"What a difference a year makes," says Brian O'Hearne, chief executive of Bermuda-based Aquila Re, which is currently winding down most of its operations.

Its parent company, Kansas City based Aquila Merchant Services, Inc. (Aquila Inc) is undergoing a restructuring and has shed most of its overseas offices.

Yesterday, it announced the sale of most of its interests in Australia for about $589 million. On the merchant side of their business, they have gone from thousands of employees world-wide to just 75.

As a utility company, Aquila Inc got seriously buffeted by waves created by the Enron fiasco. The rating agencies reacted with rating downgrades while simultaneously requiring greater capitalisation. Since it's harder to raise capital with a negative outlook from the rating agencies, this was a recipe for disaster.

"It was a self-fulfilling prophecy" says Mr. O'Hearne who ran Aquila's weather derivative and insurance division.

This is an innovative area of risk management which allows energy companies to hedge their earnings against the fluctuations inherent in weather conditions and also offers products to the agriculture sector based on either levels of precipitation or temperature. "We even cover things like film shoots, horse racing meets and NASCAR events." says O'Hearne, speaking to The Royal Gazette. He's currently without an office in Bermuda - when Aquila Re's Bermuda employees fell to just one, it didn't make sense to keep their offices opposite XL.

Now Mr. O'Hearne and other former Aquila Inc colleagues have dusted themselves off from the turmoil of the last 12 months and have split off to form a new company.

On April 6, they completed a buy-out of the Weather Risk Management system and assets of Aquila Inc together with all brand and domain names including GuaranteedWeather.com, previously ranked the second most popular insurance website by Yahoo.

The new company, GuaranteedWeather Trading Limited, is based in Bermuda and the new insurance company is awaiting Bermuda regulatory approval.

Come May, Brad Hoggatt, a former meteorologist will be chief operating officer, Kevin Colgan will be senior weather trader, and Mr. O'Hearne will be chief executive of GuaranteedWeather. All were previously with Aquila Inc.

"One of the things we bring to the market is a proven team, it's not like it's a start-up, said Mr. O'Hearne.

Bermuda remains an obvious choice of jurisdiction, he continues: "From my experience, Bermuda has good segregated account capabilities (good security mechanisms) and a fertile market for new risk management and insurance products."

The buy-out was funded by Ramsey Quantitative Systems, Inc. an alternative investment group. Ramsey's founder, Paul Ramsey will sit on the GuaranteedWeather board and the two companies will also share a chief financial officer, Kelly Duncan.

On the insurance side, GuaranteedWeather has formed a strategic alliance with Mitsui-Sumitomo Insurance Company, Ltd and Hannover Reinsurance Company to market their weather derivatives and weather risk management products.

All involved see great potential in the weather business: "The beauty of it is that the energy business offsets the agriculture" says Mr. O'Hearne. This means that when the company has to pay out to farmers because of a scorcher of a summer, their claims from energy companies ought to be low, because air conditioners eat up a lot of electricity.

The weather contracts are distinctly different to the energy derivatives which contributed to Enron's demise. "Weather contracts have a cap on them; it's more like insurance than derivatives" explains Mr. O'Hearne.

Can GuaranteedWeather succeed where Aquila Re floundered? Mr. O'Hearne says the problems that brought their parent down will not apply "because we've got the substantial support of the reinsurance industry and we do not have the collateral issues that arose due to the ratings downgrades."

What's more there are no long-tailed skeletons which will reemerge to haunt them, "It's an entirely new entity... The book of business which we had to run off expired March 31." Asked whether there were any lessons learnt on the operations side which will be taken forward, he says: "We'll keep a smaller staff and more automation." But he hopes to take on Bermudian staff in the future. "I personally would like to give back." he says.

If all goes well, they will be up and running in the next month, just in time to assess the risk of summer heat waves.