the performance of locally-based insurers and reinsurers.

Once it is set up the BSX plans to create options based on the index. The options will allow investors to buy into the overall performance of the Bermuda insurance market.

BSX chief executive officer William Woods said the exchange was in preliminary discussions about listing the index options on the fledgling Bermuda Commodities Exchange.

If those discussions did not result in any success the BSX would itself list the insurance options.

The BSX has contracted FTSE International -- owned by the London Stock Exchange and the Financial Times -- to design and audit the index. The index would be based on about ten insurance and reinsurance companies which are located on the Island, and which are publicly listed.

An independent committee would be set up to monitor the running of the index.

While the companies would not have to be listed on the BSX, Mr. Woods said he hoped the index would encourage them to set up a secondary listing locally.

Currently only ACE Ltd., EXEL Ltd., and Mutual Risk Management Ltd. have a secondary listing on the BSX.

"It's really a timely opportunity to get people to focus on the Bermuda insurance market,'' Mr. Woods said. "The Bermuda market is expanding so quickly through acquisitions that it's estimated it currently controls 20 percent of the underwriting capacity at Lloyd's.'' Mark Makepeace, managing director of FTSE International said the index would help raise the profile of the Bermuda insurance market around the world. FTSE International manages and develops equity and bond indices, including all those of the London Stock Exchange and the Financial Times. The indices are used by investment managers for analysis, performance measurement, benchmarking, asset allocation and as the basis for index tracking funds.