Underwriters Capital (Merrett) Ltd., to provide reinsurance to the nine syndicates managed by the Merrett group, a major Lloyd's of London underwriting agency.

The company is the first of its kind under the recently amended bye-law at Lloyd's that permits the use of corporate capital to increase the capacity of Lloyd's syndicates, which in the past has been provided by individuals.

Underwriters Capital will provide whole account quota share reinsurance for a five-year term, which is subject to extension for an additional year at the end of each year.

The company and the Merrett group will explore converting the quota share arrangement into a consortium or similar arrangements if and when feasible.

Marsh & McLennan, an insurance broker, and J.P. Morgan, an investment company, will each provide approximately ten percent of the $70 million capitalisation of the new firm.

The other 30 investors include professionally manager investment partnerships and other private institutional investors and corporate entities. The capital was raised by J.P. Morgan.

Mr. John E. Baney, formerly president of the CIGNA International and Brokerage Division, has been appointed president and CEO of Underwriters Capital.

He said: "Lloyd's has always been a premiere insurance marketplace and is no looking to enhance its traditional source of capital -- individuals acting as sole traders with unlimited liability.

"Underwriters Capital (Merrett) represents an important new source of capacity for Lloyd's and provides investors with an opportunity to participate in Lloyd's on a limited liability basis through the business of a leading agency at a favourable time in the market cycle.'' Marsh & McLennan and J.P. Morgan have previously created a number of other insurance ventures in Bermuda, including XL, ACE, Centre Re, SCUUL and Mid Ocean Re.

Underwriters Capital is the latest in an astonishing wave of new insurance-related companies in Bermuda announced over the last few weeks.

New capital of almost $2 billion has either arrived or is on its way to the Island through new excess liability and property catastrophe ventures. The US-based Chubb group of insurance companies' new alternative risk transfer entity in Bermuda has begun operations.

Chubb Atlantic Indemnity, which is which is being managed by International Risk Management, has been formed "to capitalise on the growing opportunities presented by the ART market''.

Mr. John B. Stites, a vice president of Chubb and manager of the company's ART department, is Chubb Atlantic Indeminity's president.

"We intend to use Chubb Atlantic Indemnity in a variety of ways to help our customers overcome their more difficult or complex insurance challenges,'' said Mr. Stites. "Having an offshore company will enable us to extend meaningful, long-term relationships with our clients and provide them with more options to help them manage risk.'' The new company is capitalised at just over $20 million.