in diversifying and modernising the Bermuda market.The question of why so much capital came to Bermuda after 9/11 was not so much an issue of tax, as many other jurisdictions can offer similar advantages on that score, but rather the short time in which investors could get their new companies up and running.“The Bermuda advantage of speed to market, for an entity with the right pedigree of capital source and management team, meant they could be up and running well before the 2002 renewal season,” Ms Foulger said.“Secondly capital came to Bermuda post 9/11 to support the large reinsurers who were bearing a significant part of the loss from the event. 9/11 was unprecedented; the Bermuda companies who bore the loss had strong ratings, management teams and track records and were therefore able to attract additional capital to replenish and strengthen their balance sheets. Investors had faith that these companies would capitalise on the opportunity afforded by the post 9/11 environment.”Mr Kading agreed that speed to market played a part and suggested that intellectual capital was another lure.“Bermuda is known for its ability to quickly review and decide upon licensing applications,” Mr Kading said. “The regulator is known for being keenly attuned to market conditions and recognising that accepting or rejecting an application needs to be done in a timely fashion.“Bermuda has a history of attracting talent in the reinsurance business. It’s got a critical mass of the consultants and technical talent necessary to make a wholesale insurance operation work.”This week’s news that a New York hedge fund has decided to to base its new reinsurance company Third Point Re on the Island suggests that Bermuda retains its appeal to start-ups. However, many in the industry believe that another wave of new companies is unlikely to happen in the near future, but that new capital when another momentous event makes it necessary will come in the form of sidecars and catastrophe bonds