The next "great battlefield'' in the insurance industry will relate to pensions and health insurance. And at stake will be who is to manage "these vast pools of capital''.

The claim was made yesterday by John Engestrom, president and chief executive officer of Tempest Re, in his keynote address to the 13th International Reinsurance Congress.

He also stated today's 400 reinsurance companies would be reduced to 100 by the year 2010.

In his address, Mr. Engestrom provided a "personal view of consolidation and convergence'', which he broke down into sections: the reinsurance market, the drivers of consolidation, convergence with the capital markets and a view of the future among them.

The most interesting part of the address, naturally, was Mr. Engestrom's look forward at the market over the next ten years. Will 90 percent of the reinsurance sector belong to the top ten companies by 2010, as the common wisdom has it? No, said Mr. Engestrom, it will not. "I see interaction, not integration with the banks,'' he forecast.

"But this is an opportunity we can squander,'' he warned, "if we are driven by the need to grow premium income rather than the bottom line''.

Mr. Engestrom then categorised the 400 companies which make up the world of reinsurance into five groups: big allrounders, specialists, regionals, paradigm shifters and `wannabes'.

Number of reinsurers to be reduced -- Tempest Re CEO "The big allrounders are the top dogs; the specialists are the cat companies, the alternative risk transfer agents, captives -- a growing force -- and the life and health industry largely centered in the US,'' Mr. Engestrom said.

The regionals are spread throughout the world, he said, and are frequently State-owned, while the `paradigm shifters' are those companies providing risk services, investment bankers and `transformers', not the children's toys, but the reinsurers who hedge insurance risk into a capital market risk.

The also-rans, a term Mr. Engestrom admitted was not too friendly, include those companies whose owners are not committed, or who have no special franchise. Of the 400 insurance majors today, perhaps 300 are also-rans, in Mr. Engestrom's terminology. "These include the walking wounded and the walking dead,'' he said, to general laughter from a very receptive audience.

"Our industry will not be taken over by the bankers,'' Mr. Engestrom proclaimed at the conclusion of his speech, setting to rest any fears his listeners may have had that their business would somehow end up on the ledgers of the world's largest banking institutions.