Bermuda?s financial services regulator has licensed five more major reinsurers in November, bringing the total number of start-ups moving into the market to 11, in anticipation of improved pricing on 2006 policies.

Those granted class four licenses ? reserved for highly capitalised companies ? in November were Ariel Reinsurance Company, Limited; Ascendant Reinsurance Ltd.; Castellum Re Ltd.; Flagstone Reinsurance Ltd. and New Castle Reinsurance Company Ltd., according to a bulletin last night from the Bermuda Monetary Authority.

Already licensed in October were Amlin Bermuda Ltd.; Arrow Capital Reinsurance Company, Limited; Harbor Point Re Limited; Hiscox Insurance Company (Bermuda) Limited; Lancashire Insurance Company Limited and Validus Reinsurance Ltd.

In addition to a rush of new incorporations, with the companies aiming to all be off the ground before the pivotal January 1 renewal season, there is also a push to obtain financial strength ratings, especially from the leading ratings agency A.M. Best.

The ratings are a key component to being able to attract business from a wide range of clients, with some corporations being bound to buy policies from companies rated with a financial strength rating of ?A-? or higher.

AM Best is expected to assign initial ratings on several of the new companies within the month, including on Ariel Reinsurance Co. Ltd., Amlin Bermuda Ltd., Harbor Point Re Ltd., Ascendant Re Company, Ltd. and Lancashire Insurance Company Ltd.

New Castle has already secured an AM Best rating ?A-?.

In addition the wave of new ?Class fours?, there have several others formed with significant capital but to provide reinsurance to existing Island insurers. One of these is a venture that XL Capital is to work with: Cyrus Re, a $500 million reinsurer, was formed to have a quota-share agreement with the insurance giant.

And Montpelier Re, another Bermuda insurance and reinsurance company, also last month formed Blue Ocean Reinsurance Ltd.

The race to form new companies is being spurred on by the prospect of higher pricing for various types of insurance and reinsurance policies come up for renewal. Most reinsurance contracts are inked on January 1, or earlier, for the new year. But the policies expected to go up most in price ? those covering damage from catastrophes like hurricanes ? may not be renewed until mid-year.

The overall rise in pricing, called a ?hardening? of the market, is anticipated because of a capacity crunch that could materialise as a result of up to $80 billion in losses from a wave of deadly hurricanes ? Katrina, Rita and Wilma in August, September and October.

And an active 2006 hurricane season has already been predicted (see separate story) which could spur demand for this type of policy. As is typical after a costly catastrophe, new capital has been flooding into the Bermuda market both to back the wave of new companies, and to shore up the capital at established companies badly hit by losses.

In total, more than $15 billion has already been raised ? at least $9 billion of which is going to back the start-ups. And $6 billion in equity, hybrid and debt securities have been sold by established companies, with another $3 billion in securities offerings on the table.

Cyrus and Blue Ocean ? referred to in industry parlance as ?side-car? vehicles because of their focus on doing business with one company ? have been classified by the BMA as Class three companies, most likely because of their more limited business plans. I

n contrast, most class four companies offer broad third party insurance and/or reinsurance.

Bermuda insurance group White Mountains is also believed to be working with investors to recapitalise Olympus Re, an insurer it formed in late 2001 principally to provide quota-share reinsurance to the group?s reinsurance units.

Olympus saw most, if not all, its $600 million in capital wiped away by storm losses incurred by White Mountains? reinsurance companies Folksamerica and Sirius last year and this year. The reinsurance recoverables are collateralised, according to company records.

November?s new players are:

Being set up by former ACE executive Don Kramer and investors, the company, with $1 billion in initial capital, may have got a head start on some of the other companies by reaching an agreement to take over the infrastructure of reinsurer Rosemont Re, a Bermuda company owned by troubled UK parent, Goshawk Insurance Holdings Plc., that is now effectively in run-off.

Mr. Kramer is to be chairman and chief executive of Ariel, which is named after the sprite in William Shakespeare?s Bermuda-based epic, ?The Tempest?.

Mr. Kramer set up Tempest Re, a company later bought by ACE, in 1993 after Hurricane Andrew. Tempest was focused on selling property-catastrophe policies while Ariel is to be a ?broadly diversified company? selling a range of reinsurance products.

Under the arrangement with Rosemont, Ariel will take on Rosemont?s Queen Street, Hamilton office space, its modelling capabilities to help assess the risk of loss in each contract, and other technology infrastructure. Ariel will not have exposure to any business already written by Rosemont.

About 20 Rosemont staff are joining Ariel including Russell Brooke and Jonathan Beck, who were formerly CEO and CFO. Also joining Ariel are George Rivas, who founded Tempest Re with Mr. Kramer and served as its chief operating officer. Mr. Rivas is to be a special advisor to Ariel. And Mark Herman, previously president of ACE Bermuda, is to become president of parent company, Ariel Re Holdings Ltd. Mr. Herman, a professional-liability specialist, is to help build Ariel into a diversified company selling numerous types of insurance policies.

Ascendant Reinsurance Ltd. is being formed by David Whiting, Richard Black and Rick Pagnani.

Mr. Whiting and Mr. Pagnani were until recently senior reinsurance executives working for Bermuda insurer Quanta Capital Holdings.

Other information, including the company?s initial capitalisation, has not been disclosed.

Castellum Re Ltd.?s backers and principals are not known.

Flagstone Reinsurance Ltd. is being launched by Bermuda hedge fund management company West End Capital.

West End partnered with Bermuda reinsurer Montpelier Re earlier this year to form $91 million Rockridge, a Cayman Islands reinsurer, but is setting up Flagstone as a stand-alone reinsurer.

Plans are to capitalise Flagstone with between $750 million and $1 billion. Flagstone?s business plan is largely to sell property-catastrophe reinsurance, and it could also sell a small percentage of short-tail casualty policies.

Flagstone?s chief executive is to be David Brown, who is currently a principal of West End. Mr. Brown was previously chief executive of Centre Reinsurance, a Bermuda company now effectively closed that focused on selling finite reinsurance. Guy Swayne, most recently of ACE, is to be Flagstone?s senior underwriter.

New Castle Reinsurance Company Ltd. is being formed by hedge fund company Citadel Investment Group LLC. Citadel set up its first Bermuda reinsurer, property-catastrophe focused CIG Re Ltd. in September 2004.

New Castle is the first off the marks with a strong financial strength rating. The company has earned an A- (Excellent) financial strength rating, and will be capitalised with $500 million and plans to sell property-catastrophe reinsurance as well as workers comp catastrophe and terrorism reinsurance.

Chris McKeown, formerly of ACE Tempest Re, is head of CIG Re and is also to lead New Castle.