In fact, she said jokingly, "a lot of people in the financial services sector are in the soup kitchen line, and we're walking around with quite a big beef tenderloin."

While Lloyd's might certainly be expected to toot its own horn, others not employed by the world's oldest insurance entity echoed the sentiment that the London market--and Lloyd's in particular--is well positioned to draw new business because of its deep pockets and financial stability.

London and Lloyd's have "done well out of the Jan. 1 renewal cycle. Certainly the clients and buyers of reinsurance and insurance products are looking at Lloyd's as a good place to buy their lines of coverage," according to Ross Howard, chief operating officer of Towers Perrin's Europe reinsurance business in London.

This is a result of the security of the London market, "particularly the fact that so much of the asset base of the Lloyd's syndicates are in cash, as opposed to other investment areas," he said.

Mr. Howard also pointed out that even when times are uncertain, the well-established London market has always been a "serious player on the energy and marine side," which has seen losses from Hurricane Ike and other storms--thus making it a "problem area" for the buyers in those lines.

"It appears the problems will get more serious in 2009," he added. "Anything that's got hurricane exposure in the [U.S.] Gulf [Coast] is difficult to place at the moment, and capacity in that area is a real problem."

In Bermuda, he said, results coming out on some of the companies also are a concern for buyers, "so we look at that closely--particularly on the energy side."

Taking into account the economic recession and credit crisis, Ms. Lowery of Lloyd's observed that London's scenario is similar to the U.S. situation, "with a few months lag in terms of the full impact." Overall, however, the London insurance market is in "fantastic shape," she said.

At Lloyd's, the mood for 2009, she observed, is that "this is a work year." Lloyd's is planning on being proactive, supporting client needs, "listening to what the marketplace wants and being very underwriting-conscious," she explained. "It's not about trends or profitability. It's about prudent underwriting."

After Jan. 1 renewals, she reported, many buyers expressed surprise that their insurance costs "actually went down, as opposed to the market hardening, which many were anticipating."

"I think there are a number of carriers out there really still looking at retaining business, and I think the trend is going to have to shift, particularly as the year progresses," she said, warning that as losses and other issues arise in the marketplace, the pricing direction will have to change.

Instead of competing on price to retain business, she cautioned that insurers must look at each risk "as it stands and underwrite accordingly--as opposed to trying to beat the prices of another company. Every risk will have to stand on its own."

Mr. Howard observed that poor investment returns compounded with a poor underwriting year gives "no doubt that we are now faced with the beginning of a capital shortage within the insurance business."

However, while this is a challenge for all markets, it's where Lloyd's financial strength comes in, Mr. Howard noted.

"Perhaps Lloyd's has come out a little bit better than most because of its investment portfolio, and how it has been very much cash-based," he said, making London a "very viable option for buyers to look at as a marketplace. It has not got the problems some other areas are sharing."

Mr. Howard said he has noticed that more buyers are "involving London more than other markets at the moment," with most at least looking at London as an option for placing business "because it doesn't seem to have the issues that are going on in other parts of the world," noting an upswing of interest in the past 12-to-24 months.

Michael Liebowitz, director of insurance and risk management for New York University and a past president of the Risk and Insurance Management Society, is one of those buyers planning to shop the London market for his July 1 renewals.

"At this point, the reason why the London market is all of a sudden appealing to me is that it is my belief and understanding that their capital has not eroded like the U.S. domestic carriers' has," he said. "They appear to have better control over their capital inflows and outflows, and what I'm looking for is stability in a market."

He confessed to being a little "gun-shy about some of the markets here in the U.S.," as some of the carriers he thought were solid are starting to show results that are "leading me to believe they might be on the road to having financial troubles."

And as the U.S. economy continues to move in "the wrong direction," he added, "I can only expect their financial results won't get any better."

On the other hand, he said, "I'm hearing about stability in London." For the most part, Mr. Liebowitz said the London market offers "the kind of policy, form and coverage that you want, and now when you add that with financial stability, they really have something they can move on."

With the majority of his programs renewing July 1, he said he will be looking to London for coverage--excess on some exposures and primary on others.

"My whole book of business is up for grabs this year--everything but property," according to Mr. Liebowitz, adding that property coverage is not being shopped because of a strong two-year program he purchased last year.

He also acknowledged that in the past he would not have gone to such measures, but "with the board of directors taking a closer look at where an organization's money is going, you have to view insurance today like an investment." He said that "questions need to be asked, such as will the carrier still be there when the claim needs to be paid."

While "non-scientific," Mr. Liebowitz said that from his talks with other risk managers, he estimated the likelihood of U.S. risk managers moving business to London is "probably 50-50." Many buyers are hesitant to move, he added, "because they're afraid of breaking relationships and they have a comfort level. But there is a bucket of risk managers looking for something solid today."

To start the ball rolling, Mr. Liebowitz said he will begin meetings next week to "test the waters." He will inform his broker what carriers he wishes to market his exposures to, "and London will be on that list. We'll look at terms and conditions and pricing, and then we'll look at long-term financial growth for the carriers--and it might come down to looking at annual reports."

Where he used to look at the policies, the carrier's ratings and the form, he concluded, "now I want to know what makes the ratings tick, because ultimately it's my comfort level."

He added, "I don't want to go to my board and say, 'Your trustees and officers policy was written with XYZ carrier...And by the way, we need to go and buy new coverage because those guys are in liquidation.'"

Mr. Howard said that London is also looking to increase its business in the U.S. market. "The U.S. has always been a major part of what Lloyd's has written and will continue to be," he said. "I think there's no doubt that the U.S. side of the business will be increasing."

While there have always been ups and downs with U.S. regulations, he said, "with the guaranty fund and other security lines, Lloyd's has ended up managing, with most of the insurance commissioners, to come through any issues or problems."

He also observed that for the energy and marine books of business, "capacity is an issue and a problem as a whole."

"We certainly had an issue with anything that's hurricane-exposed on the property side over the last few years. That will continue to be the case," he added. "When you look at the capital shortage that's going on in the worldwide markets, the outlook for the next two quarters appears to be one of rate increases--particularly on the property book of business.

He concluded that buyers are operating in "an unstable world. You look at interest rates--that has an effect on business."

Ms. Lowery, commenting on the U.S. regulatory environment, said she applauds the National Association of Insurance Commissioners for "the position they've taken on the collateral piece." She was referring to the move toward relieving Lloyd's and other foreign insurers from having to post 100 percent collateral on their liabilities to write U.S. business.

She noted that an area of concern is "knee-jerk" regulations, or "adding more regulation for the sake of having more. I do get concerned there will be a rush to regulation in general [as a result of the financial crisis] that will create barriers and impediments to doing business. We've already had significant regulation in the insurance industry."

She said insurance regulators "should be quite pleased, because look at how well the insurance companies have done in comparison with the banking sector--it should be pointed out that [insurance] regulators have done a fine job."

In fact, problems with AIG were not because of the insurance side of its business, but due to financial products, which were "under the privy of the Office of Thrift Supervision, not the insurance regulators."

As for capacity, "from everything I've heard it seems there is enough capacity in the industry, not London-specific," Ms. Lowery said. "But I don't know if there will be any more casualties, such as Lehman. If there are corporations no longer in existence, there will be a need to build capacity--but the insurance industry as a whole has been able to find capacity."

The Bermuda markets, she said, came out of a situation in the 1980s "where there was lack of capacity in product liability and D&O." The industry is "quite creative and solution-oriented" when it needs to be, she said, adding that insurance is "not a luxury item, it's an item of necessity, and when there's necessity, there's invention."

What the future holds for the industry is anyone's guess. The new presidential administration "will look at everything with a fresh set of eyes," she said. "Whether it's an office of oversight for insurance or a federal charter, I'm sure they will investigate all the avenues there."

At this time, it's important for the industry to stay involved with Washington as it reshapes the financial services regulatory landscape, "so we can give our insights as to what has and hasn't worked in the past, because no one knows it better than the people living it on a day-to-day basis," she emphasized.

Given the industry's history of creativity and innovation--a longtime hallmark of Lloyd's underwriters--Ms. Lowery said she is optimistic about the industry's future.

"I think now is a good time for the industry," she said. "Our focus as an industry and as a financial services sector is making sure we compensate our people fairly and based on the job they're doing...It's about prudence and discretion, and making sure we build sustainable models that can withstand the test of time."