Bermuda-registered Annuity and Life Reassurance's success in the life and annuity reinsurance could attarct competitors to the Island, a ratings agency has warned.

Fitch, the rating agency formed through the merger of Duff & Phelps Credit Rating Co. and Fitch IBCA, has affirmed the insurer financial strength rating of Annuity & Life Reassurance, Ltd. (ALRE) at `A'. It said the Outlook for the rating is stable.

The agency said ALRE's conservatively structured investment portfolio, strong management team, good operating performance, low expense levels and the competitive advantages the company derived from its Bermuda domicile all contributed to its success.

"Fitch considers ALRE to have effectively established itself as a viable player in the life and annuity reinsurance market,'' a statement said.

"Its client list currently includes some of the largest and best-known insurers in North America.

"Pricing benefits originating from lean operations and its Bermuda domicile have given it an edge over many of its domestic competitors. However, there is the risk that its success may also attract competition to the Island,'' the agency concluded.

Through its subsidiaries, Annuity and Life Re (Holdings), Ltd., ALRE's immediate parent, provides annuity and life reinsurance services to insurers and reinsurers doing business in North America.

On a consolidated basis, Annuity and Life Re, Ltd. reported $2.1 billion in assets and $408.9 million in shareholders' equity at June 30, 2000.