The latest wave of insurance companies to set up on the Island will not grow as quickly as those set up in the 1980s and 1990s in Bermuda, according to James Stanard, head of Renaissance Re and its new reinsurance company DaVinci Re.

In an interview with The Royal Gazette, Mr. Stanard said that there was not as much of a crunch for capacity as there has been in the two waves which have helped make Bermuda one of the world's leading insurance markets.

"Existing companies are open for business providing more capacity, so you don't have the same kind of window for companies to come in to a void in the market," said Mr. Stanard, who is chairman, president and chief executive officer of Renaissance Re.

"But I think the new companies are going to need to, I don't think they will be able to grow as quickly as those companies that were started in a situation of a total lack of capacity."

DaVinci was set up in the wake of the September 11 attacks by Renaissance Re to take advantage of new market conditions, and was assigned an A rating by A.M. Best and Standard & Poors'.

DaVinci is a strategic joint venture formed by Renaissance Reinsurance Ltd. and State Farm Mutual Insurance Company to write various property/catastrophe cover on a worldwide basis.

The funding of the new venture with initial surplus of $500 million, with State Farm investing $200 million. Announcements about other investors will be made later this week.

Mr. Stanard said:"DaVinci is obviously a new company... but it is not a new company in that it is going to write business that is parallel with Renaissance. So it will be getting a very similar portfolio of property catastrophe business to what Renaissance Re gets.

"This is similar to the agreement that we currently have with OpiCat. OpiCat is owned by Overseas Partners Ltd. They capitalised it with over $400 million of equity. We are the underwriting manager for OpiCat and we write property catastrophe business into OpiCat parallel to what we write into Renaissance. So DaVinci will also be a parallel vehicle."

When asked why DaVinci was formed and not extra capital added to Renaissance Re, Mr. Stanard said: "We did put more capital in Renaissance we raised $230 million of equity and $150 million of preferred stock.

"But to be able to bring in another $500 million is really too big in terms of Renaissance's own equity base to be able to increase the size of the company. So it makes more sense to have a separately capitalised vehicle. This is also an opportunity for the investors in DaVinci to basically not have the common stock equity risk, and they are just focused on getting the reinsurance business."

He added that business was doing very well, but did not reveal how much the volume had increased since September 11.

He said: "The opportunity is very good because Renaissance is one of the largest writers of property catastrophe excess reinsurance in the world. We have got an excellent stable client base so DaVinci is not really being treated as a new market, it is being treated as an existing market, because we already have the client relationships inside of Renaissance.

"The volume of business has increased significantly "

Da Vinci Re was one of the first of seven companies so far formed to provide fresh capacity to the property catastrophe reinsurance market in the wake of the September 11 terrorist attacks.

The seven companies have a combined capital of nearly $7 billion. Further announcements about new companies are expected to take this figure up to $9.5 billion.

Da Vinci Re will provide companion line capacity for business underwritten by Renaissance Re, a recognised leader in the property catastrophe reinsurance market.

The company is housed in the Renaissance Re building on Crow Lane.