Duperrault upbeat on property-casualty rates

NEW YORK (Dow Jones) - Property-casualty insurance rates should remain "hard," if not rise, in many lines into 2004, Ace Ltd.'s (ACE) top executive said Monday.

Speaking at a luncheon at the Association of Insurance and Financial Analysts' conference in Scottsdale, Arizona, Brian Duperreault, the Bermuda insurer's chairman and chief executive, said the US property-insurance market has corrected itself in recent months. However, property-insurance rates continue to rise outside the US, especially in Europe, he said. At the same time, casualty-insurance rates are rising in many lines, he said.

Terrorism coverage, now offered as a result of a federal terrorism backstop for insurers, isn't flying off the shelves, Duperreault said. A large number of clients are rejecting terrorism coverage at current prices, he said.

Those that purchase terrorism insurance are often doing so at the request of third parties, such as lenders, he said. Capacity to write new insurance is shrinking as it has become more difficult for insurers to go to the market for new capital, Duperreault said. Secondary offerings, in particular, are very expensive, he said.

A number of insurers also are exiting lines of business because of weak balance sheets and higher perceived risk.

Endurance, Platinum join BSX

The Bermuda Insurance Index Advisory Committee today announced that pursuant to Section 4 of the Ground Rules for the Management of the BSX Bermuda Insurance Index, Endurance Specialty Holdings (ENH) and Platinum Underwriters Holdings (PTP) have been added to the Index's constituent base with immediate effect.

The total number of Index constituents now stands at ten, with a combined market cap of $30.4 billion.

Top Layer sees rating lowered

Bermuda-based Top Layer Reinsurance Ltd.'s A.M. Best rating was lowered to A+ (Superior) from A++ (Superior) yesterday.

The action follows a ratings downgrade of State Farm Mutual Automobile Insurance Company. State Farm own 50% of Top Layer in a joint venture with Renaissance Re.

While A.M. Best affirmed the financial strength rating of A++ (Superior) of State Farm, a negative outlook was assigned to that company reflecting uncertainties relating to several issues, including its prospective operating performance and its significant exposure to equity market volatility.

A.M. Best believes the credit quality of Top Layer's most significant backer has been modestly reduced and, as such, has lowered Top Layer's rating to below the A++ level.

According to the A.M. Best appraisal, as a reinsurer, Top Layer is itself dependent for capital reserves on reinsurance it receives from State Farm and RenaissanceRe.

State Farm provides Top Layer with a $3.9 billion pool of reinsurance for any claims Top Layer receives in excess of $100 million. Top Layer also receives backing from State Farm and RenaissanceRe in the form of letters of credit totalling $75 million and the option to make a capital call to these companies each fiscal year for up to $100 million.

State Farm's financial strength is still judged to be superior and Top Layer has an outstanding track record of operating results attributable to RenaissanceRe, who underwrites all the risks undertaken by the company. A.M. Best will continue to monitor Top Layer and the impact that any developments with State Farm may have on its rating.

Conexys extends BSX suspension

Communications company Conexys Corporation have reported that it still does not have the funding for its immediate operating requirements and has asked the Bermuda Stock Exchange to extend its trading suspension, begun on February 26.

The company reports it is exploring options in order to "retain and maximise value for shareholders" - including a restructuring its balance sheet and a restructuring plan with its major creditors.

Management has proposed a plan to creditors to allow them to convert their debt into preferred equity of the company and it is also looking to secure financing for near term operations from strategic partners and other third parties.