The tug of war between Validus Holdings and Allied World over Transatlantic Holdings is a positive sign for the insurance and reinsurance market, according to John Charman.In an interview with The Royal Gazette, Mr Charman said the property and casualty re/insurance industry needed more merger and acquisition (M&A) activity because there were “too many companies in the market doing nothing”.Mr Charman, who is chief executive officer of Axis Capital Holdings Ltd, also gave a warm welcome to proposed changes in immigration policy that open the way for ten-year work permits and the opportunity of permanent residency status for leading executives.Bermuda-based reinsurer Validus announced late on Monday that it had tabled a $3.5 billion bid for Transatlantic, topping the $3.2 billion merger deal proposed by Allied World last month.Validus hopes to derail the Allied World-Transatlantic deal, just as it successfully derailed Max Capital Group's efforts to merge with IPC Holdings two years ago.“The market needs M&A activity,” Mr Charman said. “Business opportunities are scarce for the small to mid-sized companies. Good businesses will continue to produce reasonable returns, but it will become much more difficult for weaker businesses without a real market presence to prosper.“The only logical outcome is for more M&A to take place in the best interests of shareholders and the market as a whole.“There are too many businesses in the insurance and reinsurance marketplace. Many of them just provide capacity and few of them provide intellectual capital and the innovation that the industry and its clientele need.”While more M&A was logical, attitudes of management of some of the smaller companies, in particular, had to change for it to actually happen. “It will just take some CEOs to be more mindful of their shareholders' interests than their own,” he added.Mr Charman, who founded Axis in the wake of the September 11 terrorist attacks in 2001, said Transatlantic was not a target for his company. In its selection of M&A targets, Axis is very mindful of the potential threat of legacy issues.“We're extremely protective of our balance sheet, which we think is one of the strongest in the industry,” Mr Charman said. “Any company that has any history of any sort, we would be very wary of.”Mr Charman, a very pro-Bermuda CEO, has been outspoken in the past about the need for the Island not to treat expatriate workers like “second-class citizens”. He welcomed the apparent change in direction of immigration policy exemplified by Government's proposals for permanent residency status for some ten-year work permit holders.“Paula Cox and the Government are now doing an extraordinarily good job in very difficult times in the Bermuda economy in trying to position Bermuda as one of the finest places in the world for high-quality international business activity and particularly insurance and reinsurance,” Mr Charman said.“The business community is greatly pleased and relieved that the Premier has taken such a positive position in recognising the extremely valuable contribution to the Bermuda community and economy of the insurance industry.”