prices, over-capacity and a soft insurance market, RenaissanceRe has gone from strength to strength. Chief executive and Bermuda Insurance Market Leader of the year James Stanard tells Sue Stuart why RenaissanceRe has succeeded.

Since founding RenaissanceRe in 1993, James Stanard has taken the company to the forefront of the market. While other companies in the industry generally suffered through soft market conditions and share price declines he led his company from strength to strength.

In January the company announced its sixth consecutive annual increase in quarterly dividend, an 18 percent increase in operating earnings per share for the year and a 21 percent return on equity. In terms of productivity for shareholders these figures placed the company at the head of the industry for the eighth year in a row.

RenaissanceRe also achieved 40 percent growth in managed cat premiums over the year. Gross premiums written for the last quarter of 2000 rose to $52.4 million, compared with $31.3 million for the same quarter in 1999. Gross premiums for the year ending December, 2000 were up to $433 million, $81.7 million up on the previous year.

Mr. Stanard attributes the tremendous success of the company to three main features -- a disciplined focus on the business it does, the right team of people running the business and having established the right culture within the company.

He also feels he is in the right location.

"Bermuda is a tremendous place to do reinsurance business,'' he said. "The tax advantage is one reason the market developed here. It is a uniquely attractive environment in which to do business and is now the largest for catastrophe/property business. It has a good regulatory environment and is considered one of the most creative locations.'' He explained the company focuses on three areas: "One: Risk selection. We have to select a portfolio of cat risk that is better than average to be successful. We were early to use computer models for natural catastrophes.

"Two: Customer-focused marketing. We try to be the first one back with quotations and the first one to pay claims.

"Three: Active capital management. We are willing to buy stock back and manage our capital base to fit the business available.'' Mr. Stanard has the relaxed bearing of one who knows his business inside out and upside down. Born in Chicago, he grew up near Philadelphia then went on to gain over 30 years working experience in property and casualty insurance and reinsurance.

He was working for Prudential Re in New Jersey when a colleague, Paul Ingrey, left to form a new US subsidiary of USF&G, F&G Reinsurance, taking Mr. Stanard with him as his number two person. He said: "We were operating in the broker market, using USF&G paper, and were very active in the casualty market when it hardened in 1985. F&G had the best track record of any reinsurance company in the 1980s. We were very profitable.'' A new chairman of USF&G then moved him back to the parent company where he was in charge of underwriting and claims.

"Two years later I put together the business plan for RenaissanceRe. I actually did it on my home computer over the Thanksgiving vacation.'' He got support from USF&G, General Electric Pension Fund and Warburg Pincus and in June 1993 resigned his job to start the new company.

"More than half our business comes from the US and we are now the largest writer of prop/cat in the world in terms of premiums. Over the last two years we haven't found ourselves surprised by any adverse loss experiences. Our results were consistent with what we would have expected. I feel our portfolio is appropriately priced and underwritten, so we are able to be pro-active and promote good service and quotations.'' Renaissance's man probabilities out of which it then creates a balanced portfolio of risks around the world.

Mr. Stanard said: "The field of modelling prop/cat started in the mid 1980s.

In the late 1980s USF&G was a test site for two models, catmap and catylist, but at that time there was not very good data as to where the risks were located. As a result of Hurricane Andrew in 1992, the primary companies put high level focus on where the risks were, which provided data for the modellers.

"We have developed our own model, REMS, but we also use all the models from major modelling firms. Having such a focus on modelling has given us a good insight into models around the world. And part of our success lies with the fact that all our underwriters have technical backgrounds and can effectively use these models in decision making.'' In the long term he wants to take RenaissanceRe to the next level and build on its success. " But it is important to keep the size manageable so the company doesn't change in character,'' he said.

About one and a half years ago the company set up an office in Dublin to cater for the European market, but the bulk of the business is done out of Bermuda.

"I have been here eight years. It is a great place to do insurance or reinsurance business with a lot of opportunities to cooperate with other companies.'' The Royal Gazette will profile Brian Hall, the other BII award winner, at the beginning of April when he returns to the Island.

Leading light: RenaissanceRe's's chief executive James Stanard will receive his Market Leader of the Year award tomorrow.