term drivers and beneficiaries of the evolution towards securitisation, ACE Ltd. chairman, president and CEO Brian Duperreault said yesterday.

He was speaking at a reinsurance congress at the Princess Hotel which winds up today. Mr. Duperreault said there was no incentive for ACE to be an originator of financial and securitised products, given current capital market pricing at this time.

An active player in the capital markets, the Bermuda insurer views the trend toward financial and securitised products as quite real.

But Mr. Duperreault noted, "The overall market for these new instruments has, in fact, seemed to be a bit quirky of late with overall economic forces creating both volatility and a great deal of credit risk aversion among likely players.'' And while others see forces outside the insurance/reinsurance industry as shaping the future, he believes the industry has been recreating itself from within. And it will be that which continues to redefine the industry.

Within the last year, two US investment banks created Bermuda reinsurers, the Bermuda Commodities Exchange for securitised risk products was established and legislation was enacted here to facilitate securitisation. He said, "Much has been heralded about the entry of investment banks into the market as a harbinger of the financial or securitisation direction of the business.

"You need only look to what has been done at ACE to recognise that insurers and reinsurers have already begun that move. We have our financial lines division as well as ACE Capital Re which house some significant capital markets expertise.

"Add to that the sophisticated modelling that is the hallmark of Tempest. Not to mention our joint ventures with Exel and others on project finance political risk, airline risks, etc. and you have some idea of our capability.

And, just as quickly and as surely as the catastrophe reinsurance market has changed, the securitisation of the market is promising to affect the competitive landscape for all of us in varying degrees.'' In 1994 ACE was a Bermuda-only company with two insurance product lines and about 50 employees. Today, it has more than 12 times that number of employees and products, as well as multiple offices in key global markets.

Mr. Duperreault said, "As to the investment banks entry into the market, we do expect that they will have a role in the development of the securitisation market (if for no other reason than their proven ability to package and sell complex financial instruments in the capital markets).

"This will no doubt threaten some smaller players in our industry. Yet, fiscal reality and industry wisdom would seem to suggest that few investment banks could truly attempt to go it alone, building start to finish underwriting capacity.'' Brian Dupperault