Jim Veghte, Executive Vice President & Chief Executive XL Group's Reinsurance Operations said the underwriter fully expected pressure in rates due to the increased capacity in the market but that the level of reductions had not been as sharp as first predicted.

“We had undergone our planning process for the year in terms of the market conditions and the prices were better than we feared,” he explains. “There was some deterioration in the rating environment and there was clearly plenty of capacity and brokers were working hard to get the best deals for the larger programmes.”

Mr Veghte says the capacity in the market defined the renewals and was expected to continue to add pressure in the year to come.

“There is plenty of capacity both for the short and long tail classes,” he adds. “On the cat side the existing relationships still count for the clients although there has been some tough talking in some areas.”

Mr Veghte addsit would take something spectacular to move the market on a single sweep.

“I cannot envisage any real changes in the market conditions unless we get a significant event, and by that I think we are talking in the region of a $50 billion event,” he says.

Like many in Bermuda Mr Veghte said should the market see a major shock and rates start to increase the new capacity will enter the market in a more structured manner and in a way in which the investment had a determined length.

Sidecars will be the preferred investment of choice with hedge funds likely to be a source of capital given the fixed term nature of the investment.

In terms of XL Re Mr Veghte says the aim for the year ahead is to maintain its focus on underwriting and look to seize the opportunities which are presenting themselves in the global marketplace.

“We have delivered strong underwriting results and it is something we are keen to continue to build on,” he adds. “We are 18 years old and have developed a global underwriting platform and we will continue to look for opportunities within those markets.”