Excess liability insurers are expanding their horizons to include new strategies as they search for alternative locations to direct capital and generate revenue growth.

Mr. Robert Cooney, executive vice president, underwriting operations, of XL Insurance Company Ltd., said his company is looking at broadening its product lines, entering new markets, and researching specialty reinsurance products.

XL was set up with $400 million in capital in the mid-1980s to write general liability and directors and officers insurance for Fortune 1000 companies.

Mr. Cooney admits it is becoming more difficult to manufacture profitable growth in their core line of insurance and XL now looks to "broaden its product line out.'' XL's recent involvement with First Line, developed by Johnson and Higgins and underwritten by Stockton Reinsurance Ltd. to satisfy the Certificates of Financial Responsibility (COFR) requirements of the US Coast Guard for vessels entering American waters, shows the company has expanded its interest in the reinsurance market.

Though XL has written a handful of reinsurance policies, said Mr. Cooney, none have been as large as their involvement with First Line.

"We are becoming more proactive with our reinsurance intermediaries as well as our regular insurance brokers. We are repackaging capacity in the form of specialty reinsurance. It is a natural evolution of our company. The capital base is steadily growing and XL must continue to grow the revenue as well.'' Part of the evolution for liability companies will no doubt be "blended cover which is a mixture of financing and insurance. Blended cover is the brave new world of risk transfer. There will be real hybrids out there,'' he said.

As well as interest in reinsurance XL has also developed a multi-year excess product. Traditional excess products have been sold on an annual basis.

XL set up XL Europe four years ago to penetrate the European market and the company is "putting more resources into Europe because it is a growth area,'' said Mr. Cooney.

Insurers looking to branch out From Page 9 XL will offer optional earthquake capacity in California on new stand alone excess property accounts it writes effective July 1, 1995.

The insurer entered the excess property insurance market in 1993. Coverage was initially only offered to accounts insured in the XL group but the company has gone outside those accounts and will now write quotes on stand alone property accounts.

The capacity crunch that resulted in the formation of companies like XL and ACE has subsided and Mr. Cooney said, "I don't think these (companies) would be set up today. Today there is a lot of capacity for the risks. We are still successful because 93 percent of our clients renewed.'' Another Bermuda excess liability insurer, ACE Ltd., set up as a direct insurer, has also sought different avenues for growth.

A year ago the company entered the satellite insurance market.

ACE Ltd. continues to focus on diversification as it set up its financial lines operation in January and will soon bring in an aviation product underwriter.

On Monday, the company appointed a senior vice president to head its new excess property line.

The company has traditionally been involved in high excess liability and directors and officers insurance.

ACE also acted as reinsurer for First Line's primary insurer Stockton Re.

But ACE, formed in the mid-1980s to meet the needs of several US corporations unable to find insurance, is not likely to take on any new lines for at least a year, said Mr. Brian Duperreault, ACE's chairman, president and CEO.

"The three new lines this year I think all have great potential. I do want to get these three right'' before entering a fourth, he said.

All of the new lines appeal to some of ACE's core clients but not exclusively.

"We hope the new products bring in new clients but there is still growth potential in the core business. The financial lines are tailor made while in property the larger the risk the more tailor-made the policy while aviation is probably more standardised,'' he said.

"You have to be prepared to make individual programme construction. That is where you can make a difference. There is some capacity demand on the excess side.'' Like Mr. Cooney, Mr. Duperreault believes from a capacity standpoint, "It is unlikely a company like ACE would be formed today but the reason there is not a need for another ACE or XL is because there is an ACE and an XL.'' Another of the Island's liability insurers Starr Excess Liability Insurance Company, set up less than two years ago, specialises in excess general liability insurance and excess directors and officers liability insurance, but recently expanded their operations by opening a London office last September to pursue new business.

Starr Excess, a wholly-owned subsidiary of SELIG Holdings Ltd. SELIG is co-sponsored by American International Group and General Re. Mr. Cooney said it will be interesting to see how the Island's property catastrophe reinsurance company's develop because there were a lot more of them formed.

"The playing field is more crowded in the property catastrophe market. They face similar challenges,'' Mr. Cooney said.

"The property catastrophe companies really haven't increased (into other product lines). It is still early days for them,'' said Mr. Roger Scotton, director of information with the Bermuda Insurance Institute.

"But the ability of Bermuda insurers to adapt and seek new markets shows they are not stuck to a specific business plan. Bermuda has an ability to do what the traditional markets cannot or will not do. Bermuda has premium rate and policy form freedom,'' he said.

Mr. Jay Ralph, president of Centre Reinsurance (Bermuda) Ltd. said, "I do not think we have changed our focus. We continue to do what we were founded to do.

Part of our business has been to be innovative. We hope to be a place where people look for strong capital.'' Another of the Island reinsurers, Global Capital Reinsurance Ltd., has expanded its focus into marine.

"One year ago we took on a marine underwriter,'' said Mr. Lawrence Doyle, president and CEO of Global Capital Reinsurance Ltd.

Global Capital Re opened for business October 1, 1993 and primarily writes property risks.

`'A main need for Bermuda is international exposure. Most companies are working on international strategies. All have done well establishing their base franchise,'' he said.

Over the six months ended March 31, 1995, the company's premiums written are up 42 percent compared to their first six months of operation. The company principally writes catastrophe reinsurance, about 85 percent.

The shift in focus for Bermuda's insurance and reinsurance company's is a "subtle'' one, said Mr. Doyle.

"We are not going into other lines, we are a property catastrophe specialist and chose currently to explore that changing area of insurance. Rather than diversity we are moving forward on our business plan,'' said to Mr. Jim Stanard, chairman, president and CEO of Renaissance Reinsurance Ltd.

The property catastrophe market has "seen a fundamental change driven by the availability of good data from our clients. With more data comes more models.'' After Hurricane Andrew property catastrophe became a CEO and board level issue, he said.

"Bermuda company's are leading the world in modelling and product design,'' he added.