into financial reinsurance, it was revealed yesterday.

GCR and New York-headquartered Capital Re Corporation have formed a new Bermuda domiciled reinsurance company, Capital Global Underwriters Ltd., expected to be operational by early next year.

The new company, with up to $50 million in committed capital, will specialise in financial reinsurance, including financial guaranty, mortgage guaranty and finite risk reinsurance.

Capital Re and Global Capital Reinsurance Ltd., GCR's subsidiary, will each provide half the new company's initial capital.

"This initiative will enhance our efforts to diversify beyond the property catastrophe business,'' GCR president and CEO Lawrence Doyle said.

"It also provides us the opportunity to work with the underwriters of Capital Re, whose underwriting of financial guaranty products meshes well with the financial reinsurance requirements of our client base,'' he said.

The joint venture's operations will be managed and underwritten in Bermuda by Capital Global Managers, a managing agency wholly-owned by Capital Re.

NYSE-listed Capital Re is the holding company for several specialised reinsurance companies. The corporation has aggregate statutory capital over $500 million.

"The joint venture with GCR provides Capital Re with the capability to utilise a non-consolidated, tax advantage vehicle to enhance profitability of Capital Re's core products and facilitate Capital Re's expansion into finite risk reinsurance,'' Capital Re chairman, president and CEO Michael Satz, also on GCR Holdings board, said.

Also, GCR's chairman, Steven Newman is a member of Capital Re's board.