chairman of Centre Reinsurance (Bermuda) Ltd., Steven Gluckstern has said.

Doubling as chairman of Centre Reinsurance Holdings Ltd., Mr. Gluckstern also noted in a telephone interview from his New York office that real breakthroughs in the attempts to securitise risk will probably come, not from reinsurers, but from securities firms.

He said: "Securities firms are a lot more familiar with that world. The Goldman Sachs', the J.P. Morgans and the Morgan Stanleys of the world -- or as they now call it, Morgan Stanley/Dean Witter/DiscoverCards of the world -- are more likely in some ways to drive their clients.

"Reinsurers, in general, unless they are really confident they can design these things, are probably happier selling some form of reinsurance, because that's what they do every day.'' Centre Re has won world-wide recognition for its ingenuity in the non-traditional packaging of risks. Mr. Gluckstern, Centre Re's founder, is the man who coined the term "finite risk reinsurance''.

Here this week for the third Bermuda Insurance Symposium, he was unperturbed by a suggestion from a senior executive at a major ratings agency that the concept of securitising risk may eventually be a non-flyer.

John Kriz, managing director, financial institutions at Moody's Investor Services, said that if it was easy to securitise risk, it would have happened by now.

He said: "Securitisation seems to be the dog that won't hunt. I have to believe, with some faith in efficient markets and capitalism, that if it was easy to do, it would have happened by now.

"It hasn't happened, so I must believe there is some very good reason why, with all of the time and talent that has been spent on it. So, from a near term prospect, it doesn't look like that is going to provide capacity to cedants.'' Asked about this viewpoint, Mr. Gluckstern said: "I don't know in the end how big the securitisation of risk will become. But 20 years ago people said mortgages will only ever be sold by the local savings and loans. You were asked how could you ever think about trading mortgages? "But today, it is the largest capital market in the world. Now, did it happen overnight? No.'' Mr. Gluckstern said companies like Centre Re will continue to use resources in looking for alternative ways to help customers manage risk. The reinsurer will continue to seek the necessary breakthroughs that may improve the future for securitisation.

But he noted that a key difficulty is that the reinsurance industry has not yet provided some of the tools needed to create liquidity in the market.

He said: "I'm not ready to say yet that the securitisation of risk can't be done and won't happen. One problem we have is that investors, people who buy securities, need essentially to have indices or something against which they can compare, to determine if the pricing makes sense.

"If you have catastrophe bonds offered at four percent return if there is a catastrophe, and eight percent if there isn't a catastrophe, how do you know that four and eight are the right numbers? "The truth is that we haven't yet as an industry come up with any kind of standard indicators that you can look up on your Bloomberg screen or Telerate screen and say, `Aha! today it's 4.2 and 8.1. That's the market.' '' If there is a future for securitisation, Mr. Gluckstern believes the Bermuda market could play a significant role because of the identities of the potential buyers of these products. People are short of capacity because of property catastrophe exposure.

He commented: "Bermuda is a natural place to drive the innovation from, because that is where a lot of expertise in the management of cat risk exists.

On the other hand, the financial expertise is on Wall Street. So you will see a push in both areas, and also in London as well, although London tends to be more traditional and may lag in that kind of development.

"But Bermuda can play an important role in helping to develop this because they are handling a lot of the natural risks.'' Centre Re has a significant interest in property catastrophe risks through its newly-incorporated Bermuda company, EpiCentre Re, set up to focus on providing alternative solutions to catastrophe risks.

Mr. Gluckstern remarked: "We concluded that we wanted to develop a level of expertise that we didn't have in our own shop on the management of risks associated with natural catastrophes. To that end we decided to allocate capital, resources and talent.

"It doesn't preclude us from participating in things like the California Earthquake Authority, if that was something we thought to do. But over time, we are not looking to be a market player, to provide capacity in transactions designed by others. If we could make money doing that, it's a good sideline, but it is not our driving purpose.'' Mr. Gluckstern also commented on a contentious decision by leading Bermuda insurers ACE Ltd. and Exel Ltd. to pursue ownership of vacant land on the outskirts of the City of Hamilton.

The high profile companies sought special Parliamentary approval to temporarily suspend a prohibition on the sale of land to foreign commercial interests.

For all of the local flavour of the companies and their significant impact in the community, Bermudians still perceive them (and Centre Re) as foreign entities, having been formed as "exempted companies'' by outside capital.

Their "exempted'' status affords them a "holiday'' from some forms of local taxation into the next millennium.

But Mr. Gluckstern believes Bermudians should not fear the natural desire of these international companies to want to own land in Bermuda to add permanence to their base of operations.

In what was perhaps a more acceptable method to Bermudians, the Centre Re group had already agreed to join forces with a local company for a substantial development on the waterfront at Pitt's Bay Road near Hamilton, even though complete control and ownership is not a feature for Centre Re.

The ACE/Exel proposal to purchase the five-acre site of the old Bermudiana Hotel has raised concerns about how much land within 21 square miles should be controlled by foreign interests.

Mr. Gluckstern concedes it is up to Bermudians to determine the interests of the Island.

"I think the larger question for Bermuda is whether or not it is prepared to accept that major blocks of real estate might end up being owned and controlled by non-Bermudians,'' he said.

Mr. Gluckstern lived in Bermuda for five years during the establishment of Centre Re, before moving to New York in the early 1990s to set up Zurich Reinsurance Centre Holdings.

But he said: "I've not really lived in Bermuda for some time and therefore don't know the political situation. But I don't necessarily think it is something that should be feared by people, especially when you think these companies are major contributors to employment and corporate welfare in Bermuda.

Gluckstern discusses Bermuda "Centre Re, ACE and Exel are substantial companies that have brought tremendous recognition, flow of funds and people to the Island.

"If ACE and Exel get the permission to go ahead with their plans, would I look back and wish I had cut a different deal on Pitts Bay Road? I don't know.

"But if they do get permission and that is what the people of Bermuda want, I think it would be good for Bermuda. And if Bermuda says "No'' to them, I think we will all survive, as well.

"I like the idea of free enterprise and generally being able to come in and get things done. That is good for economies. But I don't feel strongly one way or the other.'' Mr. Gluckstern will be a panelist in the seminar, The Bermuda Connection - Financing and Transfer of Risk, which is scheduled for 9 a.m.-10.30 a.m. on Wednesday, February 19.

He also is moderator of the seminar, Assessing the Strength of Your Insurers scheduled for 2.15 p.m.-3.45 p.m. on Wednesday, February 19.

CENTRE RE founder Steven Gluckstern CONFERENCE CON BUSINESS BUC