yesterday from investment guru Mr. Norman Rosenthal, the managing director and senior securities analyst at leading US investment firm Morgan Stanley.

And he prophesied that Bermuda's unique regulatory environment "should permit the Bermuda market to remain the most efficient and innovative in the world''.

Delivering a speech at the Bermuda Insurance Institute's monthly luncheon, Mr.

Rosenthal described the local market as one of his favourites, before warning that the Island must guard against complacency.

The speech comes as a boost for the Bermuda market, whose quick growth has resulted in increased criticism from competing jurisdictions.

"Who would have thought,'' he asked, "that in a mere ten years, Bermuda would become the leading market for excess casualty insurance for Fortune 1000 companies, the leading worldwide market for property catastrophe reinsurance, the leading worldwide market for finite reinsurance coverages, as well as the leading domicile for captive and rent-a-captive insurance companies.

"And I am absolutely convinced that in the next ten years, Bermuda will become an important worldwide market for marine, aviation, satellite and excess property insurance as well as casualty reinsurance.'' The American saw Bermuda with a "fabulous future'' for speciality underwriting entities. He used oil spill mutual, Shoreline Mutual, and its sole independent competitor, First Line, as prime examples of speciality underwriting entities.

Another example was the recent joint venture set up between his Morgan Stanley and Bermuda-based Mutual Risk Management Ltd.

Morgan Stanley is the parent of the new captive, Morgan Stanley International Insurance Ltd., managed by Mutual Risk.

He foresees Bermuda underwriters playing a key role in this direction, that he said required the most innovative approach to risk management and risk transfer that current technology and brain power is capable of devising.

He said Bermuda capital was taking a leading role in the securitisation of insurance products.

Mr. Rosenthal credits Bermuda's success in part to the Island's regulatory framework that uses some of the finest worldwide capital and talent, together with a Government that listens to the industry.

On the regulators, he noted, "I have always been struck by the fact that Bermuda's Registrar of Companies travels around the world, acting as the Bermuda market's leading public relations agent, while in the US many state insurance commissioners travel around the country as the industry's leading detractors''.

Bermuda set to gain in insurance markets "Furthermore, the Bermuda Government doesn't appear to have the same fear of innovation that seems to permeate the psychology of most regulatory officials in other jurisdictions.'' He said that the atmosphere of open dialogue and mutual respect that characterises Bermuda's regulatory environment will provide the opportunity to spur growth, and deal with problems without building unnecessary bureaucracy.

"I believe that underwriters in Bermuda will increasingly be viewed as the industry innovators, a reputation that they have already garnered in the property catastrophe reinsurance sector, through their widespread use of the latest in technology and scientific modelling.'' That approach, he said, will be applied to other coverages with corresponding success in the world marketplace.

Bermuda insurance company initial public share offerings had done well, he added, and he forecast that over the next five years, the Island's insurance and reinsurance market would be the greatest single depository for new capital contributed to this sector.

"No insurance and reinsurance market in the world will benefit as much from advances in information technology, as does the Bermuda market,'' he said.

He argued that it will become harder for Bermuda's critics or detractors, as more capital is attracted here from blue chip insurance and investment bases.

Mr. Rosenthal believes that Bermuda's success will feed on itself, promoting further economic and political stability.

His warning against complacency included an observation that the higher one goes up the ladder, the greater the cost of a stumble. He said that Bermuda has to guard its reputation, because competitors will try to bring the Island down.

He had praise for the new insurance regulations, which he said came out right on cue, as there were questions being raised in the US as to the regulatory integrity of Bermuda.

International Insurance Conference underway in Bermuda -- Page 13 .