In addition to Montpelier Re, a member of Bermuda's "Class of2001," some of the already diversified members of the same classsignaled strategic shifts and expansions of their businesses duringthe quarter.

The companies set up in the wake of the 9/11 attacks were notalone, with members of earlier and later classes describing plansto expand or change their business models.

A common theme involves adding more insurance business to mixesthat include both reinsurance and insurance.

o Arch Capital:

"Our original business plan contemplated that insurance wouldbecome a greater part of our business over time," said Arch CEODinos Iordanou. He explained the attraction to this strategy,noting that insurers have advantages over reinsurers in selectingand pricing risk in times of heightened competition, since they arecloser to the risks they write.

"The anticipated change in business mix took longer than weoriginally thought," Mr. Iordanou said during a conference call,explaining the delay arose because Arch took advantage of favorablereinsurance market conditions after the catastrophes of 2004 and2005.

Mr. Iordanou said that in addition to a shift to more insurancebusiness, his company will also intentionally move to write smalleraccounts. While some specialty insurance divisions may haverequired $50,000 minimum premium accounts from distributionpartners in the past, now the requirement might drop to $25,000 orlower, he noted.

"We're broadening the funnel because we've got to process a lotmore ore to find the golden nuggets," he said. "As we continue towrite more small-to-midsized accounts, our ability to writebusiness locally is proving to be an advantage," he added, notingthat Arch's insurance group plans to expand that capability byopening two new offices in early 2008 in Philadelphia andDallas.

Mr. Iordanou said he believes the infrastructure Arch hasbuilt--which brings it close to a diverse set of distributionpartners and insureds--gives the company an edge over the newestcompetitors.

o Aspen Insurance Holdings:

At Aspen, expansion efforts included an entrance into the globalexcess casualty insurance market, with a dedicated underwritingunit in Dublin poised to write construction and global riskmanagement programs.

o Endurance Specialty:

Endurance set up a health care practice in the United States,targeting medium-to-small community hospitals, and also acquired aTexas-based managing general agency specializing in underwritingU.S. federally sponsored crop insurance.

Endurance CEO Kenneth LeStrange told analysts and investorsduring a third-quarter earnings conference that the addition of theMGA, known as ARMTech, would likely bring the company's split ofinsurance and reinsurance business close to 50-50.

Through nine months, 34 percent of Endurance's gross premiumswere in insurance, according to financial reports.

Mr. LeStrange said the company also added three underwritingteams in Seattle, Atlanta and Stamford to expand and diversifyspecialty insurance operations.

In addition, during a September investor conference, WorldwideInsurance CEO Michael Fujii disclosed Endurance's ongoing effortsto change its mix of distribution partners--from 95 percent largeretailers in 2005 to over 60 percent specialty agents and wholesalebrokers this year.

o Ariel Re and Validus Re:

The two members of the newest Bermuda "Class of 2005" embarkedon their own expansion plans--starting off in London this summerwith Lloyd's market acquisitions of Atrium Underwriting and TalbotHoldings.

Validus said Talbot would be its principal operation in thedirect insurance market and that Talbot's Syndicate 1183 would formits primary point of access to the London market.

In addition to the Atrium deal, Ariel--which from inception hadset its sights on writing both insurance and reinsurance, includingboth property and casualty insurance classes--announced inSeptember that it would also buy a U.S. specialty insurer fromZurich.

o Flagstone Re:

Another 2005 startup that developed its original business modelaround short-tailed property and casualty reinsurance, with an eyetoward diversifying as broadly as it could internationally,Flagstone Re continued to move forward with that goal in the thirdquarter.

The reinsurer, which opened an office in Puerto Rico inSeptember and another in October in Dubai, also agreed to provideunderwriting and modeling services to a reinsurance company inSouth Africa.

o Ironshore:

Officially launched as a coastal commercial property insurer inJanuary 2007, Ironshore has diversified the lines of business itwrites more quickly than any recent startup, launching IronPro, aprofessional lines platform, in May and IronBuilt to expand intoconstruction liability in October.

Ironshore bought a U.S.-admitted shell company last month aswell.

o IPC Re:

One of the island's oldest companies, IPC Re has been a seemingholdout to the diversification trend. While the reinsurer isglobally diversified, with a 50-50 split of U.S. and non-U.S.business, its commitment to a business model narrowly focused onproperty reinsurance prompted a ratings downgrade from Standard& Poor's to "A-minus" early this year.

More recently, IPC CEO James Bryce suggested the company's focusmight not continue indefinitely. Responding to an analyst'squestion during a third-quarter earnings conference call, Mr. Brycesaid: "We always want to enhance shareholder value--and the currentflavor is [that] diversification does seem to enhance value interms of share price."

"We're always looking at options," he said, declining to bespecific. Noting that the diversification issue would likely comeup in a forthcoming A.M. Best ratings review, he said, "I thinkit's something that's very useful to look at, but we have nospecific plans at this point to make any changes."