as the worst year for losses in recent history. Mairi Mallon reports Most reinsurers on the Island have been knocked hard by the European storms with many company's reporting losses for the fourth quarter.

But it is not all doom and gloom for the sector and many are looking forward to a year where prices in the market will go up.

Bermuda controls 20 percent of the world catastrophe market -- the section which was devastated not only by the storms in Europe, but also the hurricanes which swept through the Caribbean and the floods which hit the US.

The market has been soft for years due to excess capacity, and the storms in Europe came too late in the day for Bermuda-based insurers to put up prices for next year.

Now reinsurers are holding their breath for the Japanese markets, which are the next to come up for renewal in April, to see if the market is really going to harden up and see prices rise.

Partner Re, La Salle Re, Terra Nova and IPC Re all reported substantial losses which they attributed to the storms.

The only exception was Renaissance Re which reported a net income of $26.2 million.

Terra Nova topped the ranks of reported net loss with $81.2 million, followed by IPC Re with $22.7 million, then La Salle Re with $14.8 million and Partner Re at $10.3 million.

ACE, which has bought up reinsurers Tempest Re and CAT Ltd, did not break down its results. Despite wiping over $100 million off its net income the company seems to have avoided such severe losses, mainly due to having a large portfolio of business.

ACE Limited Chairman and CEO Brian Duperreault said: "While heavy catastrophe losses dominated the fourth quarter's results for most companies, particularly in Europe, the ACE Group of Companies weathered these events without incurring any unusually large losses.

"The acquisitions of ACE INA and Capital Re have added substantial global diversification and new product capabilities to the group.'' ACE Limited reported income of $152 million, or $0.78 per share compared with $238.5 million or $1.21 per share for the same quarter last year.

XL Capital also appears to have been hit hard by its catastrophe losses and earnings were reduced by $125 million or 97 cents a share.

The company's president and chief executive officer Brian O'Hara said: "The reduction in earnings in the fourth quarter reflects the previously announced impact of windstorms in Europe. Absent the impact of these losses, the Company's operating results were consistent with expectations.

"Although overall market conditions remain at unsatisfactory levels, we are pleased to note that there are signs of positive change beginning to emerge.'' Terra Nova said that last year was the "worst year for catastrophe losses in recent history''.

European storms hit reinsurers' results The company also received a double whammy as it was also hit with losses and costs associated with closing and merging some of its businesses. As a result of these losses, and the decline in investment valuations in the first three quarters of the year, Terra Nova's book value per share declined to $17.50 from $22.51 the year before.

Terra Nova's Chairman John J. Dwyer explained: "First, 1999 was the worst year for international catastrophe losses in recent history. Terra Nova's share of these catastrophes and large losses for the year was $59 million, including $42 million of catastrophe losses in the fourth quarter.

"Secondly, we were active in closing certain businesses, such as our decisions to exit company market marine hull and energy business at the beginning of the year and to exit high street motor business in the second quarter, and in re-structuring and combining others, such as the merger of our aviation syndicate 959 into our marine syndicate 1009.'' But Mr. Dwyer, whose net loss by diluted share was reported at $3.09, said the future appeared brighter for the company.

Renaissance Re's better than average performance brought praise from Standard & Poor's who have backed the company.

Glossary of terms A soft insurance market has low rates, low losses and insurance is easy to buy. Company profits are not so high because insurance is easy to get.

*** A hard market is when rates are high, losses are high and insurance is scarce.

This pushes rates up, and insurance companies will make more money.

*** Reinsurance is the insurance insurance companies take out against the risks which they underwrite.

ACE CEO: Brian Duperrault CHART BREAKDOWN OF FOURTH QUARTER RESULTS