First quarter renewals. (Bermuda Angle).
In relatively normal years, January renewals are mostly bound before Santa Claus puts in his annual appearance. The January 2002 renewal season was, of course, anything but normal. With the events of September 11, 2001, still ringing in everyone's ears, coverage in certain areas was suddenly unavailable and, where it was to be found, suddenly very expensive.
As December drew to a close, almost every Bermuda broker and re/insurer, new or old, reported that the renewal season was in full swing, and might last a while longer. A dozen new re/insurers in Bermuda vied with existing companies to cover clients who spent much of January bare.
By the middle of February, with the season continuing unabated in Bermuda, separate schools of thought began to emerge. The Bermudian companies reported that their renewal season was still not over. Those who visited at least two of the larger start-ups could hardly miss the banker's boxes of proposals sitting on underwriters' desks.
Although no one would admit it, even off the record, a degree of cherry picking was ensuring that the new Bermuda companies would get off to a flying start.
By February 20, when representatives of the industry gathered in Bermuda for the World Insurance Forum, the renewal season was surely over. It was certainly over in London.
"We are beginning to work on summer renewals," said a London broker on a coffee break between sessions. "Apart from the sheer mechanics of not backdating coverage, here we are seven weeks into the year. That's more than half a quarter. Anyone who tells you that they are still binding 2002 risks is flat out lying,"
That week, at least four Bermuda underwriters took exception to that statement.
"We've been working until 10 at night," said one. "It's funny, in a way. There I was in London, thinking Bermuda was a soft posting. Now that I'm here, I've never worked so hard in my life." Told that he must be lying, the underwriter merely snorted and walked away.
Then came March. The pressure at one or two of the Bermuda companies began to ease, but comments from Arch Capital Group, the only company to formally report on the renewal season by the end of March, gave an idea of how busy they had been.
With three dozen employees in place, Arch reported: "For the period from January 1 to March 11, 2002, (the company's) reinsurance subsidiaries have entered into about 800 reinsurance treaties and other reinsurance arrangements, which are expected to provide about $500 million of annualized gross reinsurance premiums in 2002."
Note that date: March 11, exactly six months after the day that will forever live in infamy. Most renewal seasons take the best part of six months, and this one appears to have taken exactly that.
Despite the elongation, few if any of the new companies professed to have used all their capital in the first round. Estimates suggested that between a quarter and a third of the $16 billion in new capital promised to Bermuda had made its way into underwriting the commercial activities of clients.
"It might take two full years before all our present of one of the new billion dollar companies. "We are performing, more or less, exactly was we predicted. Prices have firmed and uncertainty continues to dog the markets.
"The scares (U.S. Attorney General John) Ashcroft keeps putting into us add to that. When our great-grandchildren in herit this company, they will look back on the January 200 renewal season as a time when we unarguably got it right."
He paused for a moment and rubbed his chin. "Absent, that is, another event on the scale of the World Trade Center."
Roger Crombie is a Bermuda-based journalist who writes frequently for Risk & Insurance. He can be reached via e-mail at firstname.lastname@example.org.
|Printer friendly Cite/link Email Feedback|
|Publication:||Risk & Insurance|
|Date:||Jun 1, 2002|
|Previous Article:||Notice of loss requirements. (Risk Primer).|
|Next Article:||Business interruption: is your solution strong enough? (Cover Story).|