Storm activity in the third quarter should not undermine Bermuda reinsurers, the latest quarterly report from Benfield predicts.

The report, which is compiled on Bermuda market players every three months by the research division of UK-based Benfield Group, said that analysis of the results of global reinsurers, with specific analysis of Bermuda players, indicated that ?losses were an earnings event with little or no damage to balance sheets?.

In their analysis, the research group said that overall the earnings of Bermuda companies had ?remained positive and substantial?.

It continued: ?Total net income for the nine months was $3.3 billion, down 26 percent on 2003.

?Only three companies ? RenaissanceRe, Quanta and PXRe ? reported negative results and only five companies ? RenaissanceRe, Quanta, PXRE, Max Re and AWAC ? reported combined ratios (a measure of underwriting profitability) higher than 100 percent.?

Benfield said the average combined ratio was 95.6 percent compared to 88.4 percent for the same period in 2003.

Benfield, in compiling its quarterly report, follows the performance of 16 of the Island?s front-running players in the re/insurance sector ? ACE, XL, PartnerRe, AXIS Specialty, Arch Capital, RenaissanceRe, Endurance Specialty, Aspen, Allied World Assurance Company (AWAC), Platinum, Max Re, Montpelier Re, IPC Re, Quanta, White Mountains and PXRe.

Although all but one of the re/insurers looked at by Benfield (AWAC) are public companies, there are a number of other Bermuda-based listed re/insurers that do not feature in what is called the ?Benfield Bermuda Quarterly?.

Through the third quarter, all 16 companies reportedly recorded higher premiums and total premium income was said to have increased by 18 percent to $43 billion compared to the 32 percent growth rate achieved during the same period a year prior. ACE Limited was said to be the largest of the players with 30 percent market share followed by XL with 21 percent of the pie. Third was White Mountains which trailed with a nine percent share.

Benfield said that in 2004 there had continued to be a ?substantial focus on casualty? which it explained as a reaction to the more attractive pricing along these lines.

The report pointed out that RenaissanceRe ? which said earnings would be reduced by approximately $425 million as a result of hurricane activity in the third quarter ? ?was notable for its continued diversification into non-catastrophe lines?.

Looking ahead, the Benfield report predicted that catastrophe losses seen in the third quarter ? which it said are already at the top of the historical range ? may slow and stabilise the decline in catastrophe pricing.

In the short term, however, with reinsurers? balance sheets still intact and robust, rates could still be expected to decline outside the storm-affected regions in the forthcoming renewal season and into 2005.

While Benfield said the third quarter?s storm clouds had disappeared as quickly as they arrived, the report said a shadow lingered over these companies as a result of the probe of New York Attorney General Eliot Spitzer, as well as other regulatory bodies looking at various market practices and use of non-traditional finite risk reinsurance products.