Bigger is not necessarily better in the reinsurance market, according to Montpelier Re executive chairman Anthony Taylor.

Montpelier's name has been suggested in some wire reports as a likely merger candidate or takeover target, after two Bermuda reinsurers made major acquisitions earlier this month.

But Mr. Taylor told The Royal Gazette yesterday that the company was competitive with its present level of capital and aimed to grow organically.

Some analysts and accountancy firm Deloitte have said they expect the industry to see more consolidation, with Bermuda companies likely to be at the centre of it.

Three weeks ago, Bermuda-based PartnerRe agreed to buy Paris Re in a $2 billion deal and Validus Holdings agreed to buy fellow Bermuda reinsurer IPC Holdings in an agreement worth $1.67 billion.

Michael Paisan, an analyst at Stifel Nicolaus & Co., told Bloomberg News last week: "Capital is king, more so today than it ever has been. There seems to be that imaginary threshold of $3 billion. You need more than that to be a viable longer-term player in the industry."

Mr. Taylor rejects the notion that reinsurers need to have $3 billion in shareholders' equity to be viable competitors.

"I think the $3 billion thing is being bandied around by investment bankers, because they want to see more deals," Mr. Taylor said in an interview.

"We see a company of our size — $1.5 billion to $2 billion shareholders' equity — as a perfectly viable entity, accepted by brokers and clients. We are not suffering because our capital is below $3 billion."

Clients were in fact seeking more diversity among reinsurers — consolidation would lead to less diversity, he added.

Mr. Taylor said he did not know whether the industry would see more consolidation, but added that "IPC was a one-off" situation.

IPC, which has stuck to a monoline property-catastrophe business model during its 16 years in business, sparked a bidding war after it actively sought a merger partner. Montpelier aims to expand through the US and UK platforms it has added to its Bermuda underwriting operations in recent years, Mr. Taylor said.

The company operates in the Lloyd's of London market through Montpelier Syndicate 5151, and in the US through its subsidiaries Montpelier Underwriting Inc., based in Hartford, Connecticut, and Montpelier US Insurance Company, based in Scottsdale, Arizona.

Another subsidiary, Montpelier Europa AG, runs a European marketing office, based in Switzerland.

"We have already started to see the benefit of these platforms and I hope we'll see more benefits going forward," Mr. Taylor said. "We're happy to grow this business organically."

Mr. Taylor said Montpelier had seen rate increases in catastrophe lines, but in casualty business — which Montpelier has cut back on — rates were continuing to decline.

Montpelier is scheduled to report its second-quarter earnings today, after the markets close.