Key indicators compiled by ratings agency, Standard & Poor's (S&P), show the real effects Bermuda had on the reinsurance industry during the early 1990s when billions of dollars flocked here to form nine companies that reinsured catastrophe risks.

A new S&P publication has reported how the formation of Bermuda's property catastrophe reinsurers created the environment for the increasingly soft market seen today.

The same publication ranked Bermuda-based finite risk reinsurer, Centre Re, number 20 on the "Tier 1'' list of the world's leading rated reinsurers, with a "AA'' rating for 1994. A second Bermuda-based company, Scandinavian Re, was ranked number 41 with an "A '' rating. The ranks were based on performance and capital strength indicators.

The somewhat dated ratings for 1994 were at a time when many of the newer Bermuda reinsurers were not yet rated, because they had just formed.

The rating agency's 1996 edition of Global Reinsurance Highlights also stated: "The Bermuda phenomenon also raised fears that specialised capacity providers would expand into other reinsurance segments, competing with established global companies and exerting depressing underwriting rates and terms.'' The report said that Bermudian companies, as well as those in the US, France and Germany benefited from the "turmoil'' at Lloyd's.

Reflecting on 1994, the study showed the increase in significant net premium volume from Bermuda reinsurers, many just completing their first full year of operations. Unrated by Standard & Poor's at the time the information was compiled, the Bermuda reinsurers added over a billion dollars of new premiums over the prior year, largely due to the scarcity of catastrophe reinsurance capacity.

The young Bermuda companies lacked sufficient operating histories to be rated.

But in terms of premium growth rates, the report said, "Bermuda dominated the field with 88.6 percent expansion albeit from a minimal base, followed by the UK (37.1 percent) and France (28.2 percent).'' As newcomers to the market, the Bermuda reinsurers (3.7 percent) in 1994 was just below the UK (3.8 percent) in terms of reinsurance premium volume. The leaders were Germany with 36.5 percent, the US with 25.6 percent of net premium, followed by Switzerland (11.2 percent) and France (7 percent).

Bermuda also figured prominently in a key insurance statistic for the global reinsurance industry. The industry improved its overall combined ratio, an important insurance measurement which indicates whether or not the company (or the industry) is making a profit on the business it is writing, excluding any gains from investing the money they take in.

The industry's combined ratio was around 114 percent in the first three years of the decade, dropped down to 108 percent in 1993 and 106.8 percent by 1994.

Apart from notable exceptions of Swiss Re and Munich Re, the report noted: "This stellar result was largely driven by the secure and unrated Bermuda companies...'' The Bermuda companies, with moderate levels of catastrophe losses, posted a country combined ratio of 69.2 percent, the best, by far, of any country.

The report also indicates that in Bermuda, the US and the UK, where underwriting results have been more historically volatile, the majority of invested assets of a reinsurer are held in bonds. Companies in these countries allocated a minimum of 65 percent of their portfolio in this asset class.

Reinsurers around the world heavily weight their bond portfolio toward highly liquid government and corporate issues.

Switzerland held the most balanced portfolio of invested assets, while Bermuda and the UK held the most liquid allocations, concentrated on high quality bonds and large cash and short-term investment positions.