More than 100 insurance analysts were on the Island this week to get the most up-to-date financial information on six of Bermuda's publicly traded companies - ACE, IPC Re, Max Re, PartnerRe, RenRe and XL - from senior executives.

But what were analysts pressing the company CEOs and CFOs on? There were all sorts of questions being asked, but generally analysts attending the conference - there were more than 150 buy and sell side analysts from both the US and Europe - said the two areas coming under the greatest scrutiny were a company's investment returns and the pricing, terms and conditions of their product. An American analyst - who, as with other analysts asked not to be named according to their company policies - said prices were going up in the hardening market, and he said he was happy with the rate increases he'd seen so far.

He predicted the hard market - an environment in which insurance is more expensive and in short supply - could continue through 2003 and even into 2004.

But the news from three insurers on Monday - XL, Partner Re and Max Re - that lower investment incomes could adversely affect earnings was not taken well by some analysts.

One said: “Conceptually it is hard to understand. Are they just waking up now? Interest rates are down, but suddenly this is shocking news.”

Another analyst added: “Isn't it stating the obvious that investment income could take a hit?”

But some analysts said that as lower investment income was to be expected, they were looking more at how companies were invested in this market and how they could make up for lower investment income on the underwriting side: “I like to see a company that doesn't take on too much investment risk,” one analyst said, and he also called for “tighter underwriting from insurers, and not just on the pricing side but on terms and conditions as well”.

He added that as long as companies were prudently invested he wasn't concerned: “I don't worry too much about investments, the markets will correct themselves eventually.”

Speaking of the opportunities to make money on the underwriting side, a different analyst pointed out that things looked good for some of the Bermuda insurers as the hard market cycle could be protracted especially with several European insurers taking “huge hits”. He added that it could also emerge that some US insurers were not doing so well, and echoed the oft-heard conference speculation that the cycle could extend into 2004.

Although citing the current market as ripe with opportunities for underwriting income, another American analyst was pleased with some Angle companies but said not all appeared strong: “It's been a bit of a mixed bag. But it is the first time that I can say insurers are really well-positioned - especially specialty insurers and reinsurers. But pricing needs to go up a lot more - across the industry there are huge pockets that are under-reserved.”

Speaking further on local companies, this analyst cited Max Re as one company he was not “thrilled” with after their presentation on Monday. Max Re has shifted its business model from a dependence on investment income to a focus now on more traditional insurance products. On the flip side, he said “RenRe seems very strong.”

Another analyst added: “I like the guys who are focusing on their core business and that get their core pricing up significantly.”

He cited ACE as an example of a company that was doing a “great job” in contrast to XL which he cited as “being in this business and that business. It sounded like a mess.

“But ACE, I like it. They were focused on their primary business and I don't want to see (a company) taking risk in their investment book. ACE convinced me of that, but I felt XL wasn't doing a great job at focusing things.”

Another analyst on the ACE bandwagon - and immediately after the company had presented on Tuesday morning - said: “There was an increased level of disclosure, they were very forthcoming. They went through their business line by line, including asbestos and they have made changes in their terms, conditions, attachment points...”

One of the analysts added as an aside that ACE senior vice-president Patricia Henry, who gave the company's presentation on asbestos, had been ACE's trump card at Angle: “Everyone was swarming around her after the presentation and (CEO) Brian Duperreault was looking for someone to talk too...,” he said.