Bermuda's insurance leaders are more concerned about cycle management and underwriting discipline than any other single issue, a survey released today by PricewaterhouseCoopers (PWC) has shown.

Chief executive officers polled for the accountancy firm's Bermuda Market Survey 2008 also put diversification higher up the agenda than in the last PWC biennial survey in 2006, as they look for ways to grow their franchises in difficult times for the industry.

PWC partner Caroline Foulger said: "Two years on from our last survey, the future road for reinsurers is much less certain. A sustained soft market, fall-out spreading from the credit crunch and increasing competition for available talent are just a few of the challenges they expect.

"Companies are actively looking beyond their 2006 and 2007 business franchises to remove the current pressure from share price and sustain underlying shareholder value."

The CEOs, who, according to PWC, represent a substantial proportion of the Bermuda market, gave confidential answers to in-depth questionnaires and in face-to-face interviews. Among other things, they were asked for the top five issues on their agendas. Cycle management was the top issue, as it was in 2006, but this year the emphasis was on rate adequacy. Two years ago, the aim was to preserve the top line ahead of the cycle turn. Although CEOs broadly agree that the downturn will be no more severe than in previous cycles, they generally expect the market to show year-on-year premium rate cuts until 2010, across all business classes.

New markets in terms of product lines ranked second — compared to seventh two years ago — and new geographic markets was fourth, illustrating the growing emphasis on diversification.

The survey found that the Class of 2005 start-ups are developing their business models beyond their original products. Another trend the PWC researchers found was the desire of Bermuda companies to enter new markets around the world, while many of the younger companies, in particular, were aiming to establish a presence in the Lloyd's market.

The number three issue was managing the effects of turbulence in the financial markets. Few companies have escaped the sub-prime crisis totally unscathed and the unprecedented events, coupled with the ensuing credit crunch, clearly concerned CEOs.

The fifth issue on CEOs' agendas was effective monitoring of aggregations of exposure. The issue dropped in importance from number two in 2006, suggesting that companies feel that they have addressed many of the issues exposed by the 2005 hurricanes Katrina, Rita and Wilma.

Researchers found that most companies considered they had improved their expertise in this area with better tools and the newer start-ups had been investing heavily in model science. The perceived improvements to these models can only be truly assessed in the event of a large catastrophe.

The survey highlighted other issues challenging CEOs in 2008, including effective investment management and performance, and capital management and allocation.

Ms Foulger concluded: "Bermuda companies have an enviable reputation for adapting to change in uncertain times. But how they weather a sustained soft market in a time of world economic instability and slowdown will be interesting to see."