"Nobody prefers war," said Brian Duperreault, chairman and chief executive officer of ACE Limited during a conference call with analysts yesterday.

Asked how the possibility of war affects ACE's business, Mr. Duperreault said: "The issue fundamentally for us and other financial institutions is the impact on our assets whether its equities or fixed."

The effects of a conflict between the US and Iraq are "weighing on the mind of the market" he said, leading to rising oil prices and possibly delaying the improvement of the economy, but as far as ACE's business is concerned, it is in marginal segments such as travel accident products where sales will fall.

For those who specialise in underwriting marine and aviation, war means more business at potentially higher rates.

Trevor Carvey is a marine underwriter at another Bermuda start-up insurer, Arch Reinsurance. Asked why conflicts produce higher rates, he explainedthat when a vessel makes a voyage to a hostile area, there will be a short term amendment to a 12 month policy which incurs an additional premium.

He said policies covering war-like acts also contain an option for underwriters to cancel cover and re-rate at short notice: "If there is a claim, it's a function of supply and demand that at those times, the rates will increase".

According to an article in London's Evening Standard, the chief executive officer of Bermuda-based AXIS Specialty, John Charman, was one of two Lloyds marine underwriters to make millions during the Gulf War.

The other was Lloyds insurer Mark Brockbank of the Brockbank Group which was subsequently bought by reinsurer Mid Ocean, now owned by XL Re.

The article discussed how conflicts can produce big profits quickly for marine underwriters.

During the time of the Falklands campaign for example, a typical annual premium was 0.025 percent of a the value of a ship or a tanker. The cruise ship , commandeered as a troop ship, however, was insured at eight percent per month.

During the Gulf War, Mr. Charman set up a 24-hour service on syndicate 488 and made a fortune with fellow underwriter, Richard Brindle. The secret to their success, according to the story, was the shrewdness with which they selected their reinsurance.

Mr. Charman's underwriting agency was later acquired by ACE for ?350 million.

With his new venture, Axis Specialty, Mr. Charman is still writing specialist risks including marine and aviation. With the impending possibility of war with Iraq, he may get a chance to repeat his Desert Storm performance.

While factors such as reinsurance limits may make it more difficult than it was, on the other hand, most insurers now have online facilities which will make a 24-hour service, seven days a week easier.

While Mr. Carvey admitted his industry made a lot of money out of conflicts in the past, a major new downside at the forefront of his mind is the potential for secondary actions outside the main theatre of war. Such losses would also be covered under the marine hull policy without any additional fee.

It appears that in the context of the war on terror, Mr. Duperreault was right: nobody prefers war after all.