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MONTE CARLO, Monaco -- While the reinsurance industry's growth and earnings prospects are diminished, new formations and acquisitions continue to occur in the soft marketplace.

One of the most talked-about examples of this during the Rendez-Vous de Septembre was the creation last month of Chubb Re Inc., the newly formed reinsurance subsidiary of Chubb Corp. (BI, Aug. 24).

John Berger, who was formerly chief executive officer of F&G Re Inc. prior to its purchase by The St. Paul Insurance Cos. Inc., was the first employee of the company, but he has since been joined by several other executives: Brian Hegarty, managing director, non-traditional reinsurance; Wayne Paglieri, managing director and chief underwriting officer; and Thomas Wafer, managing director, international underwriting and marketing.

Although Chubb Re is being set up in the midst of a very soft market, that is not a bad thing, Mr. Berger said.

"If you like the business and you like the people, that is more important than the timing," he said.

The current state of the market will not necessarily be an impediment to startups, agreed Brian Duperreault, chairman and chief executive officer of Hamilton, Bermuda-based ACE Ltd. "If it's worth doing, it's a good idea; do it regardless of the market," he said. "It needs to be an all-weather idea; if it's only a fair-weather idea, then don't do it."

Another recent acquisition is Hannover Reinsurance A.G.'s purchase of Clarendon Insurance Co.

The acquisition of the specialty insurer gives the reinsurer another outlet for diversification from the soft reinsurance market, said Hans D. Rohlf, managing director and chief underwriting officer-North America for the Hannover, Germany-based reinsurer.

Mr. Rohlf said much of his Rendez-Vous discussions were spent assuring other reinsurers that it would not assume all of the reinsurance for Clarendon, which traditionally has ceded a lot of business to the market.

"We very much honor existing relationships and will do everything not to endanger those in order to provide the continuity expected from us," Mr. Rohlf said.

"Consolidation and startups are continuing in this market," said Donald S. Watson, director of reinsurance ratings for Standard & Poor's Corp. in New York. In addition to Chubb Re, he cited Rhine Reinsurance Co. Ltd.'s planned acquisition of Bankers Trust Corp.'s insurance products group as another recent deal.

"It's fascinating, with all the pessimism in the market, all these companies are starting up," Mr. Watson said. The reason is that even if rates continue to go down, much of the reinsurance industry will still turn in "respectable" returns, so it may be an attractive investment for some companies, he explained.

"Our outlook is negative, as capital will diminish, but on a historical basis, earnings will still be attractive," he said.