The high cost of capital is making it difficult for mergers and acquisitions (M&A) to go ahead in today's tough financial market.

That is the view of Don Kramer, chairman and chief executive officer of Ariel Re, a panellist at the Bermuda Insurance 2008 conference held at the Fairmont Hamilton Princess hotel yesterday, who was speaking about the future of M&A activity in the insurance industry. Mr. Kramer, who was joined on the panel by moderator Laline Carvalho, a director of Standard & Poor's, Ed Noonan, chairman and CEO of Validus Reinsurance Ltd., and John Marra, a partner at PricewaterhouseCoopers LLC., said a number of companies should be ripe for takeover if they are selling at less than book value - but that was not happening due to the high capital costs incurred.

He also talked about hedge funds, monoline versus diversified insurers and reinurers and the impact of the US tax regime on Bermuda.