Last week's decision by Bermuda-based property insurer, CHA Insurance Co.

(CHAIC) to cease underwriting ( The Royal Gazette , December 10) is the latest twist in an eventful two year existence.

The ink was barely dry on its initial contracts before Hurricanes Marilyn and Luis ripped through the Caribbean wreaking so much havoc, that by the end of the first year, the company lost nearly 30 percent of its $24 million in capital.

Although the insurer's viability was called into question at that time, CHAIC chairman, Peter Rackley, said from England on Friday that in the end, its economic footing was never a problem.

He said, "The actual financial viability of the company has never been an issue. If you can't attract sufficient interest in the company's products from the people that we are marketing those products to, then really that is the key issue.'' Mr. Rackley said, "It is unfortunate that hurricanes like Marilyn and Luis struck so soon after we began, but it did not at all impair the financial viability of the company.'' And about the decision to cease underwriting, he said, "It's a great disappointment for all concerned. But in the end, this is a commercial world in which we operate. And you have to make commercial decisions.'' The insurer was first sponsored by Centre Re and its parent Zurich Insurance, together with Aon. Western General, Allstate, Bank of America, Fidelity Investments and Chartwell Re were other financial institutions scheduled to be involved.

There was local concern raised in some quarters when the company was being established here as an exempted company, with the benefit of a Government waiver to actually conduct business here, in direct competition with local companies.

But if the company, which had the full blessing of the Caribbean Hotel Association (CHA) failed after two years to maintain support from many of the 1,180 CHA hotels down south, it never commanded support from hotels here.

John Harvey, executive vice president of the Bermuda Hotel Association (BHA), which is a CHA member, said, "We supported the company being domiciled in Bermuda. We certainly supported it in that we made our members aware of their offerings.

"But the individual hotels have to determine what's best for their interests, in terms of what insurance carrier they choose. Bermuda hoteliers had been dealing with the same insurers for some time.

"And I suspect that some of the local carriers did, in fact, become more competitive.'' One observer noted: "It is ironic they couldn't make a go of it considering who their backers were. They also were not able, I think, to get the big hotel chains, like the Marriotts and the Princess Hotels.

"They were not able to get anywhere near the pricing being offered these hotels by long serving insurers. Those hotel chains get a worldwide programme for all their properties. They just couldn't get in and the family hotels wouldn't move from the programmes they were already with.

"I thought from the start that it would be very, very difficult for them to succeed. Their competitors have a long history in the relationships, and the experience. You have to have a proven history.

"And you have to be able to provide the liability insurance, which is an area where some felt they may have been falling down. You have to be able to place the liability insurance for a hotel if you are going to do their property insurance.'' Another stated that by not supporting CHAIC, Caribbean hotels lost their best opportunity to protect themselves in the future.

She said, "The problem here is that while the rates are low right now, we all know they will go back up after the next major catastrophe. So those hoteliers are looking at the short term advantage of lower pricing now and will be scrambling when the rates harden again.

"They will be in the same boat as they were before that led to the formation of CHA Insurance. And that won't be good, because it was at the point where some hotels in the Caribbean were not being properly insured, the rates were so high.''