of Delaware is imminent, after receiving regulatory approval.

But the company will maintain a branch in Bermuda with a Class Four licence, and will operate as a foreign permit company.

A top executive said much of the operations that are currently in Bermuda, including the major underwriting function, will remain.

Managing director of the company's London marketing and service company, Graham H. Nankivell said, "The predominant part of our business will be written in Bermuda for the foreseeable future. Our main centre of operations and our principal decision makers will remain on the Island.'' Starr Excess established a Dublin subsidiary, Starr Excess Liability Insurance International, Ltd., a company approved as a licensed European insurance company within the International Financial Services Centre and is capitalised initially at $100 million.

In April, Dublin-based Starr Excess Europe Ltd., renamed Starr Excess Liability Insurance International Ltd., applied to engage in insurance business in, or from within, Bermuda.

Starr Excess, in the year to December 31, had net income rise ten percent to $31.7 million.

Net written premiums fell 13 percent to $94.3 million, with 86 percent of written premiums in excess liability, and seven percent each in D&O and professional liability. Net investment income rose 31 percent to $30.2 million.

The company reported in its June newsletter that no claims had been reported that appear likely to exceed applicable retentions or underlying insurance.

But Starr Excess continues to reserve 80 percent of its premiums for potential future liabilities. As a result, losses and loss expenses were placed at $71.9 million, with that sum added to technical reserves, which now total $274.5 million.

Assets increased by 22 percent or $122.1 million to $656.5 million, despite the drop in premium income. Shareholder funds were $307.8 million.

Starr Excess has been a success in Bermuda. But after US shareholder, AIG, bought out its partners, Mr. Nankivell said the redomiciliation of Starr Excess became a tax driven initiative.

He said, "American corporations (such as AIG) cannot consolidate losses from overseas subsidiaries within their balance sheets. With a Starr Excess subsidiary in Bermuda, it would have meant double tax consequences.

"Then there was a plan for Starr Excess Bermuda to trade as a branch of a Starr Excess Delaware, because we still want to maintain a significant presence in Bermuda. But there were certain disadvantages to that in offering a competitive product in terms of coverage and in the trading conditions that we were offering.

"We would have had to become white-listed in each US jurisdiction and we would have surcharge excess and surplus lines taxes. And US brokers who wanted to do business with us, would have had to receive three declinations or refusals from the mainstream market before they are allowed to offer it to the excess and surplus lines.

"It was clear that would not work and would not be viable. It would have undermined various other components in the way we offer our cover.

"So, Starr Excess International in Dublin, a fully-fledged, licensed European insurance company with its own capital was brought into play.'' The takeover is expected to bring AIG's ratings from A.M. Best and Standard & Poor's to Starr Excess.