Ariel Holdings Ltd. chairman Don Kramer described US insurance rival William Berkley as "extraordinarily self-centred" at a conference in Hamilton on Wednesday.

Mr. Kramer suggested that while Mr. Berkley was an outspoken supporter of the Neal bill, which would raise US taxes levied on non-US reinsurers, his company shied away from the volatile property-catastrophe risks in which Bermuda reinsurers specialise.

Mr. Berkley is the chairman and chief executive officer of US insurance giant WR Berkley Corp. and head of the Coalition for a Domestic Insurance Industry, which has long lobbied for changes in the US tax code to penalise non-US insurance companies doing business in the US.

"He is extraordinarily self-centred," Mr. Kramer said in front of an audience packed with insurance industry professionals at the Standard & Poor's/PWC Bermuda (Re)insurance conference at the Fairmont Hamilton Princess hotel.

"He's a supporter of the Neal bill and he has testified to Congress that he would not write the high-volatility business. He would not write the business, but he's trying to close down the people who do write it."

Mr. Berkley referred to Mr. Kramer in his testimony before a Senate Finance Committee hearing in 2007 and again in a testimony to a Congressional subcommittee hearing on reinsurance in July this year.

Mr. Berkley claimed that Mr. Kramer had said there was no significant tax advantage for Bermuda reinsurers, because of the one percent federal excise tax they had to pay on US business and the fact they gained no tax advantage from a loss year.

But Mr. Berkley then quoted Mr. Kramer's comment from a 1994 Forbes magazine article in which the Bermuda insurance industry veteran said he would not set up a reinsurance company in the US because it was not economically efficient to do so.

Yesterday, Mr. Kramer said that effectively, "the US reinsurance industry does not exist any more", adding that the US was almost entirely dependent on overseas reinsurers to carry its risks. He noted that approximately $35 billion of the $55 billion of US reinsurance premiums going overseas went to Bermuda, with Switzerland the second biggest provider of coverage with $9 billion.

Mr. Kramer's fellow panellist, Axis Capital chairman Michael Butt, commented on the possibility of new industry capital coming to the Island as it has done before in the wake of dislocations sparked by major events.

"In the short term, the market is overcapitalised by $50 billion to $100 billion in the global wholesale markets in which we operate," Mr. Butt said.

"In the longer term, if you look out 10 to 15 years and look at the risks and the impact of increasing concentrations of value around the world, particularly in the megacities, then I would suggest that the industry, in the long term, is undercapitalised."

Mr. Kramer said: "Because we are overcapitalised, the issue now is not ease of entry, but ease of exit.

"The next wave of capital will not come from company formation, but from insurance-linked securities."

Instruments like industry loss warranties, catastrophe bonds and sidecars allow investors to invest their money for a pre-scheduled short time and then take it out again much more easily they could an investment in a new insurance company.

The appeal for investors that they are not correlated with interest rates or stock markets and so allow diversification, as well as the opportunity of increased returns.

Mr. Butt, asked to give an opinion on how the industry would look in five years, expressed optimism for the future of the Bermuda market.

"I believe Bermuda has a strong business model and will survive well," Mr. Butt said. "New capital will come here when the industry is ready to be recapitalised. Bermuda will remain a major centre for this industry's capital.

"Bermuda companies will continue to diverge geographically [EmDash] and there's nothing surprising about that. I'm not among those concerned about its longer term future."

He predicted that the re/insurance industry would re-establish credibility with investors [EmDash] most companies are currently trading well below book value [EmDash] and that the Bermuda market would have a significant part to play in that.

"I think that Bermuda companies are really well run relative to companies in other parts of the world," Mr. Butt said.

Mr. Kramer predicted a convergence of the reinsurance industry and the capital markets and said he had seen hedge funds eyeing the industry with increasing interest.