Bermuda must continue attracting "intellectual capital'' to keep the insurance industry vibrant.

So says executive vice president and chief financial officer of Bermuda-based insurer ACE Ltd. Mr. Christopher Marshall.

Addressing a Bermuda Insurance Institute luncheon at the Princess Hotel yesterday, Mr. Marshall said that ACE's history and development parallelled the development of the entire local market.

Bermuda's emergence as the third significant insurance market was as a result of innovation and creativity in the structuring of insurance products.

But, said Mr. Marshall,"Many challenges lie ahead, but with cooperation, education and understanding Bermuda and its major industry, international business, can grow and prosper together.

"ACE is a microcosm of Bermuda. One cannot refer to ACE without talking about Bermuda. ACE is living proof that creative solutions can be found, and executed, right here in Bermuda.'' ACE has grown significantly in its first 10 years, with share capital growing from $200 million to almost $1.5 billion and an investment portfolio today of $3 billion.

But he said that it came about because of company stewards like Mr. John Cox, Mr. Bill Pimm and Mr. Walter Scott.

He noted that in the early 1980s, although a major portion of Bermuda's international business was represented by the insurance industry, their presence here was more form than substance.

There were few companies where the brains behind the management and underwriting operations were actually in Bermuda. Today, that is no longer true. "Risk managers, clients and even other major insurance companies all travel to Bermuda to access what has grown into a significant world-recognised insurance marketplace -- not only in form, but in substance,'' he said. "The impact of the people, the work force, the contribution to Bermuda's economy is undeniable.

"But the one most important and amazing aspect of this phenomenal growth in the Bermuda insurance marketplace over the last 10 years has been the people that make up this market -- the gathering together and inherent growth of what has become known as the intellectual capital of the Bermuda marketplace.

"This is the single most important and most valuable asset that the insurance market has. And we must, and Bermuda must at all costs, protect it, support it and provide it with the dynamic environment which it needs to continue to grow and prosper.

"If we do this, I can assure you that Bermuda will grow and prosper at the same time.'' Mr. Marshall said, "You will read articles, listen to speeches, listen to politicians, listen to people in the insurance industry itself, who focus on numbers of insurance companies, billions of dollars of capital which have flowed to Bermuda, the strong infrastructure which Bermuda has.

"But I can guarantee you that all of these factors are simply by-products of the amazing pool of intellectual capital that resides on this island.'' He cautioned, "The retention and growth of this intellectual capital must be the overriding focus of Bermuda as we approach the next century. The growth of intellectual capital is not constrained by the physical limitations of Bermuda; however, we must ensure that a flexible, international focus is maintained and that the dynamic environment which has developed over the last 10 years is allowed to grow and prosper.'' ACE, today with some 90 staff and a representative office in London, insures some of the world's largest multi-national corporations located in over 30 countries.

Starting with just D&O and excess liability 10 years ago, the company has even this year continued to add to its product lines. The seven today include satellite insurance coverage with $25 million of limits, some $14 million in reinsurance premium of Stockton Re's First Line programme, $25 million of coverage in the excess property market in just two quarters, together with aviation and financial lines.

SPEAKING TO BII -- Mr. Christopher Marshall.