New Bermuda-domiciled insurer Paraline Group Ltd. will bide its time before seeking to expand its business.

Paraline's chief executive officer Jack Graham said the company planned to increase its capabilities, particularly in the Lloyd's of London market, to prepare for harder market conditions.

Although the company, which has a staff of 135, will not initially have an underwriting platform in its country of incorporation, Mr. Graham does not rule out a future presence in the Bermuda market.

The company, whose launch was announced last week, in its first major step acquired US property/catastrophe insurance specialist ICAT, based in Boulder, Colorado, from private investor Vulcan.

Paraline is backed by private equity investors Wand Partners, Inc. and Elliott Management Corporation.

In an interview with The Royal Gazette, Mr. Graham made it clear that the firm does not plan on aggressively chasing new business in a soft market at a time when the industry is overcapitalised.

"It's not our intention to add fuel to the competitive fires right now," Mr. Graham said. "There is no need for us to bring new capital or competition to the marketplace.

"Rather our strategy is to build out our capabilities and have a presence as an underwriter at Lloyd's. As and when market conditions improve we can step into the marketplace as a more diversified insurer."

Elliott has more capital ready for Paraline to deploy when the market hardens.

Paraline was established by the executive team of ICAT, led by Mr. Graham, and its private-equity fund backers also bring experience to the table. In particular, Wand's Bruce Schnitzer, Paraline's chairman, is a former CEO of global insurance brokerage Marsh and McLennan, Inc.

ICAT was formed in 1998 as a managing general agency, underwriting for other insurance companies. After the devastating hurricane seasons of 2004 and 2005, ICAT started to take on its own risk, underwriting through ICAT Syndicate 4242 at Lloyd's.

Its business, about 90 percent of which goes through the Syndicate, focuses on small and middle market commercial properties in catastrophe-exposed areas of the US.

The formation of Paraline offers a means for ICAT to position itself for expansion. After ICAT's business partner Vulcan, a private-equity fund owned by Microsoft co-founder Paul Allen, began to change its investment profile, it was mutually agreed that ICAT would seek new capital partners.

Wand's experience in the insurance and reinsurance industry, and Elliott's conservative risk management philosophy, which aligned with that of Paraline, made them the natural choices, Mr. Graham said.

The choice of Bermuda as a domicile for the new company was also a natural fit, said the Paraline CEO, who first became familiar with the Island in the mid-1980s as a reinsurance broker with EW Blanch, which later merged with Benfield.

"Obviously there are financial advantages to being domiciled in Bermuda, but also we are quite familiar with the regulatory environment in Bermuda and that familiarity and knowledge is beneficial to us," Mr. Graham said.

"In addition to that, Bermuda is taking all the right steps to properly regulate the market so it's there for the long run," he added, referring to the Bermuda Monetary Authority's efforts to gain regulatory equivalence with the new Solvency II rules for insurers being introduced in the European Union from 2013.