Axis Capital CEO John Charman yesterday cited the strong earnings power and global franchise that his and other new Bermuda companies have been able to build in a short span of time as a testament to the strength of the Island as an insurance jurisdiction.

And he said Axis was set to go from strength to strength after careful cultivation of a solid reputation with clients built on consistency and conservatism.

The company yesterday announced $532 million in net income for 2003, something cited by Mr. Charman as remarkable and said other Bermuda start-ups were also seeing strong growth and returns.

Axis was the first of a wave of companies ? which also included Arch, AWAC, Endurance and Montpelier ? to set up on the Island after a void in capacity following the September 11 terrorist attacks.

Axis opened its doors on 20 November, 2001 and in the interim has established a strong Bermuda presence as well as operations on both sides of the Atlantic. Last July it went public with an initial public offering (IPO) on the New York Stock Exchange. "For a company two years old, that started with seven people, to two years later be producing real, and I emphasise real, profits is remarkable.

"And the Axis franchise, the Axis brand is well-recognised. That is not bad for a start-up company," Mr. Charman told

Speaking of the peer companies that also set up on the Island around the same time, Mr. Charman said: "The other businesses that set up in the last quarter of 2001, some are a little bit ahead of others but each has been able to gain market recognition. This is a fantastic endorsement of the Bermuda model. The rest of the world wonders how it was done. But it was done and it will continue. At the end of the day we have established ourselves globally."

Although a new company, Mr. Charman said Axis was backed by employees with years of experience, as well as clients seeking out insurance from 'quality' providers. "We have absolutely benefited from our standing in the marketplace, and the experience we possess through our underwriters. We are also benefiting from the flight to quality throughout the industry."

He said one of Axis' strengths was its clean, solid balance sheet: "When you pick up a balance sheet you should know it is real and be able to understand it. The problem with the industry is a lack of belief in (company) balance sheets. How can you assess performance if you have no real confidence in the balance sheet being produced in your respective industry.

"It is fundamental. Everybody talks about growth, but what if you cannot start with a balance sheet which shows where that comes from. To my mind is very difficult. I do not understand why there is not more focus on transparency of the balance sheet," he said.

He called for the industry to establish a level playing field when it came to reporting financials, and ensuring that gave a true representation of a company's financial standing.

"Establish a level playing field so that people can trust us. People want a balance sheet that is real.

"It would have been a lot easier (for us) to start with clean capital and play the games that others have historically but we did not want to repeat the sins of our predecessors. We set new standards of transparency that the industry will want to follow and should already be setting for themselves."

He said Axis' model could be called the "new age of business" with a conservative approach in its reserving process, and generally trying to do everything to a higher standard than seen in the industry.

As an example, he cited the company's breakdown of loss reserves with 82 percent of the total being IBNR (incurred but not recorded), or put aside "in case", while the balance of 18 percent was what they company had seen claims for.

"The reality is that this is a very safe number. It is part of the conservatism we have imbedded throughout the company. It is part of the general culture of the company. When I speak of conservatism, it is not an excuse for staying in the shadows but rather of keeping up standards while prospering in a competitive environment," Mr. Charman said of an approach he said he has taken to business throughout his 34 year career.

Mr. Charman said that while older Bermuda insurers ? including ACE, XL and PartnerRe ? were "fabulous" companies, they had taken many years to establish themselves.

"We may be new but we will continue to lead the industry," he said, despite predictions that competition in the sector could be heating up with property lines softening (prices going down while capacity increases) and with the rate of growth in casualty lines also slowing.

"In 34 years of business I have not seen any year that was not competitive. We have such a broad and diversified business, there is always competition. And I am still waiting for a hard market," he said.

Mr. Charman said companies should be able to do business under different market circumstances, and that Axis' approach was to consistently "maximise performance and penetration with a quality approach".

"I have always tried to offer consistency. How can you offer something at one time, and at another time withdraw (that service). This is true whether you are writing insurance or selling widgets."

He said Axis aimed to offer "conservative methodology and pricing throughout all market conditions".

"We may be more demanding (when agreeing to write business) but we do not walk away (from those customers). We are good partners ? good partners do not just exist when the sun is shining, good partners have to be there when the sun goes down."