Sooner or later, it was inevitable. With premium rates continuing flat for the greater part of the year, Bermuda (re)insurers looked farther afield for the acquisition and merger targets that would boost their bottom lines. As the year wore on, the number of attractively-priced insurance companies suitable for acquisition dwindled.

ACE has had its hands full since early July, when its purchase of the property/casualty operations of Cigna closed, but found time to identify and bid for Capital Re Corporation, one of two companies which dominate the financial guaranty reinsurance market. Cap Re's board deemed ACE's offer good enough to take to its shareholders and a special meeting was set for October, 1999. The delay proved hazardous. XL Capital unveiled its opening bid on the day before the meeting was due to be held, and a battle royal ensued.

On 9 November 1999, Jennifer Smith's Progressive Labour Party completed its first year in office. In the international sector, it was a year marked by little or no change. At the annual Reinsurance Congress in October, Premier Smith reiterated her understanding of government's role as a supporter of international business in general and the insurance sector in particular.

The following review of 12 months in Bermuda ending 5 November 1999 shows that the island's progress has not been without its bumps and bruises. Sooner or later, this too was inevitable: that several years of soft pricing would catch up with an industry devoted to recording quarterly earnings increases. Mutual Risk Management (MRM) has experienced unexpected difficulties; Stirling Cooke Brown is undergoing a painful transition process; earnings, generally, have been depressed.

But hope springs eternal. Whatever Y2K may hold, the global economy and the (re)insurance industry began to take a collective deep breath as the fourth quarter of 1999 arrived. The arrival of the year 2000 was not expected to cause serious disruption in Bermuda; the technology at most companies is sufficiently current. The hope in the mid-Atlantic is that the inevitable Y2K hiatus will not derail the early signs of hardening in the market.

1998
Nov 5: MRM agrees to buy the International Advisory Services (IAS) group of companies. International Advisory Services Ltd, a subsidiary, has more than 100 captive clients with annual premiums in excess of $1.1 billion. The IAS Group will act as an autonomous unit within MRM under the direction of IAS founder and president, David Ezekiel.
Dec 2: Japanese trading house Sumitomo Corp intends to launch a joint venture rent-a-captive facility called Bluewell Reinsurance Co (Bermuda) Ltd, which is expected to generate about $10 million of annual premium volume within three years by offering rent-a-captive facilities to mid-sized companies and/or insurance agencies.
Dec 11: IRMG, the risk and advisory captive management company, incorporates a Panama company, IRMG Panama, S.A. It has also entered into cooperation agreements in Brazil with Catalyst Re Consulting and in Mexico with Asescor Consultores.
Dec 14: Exel changes its name to XL Capital Ltd.
Dec 21: Specialty reinsurer Stockton Reinsurance Ltd agrees in principle to pay £9.85 billion for Crowe Insurance Group Ltd, one of the largest remaining independent managing agencies at Lloyd's. Crowe, part of Ockham Holdings Ltd, manages six syndicates, with total 1999 premium income capacity of £230 million.
Dec 22: ACE is reported to be talking to CIGNA about buying its property/casualty insurance business.


6 Jan: RenaissanceRe Holdings and US based State Farm Ltd form Top Layer Reinsurance, a Bermuda based reinsurer with total capacity of up to $3 billion which will cover large property catastrophe risks with limits of up to $500 million.
7 Jan: Centre Solutions (Bermuda) Ltd issues $56.6 million in catastrophe bonds, a securitised deal to protect the company against hurricane losses in Florida.
11 Jan: Bermuda registered Gemini Re Holdings Ltd files for a $400 million initial public offering. The company was to be formed by former Bermuda finance minister Grant Gibbons and former Centre Solutions president David Brown, but it founders within a few weeks and never gets off the ground.A Swiss Re survey reveals that Bermuda based reinsurers have taken a 5%, or $6 billion, share of the global market.
12 Jan: RenaissanceRe Holdings puts the business units of its US based subsidiary, Nobel Insurance Co up for sale, seven months after buying the company for $63 million. Renaissance takes a $40 million charge in the fourth quarter from Nobel's activities.
13 Jan: ACE agrees to pay $3.45 billion cash for the property/casualty businesses of CIGNA Corp. The purchase moves ACE into the top 20 players in the US property/casualty markets, with about 9,600 employees and operations in 47 countries.
5 Feb: MRM Hancock Ltd, the London subsidiary of MRM, becomes an accredited broker at Lloyd's, offering MRM and its client access to the Lloyd's market. MRM Hancock is an international insurance and reinsurance broker specialising in the placement of reinsurance for captive insurance companies and other specialty programmes in the London and international markets.
16 Feb: XL and Connecticut based reinsurer NAC Re Corp sign a definitive merger agreement in an all stock transaction. The combined organisation will have assets of $13.3 billion and shareholders' equity of $5.6 billion, based on 1998 figures. NAC Re is to become XL's platform for the United States.
26 Feb: Registrar of Companies Kymn Astwood successfully petitions the Supreme Court of Bermuda for the appointment of a provisional liquidator of New Cap Reinsurance Bermuda. He states: “Loss reporting on retrocessions from its Australian subsidiary had accelerated in early 1999 beyond levels expected by the New Cap Bermuda actuaries and showed no signs of tapering off. These losses resulted in the insolvency of the company.”
1 Mar: MRM enters into an agreement to buy Captive Resources, Inc, a Schaumberg, Illinois based provider of services to member owned group captive insurance companies. CRI has 50 employees and 1998 revenues of about $8 million.
5 Mar: New York investment bank Lehman Brothers establishes a four-man Bermuda office for Lehman Re, its Bermuda subsidiary. A further 31 staff are based at Lehman Advisors in New York. Lehman Risk Advisors is to deal with finite and political risk and the investment trading end of the insurance and reinsurance venture. Lehman Re is capitalised at $500 million, some 10% of the firm's capital equity.
15 April: The Hartford reveals “a new strategic thrust” for its Bermuda operations. The company intends to provide clients with innovative financial mechanisms either on a direct basis, or through reinsurance. Such products will include wrap-around punitive damages, indemnification buy-outs and captive management and rent-a-captive services.
20 May: The formation is announced of a new class four insurer, Intrepid Re, with an expected market capitalisation of $300 million. Intrepid Re and its parent, Intrepid Re Holdings, will be a joint venture between ACE, the British Royal & Sun Alliance Group and Chicago-based Aon. ACE and Royal & Sun will underwrite Intrepid's book, with Aon, whose business interests until now have been dominated by its brokerage, providing sales and marketing expertise.
20 May: The Bermuda Fire and Marine Insurance Co (BFMIC) case begins before Justice Meerabux in a Supreme Court building erected specifically to allow the case to be heard. BFMIC failed in 1991 due to large third party claims and the attempt of the liquidators to seize assets which, it is claimed, were wrongfully transferred to a new company formed by BF&M Ltd.
29 June: SCOR Group, France's largest reinsurer, acquires the 35% of Bermuda based alternative risk operation, Commercial Risk Partners (CRP), formerly held by Western General Insurance. The acquisition brings SCOR's ownership of CRP to 100%.
7 July: US-based PXRe Corp is to reorganise the company to create a new Bermuda-based holding company, PXRE Group, with a Bermuda-based reinsurance subsidiary, in order to strengthen its competitive position within its reinsurance markets.
8 July: Bermuda-based Stirling Cooke Brown Holdings (SCB) announces that Nicholas Mark Cooke is to stand down from his executive role as president and ceo of the company. Mr Cooke will retain his position as non-executive chairman of the board and will continue to advise in the areas of client development and marketing. Len Quick, chief of SCB's US operations, is appointed as chief operating officer and interim ceo of the company.RAM Reinsurance Co Ltd announces the completion of a second round of capital funding, totalling more than $57 million. The new round gives RAM Re approximately $133 million in shareholders' equity and $121 million in statutory capital. The second round of financing includes $30 million from Transatlantic Holdings, a new investor, through its subsidiary, Transatlantic Reinsurance, $15 million from the PMI Group, and $12.5 million from High Ridge Capital Partners.
13 July: Clive Tobin will succeed Robert Cooney as president and ceo of XL Insurance Ltd, one of the principal insurance operating units of XL Capital. Mr Cooney is to pursue other business interests.
19 July: Jeremy Cox is appointed as Bermuda's registrar of companies, succeeding Kymn Astwood, who resigned earlier this year to take up a position in the insurance industry. Mr Cox has worked in the registrar's office since 1993 and was most recently Bermuda's inspector of companies. His father, Eugene Cox, is Bermuda's minister of finance and his older sister, Paula Cox, is minister of labour and home affairs.
30 July: XL Capital and Les Mutuelles du Mans Assurances Group (MMA) sign a joint venture agreement to form a new French reinsurance company, Le Mans Ré. The new company will operate from headquarters in Le Mans, France, and has been capitalised at FFr 1 billion ($162.5 million). XL Capital contributes cash of FFr 600 million to Le Mans Ré for a 49% shareholding in the new company. MMA contributes the 40-year-old operations of its reinsurance division, Mutuelles du Mans Reassurance, and holds the majority stake in LeMans Ré.
17 Aug : US niche insurer Markel Corporation is to buy Bermuda-based reinsurer Terra Nova for $905 million or $34 per share. Markel is based in Glen Allen, Virginia, and markets and underwrites specialty insurance products and programmes to a variety of special markets.
1 Sept : Unaudited financial statements for the first half of 1999 show that BF&M Ltd suffered “very substantial legal expenses” totalling $3 million in the six months to 30 June. This results in net earnings of $3.5 million for the period. However, the company noted that results before the legal expenses showed an increase of 16% in earnings for the first half-year to $6.5 million.
20 Sept : Everest Reinsurance Holdings Inc is forming a holding company inBermuda. Everest provides insurance and reinsurance to life and property/casualty insurers. Based in Liberty Corner, N.J., Everest is also to form a reinsurance company called Everest Reinsurance (Bermuda) Ltd.
28 Sept : Warnings about reduced fee income from its programme business and a downturn in the workers' compensation market has hurt MRM's share price. The company, however, remains upbeat about its marketing and business plans.
5 Oct : Stockholders of PXRE Corporation approve the company's previously announced reorganisation as a Bermuda-based holding company.
6 Oct: One day before the shareholders of Capital Re Corporation are to vote on the ACE offer to acquire the company, XL Capital makes an unsolicited bid to buy the company, in an all-cash offer valued at $456 million. The offer sparks an all-Bermuda bidding war between ACE and XL. During October, ACE exercises an option to appoint two members of Cap Re's board and raises its bid price; a day later XL raises its offer and says it will pay a $25 million termination fee and set up a $50 million stand-by commitment for Cap Re if the XL bid is successful. Both sides raise their offers again before month's end and a judge strikes down an application from ACE to enforce its original agreement with Cap Re. Finally, on 10 November, XL announces it does not intend to make a new offer “at this time'' in its bid to take Capital Re from ACE.
7 Oct: US insurer Mutual Insurance Corporation Of America (MICOA) is to move its operations to Bermuda. MICOA believes it is one of the first medical professional liability companies in the US to offer rent-a-captive services, which the company is offering via a newly-formed subsidiary, MICOA Consulting.
11 Oct: Founder Nicholas Brown resigns from his position as managing director and head of London broking operations of Stirling Cooke Brown Holdings to pursue new business ventures.
25 Oct: IPC Holdings, Ltd reports net income of $7.8 million for the quarter ended September 30, 1999, down 30% compared to $11.1 million, for the third quarter of 1998.
31 October: The BFMIC case continues into its sixth month.

Roger Crombie is Bermuda correspondent of Global Reinsurance and editor of the publication's 1999 Cayman Islands edition. He is also a fellow of the Institute of Chartered Accountants of England and Wales. E-mail:roger.crombie@globalreinsurance.com.