catastrophe reinsurer will not impact on the company's other interest in property catastrophe premium writings, according to president and CEO, Brian O'Hara.

The company is buying Bermuda-based property catastrophe reinsurer GCR Holdings Ltd. for $637 million, or $27 a share. EXEL currently owns 1.2 million GCR shares, representing about five percent of the 24.8 million outstanding shares. EXEL will pay cash for the remaining shares in a tender offer.

Market shift spurred GCR buy Major shareholders include The Goldman Sachs Group and Johnson & Higgins in New York. The two firms, together with company executives, hold a total of 12 percent of GCR shares. The purchase would boost EXEL's assets to about $5.53 billion from $5 billion.

Both companies are regulated under the laws of the Cayman Islands. GCR sells property catastrophe cover through its wholly-owned subsidiary, Global Capital Re.

GCR is small compared to some of its Bermuda cat cousins, in terms of premium writings, but said Mr. O'Hara, "not in terms of capital or its position in the market.'' He added, "Because they had a real strong capital base and because the parentage was mainly Johnson & Higgins and Goldman Sachs, they had a very high quality image and were able to do business with the top companies in the US.

The franchise they have is excellent. They have access to the best reinsurance buyers in the US and around the world.

"Stephen Outerbridge, their international underwriter, is very well known in Tokyo. I was there a couple of years ago and Tokyo Fire & Marine underwriters knew his name. He was the only Bermuda name mentioned and they said he is a very good friend.

"This was before I really knew we would be going toward GCR. We have really been evaluating the scene here for some time. These companies are all good.

This is the best fit for us at this time.'' He said market conditions have changed from favouring sellers in past years to now favouring buyers. And EXEL had wanted a cat long before ACE Ltd. pounced on Tempest Re.

In fact, EXEL has long held a significant position in yet another leading light in the Bermuda cat market. They were involved in the first wave of property catastrophe reinsurance capital that flew in during the summer of 1992, as they took a 30 percent stake in Mid Ocean Re.

As Mr. O 'Hara puts it: "Getting into the property cat business was good diversification for us. Mid Ocean then began to follow its own diversification strategy, which got into our business.

"That became less attractive to us, because things like Brockbank Syndicate (purchased by Mid Ocean Re) write general liability for large accounts that we write. They write directors & officers and E&O that we write. So if we combined the two, we'd have too much liability in our core areas.

"It's concentration, rather than spread or diversification. So that's why we wanted to buy a pure property cat right away, GCR, which gives us pure diversification or spread. It doesn't correlate with our current liabilities on the books.

"Yes, we still have the 30 percent of Mid Ocean Re. We'll consolidate. We think that the strong earnings of Mid Ocean should hopefully persist, in a very strong way. It should be very high returns.'' He doesn't think the separate holdings of two different cat companies creates anymore conflict than what they've dealt with in the last three years. XL RE has been doing some property catastrophe business as well.

He said, "The nature of the property cat business is that they compete, but mostly cooperate. They are often on the same lines, same layers and its consensus business. It is not that head-banging competition. What is more competitive is Bermuda with London, or Bermuda with the US.

"But among the Bermuda companies, especially, I found, Mid Ocean and GCR, they are more sympatico, generally on the same layers, same lines of business.''