London insurance market. The company yesterday announced it would buy a 20 percent stake in Venton Holdings Ltd. from Trident Partnership, L.P. for $34.5 million.

Venton through its subsidiaries manages three Lloyd's of London syndicates.

The deal continues a relationship forged in January when EXEL's European subsidiary launched a joint underwriting venture with one of the Venton syndicates. It also marks another step in EXEL's move to diversify itself.

EXEL has agreed to pay Trident about $17.25 million in cash and provide letters of credit for an equivalent amount to buy the Venton stake. Brian O'Hara, EXEL's Chief Executive Officer, will join Venton Holdings board.

"We believe our investment in Lloyd's will offer us many opportunities to expand our current core franchise which is especially important for growth in a consolidating insurance industry and in the current highly competitive marketplace,'' Mr. O'Hara stated.

Trident which operates out of Bermuda as an investor in insurance companies is partially backed by Bermuda-based insurer Mid Ocean Reinsurance Co. Ltd.

according to Bloomberg News. EXEL also owns part of Trident and Risk Capital Insurance, which will both continue to have a majority interest in Venton.

The three Lloyd's syndicates underwrite non-marine, marine and all main classes of business. The syndicates premium capacity is 225 million. EXEL provides general liability, directors and officers liability, employment practices and professional liablity, risk solutions excess property insurance and reinsurance coverages.

"This is part of our diversification strategy but at slower more cautious route,'' Mr. O'Hara said.

For the past three years EXEL has been following a strategy of diversifying its product lines. Last month it announced the purchase of Bermuda-based GCR Holdings Ltd. for $637 million, expanding its catastrophe and storm insurance business. Over the past year the company acquired the rights to renew the business of the American Excess Insurance Association and then bought Railroad Association Insurance Ltd.

EXEL also bought a 30 percent stake in Pareto Partners, an investment management firm which the company wants to use in developing insurance products to cover financial risks, including currency risks. It also launched a political risk product through Sovereign Risk Insurance Ltd., which it founded with Bermuda-based ACE Ltd. and Risk Capital Reinsurance Co. And EXEL teamed up with CIGNA Corp. to sell a variety of coverage designed to help companies protect their balance sheets from large losses.