Montpelier Re Holdings

“God shines on the righteous.”

That's the way Mr. Taylor assessed Montpelier's good fortune to have cancelled a book of Scandinavian property business before a hurricane hit just eight days into 2005.

The market had been underpricing the business and, as he explained, where pricing conditions aren't adequate to achieve returns, his company will shrink its writings. In fact, Montepelier, the only Bermudian to report an overall premium decline in 2004, will shrink another 10 percent in 2005, he said.

“We can easily slim down our premium volume and adjust our capital,” Mr. Taylor said, noting that Montpelier operates from one location with a staff of only 65 people. “So to anyone out there who is still bent on growth and global domination in today's declining market, I say good luck to you. If you continue down that road, you will only hasten the market turnaround.”

AXIS Capital Holdings

“In some instances, the market seems to be both uncontrolled and suicidal; and in others, economically rational.”

Although market conditions were also on the mind of John Charman, CEO of AXIS, this new Bermudian posted the second-lowest combined ratio of the class (84.4), and the second-highest growth rate in 2004 (27 percent).

Prompted to clarify his remark about a “suicidal” market, Mr. Charman reported that there are “bandits out there” severely underpricing property and onshore energy lines.

Commenting on a different market challenge investigations into contingent commissions he said: “To achieve elimination of potential conflicts and appropriate compensation for brokers, we believe that brokerage firms, over time, should solely receive commissions from their clients.”

Endurance Specialty Holdings

“While $10 million may not feel like a big number, it's something we take seriouslyWe recognize underperformance right away.”

David Cash, president of Endurance Specialty Insurance, explained a fourth-quarter reserve boost that hardly dampened earnings. Endurance's 2004 net income soared 35 percent to $355.6 million, helped by a 72 percent jump in investment income.

While Endurance, like many peers, reported prior-year reserve takedowns on short-tailed business, Endurance was the only one to highlight a casualty reserve boost, albeit a minor one that was outweighed by positive developments.

A $10 million prior-year reserve charge for generic casualty business, together with precautionary reserves which Endurance executives declined to quantify, pushed the casualty-treaty combined ratio to 103 for the year. All other segments reported combined ratios below 100, with the overall result coming in at 85.8.

The precautionary reserves were set for claims that could emerge from New York Attorney General Eliot Spitzer's investigation of brokers and companies, as well as SEC charges against mutual funds for inappropriate trading activities, executives said. Endurance is exposed to these events “under a handful” of directors and officers and financial institutions' general liability policies.

Addressing softer market conditions, CEO Kenneth LeStrange said strategies are in place to achieve a 16 percent return-on-equity in 2005 in spite of them. He highlighted the 2004 launch of four new specialty reinsurance units marine and energy, personal accident, agricultural, surety as potential contributors to future success.

? Arch Capital Group

“We like what we have, but we don?t want to have a significant part of [our] business subject to contractual agreements where they [MGUs] can walk out at any time subject to no notice.”

While Arch Capital's total premiums grew to nearly $3 billion last year, CEO Constantine Iordanou explained a business decision that lowered them in one area specialty programs.

Mr. Iordanau said program premiums fell 17 percent in 2004, noting that Arch decided to scale back managing general underwriter relationships.

Speaking more generally, he said that board oversight of underwriting decisions and companywide attention to analytical models will keep Arch profitable in spite of market price declines, as he reported a 20 percent jump in operating earnings.

“Arch's board [of directors] maintains an underwriting oversight committee” that looks at price adequacy, business mix and strategies. “We believe this is unique in the industry,” he said.

? Platinum Underwriters Holdings

“I think there is dampened enthusiasm in the short term for finite business.”

In the wake of investigations into finite deals by the SEC and the New York attorney general, Michael Price, chief underwriting officer for Platinum Underwriters, gave his assessment of what's happening to the finite market one of the markets in which his company participates.

More generally, he said that while Platinum successfully maintained an overall reinsurance portfolio roughly the same size as last year's, “there is little doubt that the Jan. 1, 2005 renewal season was more challenging than Jan. 1, 2004.”

Platinum, which reported the largest premium growth of the Bermuda companies?40 percent in 2004, also reported a $60 million income drop, primarily reflecting the impact of $176 million in hurricane losses offset by premium growth and investment earnings.

In 2005, “there seems to be a genuine difference of opinion between primary companies and reinsurers over the profitability of casualty business and the likely direction of future rate changes,” Mr. Price said.

He said Platinum chose to non-renew some large casualty accounts reducing exposure to large public company D&O liability. As for finite deals, however, he doesn't anticipate any material shift away from them at Platinum in 2005.

Although market enthusiasm is dampened, finite deals won't go away. There are still risks “where it's not possible to find a willing writer on a traditional basis,” he said.

Reproduced from National Underwriter Edition, March 4, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.