One of Bermuda's newest reinsurers – Goshawk Re – has posted close to $60 million in business written during its first six months in operation, which management claimed was in line with "ambitious expectations".

The amount is however less than half of the $150 million in business the company has said it plans to write during the year and significantly under the business that has gone to some of its competitors. But management has said it is working to increase its level of capital, with solvency capital standing at $151 million at June 30, so that it can capitalise on business opportunities in the current hard market and a surge in demand and pricing.

The company – which was the seventh of more than a dozen large insurance companies to set up on the Island in the wake of "unprecedented business opportunities" following the September 11 terrorist attacks – incorporated in November, 2001 but began operations early this year.

In total, gross premiums written by the new Bermuda venture accounted for 15 percent of parent company Goshawk Insurance Holdings's business for the six months ended June 30, 2002. Goshawk, which also owns and manages Lloyd's Syndicate 102, is listed on the London Stock Exchange.

Goshawk, which is now set up in offices on the fifth floor of Par-la-Ville Place, said of its first set of results: "Goshawk Re's first six months of operation and underwriting have been successful and have met ambitious expectations. Gross written premiums of ?36.4 million are in line with budget and we are pleased by the amount and quality of business that we have been shown. Goshawk Re has written marine excess of loss, non marine property catastrophe, aviation excess of loss and satellite business."

The company added that only a small proportion of business written during the year had been earned in the first six months.

CEO Chris Fagan said: "Rating conditions are excellent both in the London market and in Bermuda. Our strategy of establishing a business in Bermuda was well timed and is paying off. Our underwriting operations in London and Bermuda are taking full advantage of attractive premium rates in both the direct and reinsurance businesses."

But the company also recognised that it could be writing more business: "After nearly nine months of operations it is clear that opportunities to underwrite profitable business in Bermuda exceed that which would be prudent in relation to Goshawk Re's capital base.

"The Group's only gearing is a ?20 million letter of credit from Barclays Bank supporting underwriting at Lloyd's. We expect that additional gearing (lending) at this point in the insurance cycle will enhance the group's return on capital employed. Over the next few months we intend to increase gearing at the group level, most probably through a bank facility, in order to increase the solvency capital of Goshawk Re.

"We expect the current hard market to be prolonged for some time as a result of the impact of significant losses in 2001, the loss of capital from declining equity markets and lower investment returns, and despite the recent capital inflows to the industry. This will continue to provide opportunities for improving return on capital on which the management team is focused," the company said.

The company said, at the time of its incorporation, that it had chosen to come to Bermuda, instead of the UK, because it was a more attractive place to do business. Chairman David Hooker said, at that time: "The larger part of our expansion is planned through a new Bermuda reinsurance company which will benefit from a more attractive fiscal and regulatory regime than in the UK."

And Mr. Fagan added: "We think that we can use (the) capital from the placing more efficiently in Bermuda than we would be in London, and also you can write at a much lower cost base in Bermuda. So there is a combination of an efficient use of capital and a lower cost base also not to be overlooked, there is the beneficial tax regime in Bermuda as well."