expanding customer base, but now has won a virtual endorsement from Insurance Day (ID), the UK-based industry publication.

Yesterday, the Lloyd's List-owned newspaper acknowledged that the local industry, still a relative newcomer to the neighbourhood of international insurance, seemed to be "developing as a major influence in the international insurance and reinsurance arena.'' And while there may still be sceptics who question Bermuda's long term viability, ID opined, those who are more analytical realise that "the ability of Bermuda market players to continuously reinvent themselves and their positioning is in itself an extremely valuable -- and all too rare -- survival technique.'' There continues to be new ventures on the Island, some which seem set to tap into the fast-emerging alternative risk transfer sector.

ID observed that after ten fresh vehicles came to market through Bermuda last year, the new year was barely a week old when RenaissanceRe and State Farm announced the creation of Top Layer Re -- a new Bermuda reinsurer to cover large property catastrophe risks with limits of up to $500 million.

These observations come shortly after rating agency A.M. Best Co. predicted that Bermuda companies will be among those who will engage in large "bolt-on'' acquisitions over the next two years -- broadening their penetration into US markets and taking advantage of modest valuations and market instability.

ID stated that Bermuda has always held an interesting position in international insurance and reinsurance, "perhaps due (to) its rather British ability to develop an influence out of all proportion to its physical size.'' Historically a captive insurance centre, funding was attracted to Bermuda in the 1980s for the establishment of finite reinsurers. And as the word began to spread rapidly about companies like Centre Re (now Centre Solutions), a boat load of new capital -- mostly US -- arrived for the establishment of catastrophe reinsurers in the early 1990s.

It was then that the Island came of age as an international reinsurance centre, as insurance rates rose to new heights because catastrophes such as Hurricane Andrew reduced the supply of capital willing to assume catastrophe risks.

"At the time,'' said Insurance Day, "many were sceptical about the Island's long term viability as an international reinsurance centre.

"Pundits, and especially those in competitor centres, were quick to point out the ambitious business plans of the new entrants, adding such expected returns on equity could only be sustained for a few years while rates were high.

"What would happen, they speculated, when the backers pulled out? Where would that leave Bermuda in an international market where longevity and security had traditionally been key selling points? "But the market turned, and most Bermudian players quickly re-emerged as multi-line carriers. Many also spread their tentacles, through acquisition, into Europe and in particular into the Lloyd's market -- a meeting of the minds, perhaps?'' Last summer, the Bermuda Stock Exchange (BSX) produced figures showing that over the four years to June 30, an index of ten leading Bermuda companies was superior to indices used to measure other market companies.

The BSX was then launching the Bermuda Insurance Index Fund, set up by the BSX and London's FTSE International to follow the Bermuda Insurance Index.

The index is based on the stock market performance of ten Bermuda-based insurers and reinsurers, weighted according to their market capitalisation.

The fund invests in the company stocks, according to their weighting on the index.

BSX figures showed that if the index had been operating over the four year period, it would have outperformed the Nasdaq insurance index by 75 percent, the S&P 500 Insurance Index by 24 percent, the S&P 500 by 39 percent, and the FTSE All Share Insurance Index by 108 percent.