takings over Christmas 1994 and for the whole year. Even poultry ran afoul of the market in 1995.

Kentucky Fried Chicken (KFC) had a minor setback before the new year, when shares traded down $4.25 to $26.25. Nearly 570 shares were being unloaded in a hurry. But troubles really began after the company held a million dollar rights issue in March to help pay for a building extension that would bring pizza to Queen Street.

In the same year that KFC began marketing what looked suspiciously like the Pizza Hut product, they suddenly ceased all pizza making activity, and returned to concentrating on their core business.

Somewhere in the exercise though, KFC announced that three quarterly dividends (June, September and December 1995) would not be paid. Stock fell further, last trading on the Bermuda Stock Exchange (BSX) on December 17 at $15.

It is not the only listed company that has had troubles, especially with regards to share price. Long Botham Boats, the owner of Henry the VIII Pub and Restaurant, is another example. The company last traded as far back as January 31 at $7. Today there still are no takers at $4.

Trading of Bermuda-registered Jardine Matheson Holdings Ltd. and Jardine Strategic Holdings Ltd., occurred for the first time on the Singapore Stock Exchange at the start of January, having been delisted from the Hong Kong market the week before.

There was some good news for hoteliers at eight of the large tourist properties, breaking a six year run of losses as they declared a modest profit.

Our insurance industry was labelled smug and complacent. That was the friendly, constructive criticism delivered by Business Insurance publisher Kathryn McIntyre.

Excess liability carrier EXEL Ltd. announced a drop in year-end, per share net earnings from $6.82 ($379 million to November 1993) to $2.65 ($144 million to November 1994).

There are real problems for former Focus Insurance boss, Mr. Mark Hardy, a bankrupt Briton, stripped of his CA designation. With his company in liquidation, he was the subject of a committal warrant from the Supreme Court.

He is to be seized and arrested the next time he arrives here and forced to defend a contempt charge.

An exhaustive renewal season for Bermuda's property catastrophe reinsurers was completed with a vote of confidence from major cedants. The Island's big `cat' players weathered the Kobe earthquake losses. Their share of the worldwide market also increased.

The liquidators for Bermuda Fire & Marine Insurance Company Ltd. (BFMIC) reported to creditors that the company had failed to set aside enough money to meet its liabilities, a point promptly criticised by former company chairman, the Hon. Charles Collis.

Meanwhile, Mr. Robert Clements, who helped found excess liability companies ACE and EXEL, together with property `cat' reinsurer, Mid Ocean Re, told the Bermudian Magazine that the controversial split in BFMIC was the "blackest mark in Bermuda regulatory history.'' Mr. Collis didn't agree with that remark either.

But by mid-year, liquidators told BFMIC creditors that the company was facing some $500 million in liabilities, with a potential deficiency of $300 million, far more than originally estimated.

Late in 1995, BFMIC's joint liquidators pursued legal action against certain BF&M Ltd. shareholders, who then went on to form an association to defend against the loss of their shares to liquidators.

Meanwhile, collapsing under the weight of debts and precipitated by a significant December 1994 claim, Stockholm Re (Bermuda) Ltd. was placed under a compulsory winding up order, estimating total liabilities of $64 million and a capital deficiency of nearly $14 million.

The liquidators for another problem firm, Mentor Insurance Company, continued their nine-year mission in pursuing reinsurances and other monetary claims from delinquent firms.

Sphere Drake Underwriting Management (Bermuda) Ltd., citing estimated premium growth to some $90 million, took on a larger line, chasing more US business.

And Bermuda-registered Sphere Drake Holdings Ltd. lifted its yearly profit more than 28 percent to $40.4 million.

ACE Insurance had begun writing aviation product liability cover, and suffered its first loss in the new satellite market, although premium income covered the company's losses over the Apstar-2 telecommunications satellite.

The town of St. George's was facing its eighth bleak year without a hotel to bring much needed money into the town. French resort owners, Club Med, still failed to live up to their billing. There still are no smiling, happy families enjoying what could be a unique tourism product. Even today, the property languishes as a ghost of Christmas past.

Inflation was hardly heard of in Bermuda or the US, but following a series of moves by the US Federal Reserve Board, there was upward pressure on free-floating local interest rates. Deregulation has so far been a ho-hum affair.

The Bank of Butterfield announced their net income for the first half of fiscal '95 slumped 16.5 percent to $13.7 million. Bank of Bermuda was down six percent to $19.28. Mutual Risk Management Ltd. profits for the year rose 16 percent to $23.9 million.

The February budget brought planned Government spending of $390 million and the borrowing of $75 million for capital projects. The $426-million revenue package included controversial measures, such as personal and corporate additions to the tax bill for successful lawyers and accountants. Bankers thought the budget was fair. International insurers felt hard done by increased employment taxes.

The shocking Barings Bank collapse at the end of February left Bermuda's banks and other financial institutions estimating what losses they may have to absorb. But the opportunistic takeover by Dutch bank, Internationale Nederlanden Groep NV, threw a protective veil over assets.

Mrs. Anne Kast of Kast Investment Management Ltd., whose firm had placed some $40 million in Barings' mutual funds, came out relatively unscathed and moved to further diversify a $70-million portfolio of assets under management.

Meanwhile, former staff of failed insurer, United Security Life, found that they were united in a lack of security for pension money they put into the company's compulsory plan up to 1992. The Supreme Court ruled they had to line up like any other creditor.

New insurance laws were passed by Parliament, improving insolvency and reporting requirements. It would bring a measure of further credibility for the Bermuda market and its unique system of regulation.

The revision of insurance regulations included the one-off insurance company re-registration under the Insurance Amendment Act 1995. All Bermuda insurers must be re-registered by January 1, 1996. The exercise, faced with hiccups early on, is largely completed.

The end of an era occurred when the last major operating division of travel agency LP Gutteridge was sold to family-owned Kitson & Company Ltd. after 40 years. Meyer Agencies Ltd. later obtained the American Express Agency.

Financier Mr. Wolfgang Flottl, began his departure from the Island early in the new year, when traders were laid off from his Hamilton trading house, Ross Capital Markets.

Cat reinsurer, LaSalle Re, ended its first full year with a $59-million profit. ACE Ltd. won a ruling from the Court of Appeals that meant their controversial top level additions would remain.

By April, the businessman's reaction to the referendum on Independence was well known, yet Bank of Bermuda chairman, Mr. Eldon Trimingham, and then Premier, Sir John Swan, were verbally jousting over the issue.

There was clear evidence pressure was building in the community over independence when business and political leaders began hurling words like "bias'' and "scaremongering'' at each other.

Political proponents of Independence could not shake reservations expressed by business leaders. Not only were there some concerns about Bermuda going it alone, the lengthy and acrimonious debate was, in itself, deemed detrimental.

And while Bermuda bickered over an issue that the people neither invited nor embraced, Cayman Islanders rubbed their hands with glee, rejoicing at what they saw as our misfortune.

They were convinced that a Bermudian Independence debate, replete with its harsh tones, desperate rhetoric and political ill-will would win them more of our business.

Perhaps it was the omen of Hurricane Felix's arrival on the appointed polling date that would symbolise the Island's lack of preparedness for nationhood.

After all, there was even significant confusion over how to postpone the poll.

After three out of four voters rejected independence at this time, the market accepted the political ascension of Finance Minister Dr. David Saul to the vacated Premier's office. Dr. Grant Gibbons took over at Finance.

International business didn't miss a beat.

In returning to the corporate world, Sir John Swan would lead business and political allies in a move to keep the McDonald's franchise -- on the former US Naval Air Station base -- from leaving the Island.

Earlier, finite risk insurer, Centre Re announced they had more than a half a billion dollars in premium writings during their financial year as their core business continued on a path of significant growth.

Mr. Robert Golden was replaced as president and CEO of Texaco Inc.'s captive, Heddington Insurance Ltd., over reported management differences with Texaco.

One of the Island's oldest captive insurers, Hopewell International Insurance Ltd., was scheduled for run-off, with a new replacement company, Harrington International Insurance incorporated to take its place.

Meanwhile petroleum industry mutual, Oil Insurance Ltd. (OIL) announced a $10.5-million loss for its financial year in the volatile catastrophe cover market. In a separate development, president and CEO Mr. K. Doyle Stephens announced his retirement.

The Bermuda Commercial Bank cemented a new asset management relationship with Merrill Lynch. The bank was just adding to successes during the year, declaring a small half year profit and an unusual half year dividend. They eventually doubled their capital base with a $13.5-million rights offer.

Bermuda Asset Management joined funds giant, INVESCO Plc and Bermuda company, Research Overseas Management Ltd., linked with one of Switzerland's leading bankers, The Julius Baer Group.

They all were using Bermuda ventures to target the significant assets of international insurance companies.

Meanwhile, more than 150 service professionals descended on San Francisco as Bermuda fielded a strong showing for the US risk management industry's largest trade show, the RIMS (Risk and Insurance Management Society) Conference.

Mr. Bill Loschert, executive vice president and chief underwriting officer at excess liability carrier ACE Insurance was part of a RIMS panel that warned risk managers that they had to look more closely when assessing risk.

But Government officials learned while in San Francisco that with an increasing interest in Bermuda from Latin American business, they would have to consider adding the Latin American RIMS Conference to the list of business trips important for Government attendance.

Chairman of Bermuda-based Tempest Reinsurance Company Ltd. Mr. Donald Kramer told a RIMS meeting that Bermuda's property catastrophe companies had the "fastest zero to lightspeed acceleration in the history of financial business.'' Back at home, BF&M Ltd. was announcing stunning year end results of almost $9 million, based on higher income and a better-than-expected loss experience.

The insurance industry as a whole scored a major coup with the development of a risk management MBA programme tailor-made for Bermuda through New York's College of Insurance and the Bermuda Insurance Institute.

And ACE Ltd. during celebrations this year of their 10th anniversary, unveiled the John R. Cox/ACE Chair in Insurance and Risk Management and the Robert Clements/ACE Scholars Programme, both at the College of Insurance.

The Bermuda Electric Light Company enjoyed record income of $100 million and a record profit of $12.2 million. The Bermuda Telephone Company also reported record profits of $12.2 million.

Telco chairman and president -- and still acting general manager -- Dr. James King complained that the corporate tax rate was quite a demanding financial obligation. They paid $6.3 million in taxes and duties for the year.

In June, Mr. Malcolm Butterfield gave up his top regulatory job as Registrar of Companies to return to private practice. In an apparently seamless transition, Mr. Kymn Astwood was promoted to the job.

The International Risk Management Group (IRMG) Conference at the Marriott Castle Harbour Hotel attracted some 200 delegates from around the world.

Continued on page 35 Business community banking on stability after turbulent year Continued from page 34 They heard from managing partner of John Head & Partners Ltd., Mr. John Head, concerns about the "disease of liability'' in the insurance industry.

He saw more people eager to sue in the future for issues that insurers will increasingly be forced to pay for. He felt insurers would have to change the way they write business.

The conference also heard from famous "pirate hunter'' Mr. Eric Ellen about the increasing incidence of piracy at sea.

Philanthropic Five Star Island owner, Mr. Curt Engelhorn, took back the reins of Bermuda-based Corange Ltd., parent to multi-billion-dollar pharmaceutical concerns that operate worldwide. He had spent a year off the board of the company he successfully built. The company reported comfortable profits of $215 million for their fiscal year.

The Bank of Bermuda Ltd. and telecommunications giant, Cable & Wireless Plc, agreed to a $10 million deal that makes C&W the bank's global carrier. A Canadian newspaper reported that C&W's monopoly of international telephone and data links for Bermuda was worth $100 million annually.

When asked about that princely sum, the company said that the figure was indicative of the gross turnover for all products and services currently provided by C&W in Bermuda. But they said the amount excluded payments to another monopoly, the Bermuda Telephone Company, and also excluded total operating costs for C&W Bermuda.

Later, the Government would sweep aside protectionist policies, paving the way for more telecommunications competition. A host of new telecommunications initiatives were waiting in the wings for that development.

Lloyd's of London chairman, Mr. David Rowland, visited Bermuda during the year, expressing confidence that Lloyd's would rebound from its troubles.

On the heels of facing a virtual angry mob of Names in London, in an attempt to sell them on a 2.8 billion settlement to Lloyd's litigators, he was in Bermuda telling a Bermuda Insurance Symposium luncheon that he did not see Bermuda as a rival threat to London, but a part of a global market.

At that same May conference, chairman and CEO of highly successful Bermuda company, Mutual Risk Management Ltd., Mr. Robert Mulderig, predicted a significant expansion in captive insurers' premium volume in the years to the end of the century, with Bermuda increasing its market share.

Another significant job was being filled at the Bermuda Stock Exchange (BSE) -- their first ever CEO, Mr. William Woods. The BSE made tangible moves to open 15 percent of the Exchange to non-bank ownership. It is expected to later go public.

And, in addition to a new acronym, the Exchange approved three new trading members, completed new international listing regulations, and continued to develop new domestic listing rules.

Together with new staff, the Exchange brought in new council members and laid the framework for a trading and settlement system that would be accessed from any Bloomberg terminal worldwide.

But the BSE index, which showed a marginal recovery after the referendum, continues to decline. And dollar value of shares traded was down substantially in 1995 compared to the two previous years.

No matter how bad business may be for any entrepreneur, one of the most heated debates this year has been how bad retail is and the uncertainty over the independence referendum has taken the blame for a drop in a lot of business.

But if retailers continued this year to insist that Government needs to significantly review the duty structure and provisions, many retailers realised that they, too, had to change.

The independence issue was an easy target when blame was going around on how the Bermuda Financial Centre Ltd. went from hot to cold in a matter of months.

And worse, a rival development on the waterfront at PW's marina has generated a lot of interest.

The biennial Bermuda Insurance Symposium, which included almost 500 participants and covered a myriad of insurance topics at Marriott's Castle Harbour.

At the annual Monte Carlo conference for reinsurers, Bermuda's representatives used the opportunity to emphasise the post-referendum stability.

Bermuda-based property catastrophe reinsurer, Centre Cat Ltd., hosted the world's top climate prediction minds and insurers at a Marriott conference aimed at forging mutually-useful partnerships. The landmark conference was hosted by the Bermuda Biological Station for Research.

At least two other conferences were firsts for Bermuda. They included the Bermuda International Shipping Association's 1995 Bermuda: Charting the Course. And the Watson Wyatt Symposium, held two or three times yearly, covers directors and officers (D&O) liability insurance and was held outside the US for the first time.

There was speculation that D&O premiums would harden. Organisers said the Wyatt could return in the spring of 1997.

The Ninth International Reinsurance Congress, sponsored by Coopers & Lybrand and Hawksmere Plc, focused on issues relating to the Lloyd's of London market.

Two speeches in particular painted a positive future for the once revered market.

Six Bermuda companies conducted a significant exercise in investor relations at the annual Bermuda Angle attended by investment bankers and mutual fund representatives.

The Island also hosted the 1996 International Conference of the Organisation of Women in International Trade.

Captive insurers are right now fighting White House budget proposals that could move them outside of tax exempt insurance categories. On the other side of the Atlantic, the British budget slashed a tax shelter on UK-owned captives that could affect several Bermuda companies.

New faces on the Bermuda business scene in 1995 included Mr. Jack Carter, the son of former US President Jimmy Carter. He is an international portfolio manager at INVESCO Global Asset Management (IGAM).

IGAM involved the alliance of locally-owned fund manager Bermuda Asset Management and money management giant INVESCO Plc earlier this year.

Mr. Jeffrey Greenberg, son of American International Group chairman Mr.

Maurice Greenberg, and College of Insurance president, Dr. Ellen Thrower were appointed ACE Ltd. directors.

ACE's top lawyer, Mr. Brad Rich, resigned to assume a similar role with Texas-based mutual USAA.

The Chamber of Commerce appointed a new executive director, Ms Cyanne Thomas, replacing hardworking Ms Carolyn Mello.

The Island saw the newly-christened cargo vessel, the Bermuda Islander , a sign of stability in the container ship market.

Bermuda Bakery financial controller Mr. Earl Fithian was arrested in connection with financial irregularities at the bakery and was due to answer police bail in late December.

Financial irregularities associated with the bakery have been the subject of a fraud investigation for weeks, police revealed. Some $35,000 was the central focus of chartered accountants examining the company's books.

Near the end of the year, the Bermuda International Business Association (BIBA), the organisation that promotes the Island as a premier international business centre, had to find a replacement for chairman, Mr. Cummings Zuill.

After two years, likely the most significant for the association, Mr. Zuill, a senior executive at the Bank of Bermuda, handed the reigns to Mr. Tom Davis.

Mr. Zuill highlighted the organisation's briefing tour to Hong Kong as a major accomplishment in promoting Bermuda's international business. But, he added, there is much more to do.

A November report by Government consultant, Mr. Brian Archer, said $80 million of the $169.8 million paid out in salaries by international companies went to Bermudians.

The week before Christmas, GCR Holdings Ltd., parent of Bermuda-based property catastrophe reinsurer Global Capital Re, floated 6.6 million shares. It was one of several Bermuda offerings that met with huge success.

Also successful was a City bond issue, floated to finance the just-opened Bull's Head car park. It was more than four and a half times oversubscribed.

Chips Ltd. and Staples Ltd. as well as Watlington Waterworks Ltd. and Pure Water (Bermuda) Ltd. struck deals combining operations.

Profits were up for many of the Island's companies. Bank of Bermuda, Bank of Butterfield, Bermuda Commercial Bank reported profit of $42.2 million, $31.3 million and $1.6 million respectively.

ACE's profit was $237.6 million while PartnerRe Holdings Ltd. reported profit of $146.1 million. EXEL Ltd. netted $144 million while Mid Ocean Ltd.'s profit was $91 million.

DR. DAVID SAUL -- Follow the leader.

SIR JOHN SWAN -- Prepares for Big Mac attack.

KYMN ASTWOOD -- New Registrar of Companies.

DR. GRANT GIBBONS -- In finance hot seat.

CALLING ALL SHOPPERS -- Retailers are hoping for traffic jams inside their stores in 1996.

Bloomberg Business News DOWNWARD TREND -- The Bermuda Stock Exchange index slumped on Wednesday to 976.92, reaching its lowest level of the year. Wednesday was the first trading day after Christmas. The graph illustrates the downward trend of the index for the year.

BUSINESS BUC