with Mid Ocean Ltd. an "act of desperation'' as the companies seek to grow through acquisition in a market where there is an overcapacity.

Others see the move as a logical one in a market where the larger companies are taking over the business.

"In some ways it's an act of desperation,'' a Bermuda industry insider, who did not wish to be named, said. "...It's almost as if they (Exel) are making it up as they go along. It is putting size over function. Will the merger create any more business?...It doesn't do any thing in terms of focus.'' Gloria Vogel, an analyst at New York-based Advest Inc., said the need to build revenue and cut overhead costs were driving the recent spate of insurance mergers and acquisitions.

"The Bermuda reinsurance market is one of those areas where you have too many companies,'' Ms Vogel told Bloomberg news service. "It's difficult for them to expand.'' She singled out IPC Holdings Ltd. and LaSalle Re Holdings Ltd. as other companies which might be bought.

Ira Zuckerman, an analyst at Connecticut-based Nutmeg Securities who was also quoted by Bloomberg, said the acquisition would also end an intramural rivalry between Mid Ocean and GCR Holdings Ltd. (Global Capital Reinsurance), which Exel bought last year.

Standard & Poor's, meanwhile, gave a vote of confidence in the move by affirming its double-`A' claims-paying ability and counterparty credit ratings on both X.L. Insurance Co. Ltd., and Mid Ocean Reinsurance Co. Ltd.

"Standard & Poor's believes that while Mid Ocean's property catastrophe risk portfolio may overlap that of Global Capital's, the merger provides increased product diversification and a solid position in Lloyd's.'' On the stock markets Exel's share price gained $2 3/8 to close at $73 5/8. Mid Ocean gained $10 3/8 to close at $73 11/16.