Principals behind Castellum Re, one of 11 major reinsurers licensed to operate in Bermuda in the last two months, have decided against proceeding with formation of the company, its law firm said on Friday.

Appleby Spurling & Hunter, the law firm hired to handle the group?s incorporation process, told the parties behind Castellum had decided not to proceed with their plans. It is not known who was behind Castellum?s bid to join the Island?s burgeoning reinsurance sector, or why they decided against it. A search of Castellum?s share register, something that is generally available for public viewing, was not allowed because the company is to be struck off the Bermuda register.

Parent company Castellum Holdings Ltd., and reinsurance unit Castellum Re Ltd., were added to Bermuda?s register of companies in mid-November.

Also during November, Castellum was handed a licence by the Island?s financial services regulator giving it the green light to open up as a major reinsurance operation.

On Friday a spokesperson for the Bermuda Monetary Authority said she could not confirm whether Castellum had asked to cancel its licence, saying the Authority was bound not to comment on any matter involving a specific company.

Castellum and ten other insurance and reinsurance companies have been classified as class four insurers by the BMA in recent weeks.

This classification is generally given to companies planning to sell expensive contracts to help protect corporations against a variety of losses, from damage to property in a catastrophe to protecting officers and directors from lawsuits.

Under Bermuda licensing regulations, class four insurers must hold a minimum of $100 million in capital and surplus. They are often capitalised with much more ? on average, with $1 billion and up.

The wave of new insurance incorporations is in response to the expectation that premium rates will rise after the industry was hit with up to $80 billion in losses from record hurricane activity this year.

Lining up to invest in the new companies ? mostly in Bermuda ? have been private equity investors, hedge funds, investment firms and several of Lloyd?s of London?s leading lights.

Some who have put money in to back new Bermuda insurers during previous waves of insurance incorporation activity have decided to sit out this time around. This is believed to include buy-out firms the Blackstone Group and Thomas H. Lee Partners.

The reasons some may not be taking advantage of market opportunities this year are believed to include concerns there is a lack of qualified reinsurance executives to take on key roles, as well as other infrastructure concerns. Thomas H. Lee has also been under a cloud after a company it had a large investment in, commodities broker Refco Inc., fell into trouble when its chief executive was found to have violated securities laws by not declaring a loan of more than $400 million between Refco and a company he controlled. Refco?s regulated units were sold, and its unregulated units, including Bermuda company Refco Capital Markets, are now the subject of numerous legal actions.