NEW CAPITAL TO FLOW TO MKT

Between $10 billion-$20 billion of new capital will flow into the global insurance market over the next six months, with the bulk going into the reinsurance industry, Standard & Poor’s reported. “We have already seen proposals for a number of new companies, bringing more than $5 billion in new capacity to the market, and more are expected to surface in the next six months,” said Donald Watson, a director of Standard & Poor’s Financial Services Ratings in New York. “With existing market participants also having filed to raise more than $15 billion in new capacity, and the first $4 billion expected before mid-2002, even at this early stage the capital inflow looks set to be significant.” Of the $10 billion-$20 billion expected, more than one-half will be used to fund start-up ventures, reflecting, in part, the continued hesitation among institutional investors to invest heavily in current insurance companies until they can fully demonstrate their liabilities to the Sept. 11 terrorist attacks. The first of the start-ups have already been launched, with the majority of those that are still in the pipeline likely to follow before the end of the year, in order to take advantage of the January renewals. “New investors are keen to enter the market as they hope to exploit the opportunities presented,” Watson commented.