Bermuda's insurance sector grew by almost a third in 2001, according to figures just released by the Bermuda Monetary Authority (BMA). Net premiums earned in Bermuda that year - in effect, the Island's insurance capacity - totalled $41.6 billion.

Gross premiums for the year 2001, the total business written by all Bermuda-based companies before counting reinsurance, stood at $49.0 billion.

Capital and surplus in the Bermuda market at December 31, 2001 totalled $65.8 billion. Total assets at that date were a record $172.6 billion. Bermuda added (net) $26.6 billion in new assets in 2001.

The size of these numbers is best understood in context. Bermuda's insurance and reinsurance capacity in 2001 was $41.6 billion. Lloyd's stated capacity for 2003 is $23.2 billion - only just over half of Bermuda's capacity two years earlier. Lloyd's describes itself as "the world's biggest insurance market", yet Bermuda is more than twice its size, by capacity, the most important measure.

Global reinsurance capacity in 2001 - reinsurance is Bermuda's specialty - was $124.0 billion, according to Standard & Poor's. The entire US property and casualty market had capacity of $282.9 billion at June 30, 2002.

The notion that Bermuda has insurance capacity almost a quarter the size of that of the United States will raise some eyebrows. Bermuda's market share has benefited from its own growth and simultaneous shrinkage in the North American markets. In the first half of 2002, North American capacity dropped by 3.68 percent, Standard & Poor's has reported, citing poor underwriting and low interest rates. By contrast, Bermuda has kept growing.

One final comparison is germane: net premiums earned in the Cayman Islands for the year ended September 30, 2002 totalled $4.0 billion, less than 10 percent of Bermuda's net premiums.

Bermuda's current capacity is certainly larger now than it was at December 31, 2001, the date to which data from the BMA relates. In 2002, significant new capital was injected into the Bermuda market.

Premiums on some Bermuda lines improved by more than 300 percent that year, according to local brokers. Bermuda's 2003 net capacity is probably nearer $50 billion, although it will be two years before that statistic will be released.

The report on Bermuda's insurance sector is the first set of annual statistics to be released by the BMA following the recent restructuring of the Island's regulatory responsibilities.

The Registrar of Companies previously released the figures.

For the year ended December 31, 2001, gross premiums written by the Bermuda market totalled $49.0 billion, ahead by $10.8 billion, or 28 percent, on a year earlier.

Net premiums for 2001, at $41.4 billion, grew similarly, by 29 percent.

Total assets employed in the Bermuda insurance sector at December 31, 2001 increased by $26.6 billion, or 18 percent, during 2001 to a record $172.6 billion at December 31, 2001.

Eight new major insurance companies were incorporated in Bermuda in the final quarter of the year, following the events of September 11, 2001.

The new capital those companies brought to Bermuda was accompanied by an almost similar amount of capital raised by the largest existing Bermuda insurers and reinsurers in the same period.

In 2001, gross premiums earned grew in each of the five classes into which Bermuda law categorises insurance companies:

Long-term companies' gross premiums grew by 52 percent, to total $3.9 billion for 2001;

Class 4 companies' gross premiums grew by 57 percent, to $10.2 billion;

Class 3 companies grew by 21 percent to $26.5 billion, showing that the huge companies that draw the headlines are not as big, as a group, as the smaller companies, mostly captives, that populate Class 3;

Class 2 companies grew by 16 percent to $6.2 billion; and

Class 1 companies grew by 21 percent to $2.2 billion.

For the year ending December 31, 2001, the ratio of net premiums earned to capital and surplus was as follows:

For long-term companies, the ratio was 1.61, meaning that $1.61 of premium was written for every $1 of capital and surplus;

For Class 4 companies, the ratio was 0.48;

For Class 3: 0.74;

For Class 2: 0. 47; and

For Class 1: 0.31.

By comparison, US companies aim to write $1 or more of premium for every $1 of capital and surplus.

Given that a high percentage of the Class 4 Bermuda capital at December 31, 2001 was brand new and therefore unused, the ratio in that class will have increased since then.

The ratios recorded in 2001 marked an increase across every category, marking a more intensive use of funds in Bermuda, which is roaring forward on its way to becoming the world's risk capital.