including J.P. Morgan & Co. Goldman, Sachs & Co. and the Blackstone Group LP are cashing in their holdings of Bermuda-based catastrophe insurers as profits in the business wane.

"Given how savvy these investors are, when you see them become sellers, it's a clear signal the best is not yet to come,'' said Michael Holland, chairman of the New York investment firm Holland & Co. and a former official at the Blackstone investment group.

Those three firms, as well as Lazard Freres & Co. and Marsh & McLennan Cos., the world's largest insurance broker, were among the original investors in eight reinsurance companies formed in 1992 to spread out risks of major catastrophes.

One of those reinsurance companies, CAT Ltd. agreed to a $711 million purchase by ACE Ltd. Another, Mid Ocean Ltd., agreed earlier this month to a purchase by Exel Ltd. Both ACE and Exel are based in Bermuda and offer other lines in addition to catastrophe coverage. Insurance companies were stunned by a record $15.5 billion of claims from Hurricane Andrew in 1992, and they sharply raised purchases of reinsurance policies to guard against losses from major catastrophes. Many companies were worried that a well-placed hurricane or earthquake could put them out of business.

Now, after a four-year lull in large disasters, premiums for catastrophe reinsurance have dropped, and competition for the business is keener. That has cut into profits of CAT, Global Capital Reinsurance Ltd., IPC Holdings Ltd., LaSalle Re Holdings Ltd., Mid Ocean, Partner Re Ltd., Renaissance Re Holdings Ltd. and Tempest Reinsurance Co.

Recent sellers also include the Kamehameha Schools-Bishop Estate, Hawaii's largest investor, and the Luxembourg-based Exor Group.

Getting into the business just after Hurricane Andrew was an almost foolproof idea for the investors, said Holland. "They saw a heads-I-win, tails-you-lose type of opportunity,'' he said. "When you get that number of smart people first on the buy side and then on the sell side on both sides of a trade, you know that the best bet is to be with them.'' Industry experts agree that the catastrophe reinsurance business is headed for rockier times. "Prices are significantly lower today than they were in 1993,'' said Doug Collins, who runs the catastrophe modelling unit of the consulting firm Tillinghast-Towers Perrin. Much depends, however, on events which can't be predicted, he added. "Even with low prices, you can still do well if the wind doesn't blow and the ground doesn't shake.'' Eventually, he said, there will be severe hurricanes and earthquakes that will require the catastrophe reinsurance companies to pay large claims. "Clearly, over the next five-year period, it's unlikely these companies will do as well as they have in the last five years,'' Collins said.

Insurers' catastrophe losses surged to a record $23 billion in 1992 and then dropped to $5.7 billion in 1993, according to Property Claims Services, which tracks insurers losses. The 1994 Northridge, California, earthquake drove catastrophe damages to $17 billion, though catastrophe reinsurers covered only a small part of those losses. Claims from catastrophes fell to $8.3 billion in 1995, $7.4 billion in 1996 and a nine-year low of $2.6 billion last year.

Warren Buffett, chairman of Berkshire Hathaway Inc., which owns the National Indemnity Co., a large insurance company, is among those bracing for a rebound in catastrophe losses.

"A truly terrible year in the super-cat business is not a possibility -- it's a certainty,'' he told shareholders last month. "The only question is when.'' National Indemnity Co. faces a maximum loss of $600 million on a policy written for the California Earthquake Authority.

While Buffett isn't leaving the business, he said prices are too low. "If we could get appropriate prices, we would be willing to significantly increase our `worst-case scenario','' he wrote.