The irony of Bermuda reinsurers investing corporate capital into Lloyd's was not lost on the authors of Guy Carpenter's just released Global Reinsurance Analysis 1998.

The report emphasised the very positive nature of developments in Bermuda's business, amid the softness in a worldwide market that is characterised by healthy companies, experiencing slow growth.

But the recent and substantial investment in Lloyd's by Bermuda firms was "tinged with irony,'' the report noted, as the Bermuda market in its formative years "struggled with a certain amount of disparagement from competitors, including Lloyd's participants.'' Today however, those criticisms have evaporated after Bermuda companies supplied nearly a billion pounds of capacity, or 10 percent of Lloyd's total capacity for the 1998 year of account.

Some of these firms were only formed as Bermuda cat reinsurers between 1992 and 1994, against a backdrop of industry criticism that included less than complimentary remarks from the US and Lloyd's market.

Yet collectively, Bermuda companies have now dipped in for an even bigger share of Lloyd's 1999 year of account.

Lloyd's deputy chairman, Elvin Patrick recently disclosed during the 12th International Reinsurance Congress in Bermuda that some 28 percent of the corporate money in Lloyd's for the 1999 underwriting year is from Bermuda companies.

"That's from no where, five or six years ago,'' he emphasised. And it is against 35 percent from UK companies and 32 percent from the US.

The Guy Carpenter report talked of how the big cat reinsurers in Bermuda were expanding into multi-line insurers and reinsurers. Just five years after they started, only three remained stand alone, and still successful, companies (LaSalle Re, RenaissanceRe and IPC Re).

And importantly, the highly capitalised Bermuda companies had still managed industry leading combined ratio figures last year, well under 100 percent.

Combined ratio is the industry's best test of a company's underwriting profitability. The further under 100 percent, the higher the underwriting profitability. The further over 100 percent, the deeper the underwriting loss.

There were indications that US companies continued to use investment earnings to garner bottom line profits.

The number of Guy Carpenter reinsurance composite-listed companies was reduced from 64 in 1992 to 38 last year, through the trend of consolidation in the industry.

While the US market's 1997 premiums were marginally improved at $17.9 billion, the rate of return improved to 11 percent and the combined ratio was just over 100 percent -- its best level for a decade.

The report saw no clear-cut winners emerging to tip the balance of power. It stated: "There is no sense yet that the market has reached a point where any player has significant market power.'' The Bermuda companies, in a market of plunging rates, were among the leaders in spurning business that was priced too low.

And although Lloyd's has had to shoulder some of the blame for leading the price decline, the London market, much like the broader market, had good investment returns and no major claims mixed with increased competition. More generally, the report discussed the lengthy weak market, low claims, and depressed rates, and moderate profitability.

It hinted at a market on the verge of significant change, with the acceptance of a restructuring that included a potent role for the wider financial markets.

It will be the flexible and innovative corporations, the report forecasts, which will be the key players to capitalise on the future state of the markets, a state which as yet is indiscernible because of fluctuations in global financial markets.