Renaissance Reinsurance Ltd. to positive from stable.

S&P also announced yesterday it had affirmed its single `A' insurer financial strength and counterparty credit ratings on the company, and its triple `B' preferred stock and counterparty credit ratings of its parent, RenaissanceRe Holdings Ltd. (RNR).

"The outlook revision reflects Renaissance Re's strong market presence as a leading provider of property catastrophe reinsurance coverage, the company's technically-oriented management, skilled underwriters and RNR's conservative oversight on the quality of Renaissance Re's capital base during the last two years,'' S&P stated. As previously reported, Renaissance declared net income of $35.7 million for the quarter ended March 31, a gain of about $300,000 over the same period last year.

"The current ratings also encompass soft market conditions, as well as the high merger and acquisition activity within the Bermuda reinsurance sector,'' S&P continued. "Added weights include RNR's vertical diversification strategy to compliment Renaissance Re's core product -- risk diversification -- and Renaissance Re's sophisticated usage of risk management models to set benchmarks for aggregate exposure and capital management.'' In an interview with The Royal Gazette , S&P analyst Frederick Loeloff said the EXEL Ltd.

buyout of Mid Ocean Ltd. and the ACE Ltd. acquisition of CAT Ltd. had turned clients into competitors thus potentially affecting Renaissance's bottom line.

"Along with the soft market this puts additional pressures on Renaissance,'' he said. "However, the (S&P) committee feels the company has met all of the challenges. In the last couple of months they have restructured and shown they are committed to their core product -- property catastrophe reinsurance.'' Mr. Loeloff doesn't think the company is on offer as a potential takeover target. The direction of the company's subsidiaries and its planned purchase of Bermuda-based Nobel Insurance -- which is still in the works -- shows management wants to remain as a niche market player, specialising in the property catastrophe market.

In December Renaissance announced it had struck a deal to buy Nobel, a leading casualty underwriter for the explosives industry, for $54.1 million in cash plus $8.9 million in financing to support the company's obligations during its planned liquidation. "With all they have done, I see them wanting to stay as more of a stand-alone operation,'' Mr. Loeloff said.

In its report on Renaissance, S&P concludes that "barring a significant catastrophic event'' the current soft market conditions and increasing competition will reduce Renaissance Re's growth in 1998.