Limited, the Bermuda-based liability company, is continuing a strategic planning study designed to expand its book of business.

Market observers have described the cut-rate prices being offered from the mainland as questionable and "the biggest threat from almost uninformed competition'' that is trying to take business away from the markets like Bermuda.

Senior vice president and investor relations officer, Mr. Gavin R. Arton, forecasts a year or two of competitiveness but no long-term effect on EXEL.

"It is disruptive in the short term,'' he said. "Business that has not in the past ventured above $10 million in cover is now going up to $100 million.

"It is reminiscent of the '80s which led to the formation of companies like ours in this market. We will continue to review things like new business, but we must be on our toes.'' EXEL is looking at new markets with the insurance regulations governing Europe changing as of July 1, as the European community becomes more of a reality.

With no immediate plans to seek a presence in London, the company expects to spearhead efforts to acquire new European business through its Dublin subsidiary, X.L. Europe Insurance. The subsidiary has been open since 1990 and had already been active, writing gross premiums of $56 million last year.

"Many London brokers already know us,'' said Mr. Arton.

But the Dublin company will have freer access to the European market as European economies become more closely linked. They will be looking for new growth markets.

The board of directors of EXEL Limited has just declared a regular quarterly dividend of $0.30 a share to be paid July 27 to shareholders of record on July 8.

"That,'' said Mr. Arton, "demonstrates our confidence for the future.'' EXEL Limited, through its wholly owned subsidiaries, X.L. Insurance Company Ltd.

and X.L. Europe Insurance, provides general liability, directors and officers liability, professional liability and property coverage to industrial, commercial and other enterprises, directors and officers of such enterprises and professional service firms on a worldwide basis.