Bermuda's "incredible infrastructure" is driving the creation of new reinsurance business, Endurance Specialty CEO Kenneth Le Strange told industry executives at yesterday's International Reinsurance Summit.

And such strong business now makes the Island a rival of London in policies, buoyed by our "leading edge" environment for both start-ups and veteran companies.

Mr. Le Strange was the keynote speaker at the 2006 summit at the Fairmont Hamilton.

He said the lessons of hurricanes Katrina, Rita and Wilma have world wide implications for the industry, and noted: "The velocity of our insurance and reinsurance cycles is speeding up and the ability of capital to rush in and rush out of the industry is much stronger than it has ever been.

"Hard markets aren't as hard and soft markets aren't as soft as we have experienced and the driver of that is the investment community's willingness to accept that property and casualty companies should not grow year after year regardless of market cycles.

"The investment community are also accepting the premise that if management doesn't have a good use for capital in the short run period of time it better it they should return to you as investor than squander it."

Mr. Le Strange said Hurricane Katrina of last September which caused breaches in levees surrounding New Orleans, causing citywide flooding, supplanted the terror attack of September 11, 2001 as the industry's largest loss ever.

He added that Katrina's magnitude is under appreciated even today.

"I think Katrina told us about the vulnerability of some our cities, buildings and populations on the coast lines not just in the US but worldwide," Mr. Le Strange said.

"The industry is not just thinking about Katrina, we are thinking about the future we didn't experience and what that means to your capital base and to risk management."

Katrina, Rita and Wilma have changed the outlook of the industry, with Endurance gaining "an appreciation of what models can do well and what they don't do well".

Explaining that the models were dominated by the views of hurricane activity in the 80's, 90's ? particularly 1992s Hurricane Andrew ? the industry has found that "data quality is all over the map and in some cases totally erroneous and the rating agencies, particularly Standard & Poor's have been driving the reinsurance and insurance industries to higher standards of capital adequacy".

Mr. Le Strange continued: "In Bermuda we are experiencing the fifth major wave of capital formation that has come on the Island. I don't think this its a coincidence that this capital tends to flow to Bermuda. One can get in get into business here rather quickly.

"If you are an organisation with credentials with the right level of capital, and have the right people involved you can can establish fairly quickly here and Bermuda has an incredible infrastructure.

"Its a very modern leading edge place in many ways and what has happened with each successive wave is that a growing insurance community has been established here with Bermudians and expats."

Mr. Le Strange said Bermuda in the last five years has become a leading insurance and reinsurance centre worldwide and a rival to London's insurance market.

"The reverberations from 9/11 are still being felt by our industry. The lines of business affected included aviation, workers compensation, property insurance, business interruption, general liability personal accident, life insurance and other lines."

"I believe all but one of the companies formed at the end of 2001 are thriving, successful organisations. This class of 2001 represents a phenomena where in essence the capital markets have a playbook they had executed successfully in the 1990's."

He said almost immediately after 2001 the market established an equilibrium and competition was created but only temporarily and certain sectors of the market rapidly declined.

"One of the key drivers on the insurance cycle is the boom and bust of capital adequacy. Companies that become over capitalised pursue marginal and then less than marginal business and often pursue acquisitions or mergers unlikely to succeed."

"This is all driven by pressure on management to put that capital to work but that capital doesn't have to be put to work if there no opportunities and should be given back to shareholders and they can find opportunities."