Although Bermuda's insurance market is suffering from what seems, at times, like an endless `soft market', insurance companies continue to incorporate, bringing new lines of insurance to the Island as well as new pools of capital.

Danish Re, which has started a global reinsurance business headquartered in Bermuda, has $250 million in initial capital, with a further $250 million standing by as needed.

Although many of the larger Bermuda start-ups have involved North American capital, the management of Danish Re, a new Class IV insurer, brings half a billion dollars in capacity to Bermuda from Europe.

Danish Re is backed by investor group Trident II and advised by Marsh & McLennan Capital. Its new chief executive officer, Leif Corinth-Hansen, and chief underwriter, Matthew Petzold, made European headlines when they resigned on the same day from their former employers, Copenhagen Re.

The group will write mainly short-tail insurance business and will concentrate on lines where it has been able to hire suitably experienced underwriters.

Marine treaty and non-marine treaty, financial institutions and general facultative business are expected to comprise the group's initial lines of business in London, together with some longer-tail casualty underwiting.

In its Danish offices, says Corinth-Hansen, "we will have a team which can write such business as treaty and facultative risks, and specialists in a number of areas including accident and health and alternative risk transfer.'' The bulk of business to be underwritten outside London will be in Copenhagen, although business will be directed to the most suitable underwriter, regardless of his or her location.

"By starting from scratch, the company has a huge advantage on the communications front when it comes to the innovative use of information technology,'' says Petzold.

Danish Re is notable for being the first new reinsurance group to take advantage of the Lloyd's market's new corporate capital structure.

Danish Re will ultimately be owned by a holding company incorporated in the Cayman Islands. Danish Re will be the Bermuda-based parent of two subsidiaries, Danish Re Syndicates and Lloyd's corporate capital member Danish Re Capital.

The two Lloyd's entities together form what is called an "integrated Lloyd's vehicle'' (ILV), which forms the risk-carrying elements of the group. Another subsidiary, Danish Re Underwriting Agencies, based in Copenhagen, will direct business into the ILV under a full coverholder arrangement, which has been approved by Lloyd's.

The underwriting agency in Denmark will have several subsidiaries, including Danish Re (Australasia), which has already been set up, and Danish Re (Far East) and Danish Re (Latin America). A Japanese representative office, Danish Re (Tokyo) is also being established. The overseas offices will write only reinsurance business.

The ILV structure has only been possible since 1996.