Intense regulatory scrutiny of insurers? connections to the companies they do business with could lead to proactive measures from companies to make sure no conflicts of interest or ownership questions can arise.

Regulatory scrutiny of ties between insurance companies ? and whether genuine risk transfer is achieved when business is placed between affiliated companies, and how that is accounted for ? follows questionable business deals between AIG and offshore firms that counted the commercial insurance giant as a main source of business.

Probes of ownership and control issues have now turned the spotlight on other insurers and reinsurers that share close ties.

Dr. Robert Hartwig, insurance economist with New York-based Insurance Information Institute, said: ?Most insurers that have associations with reinsurance entities in Bermuda or elsewhere are going to be taking a look at the organisational structures to see if there is any actual or even apparent potential questions about control or ownership.

?My guess is that most companies are already engaging in that kind of analysis right now rather than waiting for a subpoena from Eliot Spitzer to let them know about it.?

New York Attorney General Eliot Spitzer has led a wide-scale probe of the insurance sector, starting with an investigation of business abuses between insurers and the brokers who place business for them, now expanding to scrutiny of non-traditional insurance, particularly finite risk, and whether there could be misaccounting by some companies which use these kinds of loss mitigation policies.

Most recently, Bermuda-based White Mountains and a reinsurer it does significant business with ? Bermudian reinsurer Olympus ? said they may re-evaluate their ties, in this regulatory environment.

Olympus? dealings with White Mountains could attract attention because the latter effectively established the former, the two have common directors and White Mountains is the major, if not sole, source of Olympus? business. The business being written is traditional reinsurance, not finite risk.

On Sunday, Olympus Re chief underwriting officer Sheila Nicoll told ?I guess everybody is re-looking at relationships and potential conflicts. Maybe we?ll have to consider if it is a conflict going forward.?

Whether ownership issues or conflicts of interest exist is something many companies may be evaluating right now.

?I would expect a certain proportion of those companies to change the structure of the board of directors as a proactive strike to eliminate any appearances of inappropriate control over reinsurance or some other entity they are associated with,? Dr. Hartwig said.

The board structures of Olympus and White Mountains are ripe to raise questions over control issues with Olympus chairman Joseph Steinberg and deputy chairman Bruce Berkowitz also serving as White Mountains directors.

In the case of Mr. Berkowitz, he also sits on White Mountains audit committee, a position that carries heavier obligations for independence of any conflicts.

Neither Mr. Steinberg nor Mr. Berkowitz returned calls from for comment on the matter.

White Mountains admits to being behind Olympus? formation, with the help of an outside advisor, attracting $500 million for the start-up from investors it knew well through their own ownership of White Mountains or through joint business ventures.

But both White Mountains and Olympus? Ms Nicoll vigorously defend the propriety of their arrangement. Olympus derives most, if not all, of its business from agreements with the reinsurance units of White Mountains. In turn, White Mountains is paid override commissions and profit-based fees for passing on that business.

Dr. Hartwig said control of an entity might be determined if there was ?substantial overlap in management or board of directors, and/or if [the reinsurer is solely doing business with that one insurance company?.

?There is nothing wrong with having affiliates that are wholly owned or controlled. But, it becomes a question of if an entity is wholly controlled by an insurer (or reinsurer, it becomes difficult to see how there is any transfer of risk. The question is, if Olympus does business with anybody else? There is nothing wrong with an insurer having a major stake in a reinsurer but if that reinsurer does business with only that one insurer than the question will be raised over ?can there actually be any transfer of risk if in fact that particular reinsurer does business with nobody else, and the directorship comes from the insurer that formed it?? That is the question.?

Dr. Hartwig said an easy fix would be a reinsurer relying on one company for business to expand its book to selling reinsurance to a wider group.

That could, however, prove difficult for a company like Olympus which has only two staff. Taking on more business would likely require it to expand infrastructure ? a move that would be counter to the reasons for its establishment, which was effectively to increase the capacity, or ability to write business, for Folksamerica, a White Mountains? reinsurance subsidiary.

From the time it opened its doors, Olympus had a deal in hand to provide a significant level of reinsurance to Folksamerica, thereby freeing up that company?s capacity to write more business.

The deal was hatched as insurance market conditions improved on the back of a severe void in capacity after the multi-billion dollar claims from the World Trade Center attacks in 2001.

Speaking generally, Dr. Hartwig said those who may be most concerned about ownership issues between companies are the policyholders.

?Customers ? risk managers ? are generally going to be interested about the arrangements between primary insurers and offshore reinsurers they may have an interest in and the extent of that interest,? he said.

?On the one hand, some risk managers might be comforted by the fact that that there is some overlap in management. Presumably you are doing business with that insurer because there is some faith in that insurer, and that that insurer will be around to pay those claims and that may expand to any reinsurance affiliate they may have. That being said, on the other hand, they may be concerned about systematic risk throughout the organisation. If a cataclysmic event affects the primary insurer, is it entirely concentrated on a single reinsurer? Probably the solution is the one already coming down the pipe, and that is greater disclosure and transparency.?