One thing is for sure. In the heady world of (re)insurance, it is impossible to escape the topic of consolidation, whether you're merely keeping up with the headlines or one of the growing band of new job seekers.

The issue of consolidation crops up in several of this edition's articles; sometimes where you'd least expect it. For example, in Matthew O. Hughes' piece on the American view of the Euro (see page 45) he has the following to say: “All signs are showing that Europe's biggest insurers are getting bigger, primarily through acquisition campaigns. As these purchases are digested and economies of scale offered by the larger size are experienced, the European giants are building larger ‘war chests' of funds for further acquisitions.”

His argument is that although some of this money will be earmarked for European purchases, some is also being targeted for growth in foreign markets, including the United States. To lend weight to this argument he cites ING and the Zurich Financial Group, which have embarked on stateside shopping sprees, primarily targeting US life insurers and asset management companies.

Let us not forget, of course, the growing US ownership of European firms, both on the underwriting and broking side.

Risk managers worldwide are watching these developments with trepidation; fearful that fewer, larger insurance firms will strip them of their negotiating power. The insurers are quick to quash such fears, but the fact is that only time will tell.

Another pertinent fact is that risk managers always have the so-called alternative market to turn to, which continues to flourish. For example, Royal & Sun Alliance and ACE Bermuda Insurance recently joined forces with broker Aon Corporation to form Intrepid Re, a $300 million (re)insurance entity concentrating solely on alternative risk transfer.

The captive market in particular, the original ‘alternative market', shows no signs of letting up. Ridiculously soft rates in many lines have had little impact, putting paid to the antiquated view that captives are born of hard times. There is so much more to today's captive formations than the price of insurance. As Jenny Hill points out in her overview preceding our captive domicile section, (see page 87) the role of captives is ever changing, ever more sophisticated.

With all the consolidation going on and the intense rating competition, the run-off market is also going from strength to strength. In his article, ‘Stabilise before you finalise,'(see page 78) Art Coleman contends that he is part of today's largest growth industry. “With estimated liabilities currently at $300 billion growing to an estimated $505 billion by 2006, the growth of the run-off industry exceeds the growth projected for the industry as a whole.”

Just recently, for example, AIG (Europe) put into run-off its facultative reinsurance business, AIU Re, and its primary property operation which concentrated on the small sector of high hazard, primarily in the energy market. At the same time, the AIG subsidiary Lexington is closing its international property account, although it will continue to write North American property lines, providing worldwide coverage and exposure requirements for US clients.

Soft rates and overcapacity were blamed for the decisions, although a spokesperson stressed that the company was not a significant player in the business closed down.

This is a trend which is set to continue.

Talking of trends
As the mature, developed markets chase relatively stagnant premiums with that sword of Damocles - overcapacity - hanging overhead, windows of opportunity do still exist. The Latin American market continues to decentralise and open up, offering all sorts of potential to the prudent (re)insurer. In his article on health social security reform in Latin America, (see page 72) John H. Rooney points to the opportunities and challenges for the reinsurer of medical risks.

Pakistan is another example of a country which has plenty to offer. In his article on Pakistan's insurance industry (see page 65), Imran Mateen sums the situation up thus: “The socio-economic changes in addition to the deregulation, liberalisation and privatisation programmes in Pakistan during the last few years have opened up a whole new vista for the insurance industry as quite a number of new insurance companies have entered into insurance business in the country.”I have said it in previous editor's notes and I shall say it again; the only thing that is certain about the (re)insurance industry today is that it will continue to change.We at Global Reinsurance have a change of our own to report. Regent Publications Ltd, the publisher of Global Reinsurance, has been acquired by Southern Magazines Ltd, a subsidiary of News Communications and Media plc (Newscom).

Newscom is the UK's ninth largest regional newspaper publisher, according to the Newspaper Society, with 119 titles including four daily newspapers, 38 paid-for weeklies, 77 free weeklies and a total weekly circulation in excess of 2.6 million copies. Southern Magazines Ltd also publishes two other titles in the business finance market, Insurance Times and Portfolio International.

Lee Coppack and I continue as co-editors of the magazine. Mark Brown, sales and marketing director of Global Reinsurance for some years, has joined Southern Magazines, along with the editorial team as publisher for the title.

The new contact details are as follows:
Global Reinsurance,
30 Cannon Street, London
Tel: +44 171 618 3456
Fax: +44 171 618 3420.

Email: Lee Coppack -
Valerie Denney -
Mark Brown -
Valerie Denney is co-editor of this publication.