What a difference a decade makes. Ten years ago, Bermuda was viewed as a small offshore island, somewhere near the Caribbean, with a scattering of specialist re/insurers which had been set up to do the dirty work the conventional market refused to touch, and a handful of captives thrown in for good measure. Now those specialists have turned the tables and are probably best described as international giants.

Both ACE and XL were established in the mid-1980s to provide excess liability cover when the traditional markets walked away from the business in droves. At the time, Lloyd's underwriters were sniffy about any potential competition emanating from Bermuda. In an ironic twist of fate, now a substantial amount of Lloyd's capacity comes from those very re/insurers the underwriters ignored.

In part, this could be that the Bermudian market has taken over the mantle of innovation held for so long by Lloyd's. Bermuda is the heartland of the new generation of re/insurance and capital market products, and the establishment of companies such as Max Re, fusing reinsurance underwriting with smart asset management, proves that the island is seen as a hotbed of product development.

Nevertheless, it hasn't taken Max Re long to extend its operations beyond the shores of Bermuda and into Dublin, itself an up-and-coming alternative risk transfer domicile. Bermuda's star performer Renaissance Re has been in Dublin for no less than three years now – though several years less than XL Europe's operation has been writing out of the domicile. Tokio Millennium Re, Bermuda's first Japanese-owned reinsurer, has an office in the Irish capital, and Imagine Re has said it will follow the same model. At the same time, Mary Hennessy, president and CEO of Overseas Partners Ltd, has confirmed OPL will be setting up a Dublin-based subsidiary in the near future. “We are putting a toe in the water,” she said. “It will provide an additional option to Bermuda, and when you are closer to the source of business, you get better opportunities.”

Despite OPL's substantial $2.5bn capitalisation – “I like to think of it as the largest start-up I'd ever see,” said Ms Hennessy – global domination is not in its sights. Instead, the strategy is to “put the balance sheet behind a small number of quality teams of people,” including property catastrophe, finite, workers compensation, accident and health, and aviation business. It could be the latter that “drives us towards a European platform,” she commented.

Others, however, have been less modest in their approach to international operations. Once ACE had bought Cigna's property/casualty operations in 1999, and, along with XL, was dominating the Lloyd's market, there was no longer any doubt that the Bermudians meant business internationally. In more recent times, that pace has not slackened. Back in December, XL bought the US surety operations of CGNU, a British multiline insurer which three months earlier had sold its US property/casualty operations to White Mountains Insurance Group, itself a successful redomiciliation from Delaware in late 1999.

But the XL/CGNU deal was nothing compared to XL's next move; buying Winterthur International for about $600m cash. This meant XL picked up Winterthur's not insubstantial property/casualty book from Credit Suisse, and added an impressive network of offices to its operations. At the time, XL president and CEO Brian O' Hara commented: “We believe that this will give us the opportunity to leverage the XL and Winterthur International franchises, creating a powerful combination that gives us added global reach and critical mass with very little overlap with our existing insurance operations. Our customers will benefit from the service capabilities of our global infrastructure across all lines together with more products and solutions to help manage the risks of their business.”

Others have, however, decided to retract from the international onslaught. PXRE threw in the towel with its Lloyd's operations – most likely a factor of the high costs involved in trading at Lloyd's combined with less than impressive results from its syndicates – while Stockton's London market profile has diminished over recent years.

By contrast, overseas re/insurers wanting a slice of the Bermuda action are not exactly thin on the ground. Tokio Millennium Re (TMR) was so happy with its first years of trading that it has doubled its capital to $250m. “We are able to see a lot of business and bring in good profits,” said Tatsuhiko Hoshina, director and chief underwriting officer. Locating in Bermuda enables TMR, a wholly-owned subsidiary of Tokio Marine and Fire, and the largest subsidiary outside Japan, to diversify its parent company's book. All its business is international catastrophe, ex-Japan, either through traditional reinsurance or portfolio swaps.

And redomiciliations seem to be flavour of the month, with Scottish Annuity & Life forsaking the Cayman Islands for their northerly neighbour, and Arch Capital relocating from Connecticut.

Of particular interest at the moment, however, is Willis' stated intention to move its headquarters to Bermuda once it rejoins the ranks of listed stocks. Until Willis is further down the listing line, little information will come out of the world's third largest broker, but the affirmation this will give to Bermuda, the third largest re/insurance market is clear; no longer the small offshore island of yesteryear, Bermuda is now a re/insurance giant.