widespread interest within the insurance and investor communities, a Moody's Investors Service analysis of the Bermuda insurance market has said.

"It is even less clear,'' it continued, "whether the Bermudian property catastrophe insurance community will benefit from participating in the underwriting process alongside investors, or perhaps suffer disintermediation.

Currently, the Bermuda Stock Exchange (BSX) is working to add to its arsenal of risk transfer and risk financing instruments the world's first electronic risk exchange, the listing of special purpose vehicles such as Act of God bonds, and the design of a new equity index of Bermuda-based insurance and reinsurance companies on which a derivative fund can be based.

"Significantly, as Bermudian insurers expand into these new classes of business, they will most certainly encounter stiff competition from strongly capitalised players in several international markets.

"However, in contrast with the past, when competition was primarily within-market (i.e. between established insurers and reinsurers), the Bermudians are increasingly likely to confront leading global commercial and investment banks, established financial guarantors and other specialty financial firms.''