Hannover Re ranks number one in a Standard and Poors Rating Services comparison of how five Bermuda-based property catastrophe reinsurers are responding to increased catastrophe risk.

The other providers of short-tail property catastrophe reinsurance ranked in the report "Peer Comparison: Bermuda Property Catastrophe Reinsurers" are IPCRe Ltd., DaVinci Reinsurance Ltd., PXRE Reinsurance Co. and Montpelier Reinsurance Ltd.

S&P's study takes into account each company's ability to assess and model for multiple events at a time when storm frequency, coastal populations, building values and inflation are all rising. The report focuses on lessons learned from natural catastrophes in 2004, when Hurricanes Charley, Frances, Ivan and Jeanne, the Indian Ocean tsunami and ten Japanese typhoons set new records for storm related damages.

S&P noted that these catastrophes are already driving change in a reinsurance line known for high profits and high volatility.

S&P scored Hannover Re Bermuda highest due to strengths that include a strategic and significant role in its parent's global strategy, strong competitive position, and extremely strong operating performance. The report notes that its weaknesses include a high concentration in property catastrophe reinsurance and an expected volatile operating performance inherent in its business profile.

The peer comparison report went on to differentiate the other property/casualty reinsurers based on their ability to manage volatility risk through their own risk management tools and underwriting capabilities. The report outlined each company's strengths and weaknesses based on competitive position, management and corporate strategy, operation performance, capitalisation, liquidity, investments and financial flexibility.

IPCRe ranked second with strengths including its competitive position, management and corporate strategy and earnings. S&P noted its weaknesses as concentrated premium profile, high equity allocation and low reinsurance utilisation.

DaVinci Reinsurance Ltd. landed in the middle of the ranking with strengths of consistent capitalisation, financial flexibility and its strategic importance to RenaissanceRe Holdings Ltd., which owns 25 percent of the company. S&P said its weaknesses are its concentrated premium profile, severity-prone catastrophe risks and low reinsurance utilisation.

PXRE Reinsurance Co. ranked fourth with S&P citing its strengths as an improved earnings performance and capital adequacy. The report cited its weaknesses as volatile historical operating results and limited business review.

Montepelier Reinsurance came in at the bottom of the ranking with including its competitive position, operating performance, capital adequacy and financial flexibility. The report said however that its weaknesses include high-severity risks, a limited track record and a concentrated management team.