Bermuda reinsurer specialising in the Latin American market.

XL Global Re (the former XL Re) is a subsidiary of Bermuda-based EXEL Ltd. and recently underwent a name change to reflect EXEL's acquisition of property catastrophe reinsurer, Global Capital Re.

EXEL said this week that the new reinsurer, Latin American Reinsurance Co.

Ltd. (LARe), is in response to significant economic growth in Latin America and the lack of specialised reinsurers in the region.

XL Global Re has entered into an agreement in principle to form the company with Risk Capital Reinsurance Co. (RCRe), a subsidiary of Risk Capital Holdings, Inc.

LARe is to be capitalised in Bermuda with approximately $100 million, of which XL Global Re will contribute $75 million and RCRe will add $25 million.

Duff & Phelps Credit Rating Co. has already assigned a preliminary claims paying ability rating of `A' (Single A) to LARe and expects to assign a final rating after the consummation of the contract.

Risk Capital Re chief financial officer, Paul J. Malvasio, said: "Ideally, the game plan is to be up and running as soon as possible to be positioned to start writing business for January 1, or sooner. There is some international marketing that is planned for Mexico in October.

"We would be reinsuring primary companies operating locally in the Latin American area.

"We needed to have the right people in place to create the opportunities and operate the business. We also felt it was important to have a financial size large enough to be attractive to the players in the local area. And the credit rating was very important.'' Mr. Malvasio said there will be contact offices in various Latin American locations and work is underway toward licensing those offices within the next couple of months.

LARe will provide multi-line reinsurance to the Latin American market, emphasising short-tail, multi-peril property reinsurance and, to a limited extent, casualty, marine, aviation and other lines of reinsurance.

LARe will also seek to enter other reinsurance niches, which may include workers' compensation, directors & officers, financial and finite reinsurance contracts on both a treaty and facultative basis.

That consummation of the deal is subject to the negotiation of definitive documentation as well as the satisfaction of a number of conditions, including the appropriate regulatory approvals.

Marsh & McLennan Risk Capital Corp. is acting as advisor to the transaction.

Richard Meyer, formerly of Johnson & Higgins, is being named chairman and CEO of LARe. The chief underwriting officer will be Keith Shroyer, formerly of American Reinsurance Co.

Vineet Kalucha, who was previously with Ernst & Young and the Arab Insurance Group, will be the chief financial officer and John Barger, previously at Bankers Trust is to be named chief counsel.