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LONDON -- Policyholders and investors may gain a clearer idea of the performance and worth of Bermuda-based insurance and reinsurance companies with the launch last week of a Bermuda Insurance Index.

The index is a joint initiative of the Bermuda Stock Exchange and FTSE International, a company jointly owned by the Financial Times publishing group and the London Stock Exchange to provide share indices and data services.

After a trial period lasting about two weeks, a Bermuda Insurance Index Fund will be launched to trade in a portfolio of stocks that matches the index. Minimum investment will be $5,000. The index fund will be managed by Bermuda-based Kast Investment Management and Mutual Risk Management Ltd.

The index tracks the stock performance of 11 Bermuda-based companies: ACE Ltd., Annuity & Life Re Ltd., EXEL Ltd., IPC Re Ltd., La Salle Re Ltd., Mid Ocean Reinsurance Ltd., Mutual Risk Management Ltd., Partner Re Ltd., Stirling Cooke Brown, Terra Nova (Bermuda) Insurance Co. Ltd., and Renaissance Reinsurance Co. Ltd.

William Woods, chief executive officer of the BSX, said in London at the launch of the index that he believes it will act not only as an indicator of the state of the Bermuda insurance market but also should demonstrate the financial advantages of operating an insurance business from Bermuda. These advantages include a zero corporate income tax rate on insurance companies and a flexible regulatory regime, he said.

The index will provide not only a benchmark against which investors and analysts will judge the performance of individual insurance and reinsurance companies in Bermuda but also will allow them to gauge the performance of the Bermuda insurance and reinsurance market against other indices or markets.

Mr. Woods said the index should also highlight the "tremendous success" of stock in the Bermuda-based insurance and reinsurance sector, which during the past 41/2 years has outperformed the NASDAQ Insurance Index by 75% and the S&P 500 Index by almost 24%.

The index is weighted according to the market capitalization of the companies included. At its outset, the index is being based at a value of 1,000.

Although ACE and EXEL together will account for 56.15% of the index's weighting, Mr. Woods maintained this would not distort the index.

"We believe its sufficiently spread over the 11 companies to be a meaningful index," he said.

Mark Makepeace, chairman of FTSE International, added that it is typical of many of the major share tracking indices around to world to be dominated by a few major companies.

New companies will be added to the index as they go public.

Criteria for inclusion include: a corporate headquarters in Bermuda, market capitalization greater than 1% of the total capitalization of the index, stock denominated in U.S. dollars and listed on either the New York Stock Exchange, NASDAQ, American Stock Exchange or the Bermuda Stock Exchange.