"We have responded from a portfolio management point of view by setting minimum rate thresholds for marginal business--a.k.a. walk-away prices," according to Mr. Carmilani.

Market challenges played out against a backdrop of extreme events, Mr. Charman said, noting that insurance and reinsurance markets worldwide digested $60 billion in catastrophe property and energy losses.

While the catastrophe losses drove up combined ratios in year-to-year comparisons of 2008 against 2007, members of the "Class of 2001"--like Bermuda counterparts created in earlier years, and "Class of 2005" insurers launched soon after Hurricane Katrina--all reported underwriting profits last year in spite of a weak pricing environment.

As a group, the combined ratio for the "Class of 2001" in 2008 was roughly 93--slightly worse than older and newer companies included on a list of companies with roots in Bermuda whose financial results are tracked by NU. (See accompanying chart for details of key financial ratios, income and capital figures compiled using data reported on Highline Data's online data service, Analyst PRO.)

Individually, Allied World reported the best full-year 2008 combined ratio for the "Class of 2001" (84.2), while AXIS reported the best fourth-quarter combined ratio of the class (67.6). AXIS also reported the highest "Class of 2001" net income figure for 2008 ($387.4 million), while Allied World was the only one in the group to report growth in capital--an 8 percent jump in shareholders' equity from year-end 2007.

The successes came even as both AXIS and Allied World saw fourth-quarter income figures dented by losses of more than $100 million each recorded for alternative investment portfolios holdings.

Mr. Charman and Mr. Carmilani both discussed the benefits of diversified insurance and reinsurance platforms as they explained their underwriting results on earnings conference calls last month. But these two leaders, and other "Class of 2001" executives, laid out different strategies for lining up offenses and defenses on reinsurance and insurance teams, and on their property and casualty squads as well.

"Through the last several months, we have seen strong signals that [a] reinsurance- led hard market is coming to fruition," Mr. Charman observed. "The most capital-intensive lines in both the insurance and reinsurance markets--often cat-exposed lines--are responding first and most significantly. The generally weaker-managed insurance markets are lagging."

While the impact of a global recession will mean a decline in industry premium volume overall, Mr. Charman believes "in the medium term" the reinsurance market will represent a larger portion of global premium. "The consistency and strength of capital we have demonstrated should serve us well in capturing the benefits of this trend in our reinsurance business," he said.

In 2008, AXIS reported relatively flat reinsurance volume, with roughly $1.6 billion in gross premiums, while insurance premium fell 10 percent to $1.8 billion.

"We have not, cannot and will not abandon our underwriting and operational standards, which in some areas mean that we will continue to shrink our underwriting activity and our exposures," Mr. Charman said, referring to less capital-intensive areas of the insurance market that "are constantly challenged by the competitive behavior of distressed participants." He added, however, that he fully believes the primary market "will begin to respond positively," with a harder insurance market starting midyear.

At Allied World, Mr. Carmilani said market-driven portfolio management activities have resulted in dramatic changes to the company's mix of insurance and reinsurance business as well as changes within the insurance portfolio.

Focusing on the fourth-quarter top line, he said premiums jumped 19 percent to $310.9 million, with significant gains coming from the casualty insurance segment and U.S. casualty business, in particular.

He reported that $70 million of the premiums came from Darwin Professional Underwriters--a specialty casualty and health care liability insurer acquired in late October--but that excluding Darwin, premiums in the United States still soared "an impressive 64 percent" as a direct result of actions Allied has taken to build out the rest of its U.S. platform.

Actions included beefing up resources and expanding product capabilities, with branch offices being added in Atlanta and California last year. "We have selectively added over 40 senior professionals and executives from some of our troubled competitors," Mr. Carmilani said.

Excluding the Darwin figure, gross written premiums across all regions and segments fell more than 7 percent in the fourth quarter and more than 8 percent for the year. By segment, property insurance premiums fell 16 percent, casualty insurance rose 19 percent, and reinsurance premiums dropped 20 percent for the full year.

"Reinsurers so far have been unable to secure meaningful rate or term improvements, in our view," Mr. Carmilani said, noting that for the fourth quarter, Allied World's reinsurance premiums were down 70 percent.

"That dramatically changes our mix," he said. With casualty insurance premiums doubling in the quarter, the mix of premiums was 80 percent casualty insurance, 17 percent property insurance and 3 percent reinsurance--compared to 55 percent casualty insurance, 28 percent property insurance and 17 percent reinsurance in fourth-quarter 2007.

For the year, total gross premiums were $1.4 billion, with the reinsurance share falling to 30 percent in 2008, compared to 36 percent in 2007.

Other members of the "Class of 2001"--even a pure reinsurer, Platinum Underwriters--reported reinsurance premium drops in 2008 (albeit smaller ones than other class members), along with purposeful cutbacks in their writings as of Jan. 1.

In 2008, Platinum's gross reinsurance premiums fell 6 percent to $1.1 billion in 2008, with casualty reinsurance premiums falling 26 percent to $430 million, while property and marine premiums grew 18.1 percent to $622.2 million.

"We continued with our approach of underwriting for profitability, not market share" for Jan. 1, said CEO Michael Price, noting that the company wrote roughly $373 million of the $469 million in premiums that came up for renewal--a 20 percent drop.

Reporting on individual segments, he said while catastrophe rate adequacy held firm or improved, Platinum wrote only 70 percent of the North American catastrophe excess-of-loss business up for renewal.

"We consciously cut back our peak-zone catastrophe exposure," he said, outlining three reasons--a 2008 share repurchase program that resulted in less Platinum shareholders equity, a goal of enhancing the company's capital cushion, and "because we think some of the best underwriting opportunities for 2009 may be ahead."

Casualty renewal premiums declined 28 percent for Platinum for Jan. 1, with the greatest reductions in financial and nonmedical professional liability lines, Mr. Price reported.

"We're going to need to see primary casualty rates improve," he said, adding that while they have started to fall at a lower rate than they had been, "that's not good enough. They need to move into positive territory and they need to do it this year."

Platinum--which, according to prior NU reports, had a premium mix in its early years that was 30 percent property and marine, 40 percent casualty, and 30 percent finite risk--had nearly 60 percent of its writing in the property and marine category in 2008. Still, Mr. Price argues that the portfolio is well balanced between property and casualty, noting that reserves for casualty reinsurance sit on the balance sheet for many years.

By the numbers, Endurance--with a 26 percent jump in gross premiums--looks like it played the most offensive game of the Class of 2001 last year. But behind the increase was a 23 percent decline in its reinsurance book--which was more than offset by increases in specialty insurance.

The latter increases were driven by the company's 2007 acquisition of ARMtech, an MGA specializing in agricultural risks and a "targeted expansion" into the U.S. specialty business, noted CEO Kenneth LeStrange.

Looking ahead to 2009 for both the insurance and reinsurance segments, Chief Underwriting Officer David Cash said that "in the short term, our underwriting posture is defensive. We have increased the stringency of our loss-ratio hurdles and where appropriate have made targeted reductions of our book of business."

He added that "in some instances, we have taken steps to eliminate portions of our portfolio that are overexposed to competition with little near-term chance of a...bounce-back," highlighting California workers' compensation as one such area. "Aside from targeted reductions, we continue to invest in our businesses to insure we are ready to move when conditions come around," Mr. Cash said.

While Endurance put California workers' comp on its list of areas to exit, one of the oldest reinsurers now rooted in Bermuda--Everest Re--put that business on its list of building blocks for the future.

"We could write up to $300 million in this segment if terms, conditions and pricing hold as we expect," said Ralph Jones, Everest's president and chief operating officer. Mr. Jones--a 30-year veteran of the insurance industry, with prior stints at Arch Insurance and Chubb Specialty--joined Everest in December.

Everest wrote $771.8 million in gross insurance premiums in total in 2008, accounting for only 20 percent of its book.

"I have asked [Mr. Jones] to focus attention for the first couple of months on our insurance operation," said CEO Joseph Taranto, who later noted that Everest has historically been more of a reinsurer, and will remain so for the next year or two. "But there are opportunities on the insurance side that... we can now tackle."

Mr. Jones outlined a plan to expand the insurance operation from one that had been principally a program operation to one that will seek to do business with brokers more directly--initially in the environmental, professional liability, and directors and officers insurance segments, which he characterized as some of Everest's "building blocks for 2009."

Also expanding into insurance in recent years were two of the youngest Bermuda players, Validus Re and Flagstone Re, which both started their lives as reinsurers focused on short-tail lines and remain bullish on the reinsurance business. Both also saw premiums soar more than 30 percent in 2008, with acquisitions aimed at global diversification fueling some of the growth.

For Flagstone, reinsurer acquisitions in South Africa, Cyprus and the acquisition of Marlborough Underwriting Agency (which manages a Lloyd's syndicate specializing in short-tail insurance and reinsurance business) were all announced in 2008, but the 46 percent growth in the fourth quarter did not include anything from Marlborough.

Instead, CEO David Brown reported that the fourth-quarter growth spurt reflected "significant business production we are seeing from our global platform, as well as firming prices," adding that for Jan. 1--business growth continued "into attractive markets such as the United States," where reinsurance premiums grew more than 23 percent as a result of market firming and the ability to capitalize on the difficulties of other reinsurance market participants.

While Validus' premiums for its reinsurance arm, Validus Re, fell 2 percent last year, CEO Ed Noonan reported the same market dynamics for Jan. 1, leading to a 26 percent gain in its reinsurance book overall.

In 2008, Validus' overall premiums--including its Lloyd's operation, Talbot--grew nearly 38 percent to $1.4 billion, with Talbot making up more than half the total.