A sixth new insurance company is to set up shop in Bermuda in order to take advantage of the high prices and gaps in insurance cover left in the wake of the terrorist bombings.

This takes the amount of combined targeted capital for the new businesses on the Island since the September 11 attacks to $5.7 billion.

The latest insurer on the block is to be set up by US Aon Corporation, which has offices in Bermuda, and an unnamed major financial services company.

Aon yesterday said it will sponsor a new Bermuda-based insurance and reinsurance company to provide "much needed underwriting capacity" to commercial property and casualty insurance and reinsurance clients.

The new company will be named Endurance Specialty Insurance Ltd and plans to have a capitalisation of approximately $1.2 billion with investments from several parties, the company said.

Patrick G. Ryan, chairman and CEO of Aon Corporation, said: "Aon plans to invest $200 million and expects that a major financial services organisation will be a significant participant in Endurance Specialty.

"I have asked Ken LeStrange to be the CEO of Endurance Specialty Insurance Ltd since the focus of this new venture is to provide disciplined property and casualty underwriting capacity to the market. Ken has an extensive underwriting background and has held executive management positions in the insurance industry."

The Zurich Insurance Group, which also has sizeable insurance operations in Bermuda, will also invest $200 billion.

The move follows the announcement last Friday that Bermuda-based White Mountains Insurance Group Ltd, was "seeking to establish a new Bermuda-based property and casualty reinsurer to respond to the current favourable underwriting and pricing environment in the insurance and reinsurance industry".

The company, which intends to focus initially on property business through the broker market, has a targeted capital of $1 billion and White Mountain said it was to invest at least $200 million in the venture.

That same week, news filtered out that a new mega-insurance venture was about to be set up believed to rival ACE and XL in size.

The company, which has not been named, is said to be a joint venture between US insurance giants American International Group Inc, Chubb Corp and Goldman Sachs Group Inc and it is believed will employ some 200 people on Island and is said to have capital of more than $1 billion.

Sources close to the companies said it was going to be a huge property and casualty business and an operation with possibly 200 or more employees and are expected to attract top ranking insurance executives from around the world.

Earlier in the month Arch Capital Group Ltd said it was going to set up Arch Reinsurance backed by two private equity firms, Warburg Pincus and Hellman & Friedman, which would invest a total of $750 million in shares and warrants in Arch Capital. The new venture currently has about $500 million in capital, but has a target of $1 billion.

RenaissanceRe Holdings Ltd. is also setting up a new venture called DaVinci Reinsurance Ltd. with $500 million backing from investors, including State Farm, the largest U.S. insurer.

And Insurance broker Marsh & McLennan Cos. Inc has also set up new firm, Bermuda-based Axis Specialty Ltd., to offer property, aviation, war and other insurance with $1 billion in capital hoped to be raised.

Aon Corp. has also added some property and reinsurance lines to its own underwriting unit, Combined Specialty Corp.

The latest investment in the Bermuda insurance industry comes after the terrorist attacks opened up new markets, increased demand and seen rates rise. The companies are being set up before January when insurance policies are generally renewed.

Last month's terrorist attacks may cost the industry as much as $70 billion, making it the largest insured loss ever. It has pinched the supply of insurance and insurance companies have raised their prices by between 30 and 60 percent in most lines.

The new businesses would enable the US companies to expand their reinsurance operations. The Royal Gazette understands that the three companies will invest about $500 million to form the business.

The new wave of Bermuda firms are part of the third wave of insurance capital heading to Bermuda in the past 20 years.

In the mid-1980s ACE Ltd and XL Capital Ltd were set up by Marsh and other US investors to provide big-ticket liability insurance as large court awards dried up coverage in the US.

In the early 1990s, six major reinsurers were set up to soak up demand for large-scale property catastrophe reinsurance after Hurricane Andrew. Those reinsurers included RenaissanceRe and PartnerRe.

On the web: www.aon.com