company formations that could see new capital of well over $1 billion come to the Island.

Plans are currently underway to incorporate at least five new companies to provide excess liability, property catastrophe, and directors and directors coverage, according to sources in the industry.

Some of the enterprises could be up and running by as early as next month. If they all come off, this additional capacity will further enhance Bermuda's rapidly growing reputation in the insurance world.

It will also also have an adverse effect on the constricting Lloyd's of London market, which has suffered heavy losses over the last few years.

Some of the new ventures are expected to issue initial public offerings soon in an attempt to raise enough capital to get them off the ground.

Details of the new companies are not being released yet by those involved because to do so would breach the US Securities and Exchange Commission's strict rules regarding stock offerings.

But The Royal Gazette has been told that the following projects are in the pipeline: General Reinsurance, of the US, is forming a property catastrophe reinsurer, which has been tentatively called Tempest Re, with an estimated capitalisation target of $500 million; Goldman Sachs and Johnson & Higgins are reported to be setting up a property catastrophe reinsurer to be called Global Capital Re; Centre Re is starting a property catastrophe reinsurer called Centre Cat with a reported capitalisation of $400 million; and As reported last month American International is forming an excess liability company, and USF&G is setting up a new property catastrophe reinsurer, to be capitalised at between $100 and $200 million called Renaissance Re.

Other new companies may also be in the offing, if the capital can be raised, in an attempt to fill yawning gaps in the insurance and reinsurance market, according to sources.

News of the new company formations comes only days after Bermuda-based property catastrophe reinsurer Mid Ocean Reinsurance Company, which was set up last November with over $350 million in capital, unveiled plans to go public with an initial offering that could raise another $250 million.

Companies will want to become incorporated before this year's hurricane season starts in earnest, said an officer with one of America's biggest insurance firms, who did not want to be named.

He said: "These kinds of coverage are generally negotiated in the third and fourth quarters of the year so it would be advantageous to have a company up and running by July 1.

"Bermuda is being chosen because it has a rather sophisticated and well developed infrastructure for this type of thing, plus, of course, it is only a couple of hours travelling time from the United States.'' The spate of natural disasters, such as Hurricane Andrew, over the last few years, far from having a harmful effect, has actually benefited the reinsurance industry, he said.

"The losses suffered by primary insurers and a depletion of their surplus has led to an increased demand for reinsurance,'' he added.

"The primary insurers are becoming more dependent on reinsurance and that's an opportunity for Bermuda.'' J&H is refusing to comment on its plans and a spokesman for Goldman Sachs said: "It's premature to comment on any plans we may have.'' The method of raising capital through initial public offerings (IPOs) is becoming increasingly popular in the US.

IPOs have been the hottest thing on Wall Street over the last two years as corporate America has turned to investors to help repair its balance sheets, which were savaged by the recession and heavy debts.

With plenty of investors seeking to break out of low-yielding investments, IPOs have generally been well received.

Last week, property casualty insurer Allstate Insurance Corporation launched the largest IPO ever, worth $2.43 billion. See story below And Bermuda companies ACE Ltd., Mutual Risk Management, Centre Re's associate company Zurich Reinsurance Centre Holdings and EXEL Ltd. have all enjoyed successful public offerings.

Even though there is a high risk involved in IPOs, the return is better than what's currently available in the blue-chip market, said Mr. Robert Mescal, a research analyst for the Econometric Research, in Fort Lauderdale, Florida.

He said he detected no signs of an over-heated IPO market.

"As the stock market has become well over-valued, it's become more difficult for mutual fund and pension fund managers to get great returns on their investments and they've been forced to look to other places, like IPOs,'' he said.

"The second quarter is going along at a brisk pace,'' he said, predicting that the total for the full year should reach $42 billion to $43 billion, compared with $39 billion in 1992.

Individual investors stuck on fixed income returns have been favoring IPOs.

"The price of the IPOs has been very attractive for investors looking to beat the inflation rate, and fixed income individuals who are getting returns of about 2.5 percent from CDs and money market rates,'' said Mr. Chris Reich, an analyst for MCM-CorporateWatch.

He said that the bull market in stocks has encouraged companies to go public and the investing public, in turn, has been drawn to the IPO market by the increasing number of offerings.

"People are getting a positive message from all these filings,'' said Mr.

Reich.

Last month, 44 US companies filed IPOs and the level will exceed 50 in both June and July.

Mr. Larry Wachtel, of Prudential Securities, sees no end to the popularity of IPOs. "People have been trying to make a case that demand would soon run out for the stocks but they've been proven wrong,'' he said.

"There's no scarcity of money with $54 billion in mutual fund money out there,'' said Mr. Wachtel, adding "that as long as the cash flows in, the better the demand will be for new issues of stocks''.