For several years prior to 2000, the property and casualty market faced increasing excess capital capacity, year-over-year rate decreases and coverage increases. Beginning in 2001, adverse reserve development primarily related to asbestos liability, under-reserving, unfavorable investment returns and losses from the events of September 11, 2001 significantly reduced the industry’s capital base. A number of traditional insurance and reinsurance competitors exited certain lines of business. In addition, the low interest rate environment of recent years reduced the investment returns of insurers and reinsurers, underscoring the importance of generating underwriting profits.

The events of September 11, 2001 altered the insurance and reinsurance market landscape dramatically. The losses related to the events of September 11, 2001 represented one of the largest insurance losses in history, with insurance payments for losses estimated to be approximately $35.6 billion. Prior to the events of September 11, 2001, the largest insured catastrophic event was Hurricane Andrew, with approximately $20 billion of losses.

Following September 11, 2001, premium levels for many insurance products increased and terms and conditions improved. As a result of the increase in premium levels and the improvements in terms and conditions, the supply of insurance and reinsurance increased from 2001 to 2005. This, in turn, caused premium levels to decrease or rise more slowly in some cases.

Over the past 20 years, Bermuda has become one of the world’s leading insurance and reinsurance markets. Bermuda’s regulatory and tax environment, which minimizes governmental involvement for those companies that meet specified solvency and liquidity requirements, creates an attractive platform for insurance and reinsurance companies and permits these companies to commence operations quickly and to expand as business warrants.

Property catastrophe includes reinsurance for insurance companies’ exposures to an accumulation of property and related losses from separate policies, typically relating to natural disasters or other catastrophic events.

Property per risk provides reinsurance for insurance companies’ excess retention on individual property and related risks, such as highly-valued buildings.

In property pro rata contracts the reinsurer shares the premiums as well as the losses and expenses in an agreed proportion with the cedant.

The Company underwrites reinsurance on marine risks covering damage to or losses of marine vessels and cargo, third-party liability for marine accidents and physical loss and liability from principally offshore energy properties.

The Company underwrites other lines of business depending on an evaluation of pricing and market conditions, which include aerospace, terrorism, life and accident & health and workers’ compensation catastrophe. The Company seeks to underwrite other specialty lines with very limited exposure correlation with its property, marine and energy portfolios.

The majority of the reinsurance products the Company writes are in the form of treaty reinsurance contracts, which are contractual arrangements that provide for automatic reinsuring of a type or category of risk underwritten by its clients and defined in its reinsurance contract with them.

Reinsurance premiums ceded for the three and nine month periods ended September 30, 2006 were $38.9 million and $64.1 million, respectively.

Net premiums written for the three and nine months ended September 30, 2006 were $77.6 million and $411.2 million, respectively.

Net premiums earned for the three and nine months ended September 30, 2006 were $92.5 million and $201.4 million, respectively.

Net investment income for the three and nine months ended September 30, 2006 was $16.3 million and $40.4 million, respectively.

Net income for the three and nine months ended September 30, 2006 was $69.7 million and $114.0 million, respectively.