yesterday announced an agreement to buy US based NAC Re Corp. for $1 billion in stock.

The purchase, due to be completed in the second or third quarter of the year, leapfrogs XL into a major position in the US insurance and reinsurance market.

It was a market that XL had entered through the purchase of shell company Folksamerica General Insurance Co. and the creation of holding company XL America, Inc. in November 1997.

Then XL gained a big foothold in the reinsurance market through the $2.1 billion purchase of Bermuda-based Mid Ocean Ltd. As XL president and chief executive officer Brian O'Hara said at a press conference yesterday, the Mid Ocean deal gave the company the ability to offer property reinsurance. The deal with NAC gives XL a casualty reinsurer with the ability to underwrite in all of the US.

"This completes our reinsurance platform,'' Mr. O'Hara said. "It gives us an onshore casualty liability platform.'' NAC Re, a writer of insurance and reinsurance based in Greenwich, Connecticut, has assets of $3.2 billion. XL Capital is an insurance holding company with assets of $10.1 billion. XL currently has 510 staff. NAC Re has about 400 employees and 13 branch offices.

"NAC Re is the premier broker-market reinsurer in the United States and will be a major cornerstone of XL's business,'' Mr. O'Hara said. "NAC Re will become our platform for the United States, the largest insurance and reinsurance market in the world.'' NAC Re president and chief executive officer Nicholas Brown, Jr. will become chairman of NAC Re as well. He will also head XL's US operations, and will serve as an executive vice president of XL Capital Ltd. with responsibility for North America.

NAC Re will continue to operate as an independent entity in XL's reinsurance operations. XL MidOcean Ltd. president and chief executive officer Henry Keeling and Mr. Brown will co-chair a reinsurance executive management board to manage worldwide activities from Bermuda.

Mr. Brown said at a press conference last night held at Bermuda Insurance Symposium that NAC Re was looking for a way to expand internationally. The company has operations in the UK.

"This takes us far down the time line,'' he said. "In every point of our strategy we can go further and faster thanks to our association today. The culture is very sympathetic, very much aligned.'' Mr. O'Hara sees savings though increased profitability by cross selling XL and NAC Re's insurance and reinsurance products. NAC Re has been a client of Mid Ocean since 1994.

"The purchase gives us direct access to a broader base of clients for us to sell our enterprise risk and other risk products,'' he said. "We are retaining a greater risk appetite within the organisation.'' Mr. O'Hara said he doesn't see any more major acquisitions on the horizon.

XL's ambitions are to expand in Europe from its Dublin and Munich offices.

"We don't think the opportunity is quite ripe,'' he said.

In the NAC deal stockholders will receive 0.915 XL Capital shares for each of the 18.3 million NAC Re shares outstanding. Based on XL's closing stock price Friday of $60.50, each NAC Re share would be worth $55.36, which is an 11 percent premium over NAC Re's closing price.

In morning trading, shares of NAC Re changed hands at $52.50, up $2.683 , on the New York Stock Exchange.

XL Capital's Class A shares traded at 60.371 , down 371 cents, also on the NYSE.

XL CAPITAL LTD. SHOPPING LIST XL Capital Ltd. (formerly Exel Ltd.) 1998 and 1999 shopping list and new formations (dates reflect when announced, and not necessarily when acquired or formed:) Merger with Mid Ocean Ltd. ($2.1 billion) -- March 1998 Purchase of Bermuda-based Reeve Court Insurance ($100 million) -- July 1998 Purchase of 25 percent of US-based Tri City Brokerage, Inc. -- July 1998 Airline Risk Consortium -- formed with ACE Ltd. and Overseas Partners Re Ltd.

-- September 1998 Formation of X.L. Financial Assurance Ltd. and equity interest in Financial Security Assurance International Ltd. through joint venture with Financial Security Assurance Holdings Ltd. -- November 1998 Intercargo Corp. ($88 million) -- December 1998 NAC Re bought for $1 billion in stock -- February 16, 1999 Big buy: XL Capital chairman and chief executive Brian O'Hara Graphic file name: BOHARA Early reactions to XL Capital's purchase of NAC Re: `With the acquisition of Greenwich, Connecticut-based NAC Re, XL gains a major presence in the United States with a company that has a reputation for maintaining strong customer relationships even though it uses brokers to bring it business.' -- Reuter `It gives them a presence in the United States they didn't previously have.

With the capitalisation they're coming to the table with now, I think it (XL) will be a formidable force.' -- Elizabeth Farrell, managing senior financial analyst at rating agency A.M. Best.

`I think it puts a lot of pressure on Everest (Reinsurance Holdings Inc.) to do something because one by one all the big players are disappearing.' -- Bear Stearns analyst Michael Smith.