rating by ratings agency, Standard & Poor's (S&P).

S&P said that the major rating factors included improving business review, strong capitalisation and operating performance, management conservatism and support from parent ABB Asea Brown Boveri Ltd.

The company is building a strong franchise in the global finite reinsurance market. The ratings agency said the company's client list will grow as a result of its innovative approach to structuring financial solutions.

In terms of capitalisation, Scandinavian Re received an additional $150 million in the form of preferred stock. Capital adequacy is expected to be superior.

Return on revenue for 1995 was a healthy 23 percent, up from 21 percent the year before. The risk profile is carefully constructed, said S&P.

S&P said the company has been a profit centre for its ultimate parent ABB, whose $150 million infusion at the end of 1996 was a demonstration of their commitment to the finite market.

The boom in the alternative risk market impacted the ability of finite risk reinsurers to guarantee the excellent operating performance seen in the past.

S&P believes new business generation is dependent on management ability to be creative in structuring deals which can add value at the least cost.

Scandinavian Re expects in the next few years to build a modest book of programme and rent-a-captive business that will help maintain a potentially volatile revenue stream. Premiums and fees are expected to grow about ten percent this year.

S&P said that being a $250-million company, will enhance the company's global competitive positioning in relation to some of the smaller players, although competition from the larger players will remain intense.

Shareholders' equity in Scandinavian Re at December 31, 1996 was $288.3 million, more than double the $132 million in 1995. Total assets had climbed from $566.3 million to $720.8 million, net invested assets had grown from $159.2 million to $316.3 million, while losses and loss adjustment expense went from $35.2 million to $46.4 million.

President and CEO of Scandinavian Re, Jens Juul, said in the company's 1996 annual report that the corporate achievements were substantial, including a significant increase in paid-up capital, excellent assigned ratings by S&P and A.M. Best (A (Excellent)), an increased client base spanning 20 countries on four continents and an underwriting profit for eight consecutive years since the company's inception in 1988. It started with $25 million in capital.

Mr. Juul said: "Recent company formations, as well as merger and acquisition activities among reinsurers and brokers, signalled the start of a structural change process in our industry, both as to market composition and service distribution.

"In the current reinsurance market it is realistic to predict that some global entities will make every effort to control their own destinies, through market share and franchise dominance, at the expense of less capitalised, skilled, innovative niche companies that have no interest in providing commodity products to mass markets, but rather who wish to design value-added solutions tailored to satisfy clients' unique and specific needs.'' Jens Juul