Bermuda is about to take a huge step towards prominence in the world insurance market with the advent of the seven new insurance companies that have set up on the Island, according to Ken LeStrange, chief executive officer of Endurance Specialty Insurance.

Mr. LeStrange is at the helm of the new insurer and reinsurer which has raised $1.2 billion in capital and has set up shop in the wake of the September 11 attacks and the capital crunch that followed this disaster.

He said told The Royal Gazette: "A theme that I think is important is there is a very interesting opportunity ahead for Bermuda to take a very, very big step forward in terms of its prominence in the world of insurance."

And he said that the Island is in pole position to set up a new kind of market, the 'Bermuda Market', which had well-defined boundaries and its own style. Mr. LeStrange said: "Bermuda's prominence had been steadily increasing, I think, over the last 18 to 20 years, maybe longer - 25 years and each kind of market crisis has spawned new opportunities and a kind of bigger Bermuda in terms of the insurance industry and this is no exception.

"This has not really been a market per-se, with maybe the exception of the property cat market, but we now have such a concentration of people with capital in a very small geographic area, kind of like the city of London, that there is an opportunity for a kind of Bermuda philosophy, a Bermuda style or a Bermuda approach to develop and I for one think that that would be a very healthy thing."

Mr. LeStrange stopped short of saying that Bermuda will become the new Lloyd's after seven separate companies set up with an estimated total capital of over $7 billion, and an estimated $12.5 billion in new capital overall coming to Bermuda.

"I think saying it will be the new Lloyd's is a little too much," he said. "There are far more people employed in the insurance world in London than in there are in Bermuda at all - I think we had 80,000 people working for Aon in the industry.

"But all kidding aside, I think that Lloyd's has some real challenges and their approach has been challenged now twice in a decade. The time they formed Equitas and all that and the substantial replacement of names capital with corporate capital and now the need to go forward on some basis.

"So I think that the already emergent Bermuda-style, heavy on analytics and heavy on capital management is a kind of consistent long-term view, I think it creates an opportunity for a somewhat different market place to emerge, but I wouldn't want to go any further in comparing the Bermuda market and Lloyds."

On December 16, 2001, Endurance announced it raised its target capital of $1.2 billion through a private placement, which closed on December 14.

The company immediately began underwriting commercial property and casualty insurance and reinsurance world-wide basis and business has been brisk.

Mr. LeStrange said: "I would say that the business activity met my expectations. I had pretty aggressive expectations in terms of how busy we would be and we certainly met those.

"I would say that the market has taken somewhat a different shape than I might have expected. For instance, early when these companies were being formed, there was a sense that particularly property catastrophe insurance would harden and that capacity would be restricted. I don't think we have really seen that. Yeah, catastrophe programmes have tended to go up in price and maybe some of the retentions have gone up, but there certainly has been no lack of supply if you want capacity there.

"So our business plan at Endurance, unlike some of the others, has been very much multi-line. We are doing many, many lines of business in both the reinsurance and the insurance categories.

"On the other side of things there has been far more demand and capacity constriction, as I have seen it, in the workers' compensation area in the United States and we have done quite a bit of that actually."

And he added that each of the seven companies was now taking on its own complexion and Endurance would stand out from the rest in the end.

Major investors in Endurance include Aon Corporation, Zurich Financial Services and its affiliates, Capital Z Financial Services Fund II, Thomas H. Lee Partners, Texas Pacific Group and Perry Capital.

Endurance was sponsored by Aon Corporation and Zurich Financial Services and its affiliates to provide much needed underwriting capacity to commercial property and casualty insurance and reinsurance clients and is headquartered at The Zurich Centre North, 1st Floor, 90 Pitts Bay Road, Pembroke.

Mr. LeStrange said: "It's been a nice advantage having Zurich and Aon as backers, in terms of investor interest. It certainly has helped attract investors to this company. In terms of getting up and running quickly, we have had computers, people that can help us, all of that has been very, very great actually and even though they are an investor, they have been a very large source of business for us.

"But I want to quickly mention that we are doing business with all brokers and we have actually done a lot of business with each of the major brokers at this point and I think that would be it. We are an independent entity and we have to make our way in the world. Aon doesn't give us business and we have to compete for it. And I think we have been very effective in positioning ourselves for the opportunities.

"When I think we initially announced, we set out to raise $1 billion, but as our investor group came together for a variety of reasons we elected to increase the capitalisation to $1.2 billion. We could have raised it to quite a bit more, but I think actually we got it just right. There is more than enough capital to be a credit worthy company and be positioned to take advantage of the opportunities that are emerging in all the different marketplaces, yet not so much in terms of being concerned in terms of our ability to put that capital to work."

When asked why Bermuda, Mr. LeStrange said there was no where else as suitable to set up shop.

He said: "Bermuda had been chosen as a domicile because of the nature of the tax situation which makes Bermuda particularly attractive in order to write particular lines of business, many lines of business actually.

"It obviously has over the years developed quite a robust insurance and financial service infrastructure. Obviously it is centrally located, or its mutually inconvenient to the UK and the US.

"Actually what I find is kind of neat, if you like to work all day long and all night long then you can do it.I speak with the UK very early in the morning, at like 6.30 and I get them out of the way and then I start with the east coast and move west and I can be here till 8 or 9 o'clock at night and still be doing business with people in San Francisco. Our business is one which has fairly acute peaks of activity around January 1 and December 1 particularly. Particularly for treaty reinsurance business, this is when the action takes place for the whole year."

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