Axis Capital chief executive officer John Charman said yesterday than the insurance and reinsurance market faced a better market opportunity now than after the 9/11 terrorist attacks in 2001.

He said the erosion of capacity, due to widespread catastrophe and investment losses in the third quarter, as well as the demise of American International Group (AIG), created a near certainty of higher rates in 2009.

Bullish about the industry's prospects going into next year, Mr. Charman said on a conference call: "I believe this is a much broader and more sustainable opportunity than 9/11."

Axis was one of a wave of insurers founded in Bermuda to fill the gap in insurance capacity created by 9/11. On Monday evening, the company reported a third-quarter loss of $249 million, thanks in large part to claims estimated at $371 million from hurricanes Gustav and Ike.

Mr. Charman said Ike had the potential to prove the third largest hurricane in history, in terms of insured losses. The third-quarter catastrophes, as well as the damage to capacity meted out by the turmoil on financial markets, had acted as "a catalyst for an across-the-board hardening throughout the P&C (property and casualty) marketplace", he added.

The problems of AIG, saved from collapse by a US Government bailout that has so far provided the New York-based company with $122 billion in liquidity, would have a massive impact on the industry and further improved Axis' prospects, the CEO added. Her showed little sympathy for a company he described as "our major and most aggressive competitor".

"As far as AIG are concerned, I shed no tears for them," Mr. Charman said. "I have been in the business for 37 years and I believe that any normalisation of AIG will be beneficial to the marketplace. It will release huge volumes of business throughout insurance portfolios, by product and by geography. I don't want to jump on their grave, but I think this is a very important event and positive for the marketplace."

Mr. Charman added: "We believe a hard market in 2009 is a near certainty." With the capital losses the industry had borne and with constraints on capital it faced over the next few years, the Axis boss said the only way rates could continue their downward movement of recent quarters was if companies "are suicidal, or want to go out of business".

The outlook for the reinsurance market was as positive as he had seen in a number of years, he added.

Mr. Charman, who became known as the "King of Lloyd's" during his years working in London and who founded Axis seven years ago, is not alone among Bermuda executives in his expectation of an end to the soft market.

Chris Harris, chief executive officer of Montpelier Re Holdings, said in a conference call last week: "Based on discussions with a variety of feeding companies, we expect to see increased demand for reinsurance, driven by several sources, including weaker capital adequacy positions and shrinking risk tolerances.

"As a result, we have become more optimistic in our outlook for 2009 since last quarter as we expect to see increased opportunities for all of our underwriting platforms. Within the U.S. operations specifically, we may benefit from potential clients expanding their list of insurance and reinsurance partners in order to lessen concentration risk."

Last Friday, Jim Bryce, of Island reinsurer IPC Holdings, said in his third-quarter earnings conference call: "It is expected that current levels of capital will be much less at 1½009 than at 1½008. As such, demand and supply is expected to be out of balance and consequential pressure on pricing is expected to increase between now and year end.

"In addition, one does not know what is in store for events in the fourth quarter or from mother nature or from further financial hurricanes."