Almost eight out of ten Bermuda reinsurance CEOs do not see potential growth in the reinsurance industry, according to a recent survey.The consensus view of Island reinsurance bosses polled by accountancy firm PricewaterhouseCoopers (PWC) reflects the challenging market conditions faced by reinsurers and does not bode well for the expansion prospects of the Bermuda market.An over-supply of reinsurance capacity and a lack of major hurricanes making landfall in the US have served to keep downward pressure on rates.And while many Bermuda companies have continued to report respectable profits, a report by ratings agency AM Best released last week found that the release of loss reserves was an unsustainable driving force behind the results.The PWC survey was conducted earlier this year to provide material for a white paper entitled “Unfamiliar times displacing familiar strategies”.The author, PWC partner Arthur Wightman, who is based at the firm’s Bermuda office, believes the industry may have reached an inflection point of a “landscape shift”, which presents opportunities for those who can come up with fresh strategic thinking.“Most CEOs we interviewed had not felt the need to change their business models following the financial crisis,” Mr Wightman wrote.“But if you examine the issues that are crowding in on the industry, set against a desire to maximise future opportunity, it is clear that change is needed now.”Reinsurers have to do more than hunker down and wait for another industry-dislocating event to turn the market, if they want to take advantage of the opportunities arising now, he added.Discipline and capital management were of great importance during the down cycle, Mr Wightman stated, adding: “It is our view, however, that strategic re-positioning and capital investment to drive future growth are complementary to capital management, even essential, given the ‘new normal’ to which the reinsurance market must adjust.”The paper goes through several areas with growth potential, including innovation, distribution and risk transfer, Solvency II, emerging markets, market positioning, non-traditional reinsurance and mergers and acquisitions.An example of innovation was the facility for offshore drilling insurance sponsored by Bermuda re/insurer Torus and launched in September. Innovation could provide differentiation at a time of reinsurance commoditisation, he added.The paper also proposes that the industry move away from knee-jerk responses of reducing cover and pushing up prices following major dislocations and instead seek closer partnerships with reinsurance buyers.One surveyed CEO had said: “Reinsurers need to be more transparent and explain their business. Creating true partnerships between reinsurers and clients helps with this perception as well.”The paper found that the Bermuda market could benefit from three possible outcomes stemming from the implementation of the new European Union rules for insurers, known as Solvency II.“The first is a straight increase in demand for reinsurance,” the paper states. “The second is likely to be through innovation and product development as a direct result of insurance companies seeking to manage their capital positions in an effective way.“The third is through mergers and acquisitions as smaller, specialty players find themselves unable to meet new capital or compliance hurdles. This could result in some ‘fire sales’ as the Solvency II deadline approaches, which represents opportunities for those companies able to unlock value quickly from these entities.”A large share of new capital coming into the industry after a dislocating event is expected to come in the form of sidecars, catastrophe bonds and other forms of insurance-linked securities, the paper states.Mr Wightman concludes that “decisive and well executed business model transformation strategies may be the only way to guarantee success when the cycle turns and markets harden”.The full white paper is available online at www.pwc.com/bm