Bermuda-based Ariel Reinsurance Company Ltd. has opened a branch office in Switzerland to make its first venture into credit and surety reinsurance.

Ariel Holdings Ltd. chairman and chief executive officer Don Kramer said yesterday he saw a real market opportunity in a business that is starting to recover after tough times during the global economic crisis.

The new office, located in the main insurance district of Zurich, will be led by three experienced executives, who have all joined Ariel from Swiss Re, along with a team of specialists and technicians.

"Trade credit reinsurance has gone through a difficult period during the economic crisis, but it's started to come back and the prices have been adjusted to reflect the bad experience," Mr. Kramer told The Royal Gazette yesterday.

"One thing that we have found is that sometimes it's good to sell barn doors after the horse has been stolen.

"Swiss Re has scaled back its involvement in these lines and we were able to take over a team that has great technical expertise in the trade credit and surety side."

Ariel had not ventured into the business lightly, Mr. Kramer added.

"We put it through the wringer," the CEO said. "Not just modelling, but also a lot of analysis into the risk and return opportunities.

"We concluded that this is a very attractive time to get in if we watch ourselves and also focus on the surety reinsurance side."

Thomas Rothenberger, senior executive and branch manager, will lead Ariel's Zurich team and will report directly to Tom Hulst, president of Ariel Re.

Joining Mr. Rothenberger are Michael Hammer, head of underwriting, and Alban Fauchere, who is responsible for directing risk and analytics.

Had they not been able to recruit such an experienced team, Ariel would not have gone into credit and surety reinsurance, Mr. Kramer said.

The company intends for the unit to be ready to write business in time for 2010 surety renewals from next spring. Ariel is a privately held company, formed by industry veteran Mr. Kramer in 2005. According to regulatory filings, Ariel Re made a net loss of almost $30 million in 2008, a figure which included unrealised investment losses of some $80 million.

The company's fortunes have bounced back in the first half of this year, however, Mr. Kramer said.

"In the first-half results, everybody did well," the CEO said. "We've done it on two fronts — good underwriting results and some substantial investment returns."

With the recovery in the markets, the companies that suffered the biggest hits last year had rebounded the most strongly this year, he added, such as XL Capital Ltd., whose share price has soared from below $3 to around $17 yesterday.

Ariel had seen strong growth in catastrophe reinsurance rates, he added, but the primary insurance market and casualty lines remained soft.