John Andrews, underwriting director of newly formed Bermuda reinsurer Amlin Bermuda, says the company's plan to do business with small, regional insurers means Amlin has to sell more policies to meet revenue targets than peers who count nationwide insurers as clients, but he thinks the approach will pay financial rewards.

Amlin Bermuda, a unit of Lloyd's of London insurer Amlin Plc, opened for business on December 1. It was one of eight major insurers and reinsurers to set up on Bermuda late last year in anticipation of higher premium pricing after last year's hurricanes wiped as much as $80 billion from insurance balance sheets.

Mr. Andrews said the underwriting approach being taken by Amlin gives the company greater control over what risks it assumes ? but it takes more work. The company is limiting its client base to insurers that provide coverage on a regional or one-state basis.

At least one of Amlin's 'Class of 2005' peers, Flagstone Re, has also said it prefers to sell to small, regional insurers over larger companies exposed to risks across greater areas.

Mr. Andrews said Amlin Bermuda can sell policies to ten regional insurers and produce about the same income as a rival could make off a policy to one nationwide insurer. "It is more work, but for much better reward," he said. "Like most things in life, if you buy at a cash and carry you'll get quantity, but you may not get quality."

Insurers buy policies from reinsurers to spread the risks in policies sold to corporations and individuals. That means when a catastrophe, or some other event, triggers claims the insurer can recoup some of the funds they'll need to pay clients from their reinsurers.

Amlin Bermuda's business approach is in keeping with how policies are sold at parent company, Amlin Plc. And while the Bermuda unit doesn't yet have much of a track record, Amlin Plc does. On March 10, Amlin reported a 2005 pre-tax profit of 182.7 million, or about $319 million. The result was a 42 percent improvement over prior-year earnings for the London-listed insurer, and is remarkable when one considers that many peers suffered large losses after last year's heavy hurricane season.

Based on the limited information available to date, Amlin Bermuda appears to have already been well served by its selective underwriting approach. By the end of February it had attracted new business to the tune of $72 million. It also saw an additional $70 million in business in the first quarter through internal agreements with Amlin's London operation.

Those results are also likely to be buoyed by Amlin Bermuda being well received by Japanese insurers when they renewed policies on April 1. (See April 7 report on Amlin's prospects during the April Japanese renews and later in the year, in the US). Overall, the company plans to sell $350 million in policies this year, and is also planning to generate a return on equity during its first year in operation.

To keep a consistent approach to underwriting, Amlin Bermuda exported a team of five underwriters from its London operations when it opened last year. And now it has offered a position to its first Bermudian underwriter, someone that will be starting as an assistant after having worked for one of the Island's specialty insurers. Amlin Bermuda is the first overseas unit to be set up by the UK-based group.

"We underwrite separately (from the rest of the group), but our underwriting philosophy is very similar," said Mr. Andrews, in an interview.

Stuart Mackellar, who was recently hired to be Amlin Bermuda's managing director, said Amlin clients are eager to do business with the Bermuda unit because they are familiar with the entity, but the risk is being assumed by a different capital base, in a different jurisdiction.

Amlin Bermuda is placing its business through a network of London brokers that already place business for other parts of the group.

Mr. Andrews said Amlin's underwriters have had to work "ridiculously hard" but said the company has been able to alleviate the work load by relying on the London office to provide modelling services. Computer-generated models help underwriters assess the various risks in an insurance policy, a key consideration when working out what rate to charge for the contract.

Amlin Bermuda is also shying away from entering in to any facultative reinsurance agreements, under which an insurer assumes a certain amount of risk in a policy and passes the rest on to a reinsurer. Mr. Andrews said the policies can take many man hours to assess.

Amlin is currently based in temporary headquarters in the IAS Building on Church Street. IAS also provides some accounting and financial services to Amlin while the company is developing its claims and compliance services internally. Mr. Mackellar, who has a financial background, said over time more of the financial work will also be moved internally.

Amlin Bermuda moves to new premises in the under-construction Bermuda Commercial Bank Building, Par-la-Ville Road, later in the year. The company has let the fourth floor, with plans for its staffing to increase to around 25 by the end of 2007.

The company currently has five underwriting staff and has already employed or made offers to three Bermudians for support positions.