Amlin Plc., a Lloyd?s of London insurer which opened its new Bermuda unit on December 1, is seeing strong sales in the Japanese market, boosting its chance of meeting an ambitious target to create sizeable shareholder returns in its first year of business.

?A lot of the Japanese business is going through Bermuda? that used to go to London, said Eamonn Flanagan an analyst with Liverpool, UK-based Share Capital.

Mr. Flanagan said Amlin Bermuda?s ?very strong? reception in Japan made him ?more optimistic? on the reinsurer?s prospects. A fortnight ago, he held reservations, concerned that the fledgeling $1 billion reinsurer was being overly ambitious in going after a substantial return on equity in its first year in operation.

While many reinsurance policies are renewed around the world at the beginning of the year, Japanese insurers typically renew reinsurance protection around April 1.

Underwriting director John Andrews, in an interview, said he travelled to Japan in recent weeks to personally drum up business. It was his first business trip since opening Amlin Bermuda late last year.

In total, Amlin has its sights set on selling $350 million in policies this year. Insurers earn policies over the course of the contract period, meaning that Amlin needs to record significant business early in the year if it is to record sizeable earnings in 2006.

Through February, Amlin sold $72 million in new policies. ?That is new business,? Mr. Andrews said. ?Had we not been here, Amlin as a group would not have had that additional business.?

And it is due another $70 million in business through internal agreements with the Amlin operation in London. That brings it to roughly 40 percent of its 2006 target.

Amlin was one of a wave of new insurance companies to form on Bermuda to take advantage of rising prices in 2006. Hiscox Plc., another large Lloyd?s of London insurer, also formed a Bermuda reinsurer late last year.

While Hiscox is also planning big things for its Bermuda operation, targeting 2006 sales of $325 million, Mr. Flanagan said it is not counting on making a significant return on equity until 2007, which he cites as a more realistic goal.

Policies sold to Japanese insurers can only move Amlin?s Bermuda unit closer to its target. It can also count on more sales from US buyers in the middle of the year.

?Everyone we saw said they would offer us some business,? Mr. Andrews said, of Amlin?s prospects in Japan. ?They?ve known me for ten to 15 years and they say ?You are Amlin?. Everything stacks up for them to be offering us business.?

Rates for Japanese excess of loss policies were ten to 15 percent higher than a year ago, Mr. Andrews said, and policies still need to be priced higher, especially if the policy covers damage from wind.

Excess of loss contracts are only triggered if the loss suffered by the insurer exceeds a certain threshold.

The next hurdle for Amlin Bermuda is the July 1 renewal season, when US insurers renew reinsurance policies, largely to lay off property-catastrophe risks as the Atlantic hurricane season kicks in.

Expectations are that hurricane-prone areas like Florida and the Gulf Coast will see premium rates as much as double after insurers last year absorbed as much as $80 billion in claims from storm damage.

Mr. Andrews said he?s waiting to see if expectations pan out. ?It will be very interesting because there is a real scarcity? of insurance and reinsurance.

The industry has adopted a more cautious approach after some parts of the US were torn apart by storms over the last two years. A heavy hurricane season is also being forecast for 2006. While the rates that insurers and reinsurers need to charge to stand a chance of making a profit varies depending on the risks, Mr. Andrews said, at the most basic level, the policies that Florida homeowners buy will have to double in order to be cover the risk of loss.

?If the rates are correct, our appetite will be unchanged,? he said.

And if rates don?t rise significantly? Mr. Andrews said Amlin will scale back the business it does in Florida. Amlin, as a reinsurer, sells coverage to insurers, thereby assuming some of the risks in policies sold to individuals and corporations.

Amlin sells to one-state and regional insurers over companies selling policies nationwide, which Mr. Andrews said gives the company greater underwriting control. Although Amlin Bermuda doesn?t have much of an underwriting track record yet (Mr. Andrews said the company has so far only had one claim), Amlin Plc., its parent company, last year managed to do what many others in the sector could not; post a profit despite record catastrophe losses.

On March 10, Amlin reported a 2005 pre-tax profit of ?182.7 million, or about $319 million. The result was a 42 percent improvement over prior-year earnings, for the London-listed insurer.

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