Ten years on, PartnerRe could be said to bear little resemblance to the company it started out as. From its small beginnings as a Bermuda-based reinsurer set up with only three staff to take advantage of a void in capacity after Hurricane Andrew, the company has grown into a global multi-line reinsurance powerhouse.

Breaking down PartnerRe's decade of growth in the simplest of terms CEO Patrick Thiele said since 1993 the company had grown from three to 850 employees and from no business to estimated business this year of $3.5 billion in gross premiums written.

Of the eight reinsurers to set up after Hurricane Andrew, PartnerRe was the first to jump on the IPO bandwagon with its listing on the Nasdaq mere months after it first opened its doors. The company, which later moved its public listing to the New York Stock Exchange, managed to go public before it really wrote any business but did have noted Swiss Re recruit, Herbert Haag, at its helm and the backing of several key investors.

PartnerRe was the brainchild of investment firm Morgan Stanley - which would serve as the main underwriter of the deal - and Swiss Re. Also on board was private investor John Head. Reflecting on company's conception, Mr. Thiele said: "Swiss Re basically wanted to have greater participation in the catastrophe reinsurance business. They saw the profitability opportunity, but they didn't wish to have (that level of) risk on their own balance sheet or income statement (but) they were very happy to be that equity investor in a start up reinsurance company. So the two of those parties - Morgan Stanley and Swiss Re - got together and filled out the rest of the ownership group and immediately took it public to raise the remainder of the funds."

PartnerRe's other initial investors were: T. Rowe Price, EXOR, Omega Capital Partners, Tiger Management, Bass Brothers and Electra Investment Trust.

Although PartnerRe was set up in 1993 as a property catastrophe reinsurer, about six years ago the company branched into other lines of business after its board of directors made a strategic decision in 1997 to diversify its business to include non-cat lines.

Mr. Thiele, who took over the helm from former CEO Herbert Haag in 2000, told The Royal Gazette: "A critical period of time (for PartnerRe) was early 1997 where the board took a strategic decision to diversify out of cat(astrophe). If you look at us and the two other remaining companies from the `class of 93', IPC Re and Renaissance Re, you would see that they decided to stay in the cat business as specialty underwriters.

"We were the first of the three to go outside the pure cat model and diversify," although Renaissance has also diversified in recent years "while IPCRe remains a pure cat reinsurer," he said. Once the decision was made to diversify, PartnerRe looked at what was the best way to go about its expansion into other lines of business and decided to do so through two strategic acquisitions. In mid-1997 it acquired French reinsurer SAFR and subsequently, the reinsurance arm of Swiss company Winterthur Re in late 1998.

Mr. Thiele explained: "The board decided that rather than try and organically set up teams to start writing business, it would be more efficient to get into new markets and lines of business by buying existing companies."

Although underwriting property catastrophe reinsurance remains integral to PartnerRe's business - Mr. Thiele said the company continued to rank globally as one of the top five cat writers - the company has only profited from its decision to expand its book of business: "In the beginning we were risk taking, we had one thing to do. We were in the cat business and we were there to make a lot of money in a very good market."

But Mr. Thiele said diversification was to become the abiding principle by which the corporation now operates: "The concept of diversification says if you can diversify across lines of business that have no negative correlation, the portfolio will be more stable than any one of your individual transactions. We believe that, and it is the organising principle of PartnerRe," he said.

As part of the company's plan to diversify, it made a conscious decision to build its non-catastrophe business in the US.

In early 1998, Mr. Thiele said the company ramped up its US operations with the establishment of PartnerRe US with the specific intent of growing PartnerRe's casualty business.

It was a decision that turned out to make good business sense with Mr. Thiele predicting the company's US business in 2003 should account for as much as $1 billion of PartnerRe's $3.5 billion in total gross written premiums for the year.

Nonetheless, Mr. Thiele said: "We love cat, it is one of the core things we do and although it is a relatively small portion of our overall premium - about 14 percent - it is a significantly larger percentage of our capital and a significant portion of our volatility.

"Cat drives our results - either good or bad."

Looking forward, Mr. Thiele said PartnerRe's plan over the next five years was to continue to grow its business and part of that he said, was preparing for the "inevitable downturn" or softening of insurance and reinsurance markets.

Mr. Thiele said: "The market is in good shape at the moment. We don't really have too many concerns in 2003 and 2004. However, we do have to start getting ready for the inevitable downturn that will occur in both the insurance and reinsurance markets. That entails making sure that all systems and processes are in good shape because as pricing becomes more competitive there is less margin for error.

"In effect, you'd better be able to evaluate the level of risk very, very well. (If the pricing isn't right,) you have to be able to walk away and you have to know where your walk away price is.

" To do that you have to have great actuarial and great underwriting talent. Secondly you have to really start watching your expenses make sure you are not putting out expenses today that you have to take off tomorrow."

In terms of what areas of the market may continue to present good business opportunities, Mr. Thiele predicted that as long as interest rates stayed at four to five percent the hard market for casualty lines could continue: "One thing that drives casualty pricing is the level of interest rates as that gets into your pricing with the time-value factor of money.

"With interest rates at four percent, you have to write casualty like you do property; you have to make an underwriting profit. If you get to six or seven percent you don't have to have the same underwriting profit, and pricing may be more aggressive, " Mr. Thiele said.

In addition, Mr. Thiele said that casualty pricing levels could still go up further on the back of the high loss trends in the present market: "What drives casualty pricing as well is the loss trend and we are not going to know what the loss trend is for quite a while.

"Based on that it would take a pretty brave underwriter to start shaving estimates of loss trends right now."