Bermuda insurance giant XL Capital Ltd's investment in South America and the Caribbean is paying off with the results of Latin American Re exceeding expectations.

According to the company's annual report for 1999 which has just been published, the business, which has offices in Argentina, Brazil, Columbia and Mexico but is incorporated in Bermuda, is continuing to take up any slack in this market. But despite the upbeat report, net earnings fell from $3.8 million last year to a net loss of $0.9 million this year.

XL Capital is the principal shareholder in Latin American Re which is rated as a top investment prospect -- A minus -- by both Standard and Poors and A.M.

Best.

The company reported gross written premiums of $39.3 million, surpassing projections for the year of 40 percent.

Total premium rose 72 percent on last year. Chairman and Chief Executive Officer of Latin American Re, Richard Meyer, said in the report: "Our performance in 1999 was driven by growing acceptance of our unique regional approach -- which is to deliver to Latin America an unparalleled mix of client benefits supported by local market presence and indigenous insurance and reinsurance expertise; the operation and technical skill of our Bermuda-based management team and headquarters staff and the sound financial backing of our founding investors XL Capital and Risk Capital Reinsurance Company.'' In March this year XL Capital bought out Risk Capital Reinsurance's shares in the business, and is using the company as part of its global expansion.

At the end of 1999, Latin American Re had expanded to have regional offices in Bogota, Buenos Aires, Mexico City, Rio de Janeiro and Sao Paulo.

The main bulk of business last year was done in the Caribbean -- 23.2 percent.

The next largest operation is in Columbia which has 20.6 percent of the company's business.

Chile is the next largest, followed closely by Argentina.

Brazil, Mexico and Central American have the smallest shares. Mr. Meyer added: "We are offering to our Latin American clients a mix of traditional reinsurance approaches.'' Latin investment pays off He said the company were also offering the most advanced thinking in financial management techniques such as alternative risk transfer.

"Responding to -- and anticipating -- such interest has been integral to our success in the past year, and will be essential to the execution of our strategy going forward.'' The report states that across the region most indications are that economic conditions will dramatically improve in 2000.

This compares with generally flat growth in 1999.

The document recognises Bermuda as playing a large part in the company's growth and success.

It states: "Latin American Re's carefully designed regional network operates with the support of a Bermuda-based infrastructure of people, systems and expertise that has helped region-based professionals to establish and build a reputation for premier client service.'' And added that the companys' Bermuda headquarters were enhanced by ready access to the established `intellectual capital' and `innovative thinking' of the Bermuda insurance and reinsurance community.

The report cited the huge growth in shareholder's equity in the Bermuda insurance and reinsurance non-captive market as proof of this. The market has grown from under $5,000 million to $55,000 million in ten years.

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