NEW YORK (Bloomberg) — Chris Harris, chief executive officer of Bermuda-based Montpelier Re Holdings Ltd., said low valuations for reinsurance companies will lead to more mergers.

Wall Street is "not showing much confidence" in reinsurance, which has been buffeted by declining premiums, Harris said yesterday at a conference in Boston about acquisitions in the business, sponsored by Macquarie Group Ltd.

Reinsurers, which reimburse insurance companies after natural disasters and other large claims, are seeking to merge to bolster capital strength. Competition in the industry, which expanded after Hurricane Katrina in 2005, has pressured premium revenue and the stocks of companies including Montpelier, and Bermuda-based competitors Everest Re Ltd. and Validus Holdings Ltd. All three trade below book value.

"I view it as an opportunity over the next couple of years," said Mr. Harris, whose Bermuda-based firm last made an acquisition in 2007. Deals may allow buyers "to really emerge in a strong position two or three years from now", he said.

Marston Becker, CEO of Alterra Capital Holdings Ltd., another reinsurer based in Bermuda, said that new interest in reinsurance companies by private equity firms showed that deals were gaining momentum.

He pointed to a bid for Brit Insurance Holdings NV, an Amsterdam-based reinsurer, by Apollo Global Management and CVC Capital Partners Ltd., which have made an £871 million ($1.4 billion) offer.

Dean Evans, an analyst at KBW Inc., said in an interview that potential buyers are hindered by low valuations of their own shares.

Clients and investors prefer carriers with large capital bases, Mr. Becker said in an interview at Bloomberg's New York headquarters in May. Alterra was formed in May by a merger of Max and Harbor Point.

Equity ranging from $2 billion to $3 billion is needed, he said. Eleven carriers tracked by the Association of Bermuda Insurers and Reinsurers ended 2009 with equity of less than $2 billion, according to data from the group.

PartnerRe Ltd., a Bermuda-based insurer, acquired Paris Re Holdings Ltd. in Europe's biggest reinsurance takeover of 2009.

Validus Holdings Ltd. acquired IPC Holdings Ltd. for $1.73 billion in 2009, after outbidding Max Capital Group Ltd. and Flagstone Reinsurance Ltd.