A report from leading ratings agency AM Best yesterday reported that 11 Bermuda-based reinsurers rank among the world?s top 35 firms ? a jump on just two years ago when data showed that only seven Bermuda companies could make that claim.

In a special report, called Bermuda: Building Capacity, AM Best reported that data from last year and the first six months of 2004 showed that more and more business is flowing to local insurers.

This development was attributed in large part to the financial capacity available from the Bermuda insurance market ? after estimates as high as $15 billion (with $11.5 billion going to reinsurers) in new capital going to both established and start-up re/insurers in this market.

In total, the market ? from the end of 2000 to 2002 ? attracted a combined total of $54 billion in new capital, meaning that Bermuda was given almost a third of the pot.

The report said that during hard market conditions since 2001, the Bermuda market had further entrenched its position as a ?market of choice? among brokers and ceding companies alike.

However, the report warned that Bermuda companies had credited the low level of catastrophe activity for leading, in part, to their strong earnings in recent years and that was now at an end with early estimates of Bermuda companies exposure reaching at least $1 billion in claims from recent hurricanes Charley and Frances.

During this period, the Bermuda market was said to have seen a surge in both primary and reinsurance business.

?The so-called ?flight to quality? by reinsurance buyers is now more than ever necessitating a visit to Bermuda.

?The flow of primary business to Bermuda is also on the increase, generally via onshore subsidiaries.?

While the AM Best report said that figurehead companies ACE and XL still led the way on the primary side, five other Island players were also making a mark.

?While ACE and XL Capital tout the largest primary insurance operations, Allied World, Axis Specialty, Arch Capital, Endurance Specialty and Renaissance Re also have significant primary platforms, which have demonstrated robust premium growth through the hardest phase of the insurance cycle.?

The report continued: ?Bermuda?s growth and enhanced market position are the result of the Island?s now-legendary operating platform, which enables Bermuda companies to set up shop quickly and allows them to operate with substantial competitive advantages over their US and European competitors.

?These advantages include no income taxes and few restrictions as to how Bermuda companies can invest their assets and deploy capital, not to mention the Island?s close proximity to the largest insurance market in the world, the United States. These factors, along with the current favourable market conditions, have contributed to the robust financial performance of the Bermuda insurance and reinsurance market.?

But the report said the future was unclear, rhetorically asking: ?The big question now is: how long can this trend really last??

Breaking down the results of the top Bermuda firms, the AM Best report said gross written premiums for the top 15 Bermuda-domiciled reinsurance companies increased 55.2 percent in 2003 to $25.3 billion.

AM Best estimates that this composite comprises more than 90 percent of Bermuda?s reinsurance business. This growth in gross written premiums was said to be ?essentially across the board? for the top 15 Bermuda reinsurers.

On the storm front, AM Best said: ?Since 2002, Bermuda insurers and reinsurers have, to varying degrees, credited their strong earnings to the absence of a major catastrophe loss. This trend continued for the first two quarters of 2004 but abruptly ended August 13, when Hurricane Charley became the first major hurricane to make landfall in Florida since Hurricane Andrew hit in 1992.

?Based on early estimates of the total industry losses, there is no doubt that the cost to the Bermuda insurance and reinsurance market alone will be in the $1 billion range.?