Bermuda as the centre for new insurance and reinsurance start-ups was the hot topic at a pre-RIMS conference in Arizona last month.

KPMG Bermuda partner Malcolm Butterfield was co-chair of the Mealey's Insurance Insolvency and Reinsurance Roundtable conference held in Scottsdale, Arizona the week before the annual Risk and Insurance Management Society (RIMS) conference in New Orleans.

Mr. Butterfield is head of corporate restructuring and insurance solutions at KPMG and was the first Bermudian to co-chair the conference and has also been asked to co-chair the 2003 conference.

Speaking with The Royal Gazette about the conference, Mr. Butterfield said Mealey's has been holding conferences for well over ten years and the attendance this year was the highest level for some time triggered by the fact that the Hawksmere conference had been cancelled and this was technically the first international insurance and reinsurance conference after September 11.

"You will see in fact that the very first panel dealt with catastrophic terrorism issues and in essence it was a post 9/11 panel discussion with some really dynamic people on the panel. That group did a fantastic job of dealing with Post 9/11 issues as they stand today," he said.

"It was interesting when you hear post 9/11 issues of capacity replacing the capacity that was lost as a result of the horrific losses of the twin towers. "They talked about a lot of the issues facing the industry from the perspective of how it will change the face of reinsurance going forward, the difficulties people have in getting terrorism coverage, the victims liability issues and the huge loss of life issues."

Mr. Butterfield said the Bermuda market frequently entered the discussion and said: "The new capital and the start ups got a lot of mention.

"There was a lot of interest in the start ups and the important role they will play going forward. And of course there was a lot of discussion on what will this look like a year from now.

"So that was an excellent start to the conference. In my mind we had some of the best people, Don Kramer of Ace, Fiona Luck of XL."

He said while RIMS dealt He said while RIMS dealt more with captives and risk management issues, the Mealey's conference examined more of the issues that Bermuda will face over the next 12 to 18 months.

Mr. Butterfield said: "When we got into the second panel discussion on recent developments in the reinsurance industry for example, we got into things like the impact of Enron on the reinsurance industry, we did an analysis of the clarity of understanding when it comes to dealing with insurance and reinsurance disputes from where the courts sit in both the US and UK jurisdictions and the fact that there is a need for more clarity, hence there seemed to be more leaning towards arbitration as opposed to litigation.

"In the recent developments we talked about the impact and the role that global regulation plays in the whole scheme of things as a result of the developments in the reinsurance industry, weather it be Post 9/11, Enron or asbestos. Debra Hall (senior vice president and general counsel, Reinsurance Association of America) did a marvellous job along with the other panellists of highlighting the challenges facing regulators and offshore regulators."

Mr. Butterfield said regulators needed to be in a position to respond to complex everyday events affecting the reinsurance industry and said: "The role of the regulator has increased globally and the need for oversight and the responsiveness to the types of reinsurance issues that are coming up from a regulatory level is critical going forward.

"Basically, one of the things that this conference deals with is what are the solutions available to the market? We dealt with a series of exit strategies particularly in the "Cut-Off or Run-Off" panel. What are the advantages and disadvantages of running a business off or should we be looking to find ways to commute to new schemes and things of that nature."

Mr. Butterfield said: "The market is going to be seeing a lot more of these types of products and analysis as people are going to need to know what is the best way forward from a restructuring standpoint, its not just automatic insolvency anymore; its can the situation be restructured?

"What are the restructuring opportunities? What are the advantages and disadvantages of these opportunities wether it be run-off or a computation or refinancing?"

Mr. Butterfield said that the Mealey's conference was not like RIMS in that it really gets into what he says is, "the meat of insurance and reinsurance issues."

Concerning the effort in the US Congress to close the Bermuda "loophole", Mr. Butterfield said: "We didn't get into that too much. I think it came up a bit in the reinsurance recent developments."

But he said there would always be that challenge, saying: "Everybody thought that the tax reform of 1986 was going to close down Bermuda.

"It didn't. Congress will try to tighten up loopholes, but again I think there's going to be more of a conciliatory approach taken and I think that Bermuda will survive. If we can survive the threat of the Fronting Model Act back in the 90's surely we can survive the threat of Congress."

And he was confident that Bermuda would survive.

"When you look at 9/11... who would have thought that you would have had $30 billion in new capital being raised. It has got to tell you the role that Bermuda plays and will continue to play in the global market in insurance and reinsurance."

Mr. Butterfield the amount of capital would create a glut and said: "It is hard to say. I think we could find ourselves in a position where it is not enough."

He said $30 to $40 billion in new capital had been raised but said losses could reach as high as $70 to $80 billion. He said this comparison as well as the strains of the cost of insurance today with coverage reduced at a higher but it is costing you more money would be issues that were going to challenge the industry going forward.

And he thought these issues would be discussed at the next Mealey's conference being held at the same place every year, in Scottsdale Arizona.

Bermudians attending the conference included vice chairman of ACE Ltd. Donald Kramer, executive vice president of XL Capital Ltd. Fiona Luck, senior counsel of Attride-Stirling & Woloniecki Jan Woloniecki, and Stephen Leonard also from Attride-Stirling & Woloniecki and Robin Mayor of CD&P.