by Lehman Brothers to target the growing demand for insurance securitisations, plans to open its doors for business in the next few months, market sources told Reuters.

Earlier this month investment bank Lehman Brothers injected $500 million -- ten percent of the firm's capital equity -- into Lehman Re, a new formation registered in Bermuda.

Sources involved in the project said recruitment was under way for staff for a Bermuda office.

A two-person property catastrophe underwriting team is being sought to develop Lehman Re's business in the global reinsurance market.

Another two-person team will focus on growing a book of business in global life and annuity reinsurance markets.

A third team will seek to build a presence in global political risk and the growing market for import/export credit trade.

Underwriters of finite and financial reinsurance risks are also being sought.

The operation will be overseen by Lehman Re President Michael Gelband, who runs the fixed-income derivatives division at Lehmans.

"It is just a matter of finding people. There seems to be a large pool of talent down there and we want to be a part of that,'' Gelband said.

Lehman Re is a new type of reinsurer known as a transformer, and follows the formation of Arrow Re by Goldman Sachs two months ago. One source said he believed Merrill Lynch was considering a similar move.

Lehman Re will price and accept risks, and then seek to lay them off to capital market investors through bond issues and securities. This method avoids the threat that a risk would not be covered if a one-off insurance securitisation package falls through.

Gelband denied the formation would take business away from traditional insurers.

"My view is that we are approaching this very differently. Over time, I think other reinsurers will view us as something very different because of our capital markets access and the way we will operate,'' he said.

"We are not looking to compete with them, we are looking to create something a little different,'' he said.