Bermuda's property catastrophe reinsurers are nearing the end of a renewal period with market share relatively intact. They have faced some very aggressive competition and an erosion in rates.

Said PartnerRe executive vice president, Graham Dimmock, "We are obviously disappointed with the levels of pricing that have been achieved. But it seems Bermuda has done well to maintain market share.'' The softening in the market appears to be led by London and Lloyd's of London markets, which seem bent on "buying'' market share they previously lost to Bermuda. Competition for non-US business, in particular, is fierce.

Just 50 percent of Cat Ltd.'s business was exposed to the potential for price erosion during this renewal period, with the remainder in the middle of multi-year contracts. President Charles Kline said in the US business there has been a reduction of about ten percent.

He said, "It is not acceptable in some areas, but can be tolerated in many areas. There were several clients for which we couldn't continue the relationship, although all-in-all, it was a small portion of our portfolio.

"Internationally, it is more aggressive depending on the territories. Some countries we found we had to leave, because some have become incredibly competitive.

"They want large portions of our portfolio, but we couldn't sustain the price decreases.'' Said ACE Ltd. chairman, president and CEO, Brian Duperreault, "There were times we didn't like the pricing and just didn't come to terms with the other side. In the UK, prices came down quite a bit. But in general we had a reasonable renewal season.'' ACE just this summer spent nearly a billion dollars buying its own Bermuda cat, Tempest Re. Mr. Duperreault was cited by Business Insurance as one of ten top newsmakers for the year, for his role in concluding a deal that AIG chairman Maurice Greenberg initially opposed.

International Property Catastrophe Reinsurance Ltd. has recently grown to a sizeable reinsurer, with assets now approaching half a billion dollars (more than $475 million).

Senior vice president underwriting James P. Bryce, said, "The renewal period has been challenging. There are definitely more players about, but we are substantially larger (by about $100 million) than we were at the beginning of 1996.

"The increase in size has given us opportunities that were not available to us before. That, together with the A.M. Best `A Superior' rating we received has been very helpful. Some buyers are out there looking only for `A ' rated companies. We are anticipating better signings this year.'' Capacity is becoming less a problem in the markets. As Global Capital Re president and CEO, Lawrence Doyle noted: "The establishment of the California Earthquake Authority (CEA) has pretty much solved the California problem (of the need for capacity). And there is adequate capacity with the existing markets today to meet most of the world's needs.

"In terms of trends, there will be a question of how much discipline will be exercised going forward to reduce shares of programmes which are marginally priced.'' The CEA programme will bring in millions of dollars in additional premium. The Bermuda cats have distinguished themselves by using sophisticated rating models or computer systems.

Bermuda companies, in some cases, have walked away from some business when the pricing did not appear to be sustainable. The healthy size of local cats remains a drawing card for buyers looking for quality of capital.

January renewals are being bolstered by client recognition of financial strength and sterling ratings given by market analysts over the past year to Bermuda's cats.

Said RenaissanceRe senior vice president Keith Hynes, "All of the Bermuda companies have received high quality ratings from A.M. Best and Standard & Poors. We've all grown on an annual basis. Bermuda has become definitively known as the locale to obtain property catastrophe reinsurance. We have strengthened the strong position we began with.'' As one observer put it: "Now not only do Bermuda's cats look good, they are certified good.''