business during the latter months of 1996. But it is just the start of an aggressive campaign to find more financial services products that can provide premium growth.

Vice president, financial lines, David Lupica, said the company's entry into the market six months ago has been greeted positively. It brings the total book of directors & officers (D&O) and errors & omissions (E&O) business up to about $9 million in net premiums.

It gives Starr the capability to join in on basket programmes that are more frequently being placed in the marketplace today.

He said, "We never had the capability to do that previously because we were just a D&O writer. It is very common now for the D&O to be put with the E&O and we are now able to participate in those basket programmes.'' `Staying smart' on D&O's Starr's definition of loss provides coverage for punitive damages where covered under the primary, regardless of their insurability. Mr. Lupica said that provides clients with a strong argument for purchasing coverage from Starr Excess.

He said, "There is a need for capacity and Bermuda has an advantage over its domestic counterparts in doing professional liability, because US companies are bound by the insurability of punitive damages.

"Some states allow punitive damages to be insurable, while others say they are not. Bermuda companies are not bound by that same restriction. If we say we cover punitive damages, we can pay, regardless of what the individual US state says about their insurability.'' The company had been writing coverage utilising manuscript policy language, but their new professional liability cover will follow form policy almost exclusively.

The coverage and definitions sections of the policy are "follow form'', with one exception.

As the new market player, Starr has narrowed its focus to non-bank financial service companies, such as insurance related companies, managed care providers, mutual funds and broker/dealers as well as other professional liability.

Cover is not being provided for banking professionals, architects and engineers, lawyers and accountants. Mr. Lupica said the company is interested in writing other types of professional liability where there is a need for capacity.

He said, "We did not get into bankers because of some of the exposures, and also because we don't feel there is enough business out there to justify our involvement.'' Starr Excess has a professional liability capacity of $25 million excess of a minimum attachment of $25 million.

The softness in the D&O market has led to lower rates and while Starr Excess continues to aggressively pursue that business, Mr. Lupica said it is only being done within reason.

He said, "We're not going to follow the market all the way down. The professional liability affords us the luxury of being a little more selective on the D&O side, in terms of what we will and will not do. So it affords us the growth we are looking for while staying smart on D&O.'' Founded by AIG and General Re, Starr Excess offers excess general liability, D&O liability and E&O insurances to the world's major corporations. The company underwrites all its business from its head office in Bermuda, while maintaining a representative office in London.

The company issues policies with a minimum attachment point of $25 million and offers capacity of up to $50 million for D&O and $150 million for general liability cover.

Starr wrote about $100 million in total premium during the last financial year.