Ariel Reinsurance Ltd. has joined the list of start-upreinsurers hoping to capitalize on higher post-Katrina propertyrates.

The Bermuda-based company announced it began operations Saturdayas a Class 4 Bermuda licensed reinsurer following funding from itsparent company, Ariel Holdings, in the amount of $1 billion.

The company said it plans on "providing meaningful new capacityto the reinsurance market during this period of heightened demand,and intends to broaden its business into direct insurance asconditions warrant."

Donald Kramer will serve as chairman and chief executive of theBermuda-based company.

The Blackstone Group, Texas Pacific Group and Thomas H. LeePartners were among the leaders of the transaction.

Ariel joins nearly a dozen new competitors in the Bermuda marketto take advantage of anticipated price hikes.

Their entry comes even as analysts are starting to question thedepth and breadth of any market price firming.

Bear Stearns property-casualty analyst David Small sees netpremiums written in the reinsurance market flat over the nextyear.

"It appears there has not been a widespread reallocation ofcapital from casualty to property, and we didn't hear of anybroad-based pricing increases," Mr. Small wrote after visitingBermuda reinsurers and brokers.

He added that the start-ups and several writers who wererelatively unscathed by hurricanes or who raised deployable capitalare significantly increasing their property appetite hoping tocapitalize on the lower catastrophe tolerance of theircompetitors.

"These underwriters should show the best book value and ROEgrowth if the wind doesn't blow," he said.

While anticipating rate hikes, property reinsurers may see theirappetites for new coverage lessened by higher capital requirementsand a generally lower risk tolerance atmosphere, Mr. Smalladded.