Don’t expect to see a wave of new insurers setting up in Bermuda again <> even if a major event sparks a need for new capacity.

That was the message from a panel including the heads of three Bermuda companies, at the Ernst & Young Insurance Year-end Outlook event, who said rating agencies’ heightened requirements was a major reason why there was unlikely to be a repeat of the waves of new companies the Island has seen repeatedly.

But Ariel Re chief executive officer Don Kramer, RenaissanceRe CEO Neill Currie and Flagstone Re CEO David Brown believe Bermuda has a strong future as a re/insurance centre, provided it keeps its talent and keeps pace with global regulatory enhancements.

Mr. Brown, whose company Flagstone was formed four years ago after Hurricane Katrina blasted a hole in industry capacity, said: “I have a feeling that the class of 2005 was probably one of the last big waves like that for Bermuda. The barrier to entry these days is not regulatory, but it’s more rating-agency driven.”

The ratings agencies had raised standards, he added, and that more capital was now coming into the market by means of sidecars and catastrophe bonds, rather than through the formation of new companies.

Mr. Kramer, the former Ace Ltd. CEO who is a Bermuda insurance veteran, said the Bermuda model had proven itself, by not only surviving the financial crisis better than most of the rest of the financial services sector, but also achieving what could turn out to be a record year in 2009.

”Part of the Bermuda model is that we’re willing to write the most volatile business,” Mr. Kramer said. “Our leading enemy, Bill Berkeley has admitted candidly that he wouldn’t write the high-volatility business because he doesn’t like the risk-return,” he added, referring to the CEO of WR Berkley Corp. who has led US industry support for proposed legislation to hit Bermuda reinsurers operating in the US with extra taxes to create “a level playing field”.

Further cementing Bermuda’s position as an insurance leader was the operations many Bermuda companies now had in the London market. “Lloyd’s which used to be hostile to Bermuda <> has now integrated with Bermuda,” Mr. Kramer said. “They’re in partnership with

”When you look at the world around us and those who covet us, like Switzerland and Dubai, who really wanted to get into it, but lacked something that we have here and that’s a pool of talent. The key to the sustainability of that model will be the talent housed here in Bermuda. If you lose that, you’ll lose the capital flow and you’ll lose the business.

”We’ve had the threats from the US, like the Neal bill <> but I’ll think we’ll overcome all of those. We can’t take it lightly. Clearly there are others who are jealous.”

Mr. Kramer also mentioned the breakfast that he and other international business leaders had with British Foreign Secretary David Miliband last month, where the local contingent made clear that Bermuda was not a tax-free jurisdiction

”We tried to talk to him about how Bermuda’s taxation system works,” Mr. Kramer said. “We told him we have a country of 65,000 people with a billion-dollar budget and the money’s got to come from somewhere. Our tax system just works differentl

Mr. Currie said: “The reason Bermuda is so successful today is that we have good people. You compare us with some of the other jurisdictions and they don’t have the infrastructure and they don’t have the underwriting talent and they don’t have the distribution network we have here.”

In the event of a market dislocation creating new demand for capacity, Mr. Currie did not expect to see new companies being set up on the Island, however.

He expected the capital to come in the form of fully-collateralised special purpose vehicles <> as those did not need rating agency approval <> or for clients to come to existing reinsurers

deal with their specific short-period needs.

In 2012, the European Union is scheduled to introduce enhanced rules for insurers, known as Solvency II. The Bermuda Monetary Authority has been upgrading its insurance regulation standards, trying to ensure it achieves regulatory equivalence, so that Bermuda-based companies are not disadvantaged in the EU market.

The fourth member of the panel, Ernst & Young partner Peter Porrino, the firm’s global director of insurance industry services, said Bermuda had no choice but to strive for regulatory equivalence.

”I’ve never talked to any company who wants to redomesticate because they are worried that regulation is getting too strict,” he said. “It’s essential that the BMA should continue on the path they’re going down.”

Mr. Porrino said Bermuda regulation was on its way to being more advanced than US regulation and said of the EU: “It’s hard to see how they would not let Bermuda in, if they let the US in.”

All three CEOs told the audience of around 300 people at the Fairmont Hamilton Princess that the industry was supportive of the BMA’s efforts and Mr. Brown said industry had been initiators of enhanced regulation, working with the BMA to achieve it, in an industry-regulator partnership unlike that in any other jurisdiction.

Mr. Brown said he would welcome a move to federal insurance regulation in the US and added: “If you get away from state regulation, then you can lower the cost of the product we provide, right down the chain.”

Asked what they’d learned from financial crisis, Mr. Kramer said: “For the first time we had a confluence of financial meltdown and catastrophic losses. Now we are paying more attention to investment management and portfolio duration. A lot of us had reached out into hedge funds and other alternative investments. We have coordinated our investment risk and our underwriting risk going forward.”

Mr. Brown said the crisis had triggered broad stroke correlations, the likes of which had not been built into anybody’s investment risk computer models, while Mr. Currie said: “We learned that you have to assume that big stuff is going to happen on your watch <> not somebody else’s.”

Mr. Porrino said there was one basic lesson for industry leaders. “CEOs can’t delegate risk,” he said. “The companies that have commanded this crisis, they uniformly have CEOs who owned the risk. They’re the only ones who really see the whole corporation.”