results & q1 meet xl’s - pwcsub-prime mortgage crisis had caused some bermuda carriers to make...

BERMUDA INSURERS TREAD WARILY… As the sun shines, why do insurers in Bermudaseem to sense they’re on thin ice? See page 1

MEET XL’SNEW CEOMCGAVICK

ALL THERESULTS &ANALYSIS

CLIMBINGHIGH FORCHARITY

12

10BERMUDAINSURANCEQUARTERLY© 2008 Bermuda Media in association with

J u l y 2 0 0 8

Q1BIQ20

19278F_BIQ_Pg_:. 7/3/08 12:21 PM

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19278F_BIQ_Pg_.qxp:. 6/24/08 1:39 PM

“Although XL is steadily nav-igating through some ex -tremely difficult global creditmarket conditions, which isreflected in our lower invest-ment performance relative tothe outstanding results in theprior year quarter, we havestill achieved another solidperformance from our In -surance, Reinsurance and Life operations.”

— XL Capital Chairman Brian O’Hara

“The world economy and theUS economy benefits enor-mously from the expertisethat has been gathered here inBermuda and the effective-ness of the industry here. Soefforts by the US or others tolimit the effectiveness of thatmarket are self-defeating inthe long run.”

— XL Capital CEO Mike McGavick

“We expect that the extreme competitive chal-lenges across all product lines will continue to pre-

vail throughout the insurance marketplace. Re -insurance business we believe will be much morestable in pricing, terms and conditions throughoutthe rest of the year. It is anticipated that the finan-cial markets will remain difficult.”— AXIS Capital President & CEO John Charman

“Ariel Re is the fifth reinsurance company I’vestarted from scratch. All the reinsurance companiesI’ve worked for are ones that I’ve started. Thatmeans I’m either a serial entrepreneur or, morelikely, no one in their right mind would hire me.”

— Ariel Re Chairman & CEO Don Krameraccepting his Lifetime Achievement award

from the Bermuda Insurance Institute

“Unfortunately, John can’t be here tonight as he isattending his son’s 21st birth-day party in Las Vegas where,contrary to opinion, he didnot learn his underwritingskills.”

— AXIS chairman MichaelButt apologises for his CEOand friend John Charman’s

absence from the BISawards banquet

BERMUDA INSURANCEQUARTERLY

EditorRichard Whitaker

Art DirectorPaul Shapiro

Contributing EditorChris Gibbons

Director of MarketingLissa Fisher

PublisherIan Coles

Published by Bermuda Media, Suite310, The International Centre, 26Bermudiana Road, Hamilton HM 11,Bermuda. Postal address: PO Box HM2032, Hamilton HM HX, Bermuda. Tel:292-7279 Fax: 295-3189 Email:[email protected]. Web: bermudamedia.bm.Printed in Canada.

Published four times a year in associa-tion with PricewaterhouseCoopers.

Cover image: istockphoto.com

BIQ

Bermuda’s property/casualtyinsurers may be in good shape— but rating agency A M Best

has forecast long-term falls inearnings and profit margins.

In a special report, BermudaInsurers Carry Strength into aSoftening Market, Best saysalthough the Bermuda companieshave bounced back from two yearsof unprecedented hurricane lossesto post strong results in 2006 and2007 ensuring that “Bermuda isclearly as prominent as any marketin the world”, industry fundamen-tals are expected to continue todeteriorate.

“The overwhelming conclusionis that the majority of carriers onthe island are financially strong,benefiting from record earningsproduced by the fundamental

quality of underwriting opera-tions,” says the report. “As can beexpected, balance sheets with fewexceptions are in the best shape inyears.”

But it warns that profit marginswill continue to deteriorate barringany industry-changing event.

The report notes that first-quarter results indicate an accept-able rate of return can be expectedfor this year, albeit at lower mar-gins than those reported in thepast two years. In previous softcycles, Best said companies underpressure to deploy their capitalhave been tempted to go afterunderpriced business but believesBermuda companies were deter-mined not to repeat the lack ofunderwriting discipline that exac-erbated soft markets in the past.

“As the July renewal seasonlooms, insurers in Bermuda seemto sense they’re on thin ice, andnone wants to be the one to breakit,” says the report.

Best notes that trends includeactive share repurchase pro-grammes and increases in dividendpayments, and expects increasedmergers and acquisitions activity inthe coming months.

“The Island’s interest in USexcess and surplus lines specialtymarkets continues unabated as car-riers such as Max Re, MontpelierRe and Endurance have set updomestic [US] operations.Another major trend is Bermudacompanies entering Lloyd’s mar-kets through the formation of aLloyd’s syndicate such as Aspen orMontpelier Re, or through trans-actions such as Ariel Holdings and

Validus Holdings acquiringAtrium and Talbot respectively.”

Best reported that although thesub-prime mortgage crisis hadcaused some Bermuda carriers tomake write-downs, it had not sofar impacted operating results. Thereport says, though, that Bestexpects redundancies to be largelyexhausted through 2009.

ACE and XL Capital remainthe biggest players in the marketwith non-life net premiums of$11.6 billion and $6.3 billionrespectively.

A M Best maintains a stableratings outlook on the Bermudareinsurance/insurance sector.

THE QUOTES OF THE QUARTER

V o l u m e 4 , N u m b e r 3J u l y 2 0 0 8

Best says Bermuda’s in ‘good shape’COMPANIES POST STRONG RESULTS, BUT REPORT WARNS OF EXPECTED FALL IN PROFIT MARGINS

‘Balance sheetsare in the bestshape in years’

[ 1 ]

Bermuda-based Renaissance Re Holdings Ltd is to buy out AgroNational, a premier managing general underwriter of crop insurance.Terms have not been disclosed. Agro National will become part of theGlencoe Group which conducts the Individual Risk business ofRenaissance Re. Glencoe Group is a leading writer of programmebusiness through admitted and non-admitted carriers.

RENRE BUYS OUT AGRO NATIONAL

19278F_BIQ_Pg_:. 6/24/08 1:50 PM Page 1

NEWS REVIEW

Soft market? What soft market?According to latest statisticscompiled by the Bermuda

Monetary Authority, the Island’sinsurance market continues toshow strong signs of growth withincreased premiums and a largercapital base.

Although the number of newreinsurers formed in 2007 wasdown slightly, 71 against 82 in2006, the Bermuda market wrote$115.8 billion in gross written pre-miums in 2006, the last year forwhich statistics are available - up15% from the previous year - andtotal assets increased 33% to$440.4 billion. Of these amountscaptives accounted for $72 billionin total assets and almost $22 bil-lion in gross premiums written.

The BMA said the decline in thenumber of new companies “reflected

the generally softer market condi-tions globally.” It added, “In suchconditions companies typically areable to purchase reinsurance cover-age at competitive rates in the tradi-tional commercial markets.”

The majority of the newBermuda market entrants for 2007were once again Class 3 insurerswith just two new Class 4 compa-nies, reflecting the general inactivi-ty in the property and casualty mar-ket and the relative lack of majorcatastrophic events during the year,resulting in the likely record prof-itability of existing insurers and asufficiency of global capital in theproperty/casualty sector.

“We were very pleased to seethat the tradition of quality busi-ness coming to Bermuda wasmaintained with the companiesthat were successfully establishedhere during the year,” said JeremyCox, Deputy CEO of the BMA.

“The high quality of the spon-sors behind the companies, inaddition to the continued increasesin premium volume written thatwe have been recording over theyears, indicates that market confi-dence in Bermuda as a leadingcentre for international insuranceand reinsurance remains strong.There is also a continued apprecia-tion among those who participate

in this market of Bermuda’s effec-tive, practical regulatory environ-ment.”

He said the BMA had contin-ued to place emphasis on enhanc-ing its regulatory standards andoperational capability during theyear to maintain effective regula-tion of Bermuda’s growing market.

“Key areas of supervision such asour on-site programmes and risk-based capital adequacy regime arebeing expanded and refined,” saidCox. “Overall, we are steadilyenhancing the depth of technicalskills and resources that we havewithin the Authority, as well asbuilding on our existing compliancewith international standards interms of our regulatory framework.”

Further enhancement of theAuthority’s operational capabilityremains a key objective.

Bermuda market still boomingBMA SAYS DECLINE IN NEW COMPANIES DUE TO SOFTER MARKET CONDITIONS GLOBALLY

[ 2 ]

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19278F_BIQ_Pg_:. 6/24/08 2:20 PM Page 2

NEWS REVIEW

Cash back to run new fundJUNIPERUS, A BERMUDA-BASED INVESTMENT MANAGEMENT COMPANY, TAKES ON CASH AS CEO AND CUO

[ 3 ]

Michael Cash is back in theinsurance business ninemonths after being fined

$130,000 by the US Securities andExchange Commission (SEC) andbarred from working as a directoror officer of a public company forfive years after allegedly participat-ing in a “sham transaction” tosmooth earnings while a senior ex -ecutive of a subsidiary ofBermuda-based reinsurer Renaiss -anceRe.

The Bermudian executive isCEO and Chief UnderwritingOfficer of Juniperus Capital Ltd( JCL), a new Bermuda-basedinvestment management companyestablished to manage third-partyfunds focused on the collateralisedreinsurance and insurance-linkedsecurities markets.

The SEC said Cash improperlyaccounted for a $50 million trans-action while at RenRe. He latersettled with the regulator withoutadmitting or denying the allega-tions.

JCL will manage the JuniperusInsurance Opportunity Fund witha $50 million cash investment bybroking firm the Benfield Group.Benfield holds a significant share-holding in JCL having acquired$6.6 million in shares, and hascommitted to provide up to $2million in working capital to theinvestment management company.

Philip Lotz, the former CEOof Swiss Re Capital Managementand Advisory will serve as JCL’sExecutive Chairman.

Cash has more than 17 years’experience in the reinsuranceindustry. He joined RenaissanceRe in 2000, resigning in July 2005as Senior Vice President, SpecialtyReinsurance. Previously he was aPrincipal at Stockton ReinsuranceLtd and also worked for CentreReinsurance. Mr Cash is anAssociate of the Casualty ActuarialSociety.

Benfield CEO GrahameChilton said the formation of JCLwas “a logical next step in thisexpanding marketplace”.

In addition to advising on theformation of new risk taking enti-ties such as JCL and its affiliates,Benfield Advisory (BA), the com-pany’s specialist corporate financeand advisory business, advises oninsurance and reinsurance M&Aand provides cedants with directaccess to hedge funds, pensionfunds, banks and other non-tradi-tional investors.

He said: “BA has advised onmany start up insurance and rein-surance companies includingLancashire Insurance, MontpelierRe and other vehicles, and has alsoadvised on the placing of billionsof dollars of catastrophe risk in thecapital markets in recent years,either through the formation ofbroadly syndicated risk transfervehicles or directly with capital

markets investors.”Rob Bredahl, Global Head of

BA, added: “The convergence ofthe reinsurance and capital mar-kets is being driven by reinsurancecompanies seeking to access differ-ent forms of capital and innovativerisk transfer techniques, andinvestors increasingly attracted tothe high yielding non-correlatednature of catastrophe-type risk.”

PRESERVETHE FUTURE.

COMMITTED TO THE ENVIRONMENT

Every day our employees prove that Insuring Progress is more than a commitment to the way we work. It’s our personal commitment to the communities in which we work and live. Through ACE’s ongoing environmental initiatives, we strive to make a difference in Bermuda and to return long-lasting benefits to our community.

MAKE PROGRESS.

COMMITTED TO THE COMMUNITY

©2008 acebermuda.com

19278F_BIQ_Pg_:. 6/24/08 2:23 PM Page 3

NEWS REVIEW

Charman takes top honoursTWO-TIME RETIREE KRAMER RECEIVES THE BII’S LIFETIME ACHIEVEMENT AWARD

[ 4 ]

John Charman, the man oncedubbed the ‘King of Lloyd’s’was named Bermuda’s Re -

insurance Person of the Year at theBermuda Insurance InstituteAwards, while industry veteranDon Kramer collected a LifetimeAchievement Award.

British-born Charman, Pres -ident and CEO of AXIS Capital,was recognised for the remarkablesuccess of AXIS, the company heformed in Bermuda in 2001, andfor his passionate support of theBermuda market.

Ariel Re boss Kramer was hon-oured for a 50-year career in whichhe has started five successful rein-surance companies from scratch.

Charman steered AXIS to arecord year in 2007 in which thecompany generated more than $1billion in net income and nowboasts more than 750 employeesworldwide. He started at Lloyd’s asa junior in 1971 and has held asenior underwriting position since1975, eventually forming his owncompany Tarquin plc — the parentcompany of the Charman Under -writing Agencies at Lloyd’s — andmaking his name writing war riskduring the first Gulf War.

He served as Deputy Chairmanof the Council of Lloyd’s and amember of Lloyd’s Core Manage -ment Group and Lloyd’s Market

Board. Disillusioned with Lon -don’s reluctance to modernise, hesold Tarquin to ACE in 1998. Hewas deputy chairman of ACE INAHoldings and President of ACEInternational and CEO of ACEGlobal Markets before he andACE parted company in 2001.

After the events of 9/11,Charman seized the opportunityto form AXIS.

“For anybody who has the rightqualifications and determination,ambition and standards, Bermudais without doubt the best place inthe world to practice insurance andreinsurance business,” Charmansaid in the official awards pro-gramme (he was unable to attendthe awards night).

“I think the strength of theBermudian insurance and reinsur-

ance market is obvious. It hasbecome, in a relatively short periodof time, one of the dominant marketsin the world and in the industry.”

At 70 and despite achieving theBII Lifetime Achievement Award,Don Kramer shows no sign ofslowing down.

He began his career as a WallStreet analyst and started his firstsuccessful Bermuda reinsurancecompany, Oppenheimer Re, in1974. He then formed KramerCapital Corporation and startedNAC Re from an inactive shell in1985. He “retired” in 1993 but inthe wake of Hurricane Andrew hequickly started a new company,Tempest Re, which was bought byACE and is now ACE Tempest Re.

Kramer served as ViceChairman and CEO at ACE aswell as chairman and director ofspin-off Assured Guaranty Ltduntil “retiring” again in 2005. Butfollowing the Katrina-Wilma-Ritastorms of 2005 he was back inaction, forming Ariel Re with $1billion in capital in just 12 weeks.

“It is important that we build aculture within our communities oftraining, education and youthdevelopment, as well as under-standing the business,” he says.“Bermuda is full of talent, youngexecutive talent and a lot of coun-tries are envious of us.”

If the Bermuda reinsurance industry was lookingfor a poster boy to show young Bermudians justwhat they can achieve in the business, then XL

underwriter Gino Z Smith certainly fits the bill.The 32-year-old Bermudian received a

deserved standing ovation from his peers afteraccepting the honour of Young ReinsurancePerson of the Year at the recent BermudaInsurance Institute Awards at the FairmontHamilton Princess Hotel.

At a time when the industry is struggling toattract black Bermudian males, Smith is an idealrole model. Dynamic, intelligent and hard-work-ing, Smith already has an impressive resuméafter barely seven years in the business and isclearly being groomed for greater things.

The former Berkeley Institute student was the

first Bermuda College graduate to be namedMost Outstanding Insurance Student and, aidedby scholarships from XL Capital, the BermudaFoundation for Insurance Studies (BFIS) andRIMS (the Risk Management and InsuranceSociety), he went on to graduate as valedictorianfrom the College of Insurance n New York. Healso attended the Don Quijote Instituto deIdiomas in Spain.

At present, Smith is an Assistant VicePresident and Underwriter at XL Re Ltd where heis primarily responsible for underwriting propertycatastrophe exposed reinsurance treaties. In2006 he was part of the XL team voted BestOverall Bermuda Underwriters by Reactionsmagazine.

Before joining XL Re, Smith spent three years

with XL Re Latin America Ltd working inArgentina, Mexico and Colombia.

Yet for a former pack racer who tauntedpolice and saw three of his friends die, life couldhave turned out very differently. “I’m a typicalblack Bermudian,” says Smith modestly butacknowledges he owes a debt to the “strong-willed” mother who raised him. “She taught methat life isn’t fair and to get anywhere you need-ed to get off your behind. Failure was a part oflife and I’d better get used to it. She taught meto have vision, to work hard and persevere todeal with the downs and the ability to adapt tochange. I have come from being ordered by thecourt to do community service to giving service.”

He has spent much time giving back to thosewho helped him, most notably the BFIS.

Gino Smith and Donald Kramer with their awards

Gino’s star-studded future is already written

JohnCharman

19278F_BIQ_Pg_:. 6/24/08 2:23 PM Page 4

First the good news: more stu-dents than ever are registeringto take insurance exams

through the Bermuda InsuranceInstitute (BII). Speaking at theInstitute’s awards dinner in May,BII president Gerald Simons saidthat in 2007, 1,144 exams werewritten — up 38% on the 831written in 2006. Hundreds ofindustry professionals also attend-ed a record number of seminarsand courses on everything fromthe sub-prime crisis to sidecars —up 43% on 2006.

The bad news is that few ofthose students are Bermudianmales and even fewer of them areblack males according to Simons,president and CEO of The ArgusGroup.

“I remain concerned by the lackof participation of males in ourcourses,” he said, noting that in2005, 59% of graduates whoobtained their professional desig-nations through the BII werewomen. “I am concerned that boysare under-represented in enteringour industry. I have seen it happenat Argus. When I started as CEOten years ago we had one femalesenior manager. Now five or six outof a dozen are heading our majorbusiness units.”

Simons, a former Governmenteducation minister, says educatingBermudian students about the roleof international business and theinsurance industry as well as theopportunities it represents wascritical.

Simons said he encouragedindustry members to actively takepart in programmes like YouthNetand law firm Appleby’s A to Bmentoring scheme, which linksstaff members with students atGovernment predominantly blackhigh school Berkeley Institute.

“When the business communi-ty encourages its staff to establishrelationships with people inschools it achieves a number ofthings. Not all of them will enterthe insurance industry but it isimportant for everyone to under-

stand business – and internationalbusiness in particular – because itis so important to our economy.Unless people understand businessand value it, they may do things toupset the industry and create anatmosphere that is not conduciveto the growth of the industry.”

Simons said he was pleased thatthe Bermuda Foundation forInsurance Studies was having

some success in attracting males toits scholarship programme.

But, as he noted in programmenotes for the BII awards night,many Bermudians were still com-ing to terms with the rapid changefrom tourism centre to an interna-tional business centre.

“It takes a while for the com-munity to understand that type ofchange.”

NEWS REVIEW

Insurance recruitment fearsBII CHIEF SAYS FEWER BERMUDIAN MALE STUDENTS SIGN UP FOR INSURANCE EXAMS

[ 5 ]

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[ 7 ]

Ahost of leading industry figuresattended the recent WorldInsurance Forum in Dubai.Dubai is one of the so-called

emerging hubs of the rapidlydeveloping economy of the MiddleEast, but is it a direct competitorto Bermuda in terms of the insur-ance market?

“I would view it as rather morecomplementary than as a threat,”said John Charman, CEO andPresident of Axis Capital.

“Bermudian businesses haveevolved enormously over the last20 years, and have become anessential feature of the globalinsurance and re-insurance industry.Dubai is very desirous and willestablish a regional financialcentre.”

Graham Chilton, the ChiefExecutive of Benfield, the inde-pendent reinsurance and riskintermediary, said: “We’ve been inthe region for some time lookingat the opportunities and I thinkwe’re closely getting to the pointwhere we feel the real opportunityto be here.

“It’s no threat to Bermuda. Ithink it’s an opportunity forBermuda to actually utilise its cap-ital in a local market area.”

Bermuda-headquartered rein-surer Flagstone Re is one of thefirms that have chosen to establishan office in Dubai. Flagstone Re’sChairman Mark Byrne said,“There is a relatively low insurancepenetration in this region, but theeconomic growth in the region isvery, very strong. A lot of featuresof the region suit our strategy tolook a bit off the beaten track sothat we don’t find ourselves justturning up as a relatively youngcompany and competing withexisting companies on price indeveloped markets.”

During the World InsuranceForum, Bermuda-based Arch Reannounced a joint venture withGulf Investment Corporation toestablish a specialist re-insurer forthe Gulf named Gulf Re.

Arch Re’s President Con -

stantine “Dinos” Iordanou said:“Business activity is growing in theregion. That’s why we feel it isgoing to be a tremendous opportu-nity for us.

“I don’t know what other firmsin Bermuda will do. I don’t know ifthey are going to follow the exactmodel, or a 50/50 joint venturewith local entities, but I do expectother Bermuda companies to open

offices in the territory.”Lord Peter Levene, Chairman

of Lloyd’s of London, said: “I thinkDubai’s different because inBermuda you’ve got a well estab-lished reinsurance industry whichhas been going for a long time andit’s got a lot of know how and isone of the world’s reinsurance cen-tres. Here in Dubai, really you’restarting from scratch. The amount

of insurance actually consumed inthe Middle East as a proportion ofthe world is tiny. You think of theresources in cash and investmentthat is in this part of the world,and then you find out this is 1% ofthe world’s insurance market.There’s clearly a long way to go.

“We need to diversify outsideour traditional markets, which aretypically the US and Europe.”

BUT IS DUBAI, THE MIDDLE EAST’S BOOMING ECONOMIC HUB, LIKELY TO BE BERMUDA’S BUSINESS FRIEND OR FOE?

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NEWS REVIEW

[ 9 ]

Agap in the offshore energymarket has provided an oppor-tunity for Anemos Insurance

Management Ltd, a newly-formedBermuda-based company.

The managing general agency(MGA) led by former OIL vice-president Elspeth Brewin and JohnJenks, former president of Ben -field’s Bermuda office, will under-write offshore energy business onbehalf of Bermuda-domiciledIronshore Insurance Ltd.

The Chief Underwriting Off -icer is Allen (Al) Steiger, who pre-viously headed the Property andEnergy teams at XL Capital,Bermuda.

Launched in early May,Anemos will initially focus on pro-viding much-needed capacity forexcess windstorm coverage in theGulf of Mexico, where the energy

industry suffered some $10.4 bil-lion worth of damage duringHurricanes Katrina and Rita in2005, mainly to offshore oil andgas drilling platforms.

CEO Jenks explained: “There isstill a shortage of capacity in theoffshore energy market, particular-ly in the Gulf of Mexico wherebuyers had significantly-reducedwind cover imposed on them intheir insurance packages.”

He added: “In 2005 the energy

buyer had no sub limits for wind.They could have bought up to thefull values of their entire exposuresand got $1 billion of coverage ifthey wanted. Their coverage wentdown to $150 million overnightfor their 2006 renewals.

“We believe that our new excessfacility will be welcomed by buyersseeking to purchase increased lim-its for these risks for the 2008 sea-son, and by those without wind-storm exposure but with capacityconstraints for certain key assetsoffshore in other locations.”

Anemos — named after thewind gods of Greek mythology —has been set up with the backing ofthe Thomas Miller Group withwhom it shares offices in ChevronHouse on Church Street,Hamilton.

It offers capacity of $25 million

per insured with policies writteneither on an “All Risks” basis withthe standard industry exclusionssuch as land, terrorism, seepageand pollution, or the full limit isavailable for stand-alone Gulf ofMexico windstorm coverage.

“We write exclusively to thebroker market and what we try todeliver that others can’t is speed ofservice and size of line,” said Jenks,who added that Anemos offered atechnical approach to underwrit-ing and risk assessment that differ-entiated by platform design/construction specifics and precisegeographic location to give buyerspackages tailored to fit their indi-vidual needs.

Since opening for business thecompany has received more than30 submissions and is expecting abrisk mid-year renewal season.

COMPANY TACKLES SHORTAGE OF CAPACITY IN THE OFFSHORE ENERGY MARKET

Anemos seizes energy opportunity

‘What we try todeliver that others can’t isspeed of serviceand size of line’

19278F_BIQ_Pg_:. 7/3/08 12:04 PM Page 9

NEW BOSS CLEARS THE DECKS TO FOCUS ON COMPANY’S STRENGTHS

PROFILE

Mike McGavick has barely set-tled into the hot seat as CEOof XL Capital Ltd but he

already has a clear idea of hisimmediate priorities.

Top of the list is to “get SCAbehind us.” He also wants torestore shaky investor confidenceby putting an end to XL’s recenthistory of volatile earnings andearn back the company’s A+ ratingfrom A M Best.

McGavick joined XL on May 1replacing Brian M O’Hara whohad been CEO for the past 13years. O’Hara will serve asChairman during the final year ofhis current term on the Boardwhich expires in April 2009.

In an interview with theBermuda Business Channel,McGavick said the credit crisis-related problems stemming fromXL’s investment in and reinsur-ance of financial guarantorSecurity Capital Assurance (SCA)was just one of several mattersrequiring urgent attention at theBermuda-based reinsurance giant.The SCA problems were behindthe staggering $1.06 billion lossXL took in 4Q 2007 which sawthe company’s stock plunge 60%from its 52-week high last sum-mer and led to rating agency A MBest downgrading the group’sfinancial strength rating from A+to A– and its issuer credit ratingsto A from AA–.

McGavick admitted that therehad been “continuing difficulty”in the SCA relationship. “Clearlythe stock markets are depressingwhat we think is the real value ofthis franchise until there’s clarityaround that situation. So prioritynumber one is to get SCA behindus in some kind of final way.”

However McGavick said therewas still some uncertainty aboutfurther losses from SCA.

“We’ve already taken significantreserve on one of the treaties thatwe have there, but the other issueis we have a guarantee to the SCAbusiness before it was moved outof XL. The real issue here is there’s

debate over how much that guar-antee is worth. We believe, as westudy SCA’s results, there’s unlike-ly to be losses on that guarantee.But there’s uncertainty around itand that’s why the markets are theway they are.”

During April’s earnings callconference, McGavick said he wasalso determined to “do all I can tolead an end to the current andunpleasant pattern of having ourvery strong earnings in core rein-surance and insurance operationslost through one-offs every coupleof years. This simply has to end.We all know that. There are toolswe can use to do so and I’m intenton bringing that fully to bear.

“By doing so I think we canbring a real focus on strengtheningthe view of others of our capitalstrength.”

McGavick told the BermudaBusiness Channel that XL neededto focus on its enterprise risk man-agement. “How do we really thinkabout protecting ourselves againstthose untoward events? We getthose things right. I think theunderlying strength of the fran-chise will be made obvious toeveryone again.”

He told the company’s recentearnings call with investors that itwas important for XL to be able toget back to focusing on itsstrengths and its core franchises.“That is particularly important at atime when underwriters, and par-ticularly great underwriting organ-isations like this one, can showtheir real relative strength as theinsurance marketplace globally

enters choppier waters.So getting back to thatfocus and having theconfidence to do it rightis exactly what we allneed to be doing and it’smy job to do all I can toquickly clear the decks

so that can again be the focus.”Before joining XL, McGavick

was Pres ident and CEO of Seattle-based Safeco Corporation afterspending six years with Chicago-based CNA Financial Corporationwhere he became President andChief Operating Officer of thecompany’s largest commercialinsurance operating unit.

He was also Director of theAmerican Insurance Association’sSuperfund Improvement Projectin Washington DC where hebecame the Association’s leadstrategist in working to transformUS Superfund environmental laws.

In 2006 he unsuccessfully ran asa Republican for a seat in the USSenate in his native state ofWashington and before enteringthe insurance industry he wasinvolved in a number of politicaland public affairs organisations,including serving as a Chief ofStaff in the United States Senate.

Born and raised in Seattle —coincidentally he went to the sameSeattle high school as BrianO’Hara but a decade apart —McGavick has now relocated toBermuda with wife Gaelynn andtwo younger sons Gates andMarco, aged nine and 11. A thirdson, Jack, is at college.

The decision to appoint a CEOfrom outside the company was notuniversally popular among XLexecutives, but XL Lead DirectorRobert R Glauber who chaired theCompany’s CEO SuccessionCommittee said: “While theCompany has extremely talentedand capable internal candidates,

the Committee decided that XL,having been led by one of itsfounding executives for 13 years,would benefit most from an exter-nal perspective at the top level ofleadership.”

McGavick said: “XL is knownfor its underwriting excellence anda values-based culture of integrity,both of which have been developedunder Brian’s leadership. These arethe very differentiating character-istics with which I closely identifyand I am proud to have been cho-sen as the company’s next CEO.XL is a world class brand with verysuccessful insurance, reinsuranceand life reinsurance businesses andI look forward to helping it realiseits full potential.”

Asked whether he thought itwould take a major event to getprices moving again, McGavicksaid: “It’s hard to say. Whenever wesee softening in rates there’s a lotof people who speculate aboutwhat might cause it to change.Clearly at this time for XL forexample, we continue to be veryfocused on charging an appropri-ate price for the risks we take on.And we continue to retain ourbusiness at a very healthy rate.

“Those are both good indica-tors for us in the short term. Thelonger-term rate trend is disturb-ing. And how long that lasts, howfar that will push insurers intowriting at rates they shouldn’t, isstill too early to say. And whatwould turn it? It really is a veryline-by-line and geography-by-geography conversation. But over-all, capitalisation remains fairlyflush in our sector and we’ve had afairly quiet period in terms ofcatastrophes. Whenever you getthat, you’re going to get this kindof softening.”

McGavick said that despiteXL’s expanding global operationsand the island’s limited infrastruc-ture, Bermuda remained centralto the company’s future.

“The fact is that the Bermudainsurance marketplace has becomeone of the most important in the

McGavick settles into CEO’s chair at XLSpecialReportby Chris Gibbons

‘I think the underlying strength of thefranchise will be made obvious toeveryone again’

[ 10 ]

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[ 11 ]

world. I think the objective, cer-tainly of XL and I think of theBermudian government and peo-ple, is to continue to have Ber -muda be an extraordinary place forinsurance and reinsurance to bedone. I see no reason that wouldchange,” he said.

“As an international or globalbusiness, we’re always going to putwhatever operations we’re buildingout wherever it is most efficient.So you’ll see us growing in a vari-ety of places around the globe. Butthat doesn’t change our commit-ment and desire to be a Bermudacompany and to be part of theexcellence that is created here.

“It seems to me that peopleshould want each of the Bermudacompanies to evolve in that way

that they can continue to be a greatglobal player. That’s what we’reintent on doing. I suspect others inthe market are intent on doing that.And I think that’s very healthy andpromising for the future of bothemployment and the relevance ofthe Bermuda community.”

Indeed McGavick intends toplace even greater emphasis onXL’s human resources – somethinghe learned to value more workingin the political field.

“I think a lot of businessessquander a fundamental asset,” hesaid. “And that is that they pre-

sume because people are paid, thatpeople will work excitedly for thecompany. Well I think being paidis kind of the basic transaction.You won’t go to work if you’re notpaid sufficiently. But to get thatfull measure of effort for any insti-tution it requires an emotionalattachment as well.

“Having led volunteer effortsparticularly in the political world,you don’t have any money to paypeople to work on those. It’s aboutinspiring and causing excitement. Ithink learning how to lead peoplein a volunteer environment is a

very helpful additional skill ifyou’re going to get the maximumout of the people you work with ina company.

“Our colleagues here at XL areremarkable professionals and theydo great work each and every day.But that extra bit of effort, thatextra bit of excitement, comes frombeing a part of something largerthan themselves, of serving othersin a way that gives meaning, and ofbeing reminded that there is some-thing bigger than just the dollarsand cents to any institution asimportant and complex as XL.”

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‘XL is a world class brand with very successful insurance,reinsurance and life reinsurance businesses and I look forward to helping it realise its full potential’

19278F_BIQ_Pg_:. 7/3/08 12:04 PM Page 11

[ 12 ]

ANALYSIS / PRICEWATERHOUSECOOPERS Q1 2008OPERATING RATIOS

FINANCIAL STRENGTH RATINGS

QUARTERLY LOSS RATIOSQ1 2008 Q1 2007 Q1 2006

ACE 55.6% 62.1% 61.2%Arch 57.1% 56.3% 61.5%Aspen 52.9% 51.4% 57.7%Allied World 52.5% 57.9% 66.7%Axis 54.9% 57.3% 56.6%Endurance 50.9% 55.9% 56.8%Everest Re 59.8% 56.3% 68.4%Flagstone Re 29.4% 47.2% 32.8%IPC 5.9% 50.6% 25.4%Max Capital 69.2% 69.5% 72.0%Montpelier 54.5% 41.8% 38.7%PartnerRe 64.8% 59.9% 60.0%Platinum 53.1% 63.9% 60.1%Renaissance Re 26.6% 40.2% 28.2%Validus 48.0% 41.7% n/aWhite Mtn 68.7% 65.4% 62.6%XL Capital 64.5% 61.4% 65.7%

QUARTERLY EXPENSE RATIOSQ1 2008 Q1 2007 Q1 2006


QUARTERLY COMBINED RATIOSQ1 2008 Q1 2007 Q1 2006


A M BEST RATING S&P RATINGMay 15, 2008 Mar 31, 2007 May 15, 2008 Mar 31, 2007

ACE A+ A + A+ A+Arch A A A AAspen A A – A AAllied World A A A – A –Axis A A A AEndurance A A – A A –Everest Re A+ A + AA– AA–Flagstone Re A – n/a NR NRIPC A A A – A –Max Capital A – A – NR NRMontpelier A – A – A – A –PartnerRe A+ A + A APlatinum A A NR NRRenaissance Re A+ A AA– A+Validus A – A – NR NRWhite Mtn A A A– A –XL Capital A A+ A+ A+n/a = not available NR — Not rated by S&P

Renewals� Pressure on premiums writtencontinued, with most companiesseeing flat to negative top linegrowth for over a year. The 2005start ups (Flagstone and Validus)were the exception to this trend.� The softening conditions werepervasive throughout the globalP&C markets, with the exceptionof D&O rates for financial institu-tions which were impacted by thesub-prime crisis.� Many companies expect prop-erty cat rate declines to level offduring the mid year renewal seasonat about 5–10% on average.� Several Bermuda companiessaw an increase in their agricultur-al business due to increasingworldwide commodity prices,which also represents a diversifica-tion opportunity for many.

Earnings� In contrast to y/e 2007, severalcompanies did not meet earningsexpectations in the first quarter of2008.

� Although cat losses were low,earnings were impacted by asignificant number of property“per risk” losses.� Expense ratios showed anincrease for the group and areexpected to get further attention.� The prior year favourablereserve development was generallysignificantly better than expected.� Another factor was the turmoilin the global capital markets whichimpacted investment performance,lowering yields on fixed incomesecurities and increasing losses onalternative investments.

Capital management� The Bermuda companies re -purchased about $1bn of stock,with outstanding authorised sharerepurchases at about $2.8bn.� The expectation is that theseshare repurchases will continue tobe a favourable method of capitalmanagement in 2008 due to thereduction in stock prices for theindustry sector together with theexcess capital available.

Q1 2008 Q1 2007 Q1 2006

ACE 4,409 4,496 4,511Arch 1,053 1,210 1,180Aspen 596 637 679Allied World 397 438 498Axis 1,264 1,303 1,165Endurance 869 573 571Everest Re 878 1,017 1,055Flagstone Re 242 207 89IPC 198 236 236Max Capital 307 214 256Montpelier 257 261 225PartnerRe 1,439 1,302 1,373Platinum 300 303 335Renaissance Re 527 633 748Validus 522 378 n/aWhite Mtn 1,178 1,202 1,229XL Capital 2,936 3,273 3,243

Q1 2008 Q1 2007 Q1 2006

ACE 2,940 3,082 2,805Arch 708 745 762Aspen 392 439 403Allied World 273 287 309Axis 659 685 634Endurance 372 377 420Everest Re 912 1,005 1,022Flagstone Re 135 101 19IPC 90 105 87Max Capital 136 139 160Montpelier 140 143 131PartnerRe 910 842 833Platinum 302 285 344Renaissance Re 309 363 352Validus 292 111 n/aWhite Mtn 929 938 901XL Capital 1,712 1,791 1,819

GROSS PREMIUMS WRITTEN $M

NET PREMIUMS EARNED $M

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[ 13 ]

Net income (loss) attributable to common shareholders ($m) Fully diluted earnings per share ($)Q1 2008 Q1 2007 Q1 2006 Q1 2008 Q1 2007 Q1 2006

ACE 377 701 489 1.10 2.10 1.46Arch 189 199 130 2.78 2.59 1.71Aspen 81 122 62 0.85 1.27 0.59Allied World 131 114 98 2.55 1.83 1.94Axis 238 228 195 1.48 1.37 1.19Endurance 74 98 103 1.15 1.36 1.45Everest Re 78 298 168 1.24 4.59 2.57Flagstone Re 33 36 6 0.38 0.50 0.09IPC 83 73 58 1.31 1.07 0.86Max Capital 8 80 75 0.13 1.24 1.19Montpelier 0 73 75 – 0.76 0.44PartnerRe 120 161 185 2.16 2.76 3.21Platinum 103 70 74 1.76 1.08 1.16Renaissance Re 137 191 179 2.05 2.63 2.49Validus 66 57 n/a 0.85 0.94 n/aWhite Mtn (57) 92 96 (5.40) 8.54 8.89XL Capital 212 550 459 1.20 3.06 2.56

Comprehensive income ($m)Q1 2008 Q1 2007 Q1 2006

ACE 88 775 407Arch 157 233 63Aspen 122 138 26Allied World 130 139 59Axis 224 259 148Endurance 83 116 71Everest Re 74 294 115Flagstone Re 31 35 5IPC 87 77 77Max Capital 18 76 26Montpelier (2) 73 48PartnerRe 190 185 111Platinum 101 82 42Renaissance Re 168 204 185Validus 67 57 n/aWhite Mtn (21) 109 60XL Capital (602) 491 78

2008 2007 2006

ACE 16,735 14,959 12,157Arch 4,005 3,783 2,750Aspen 2,923 2,509 2,079Allied World 2,395 2,356 1,479Axis 5,371 4,642 3,645Endurance 2,538 2,367 1,924Everest Re 5,633 5,197 4,266Flagstone Re 1,242 1,061 n/aIPC 2,148 2,054 1,679Max Capital 1,512 1,448 1,213Montpelier 1,570 1,560 1,100PartnerRe 4,473 3,907 3,179Platinum 1,929 1,937 1,578Renaissance Re 3,386 3,304 2,416Validus 1,991 n/a n/aWhite Mtn 4,679 4,543 3,872XL Capital 9,255 11,313 8,491

March 31 2008 March 31 2007 March 31 2006Common shares issued Market value Common shares issued Market value Common shares issued Market value

ACE 332,506,547 55.06 328,309,225 57.06 325,143,060 52.01Arch 64,649,618 68.67 73,746,726 68.21 73,827,467 57.74Aspen 85,395,154 26.38 88,133,866 26.21 95,250,401 24.66Allied World 48,841,837 39.70 60,390,269 42.75 n/a n/aAxis 144,590,000 33.98 150,417,000 33.86 149,752,565 29.90Endurance 60,097,750 36.60 65,967,559 35.74 66,255,795 32.55Everest Re 65,500,000 89.53 63,200,000 96.17 64,900,000 93.37Flagstone Re 85,316,924 12.10 84,547,891 13.48 71,547,891 n/aIPC 55,947,610 28.00 63,848,158 28.85 63,702,211 28.05Max Capital 56,450,598 26.19 60,305,517 25.48 59,372,778 23.80Montpelier 94,505,314 16.05 111,778,122 17.34 89,179,407 16.30PartnerRe 57,580,543 76.30 56,704,414 68.54 56,743,107 62.09Platinum 48,923,952 32.46 59,825,816 32.08 59,190,300 29.10Renaissance Re 64,927,000 51.91 72,289,000 50.14 71,881,000 43.62Validus 74,230,410 23.43 n/a n/a n/a n/aWhite Mtn 10,570,234 480.00 10,833,788 566.50 10,780,053 594.50XL Capital 179,033,752 29.55 178,252,037 69.96 180,284,555 64.11

MARKET CAPITALISATION

COMPREHENSIVE INCOME FOR THE QUARTER

QUARTERLY EARNINGS DATA

SHAREHOLDERS’ EQUITY ($M)n/a = data not publicly available

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[ 15 ]

Faced with an increasingly com-petitive marketplace and theprospect of an active Atlantic

hurricane season, Bermuda’s lead-ing reinsurers are in “a tug of warregarding how to manage theopposing challenges of capitalmanagement”, according to bro-kers Benfield.

Benfield’s latest BermudaQuarterly Report “Taking TheStrain”, shows that gross premiumsfor the Benfield BermudaQuarterly (BBQ) group of 18leading reinsurers slipped 2% to atotal of US$17.6 billion.“Companies showed a preferencefor expanding or maintaininginsurance lines and cutting back onreinsurance in a market where thegreater part of business remainsunder pricing pressure,” it said.

“Some companies felt that priceadequacy must be reaching a floorat the levels seen in recentrenewals. The view that primaryretentions had hit a ceiling andwould begin to fall during theremainder of 2008 was alsoexpressed. Yet some companiesalso observed that the heavy lossesexperienced in 1Q 2008 had donenothing to reverse current pricing.Comparison of the current marketenvironment with the trough ofthe 1997–2001 soft market mayserve as a warning to over-eagermarket participants.”

First quarter earnings were hitby volatility in the financial mar-kets and the group’s investmentincome including realised lossesfell by nearly US$1 billion, and netincome dropped 34% to US$2.2billion. Reserve releases of US$732million boosted underwritingprofitability improving the com-bined ratio by 6.7 percentagepoints although the overall com-bined ratio was relativelyunchanged at 86.3%.

Benfield commented: “Man -agement must carefully weigh thedecision to buy back stock at per-ceived cheap levels against theneed to retain capital in the eventof an active storm season, particu-

larly given the uncertain capitalmarkets. The US$1 billion of stockrepurchased in 1Q 2008 representsa decelerating trend and perhapssuggests that the answer to thiscapital conundrum is now morefinely poised.”

It said the immediate pricingforecast was “generally downbeatwith some indications of ongoingacceptable pricing” in most lines.

“Companies appeared to recognisethe importance of underwriting ona technical basis and the virtues ofdiscipline in a market characterisedby acute competition,” it said.

PartnerRe CEO Patrick Thieleexpected the lacklustre pricingenvironment to “continue to be ourreality for some time forward”. Hesaid: “Virtually all of our lines ofbusiness and geographies are

becoming more competitive, withprices declining.”

But Benfield says there areindications that the pendulum maybe beginning to swing back inunderwriters’ favour in areas suchas retentions, capacity and termsand conditions. Discipline though“remains paramount in a market inwhich many feel there are largeswathes of under-priced business.”

Reinsurers in ‘tug of war’NEWS REVIEW

BENFIELD’S IMMEDIATE PRICING FORECAST IS GENERALLY DOWNBEAT

19278F_BIQ_Pg_:. 6/24/08 2:27 PM Page 15

[ 16 ]

LYNDA MILLIGAN-WHYTE& ASSOCIATES

A full service internationalbusiness law firm

P.O. Box HM 1913Hamilton, Bermuda HM HX

Tel: 441-295-1302Fax: 441-295-8555

Email: [email protected]

Lynda Milligan-Whyte & Associates isa full service international business lawfirm with attorneys who have over 20years of experience in practicing cor-porate/commercial law in Bermudaand internationally particularly in com-pany and trust formation, insuranceregistration, mutual fund regulation,civil litigation/insolvency matters andcorporate governance/governmentcompliance areas.

The law firm was founded by LyndaMilligan- Whyte, J.P., the former U.B.P.Government Leader in the BermudaSenate.

BARRISTERS & ATTORNEYS

77 Front StreetHamilton HM 12,

Bermuda

Tel: 1(441) 296-5627Fax: 1(441) 296-1749Email: [email protected]

Contact: Laura E. Jackson

BES LIMITED is a leading provider ofpermanent and temporary recruitmentservices to Bermuda’s Business Sector.

Specializing in a broad range of indus-tries including the insurance and reinsur-ance business arena, BES provides inno-vative and flexible recruitment servicesincluding comprehensive employmentand relocation assistance to new start-upcompanies. All services are tailored tomeet the individual business needs ofeach client.

www.bermudaemployment.com

Trott & Duncan is a full service law firm thatprovides legal advice and consultation in everyaspect of legal practice, including:

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We invite you to contact Trott & Duncan for acomphrensive review of our capabilities and toexperience the confidential and personalisedway in which we will meet your everyrequirement.

Contact: Delroy B. Duncan, FCI Arb., JP

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“The US experience for the last 20years has been that when there is aUS capacity shortfall in liabilitylines or in property catastrophe,Bermuda carriers are quickly ableto assemble the capital and talentto fill the market gap. No jurisdic-tion has been as good as Bermudain getting the needed capital tomarket quickly so that licensedinsurers can assume business risk.”

— Brad Kading, President of theAssociation of Bermuda Insurers and

Reinsurers, quoted in the BusinessMonitor International Bermuda

Insurance Report 2008

“Climate change is the newasbestos for insurers.”

— Andre Logan of Ceres, a non-profit organisation which directs theInvestor Network on Climate Risk

(INCR), speaking at the InternationalReinsurance Summit

“Turmoil in the credit marketscould leave policyholders in limboif a major hurricane strikes theUnited States this year, as investorsshow a limited appetite for capital-

market offerings designed to raisecash for claims payments.”

— Rating agency A M Best warnsin a special report that fallout from

the sub-prime crisis means Florida’slargest insurer and state-run insurer

may not be able to pay all claimsfrom a major storm

“No jurisdiction can stand on itslaurels. Bermuda is well known as afinancial centre and there aresomething like a quarter of a tril-

lion US dollars in assets here. Butthere is competition for thoseassets. Having a strong and effec-tive anti-money laundering policyand prosecutorial regime is animportant part of a nation’s rep-utation.”

— US Consul General GregorySlayton quoted in The Royal

Gazette, talking to delegates at theInternational Reinsurance Summit

about efforts to strengthen Bermuda’santi-money laundering legislation

[ 17 ]

MEDIA WATCH

Bermuda can’t rest on its laurels

ONSHOREJuly 10Advanced Negotiation WorkshopBermuda Insurance Institute,Hamiltonwww.insightpartnersonline.comor call (617) 948-0006

July 11Powerful Performance SkillsworkshopBermuda Insurance Institutewww.insightpartnersonline.comor call (617) 948-0006

October 1–322nd International ReinsuranceCongressFairmont Hamilton Princess,Bermudawww.hawksmereltd.co.uk

OFFSHORESeptember 8–12Reinsurance Rendez-VousMonte Carlo, Monacowww.rvs-monte-carlo.com

October 26–29PCI Annual ConferenceScottsdale, AZ www.pciaa.org

October 26–30Baden-Baden ReinsuranceMeetingBaden-Baden, Germanywww.badendirectoryonline.co.uk

WHAT’S ON

19278F_BIQ_Pg_:. 6/24/08 2:27 PM Page 17

Christopher L Harris will takeover from Anthony Taylor as CEOof MONTPELIER RE HOLD-INGS LTD from July 1. Taylorwill assume the role of ExecutiveChairman until December 2009.Harris joined Montpelier Re in2002 as Chief Actuary, shortlyafter the company’s formation. Hewas named Chief Underwritingand Risk Officer in 2006, andPresident from January 1, 2008.

David Sinott has been

appointed as Chief UnderwritingOfficer. He joined Montpelier’sBermuda office in 2002 and hasbeen the company’s Chief Reinsur-ance Officer since May 2005.

Timothy Aman was appointedChief Risk Officer. He joinedMontpelier in August 2007 as aSenior Vice President and RiskMan agement Officer. PaulLarrett will assume the positionof Chief Treaty Underwriter ofMontpelier Rein surance Ltd, thecompany’s Ber muda-based under-writing subsidiary. Larrett joinedMontpelier’s Bermuda operationsin October 2003 and was responsi-ble for underwriting the company’s

specialty treaty account.In May, Michael Paquette

was appointed as Executive VicePresident and Chief FinancialOfficer, effective May 1, 2008.Paquette joined Montpelier inMay 2007 as Group Controllerafter serving 18 years with WhiteMountains Insurance Group Ltd.Kernan (Kip) Oberting, CFO ofMontpelier since October 2004, isleaving the company to establish aNew Hampshire-based investmentadvisory company and will contin-ue to provide Montpelier with cor-porate finance, asset allocation andinvestment advisory services until2010. Montpelier also announ cedseveral changes in overseas offices.Gerald Konig, Chief ExecutiveOfficer of Montpelier Europa AG,has been appointed Head ofMarketing for Europe and theMiddle East. Thomas Busher,Deputy Chairman and ChiefOperating Officer of the Mont -pelier Group, has been appointedHead of European Operations.Former Catlin Senior VP Francis(Bud) Lockwood has joined asPresident of Montpelier Under -writing Inc (MUI) and will bebased in Shelton, CT. MichaelFinnegan has joined MUI asSenior Vice President ofMontpelier Programme Manage -ment with overall responsibility forthe development and managementof MPM business. John Dalton,Senior Vice President of MUI, hasassumed responsibility as Directorof MUI’s Direct PropertyFacultative division.

ARCH CAPITAL GROUP LTDpromoted Mark Lyons to chair-man and CEO of Arch InsuranceGroup. Lyons succeeds RalphJones who is retiring at the end ofhis five-year term. Lyons will bebased in the specialty proper-ty/casualty insurer’s New Yorkoffices and will have worldwideoversight of the insurer’s opera-tions. Lyons has served as Pres -ident and Chief Operating Officerof Arch Insurance Group, a sub-sidiary of Bermuda-based ArchCapital since June 2006.

PEOPLE

Changing faces at Montpelier Re

[ 18 ]

Montpelier’s Harris and Busher

19278F_BIQ_Pg_:. 6/24/08 2:27 PM Page 18

PEOPLEARCH INSURANCE CO(EUROPE) LTD has appointedChief Underwriting Officer JamesWeatherstone as president andCEO, replacing Robert vanGieson, who becomes Chairman.

Kirk Lusk has resigned as GroupChief Financial Officer and ChiefOperating Officer of ALEAGROUP HOLDINGS. CarlSpeck was appointed InterimGroup Chief Financial Officer.

Robert Courtemanche hasbeen appointed Chief ExecutiveOfficer of ACE PRIVATE RISKSERVICES. Based in Madison,NJ, he will be responsible fordirecting the overall growth andprofitability of ACE’s personalinsurance lines including ACERecreational Marine and PrivateRisk Services, the North America-based high-net-worth personallines business of ACE.

Jay S. Bullock has joined theARGO GROUP as ChiefFinancial Office from Bear,Stearns & Co Inc where he wassenior managing director and headof Bear Stearns’ InsuranceInvestment Banking Group. Hewill be based in Bermuda.

Under a cooperative agreementbetween leading UK-based globalinsurance lawyers Edwards AngellPalmer & Dodge and Bermudafirm Marshall Diel & Myers(MDM), Katie Tornari ofEAPD’s insurance and reinsurancedepartment has relocated toBermuda to practice law withMARSHALL DIEL & MYERS.The agreement will meanenhanced legal resources availableto insurers and reinsurers doingbusiness in Bermuda, providingtheir clients with seamless legalservices in multiple jurisdictionsincluding Bermuda, the US, theUK and Hong Kong.

James MacNaughton has beenelected as a director at MAXCAPITAL GROUP LTD, fillinga vacancy on its 11-member boardof directors. MacNaughton recent-ly retired from Rothschild Inc,where he served as a Senior Advisor.From 2001 to 2007, he was aManaging Director and GlobalPartner at Rothschild. Prior to

that, MacNaughton held a varietyof positions at Salomon Brothers,including managing director.

PARTNERRE LTD has ann -ounced two executive changes inits global (non-US) operations.Costas Miranthis, currentlyDeputy CEO, PartnerRe Global,will be appointed to the position ofCEO, PartnerRe Global, andBruno Meyenhofer, currentlyCEO, PartnerRe Global, will beChairman, PartnerRe Global.

RENAISSANCERE HOLD-INGS LTD has announced thatDan Eudy has joined theCompany as Senior Vice President

of the Glencoe Group, which con-ducts the organisation’s IndividualRisk business. Eudy will be basedin Hartford, CT.

Former XL CFO ElizabethKeys has replaced David Shea asCFO of SECURITY CAPITALASSURANCE (SCA), the trou-bled US bond insurer establishedby XL Capital. Keys had previous-

ly served as SCA’s head of financialplanning and analysis and beforethat as CFO of XL CapitalAssurance Ltd.

XL INSURANCE, the globalinsurance operation of XL CapitalLtd has named John Glancy tothe newly created position of ChiefUnderwriting Officer andBernard R. Horovitz, ACAS, tobe Chief Underwriting Officer ofits Global Professional lines ofbusiness. Glancy, who joined XLin 2003, previously headed XLInsurance’s Global Professionaloperations. Horovitz previouslyserved as XL Insurance’s ChiefActuary – Professional.

[ 19 ]

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XL’s Glancy and Horovitz

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[ 20 ]

CHARITY SUPPORT

Most of Bermuda’s insurance andreinsurance companies pridethemselves on being good cor-

porate citizens but employees atXL Capital Ltd have outdonethemselves in recent weeks.

Earlier this year eight XLemployees trekked to the Base

Camp of Mount Everest in Nepaland raised more than $100,000 forBermuda-based organisation Kath-mandu Kids Club. The Club raisesfunds for the Nepal projects of theISIS Foundation, a Bermuda-based charity that helps children inextreme poverty in Nepal andUganda.

The eight XL employees —Christine Doughty, MeganKempe, Tonia Szeto, RomaJedrysiak, Cherie Simons andRoddy Gray (from Bermuda),Lukas Ackermann (Zurich), andRichard Goodger (London) —eventually climbed to 17,600 feetduring the 14-day, 57-mile trek.

Meanwhile XL’s Bermudaemployees were among more than2,500 XL employees worldwidewho donated more than 20,000hours in a single business day inthe company’s third annual GlobalDay of Giving on May 21. Theannual community service drivewas started in 2006 as part of thecompany’s 20th anniversary.

In Bermuda, employees tookpart in 15 projects including serv-ing Meals on Wheels, restorationwork at Dockyard, refurbishingfacilities at the Salvation Armyand helping to clear up twoNational Trust properties.

Around the world XL employ-ees in Brazil, India, London,Switzerland, the US, France andChina contributed their time toprojects ranging from providingfood for seniors to helpingorphaned and abandoned children.

Climbing mountainsfor good causes

XL’s Roddy Gray with children in Nepal

‘XL employees worldwide donated over20,000 hours in one day ontheir Global Day of Giving’

Meg

an K

empe

19278F_BIQ_Pg_:. 6/24/08 2:27 PM Page 20

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From solid financial ratings, to superior customer service, to a strong globalpresence. Allied World Assurance Company is uniquely positioned to deliverthe insurance and reinsurance solutions you need, when you need them.

Our brokers want flexibility.Our clients want strength.

We deliver.

BERMUDA | BOSTON | CHICAGO | DUBLIN | LONDON | NEW YORK | SAN FRANCISCOwww.awac.com

Insurance coverage is underwritten by member companies of the Allied World Assurance Group. Coverage is subject to underwriting.Member companies may not be licensed in your state or jurisdiction. To find out if coverage is available, please contact your insurance broker.

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