Validus Reinsurance Ltd., a new $1 billion Bermuda reinsurer, said it saw gross policy sales of $220 million during the January 1 renewal season, the industry?s most pivotal business period.

The company, in a statement yesterday, said the business it sold was comprised of property, marine, energy, and more specialty types of reinsurance policies. And Validus, one of ten new insurance and reinsurance companies that joined the Bermuda market in late 2005 to take advantage of an expected rise in 2006 premium pricing, said the business it attracted ?exceeded? expectations.

Other companies in the ?Class of 2005?, including Ariel, Amlin, Flagstone and Harbor Point, have also said they saw strong business opportunities during the January 1 renewal period, especially on the US side, while there were concerns that European policies were still being priced too low.

Rates in the US generally rose in the region of ten to 15 percent, although policies for coastal properties were up to 50 percent higher. European rates, at most, were ten percent higher, the new reinsurers said.

And most predicted premium rates would continue to rise through the year, based on the bulk of catastrophe policies ? where rates are expected to increase the most ? not yet being renewed. Stiffer modelling techniques and higher capital requirements from ratings agencies are also not yet fully factored into current pricing, some insurers said.

Rates for 2006 policies rose after up to $80 billion in claims from US hurricane damage, primarily along the Gulf Coast, hit insurance balance sheets in 2005. The full extent of 2005?s storm losses is still not known, with losses from Hurricane Wilma due to be reported in fourth quarter results released this month, and the expectation that third-quarter losses could escalate as some insurers revise loss estimates from hurricanes Katrina and Rita.

The high cost of last year?s hurricanes, particularly Hurricane Katrina which proved to be the most expensive catastrophe ever, resulted in rating firms increasing the capital levels they expect of insurers and reinsurers. Rating agencies assess the financial strength of insurers. The higher a company?s rating, the more clout it will carry with buyers.

Validus, which is rated ?A-? by leading ratings agency A.M. Best, said it entered the January 1 renewal period with ?conservative assumptions? on how much reinsurance rates would harden.

Reinsurers contract to take on some of the risk of losses on policies that insurers sell to corporations and individuals. In turn, reinsurers buy their own protection from other reinsurers, referred to as retrocessional reinsurers. Price increases usually start from the top, set by the retrocessional reinsurers who are taking on the most expensive risks.

?We are encouraged by the broader market acceptance of the absolute total insured value approach to risk and capital utilisation that is the core premise of our exposure management strategy,? said chairman and chief executive Ed Noonan, who joined Validus from American Re, the US arm of reinsurance giant Munich Re.

Modellers, who assess risk exposures on a policy-by-policy basis, are taking a more conservative approach since Katrina, assuming claims from a catastrophe may reach the full value of protection offered under a policy, or the ?absolute total insured value?, in industry parlance.

Validus opened for business on December 12, sponsored by Aquiline Capital Partners LLC, a private equity firm run by former Marsh & McLellan chief Jeffrey W. Greenberg. Investments also came from private equity funds managed by Goldman Sachs Capital Partners, Vestar Capital Partners, New Mountain Capital and Merrill Lynch Global Private Equity.