SCOTT CARMILANI President and CEO Allied World Assurance Company Ltd

In the ever-changing landscape that is the global risk industry, flexibility has allowed AWAC to remain ahead of the competition.

2001 saw the formation of several new class 4 insurance/reinsurance companies in Bermuda, including Endurance, Axis and Allied World Assurance Company Ltd (AWAC), which have since gone on to show astounding growth, registering combined premiums of $9.5 billion by 2004. A leader among these successful companies, AWAC today writes all lines of property and casualty insurance and reinsurance and is rated A+ (Superior) by A.M. Best. Managing in four short years to become one of the biggest names in Bermuda’s internationally renowned industry, AWAC boasts a highly successful business model and some of the most experienced underwriters in the business. Last year, in what was only its third full year of operation, AWAC generated a net income of $197 million and gross premiums of $1.7 billion.

Formed in November 2001 in response to the global shortfall in insurance and reinsurance capacity after the events of September 11th in the U.S., AWAC has become one of the brightest stars of the so-called ‘Class of 2001’. A consortium of investors, including the American International Group, the Chubb Corporation and GS Capital 2000, an investment fund managed by Goldman, Sachs & Co. provided an initial capitalization of $1.5 billion. From a start-up staff of just three employees in 2001, AWAC has grown to include offices in Boston, London and Dublin and employs 81 staff members in its Bermuda headquarters.

Scott Carmilani has been with AWAC since its inception, and became President and CEO of the company in January 2004. Commenting on AWAC’s astounding success, he says, “I was very proud when the company exceeded one billion dollars in revenue. I was also very proud when we got to the $5 billion mark in terms of assets and investments. Our next goal is $2 billion in revenue and $1 billion in profits, which may take longer than reaching the first goal, but we are patient and continue to build the value of the company.”

AWAC has maintained close relationships with its client base since the beginning, and continues to expand its international foothold.

For Mr. Carmilani, success is based on teamwork and quality of service, both of which he intends to continue fostering in AWAC. He says that the insurance industry has not been known historically as a great service provider, and being in an excess market with limited infrastructure, early on AWAC excelled in the quality of the services it provides and in its response time. AWAC’s focus on insurance activities, as opposed to its reinsurance segment, has provided the company with an advantage in the last few years as the market has softened. Primarily an insurance company with a reinsurance bond, the inverse of many of its competitors, AWAC has been closer to its client base from the beginning, according to Mr. Carmilani. This, combined with the company’s commitment to integrity and its fast response rate, has strengthened its client relations. He explains, “We wanted to be sure our clients knew where we stood. Whether it was positive or negative, we decided that we would react quickly and with integrity, be honest, very clear and concise. This has paid off in terms of our relationships, and by having a strong team and a strong service, we have had a leg up on most of our competitors who concentrated on other things.”

Looking forward, AWAC will continue to expand its international footing, especially in the European markets, and intends to diversify its product line, something that is becoming increasingly more important in today’s soft market. In 2004, the company received regulatory approval from the U.K. Financial Services Authority for its London branch and AWAC’s reinsurance unit began underwriting Accident & Health businesses. AWAC’s flexible approach will help it face the challenges inherent in the ever-changing landscape that is the global risk industry. “In this business you have to be part scientist, part economist, part financier and part mathematician, but you also have to have a good background of the history of it and good relationships with the clients,” comments Mr. Carmilani. “That is where the rubber meets the road and it becomes an art. The trick is that it is much more artistic than a bank – there is much more art to it than science because it is so unpredictable.”

The industry at a glance

• Bermuda has long been recognized as the domicile of choice for the world’s captive insurance industry with approximately 29% of captive insurers worldwide.

• Statistics published by the government in January 2005 revealed that more than 300 new firms were incorporated in the jurisdiction during the third quarter of 2004, taking the total number on the register to 16,328.

• Insurance sector professionals prefer to do business in Bermuda, as do their customers, for its ease of access, minimal red tape, infrastructure, excellent communications, clean unencumbered capital and blue-chip financial security.
l The number of jobs in the international sector rose from 3,351 in 2001 to 3,781 in 2004. If you include the number of people who are indirectly employed (providing supporting services) the number jumps to approximately 13,000.

• As of December 21, 2004, the capital base of Bermuda’s insurance industry was $65 billion. Gross premiums written totaled $49 billion, new premiums written $41 billion and total assets were $165 billion.

• The Bermuda Stock Exchange was opened in 1971. There are nearly 400 listings, with market capitalization exceeding $145 billion in 2000, although it dropped back to $70 billion in 2001 before recovering in 2003 and 2004 to $120 billion. There are currently a number of sophisticated international e-broking services developing around the Exchange.

• The international business sector is highly involved in the community, donating millions of dollars annually to local causes including charities and a wide variety of events.

• Allied World Assurance Company Ltd is representative of the island’s performance as the world capital for reinsurance. Gross premiums written in 2004 by the company in Bermuda totaled more than $1,105 million, compared to $325 million in the United States and $277 million in Europe