EXEL Ltd.'s attack on the US market, like other Bermuda-based insurance companies, is an attempt to grab business that's not coming to the Island.

EXEL, ACE Ltd., Starr Excess Liability Insurance Co., Ltd. and PartnerRe have all made significant commitments to expanding business in today's highly competitive markets by going directly to companies in the US.

ACE, EXEL, and PartnerRe pushed into the US through acquisition of already existing operations. Starr made the move after it was taken under the protective wing of giant American International Group Inc. (AIG).

EXEL decided to go into the US market through the purchase of shell company Folksamerica General Insurance Co. (the former Great Lakes American Reinsurance Co.) which holds licences in a number of US states.

XL America is operating in the US as an admitted carrier from its office located in New York. In an interview XL America's chief executive officer Ian Heap and senior vice president of underwriting and operations Elizabeth Eiss said the subsidiary will attempt to build on EXEL's capabilities. The market focus will be different from the Bermuda parent however.

"We want to build on EXEL's heritage and bring our capabilities onshore for companies that haven't necessarily accessed the Bermuda market in past,'' Ms Eiss said. "We want to focus on the upper middle market. The Bermuda market focuses on the Fortune 500 companies. We are going to go down market from that -- to those up and coming companies that are looking for a little bit more than the traditional approach to their business risk.'' In the US EXEL plans to go after companies that are less sophisticated about their insurance needs and rely heavily on brokers to put together risk management packages. The companies may not have a person devoted to managing insurance needs as some of the larger companies have. Often it's the chief executive officer or the top financial executive who are taking care of the task. Traditionally they'll direct the business to the broker who'll put together the packages -- a type of outsourcing.

"We believe the middle market places a pretty heavy reliance on the broker rather than having a full time risk manager for example,'' Ms Eiss said. `It's probably the president or the chief financial officer in partnership with a professional broker that's doing the job. That's going to be our target. That is the difference with the larger companies that come to Bermuda directly.'' The brokers may also not know much about the Bermuda market so have tended to use the US market for their needs. Ms Eiss' job will be to educate those companies and brokers about the products EXEL can bring to the US.

"There is a high level of sophistication and interest in some of the innovations in Bermuda,'' she said. "Here is an opportunity to grow that to up and coming companies. It is an opportunity to market with the brokers who weren't quite ready to bring them offshore.'' EXEL in America will attempt to help the companies build a more holistic risk protection programme, not necessarily in a pure insurance product form, but more in terms of financial protection.

"Our orientation is not to have a product strategy,'' she said. "What we really want to have is a customer strategy. Each customer is different. There may be core components that are similar from one company to the next and from one industry to the next. Some of those needs will be better handled by what are called more traditional products. You can deliver those products in a non-traditional way, in a customer friendly way. But I think you can lift that up with what I call truly non-typical, or non traditional products that are more financial in orientation -- a currency exchange kind of product, or some of the off balance sheet transactions. Those companies may not have ready outlets to handle that kind of exposure. It's taking a more holistic financial view of risk as opposed to an insurance view of risk.'' EXEL has attempted to assure local brokers that the foray into the US market will not affect their business here.

"The reality is this type of business is below their radar screens,'' Ms Eiss said.

ACE earlier this year made its move into the US with the purchase of Atlanta-based Westchester Specialty Group, Inc., now operating as ACE USA.

While EXEL is essentially starting up a new company in the US, ACE bought an operation that wrote premiums of $125 million in 1996 and has about 210 employees.

Bermuda-based insurers take US market by storm ACE chairman, president and chief executive officer Brian Duperreault said the US subsidiary will target smaller companies with more frequency-oriented products.

Westchester Specialty provides property insurance, and casualty insurance under umbrella policies. ACE in Bermuda has already brought its capabilities to ACE USA with the offering in April of a combined package providing coverages aggregating up to $250 million for excess liability and up to $100 million for property.

ACE also expanded into the Canadian market through its US platform when ACE USA announced last month it was taking a majority stake in Creditor Resources Canada Ltd. The Canadian company is the largest independent marketer of automotive service contracts in Canada.

PartnerRe's American platform was acquired in an indirect fashion, when the company bought French reinsurer SAFR, which had an already existing US operation. PartnerRe this month announced it was expanding PartnerRe US by pumping $100 million in additional capitalisation. The additional money will bring PartnerRe US capitalisation to about $230 million.

Starr Excess made its decision to move into the US market in a different manner. When AIG bought up the remaining 76 percent of the shares it didn't already own in the company earlier this year, Starr decided to change its incorporation to Delaware from Bermuda.

Clients can now access Starr Excess directly from the US, while the company plans to continue as a leading excess carrier in Bermuda. The company will be led out of AIG Boston-based subsidiary Lexington Insurance Co. Lexington's chairman Kevin Kelley was appointed as chief executive officer of Starr.

Lexington vice president Jack Gould, who is also based in Boston, becomes Starr's chief operating officer. The Bermuda operation will remain as a branch office.

Starr Excess vice president of excess casualty David Perez said the problem faced by Bermuda companies these days is getting business to the Island in the first place.

Business is not flowing into the Island at the same pace as it used to and the companies now have to figure out how to expand their distribution.

"A lot of business that was once considered traditional Bermuda market business is now mainstream,'' Mr. Perez said. "Many more companies feel that they can write it with lower prices and broader coverage and they can do it successfully in the long run. This change in underwriting focus in the global markets has impacted the Bermuda markets to such an extent that the trend over the last few years has been a focus not on the integrity of the core lines but rather on the strength of the diversity that is offered to the insurance when they come to Bermuda -- the ability to solve many of their problems in a single shot.'' ELIZABETH EISS -- Subsidiary will attempt to build on EXEL's capabilities.