He recalled rating agency pronouncements some years back which said that specialized physicians mutual insurance companies could not garner top ratings.

While Mr. Newman believes such insurers do an outstanding job, he said, "I wonder whether or not [such a company] can write coastal property...I'm not sure that [the rating agencies'] impact has been that smart."

Mr. Dowling suggested that rating agencies have shifted their thinking back and forth over the past decade. While they were supportive of monolines in the 1980s and early 1990s, they changed their models in the years that followed, putting in "diversification credits."

"9/11 blew that [thinking] out of the water," he said, "because all of a sudden non-correlated risks were deemed to be correlated. And the largest workers' compensation, largest property, largest aviation, and largest business-interruption losses in history [came together] in one event." As a result, rating agencies changed the models once again, favoring less diverse platforms.

Now, "we've had a new event," and the ratings agencies are shifting back again to a preference for multilines, he said, referring to the predominance of property catastrophe losses from Hurricane Katrina.

"I would respectfully suggest, for the folks in this room, [that] you ought to be thinking about what [the rating agencies] are going to do to you once they're done with short-tail companies," he warned professional liability underwriters.

Mr. Dowling advised, "The end result will be that you'll need more capital than you do now to write the same lines."

He said rating firms ultimately decide "how much capital you need, what your rating is, and whether you can play," noting that they are more powerful than insurance regulators in these areas. "Everyone knows if you go below 'A' in certain long-tailed lines, or 'A-minus' in short-tailed lines, you're out of the game."

He continued: "Right now, the rating agencies will decide how much new capital is coming into this business," referring to the fact that rating agencies are assessing capital adequacy and business plans of companies attempting to start up new operations in Bermuda. "Those discussions are going on as we speak," he said.

"And if they give those companies [with] two men, a dog and $1 billion "A-minus" [ratings] to go start up in Bermuda and operate--that has important implications for the overall market."

Panel Moderator Robert Deutsch, a consultant for CNA, said he believes that rating agencies have become more aggressive in their actions. Rating services, said Mr. Deutsch, not only were quick to downgrade carriers after Katrina, but the language of their press releases announcing downgrades has become more aggressive.

"They're using words and language they haven't used in the past," he said. Paraphrasing the language in a typical announcement, he said the messages coming across sound like, "Now these bozos in management have finally adapted the right underwriting standards."

Mr. Deutsch noted that the rating agencies have good reason for harsh words. "I do think, frankly, that some of them have been burned by companies," he said.