The Bermuda insurance market suffered one of its worst years in 1999 according to analysts Standard & Poor's who conducted the Bermuda Insurance Survey 2000.

Earnings growth slowed in the local insurance market, fuelling buy-outs and sell-outs in a bid by companies to remain competitive.

Results of the survey revealed that most of Bermuda's publicly held companies did not meet Wall Street expectations. But the survey also showed the ability of the companies to respond quickly to changes in the sector.

The survey was conducted by Deloitte & Touche and Bermudian Business Magazine, and was analysed by Standard and Poor's.

"Large loss costs associated with catastrophic loss frequency, adverse development and exiting from non-profitable business lines, prompted some management teams to reconsider their strategic alternatives as standalone operations,'' the survey read.

Pointing out that with the exception of only a few reinsurers operating performance in 1999 was "well below previous efforts'', Standard and Poor's said the results are reflected in the "increased volatility embedded now within many Bermuda re insurers' risk portfolios''.

But the analysts also swung a very positive line on the general state of affairs of the Bermuda insurance industry and expressed confidence that it would bounce back.

They said the lacklustre performances of 1999 "should not be construed as an indicator of the Island's overall or prospective earnings performance.'' "Because of past aggressive growth policies, many are still in the middle of growing pains, and earnings stability will remain a challenge,'' the analysts reported.

Standard and Poor's listed as necessary the establishment of short and long term strategies for each business segment with concentration on risk adjusted capital requirements, customer base and underwriting evaluations.

Holding that there is more than sufficient capital available for Bermuda's insurance industry, Standard and Poor's noted: "Investor pressures are starting to affect some of Bermuda's reinsurers' earnings and capital planning process.

"Going forward maintaining the momentum of the past decade will be the primary challenge for Bermuda's newly emergent global re insurers.''