insurer's move to join two other companies in providing $400 million in coverage for the world's largest reinsurance programme.

Starr Excess, a new Bermuda-based excess liability carrier, assumed a significant share of the cover for the major protection and indemnity clubs, formed to cover marine exposure around the world.

Various ship owners and fleets get their insurance coverage through this programme, and the P&I clubs would then protect themselves against losses by buying reinsurance.

The new coverage agreement, which came into effect on Sunday, means that Starr Excess and XL Insurance each have $100 million of cover in the programme. And a third Bermuda company, ACE, has $200 million in the top $400 million layer in the International Group programme.

With Sunday's deal, the reinsurance protection of the International Group of P&I clubs has moved from $1.05 billion to $1.15 billion.

Senior Vice-President of Starr Excess Liability Insurance Company Limited here in Bermuda, Joseph R. Wiedemann, said "It's rather a coup for Bermuda, for these three companies to be putting up $400 million in cover. It demonstrates the ability of the Bermuda market to respond in the world of insurance.

"I can't think of any other jurisdiction where you can get that kind of coverage, especially within a three-block radius.'' Starr Excess was formed in Bermuda just seven months ago, and is being backed by two of the best known names in the US insurance community, American International Group and General Re.

"We have meaningful commitments from major firms. Starr is a new player here, but we intend to be a long-term player.'' The increase in cover for the P&I clubs reverses a trend of recent years, when shrinking capacity at Lloyd's and in the professional reinsurance market led to a reduction in the protection for the clubs that cover about 95 percent of the world merchant fleet.

There had already been considerable debate on whether the major International Groups could continue to provide unlimited liability cover for risks other than oil pollution to their ship-owner members.

An extra 10 percent cover at the top end of the reinsurance programme is, however, unlikely to change views on the desirability of seeking a limit to the unlimited mutual liability ship owners currently face.

Syndicates at Lloyd's are set to continue to dominate the International Group's reinsurance for the coming year, taking a 70 percent share in the programme.

Starr Excess was set up with $100 million of paid-in capital and irrevocable commitments of another $400 million to concentrate on liability risks. And Lloyd's List reports that the cover provided to the P&I clubs is a major proportion of the company's capacity.