Bermuda-based XL Mid Ocean Reinsurance is a key player in a deal unveiled yesterday which will strengthen the security underpinning the Lloyd's market.

The five-year deal with six of the world's top insurers -- including XL Mid Ocean Re -- is designed to boost policyholder confidence in the international insurance and reinsurance market.

Lloyd's chairman Max Taylor said yesterday it would to provide the market's central fund with 350 million ($560 million) of cover for losses over 100 million. He said on top of the existing 175 million central fund and Lloyd's ability to call up another 300 million from members, the new agreement strengthens the fund to more than 800 million ($1.3 billion).

Yesterday Bermuda-based XL Mid Ocean Re president and CEO, Henry Keeling, commended executive vice president of underwriting James Veghte for bringing the "signed, sealed and delivered'' deal to fruition.

He said Lloyd's chairman Mr. Taylor approached the company while in Bermuda at a February insurance forum to see if they would consider playing a role.

"Anytime a Bermuda entity participates in a transaction like this it speaks very highly of the stature of the market here and of course the company involved,'' he said. Mr. Veghte said the lucrative profit on the transaction with Lloyd's was not the only benefit of the agreement.

It was also "extremely attractive'' for XL Mid Ocean Re since it enhanced the commercial trading position of Lloyd's in which the company had a significant investment through the Brockbank agency. Other insurers involved in the deal led by Swiss Re are Employers Re, the St. Paul Companies, Hannover Re and Chubb Corp.

Mr. Taylor yesterday described the agreement as a "huge vote of confidence'' in the success of the programme of rebuilding the strength of the Lloyd's market.

He said the extra coverage was not arranged in the expectation of large losses, but as the insurance market as a whole was facing a difficult period.

Last month Lloyd's projected an aggregate loss of about 60 million for the 1998 underwriting year. The new policy -- effective from January 1 this year -- runs through to 2003 and will not be renegotiated during that period.

In addition to the annual excess point of 100 million and an annual limit of 350 million, the total maximum payment during the five-year period is limited at 500 million.

Lloyd's chiefs remained tight-lipped yesterday on the exact amount of cash spent on the annual premium.

But some industry pundits suggested a figure of 16 million per year or a five-year total of 80 million, which is just below the 88 million of central fund contributions which come from names each year.

Ratings agency Moody's analyst Mark Hewlett said it was possible Lloyd's rating could have gone down had it not been arranged. Lloyd's chairman Mr.

Taylor said the agreement reinforced the integrity of the market by strengthening the fund that is there to support all members.

"It also increases our attractiveness to capital providers, by making it less likely that we will need to invoke the callable layer and also provides scope for a continuing reduction of the market's costs.''