The pace has been fast and furious for Bermuda's newest insurance and reinsurance ventures - with a flood of more than 70 companies having set up on the Island in the wake of the September 11 terrorist attacks and a void in capacity.

A case in point is Arch Reinsurance Ltd., a broad-based multi-line reinsurance company set up by its Bermuda-based parent Arch Capital Group Ltd.and backed by two private equity firms Warburg Pincus and Hellman & Friedman and close to $1 billion in capital.

Moving quickly, Arch Re staffed up its operation to the point that it outgrew its office premises at Craig Appen House on Wesley Street.

But opportunity knocked as Arch Re then started its own subsidiary - Arch Insurance (Bermuda) Ltd. And the new company, which set up in March with a sole focus on insurance - its lines of business are professional liability including directors and officers and errors and omissions, property insurance and excess general liability insurance - assumed the Craig Appen House space as Arch Re moved to new offices in Wessex House.

But the Wesley Street address is to be a pit stop for Arch Insurance as well, with plans to move in a matter of months to Victoria Hall, according to its president Jim Ansaldi.

Mr. Ansaldi had just over a year before moved from a long tenure at XL to brokerage firm Aon, but he jumped at the chance to move on when Arch chair - insurance veteran Bob Clements - approached him about coming over to the new insurance firm.

Mr. Ansaldi said: “I have been on the underwriting side of the business for most of my career, and I had a prior relationship with Bob Clements and he asked me if I'd like to get back in to underwriting, and I jumped at the opportunity as I like to be on the decision-making side of the business,” he said.

Mr. Clements was the man behind both ACE and XL.

Although Arch - with parent company Arch Capital redomesticating to Bermuda last year - has US offices in New York, Chicago, San Francisco and Atlanta, Mr. Ansaldi said all of the international business will be directed to Bermuda.

The booming Bermuda insurance landscape follows hard on the heels of one of the first hard markets in over a decade. But although the slew of new business has been reported as opportunistic, Mr. Ansaldi said Arch's goal is not short-term cash generation but building models that will sustain long-term business operations.

An analysis in Fortune Magazine Online of the current property and casualty market described the quick actions of insurance executives in response to the September 11 terrorist attacks reported: “Consider: Less than a month after September 11 two P&C veterans met by hurried appointment in an Albany motel.... From Connecticut came Robert Clements, 69, chairman of an undistinguished insurer called Arch Capital - a public company listed on the Nasdaq - but better known for his executive years at insurance broker Marsh & McLennan.

“Then he made a career of starting commercial insurance companies - ACE and XL and Mid-Ocean - in a tax-friendly, bureaucracy-light Bermuda.

“Now, in that motel room, Clements pitched a new Bermuda fling to Paul Ingrey, 62, a retired and renowned reinsurance executive who'd driven from upstate New York. Clements did not need to do much talking. Two weeks later the two men publicly announced they were leaping into business under the Arch Name.”

Just over six months later Arch Re has spun off Arch Insurance, but the mad pace may have been stayed for now.

Mr. Ansaldi said although the company is growing it only intends, at least for now, to have 20 staff.

“Finding office space has not been easy to the extent that space is limited in Bermuda. But we are happy with the space that we are eventually going to assume in Victoria Hall as we are going to be right in the insurance circle in terms of where we need to be for accessibility to the brokers.

“And by the time we blossom our business we expect to have up to 20 people, and that is the number we are building the space for. We do have US offices so there is not the necessity to have 500 people down here.”

Looking forward, Mr. Ansaldi said the company's focus is long-term and building up its client base, and retaining those customers.

He said: “Our motto is that we want to see the clients that we are writing today also attend our tenth anniversary celebration.

“We are trying to build long-term relationships. We are not being opportunistic but working to provide a service to clients that want to be in the Bermuda market.”

Looking at the local insurance market, Mr. Ansaldi said: “There certainly is competition out there.

“But what we are seeing with many of the programmes we are looking at, is that although there is competitiveness there is still a shortage of capacity.

“For example, on some of the larger property placements, a year ago they had $2 billion in coverage and now they can only get to $1 billion even with the new capacity.

“Hence, there is a need for the new markets and yet there is an edge of competitiveness,” he said.

But Mr. Ansaldi added: “There will still be business that we will walk away from if we think it is underpriced. We do reserve the right to say no.”

Although there has been a global push for tighter underwriting of insurance, Mr. Ansaldi said that the Bermuda market has through the years shown resiliency and also the ability to let business go.

He said: “If you look at the results of some of Bermuda's major insurance companies you would see that there revenue streams based on pure insurance operations out of their Bermuda offices dropped off by probably as much as 40 to 50 percent in the mid-1990s. And yet you look at them today and see that they are stronger than ever.

“Some people frowned on that as losing all this money, but in effect those companies are still standing and they are primed to write business in what is potentially one of the hardest markets that we have seen in the last 15 years.”

Mr. Ansaldi said this showed that the underwriting integrity never really left Bermuda: “This was one of the few venues where the underwriting integrity stayed pretty level. And we did see a lot of the commercial markets outside of Bermuda become cash-flow underwriters.”

“And I know that is the same plan that we have at Arch. We will only write business when we see it will be profitable. We would rather let business go then write it at a loss. That is our long-term strategy.”

Mr. Ansaldi added: “I can say categorically that one of the main goals of Arch is that we are here to underwrite for a profit. We are not top-line driven. My underlying philosophy is that we should not necessarily be a top-line underwriter, but a bottom-line underwriter. And Arch's management has agreed that will be in the best interest of our shareholders and of our long-term policy holders as we are confirming that they will have a market to come back to year after year.”

Although all of the underwriting is being done in-house, Mr. Ansaldi said: “In the early days we might potentially outsource some of the claims services.”

So far, the company has not had any claims against the business already written although Mr. Ansaldi said: “When you are writing property business you have to be aware that you can have a claim the day after you write the account.

“The exposure is there to have a claim tomorrow but at this point we would hope not to be inundated with claims.”

As to the reason for the Arch group setting up some of its key operations in Bermuda, Mr. Ansaldi said: “Everyone thinks that companies run to the Island for the tax advantages. But quite frankly, it is more for the regulatory advantages with being set up in Bermuda.

“You can hit the ground running, you don't have to deal with the regulatory issues that you come up against in the US in terms of dealing with state commissioners in all 50 states.”