Goshawk Re, the Bermuda-based reinsurer set up by Lloyd's vehicle Goshawk, opens for business this week.

The operation was capitalised with £100m from a share issue last year.

The company has leased an office and is having phones installed this week.

Excess of loss underwriter Jim Kemp will start work immediately.

He is the former managing director of Tate & Lyle Reinsurance in Bermuda and has 20 years' experience in the business.

The company is interviewing for a chief financial officer and is negotiating to hire a senior finite underwriter.

It will write in five main classes of business. They are: marine excess of loss; marine retrocession; aviation non-excess of loss; non-marine property catastrophe and finite.

The project effectively moves the focus of the company's reinsurance business from London to Bermuda.

Kemp said the company should have higher margins and be more profitable than many of its competitors, with more capital both in the UK and Bermuda.

The company says its capital will be used more efficiently, costs will be lower and the tax regime is more beneficial in Bermuda.

Goshawk finance director Chris Fagan said: "The overall cost is lower there and the transactional cost is lower. We estimate it's 4% lower in Bermuda than it would be in Lloyd's.

"We are in an enviably good position compared to some of our larger UK and foreign competitors.

"The size of the capital is only important to the extent that if you couldn't get a decent credit rating with a smaller amount, you would be at a disadvantage. But we have an equal credit rating with bigger businesses and on a per share basis, our margins should be higher and our business should be more profitable."

The company has also increased the capacity of its Syndicate 102 at Lloyd's. Its capital increased from £150m last year to £185m this year.

Fagan said: "We would anticipate a similar increase in capacity either during the middle part of the year or possibly next year."

Goshawk Re has a rating of A- (excellent) from ratings agency AM Best.

Some commentators have suggested that new entrants to the market, such as Goshawk Re, will only benefit from high reinsurance rates for a short while.

But Fagan predicted the hard market caused by the lack of capacity following 11 September could be a lasting phenomenon.

"In corporate America before the destruction of the World Trade Centre, insurance and risk management was so low down the agenda it would not have been discussed at many board meetings.

"Since 11 September, it's right up on the agenda and it's becoming critical. There is a sea change and people no longer think they are comfortable and secure.

"It's in the forefront of everybody's minds and that's an enormous driver for demand."

  • In a separate development, AM Best has assigned an initial financial strength rating of A to fellow Bermudian operation, Grand Central Re.

    Grand Central Re is a strategic joint venture formed by German firm Bayerische Hypo- und Vereinsbank AG and Bermudan alternative risk transfer specialist, Max Re.

    It will reinsure finite risk for Max Re.