A benign first quarter of 2007 coming on the heels of the uneventful 2006 season has topped up the capital reserves of Bermuda's 16 leading reinsurers.

Between them they boast an on-Island capital base of $66.6 billion, up $3.3bn from a year ago.

That increase is mostly the result of being able to hold on to the more than $3.1bn profit accrued from the first three months of this year, with no significant losses.

The biggest single event was European windstorm Kyrill, which cost the Benfield group a combined $450m.

The latest Benfield Bermuda Quarterly report, which focuses on the Island's 16 leading reinsurers, shows that despite a general softening of the market, underwriting discipline and increasing client retentions slowed top-line growth.

Total written premiums for the 16 companies in the first quarter of the year was $17.3bn, a one percent fall on the same period a year ago, despite efforts by some companies to write more premiums in expectation for weaker renewals for June and July, according to Benfield.

"The general consensus described a drifting market with rates falling between five and 15 percent overall," said Leon Janeke, who is part of Benfield's Industry Analysis and Research team.

"Despite the softening environment, many attractive opportunities remain for writing technically profitable business and Bermuda's reinsurers appear confident ahead of the 2007 hurricane season."

The aggregate combined ratio for the group is 87.2 percent.

Other highlights of the report show:

[bul] The market was generally described as drifting downwards following the lack of any significant losses to provide a floor support to rate levels. The consensus view appeared to settle on rates falling by between five percent and 15 percent overall.

[bul] Despite a softening in the pricing environment, many attractive opportunities remain for writing technically profitable business and Bermuda's reinsurers appear confident ahead of the 2007 hurricane season.

[bul] Legislative changes in Florida appeared to be less of an issue than initially feared.

A financial snapshot shows Everest Re has reached base camp on the route to climbing the Bermuda profit mountain that is dominated by Ace and XL Capital.

Its first quarter profit for 2007, which weighed in at $298 million, put it in third place behind the two on-Island giants who made $701m and $563m respectively.

Corporate confidence has led to a number of large share buy-backs, including two of $1bn each.

The Benfield Bermuda Quarterly Report notes that, with the reduction in premiums written, "the stable revenues point to increased competitive behaviour in the marketplace. Indeed, as groups look to sustain and protect their market-share, the focus on innovation and deal-making has become evidently sharper."

Max Re, Renaissance Re, Allied World and Platinum recorded the largest reduction in premiums, with Renaissance Re lower by $116m. The most successful year-on-year was newcomer Lancashire, showing a 61 percent improvement in its second year to $181m for the quarter.

In terms of market share amongst the 16 leading Bermuda players, Ace remains comfortably in charge with 26 percent of the total gross written premiums for the group. The biggest market share improvement was by Axis which went from seventh place a year ago to equal third with Partner Re behind Ace and XL.

Underwriting performance's show that White Mountains was the only company with a combined ratio over 100. It recorded 106.2 percent in the first quarter driven by the highest expense ratio of the group at 40.9 percent, Max Re's 97.5 percent combined ratio was principally due to the highest loss ration in the group at 69.3 percent.

The average combined ratio for the group was 87.2 percent, an improvement from 89.4 percent a year ago.