that competitive pressures will push the company to higher attachment levels in the future.

That position was taken in the annual report for the year to November 1994 for parent company, EXEL Ltd., released this week.

The average attachment points for some lines of business were last increased in 1993, resulting in lower premiums due to the reduction in the probability of losses reaching higher attachments.

An attachments point is the term used to signifiy the level of loss when an insurance policy becomes effective.

But XL's report also highlighted the significant and continuing increase in operating results, which increased on a per share basis by 12 percent. Net income was hurt significantly, however, by the impact of realised investment losses as a result of steep declines in the bond market.

The report to shareholders from president Mr. Brian O'Hara, stated: "Throughout the year, the company faced increasing underwriting competition in all of its lines of business. Would-be competitors both in Bermuda and other major markets naively believe that by offering the lowest price, they will be able to write enough excess business to succeed.

"The dedicated financial strength and consistent commitment to a few key products and the expertise that the company offers are more important to the long term success of this business.

"Despite the aggressive attempts of others, we were able to renew 93 percent of our general liability book of business with minimal erosion pricing.'' The general liability book represented 84 percent of total premiums.

The report forecasted that competitive pressures will continue to constrain growth in 1995 in the company's traditional markets, but specific opportunities in specialty reinsurance programmes and further developments in non-US business will exist in the year ahead.

The company is already involved in providing reinsurance protection to Bermuda-based insurer, First Line, set up to provide evidence of financial responsibility for shipowners whose vessels ply US waters.

The company raised the possibility that there may be modest increases in its loss ratio this year. As a result of its high business retention rate, the nature of the company's general liability form may increase the probability of losses over time, it said.

Total paid losses in 1994 were $138.7 million. But as the company's business matures over the next three to five years, it is likely that the claims payment will increase due to the increased exposure to events which occurred in prior years but have not yet been reported or paid.

EXEL at November 30 had total assets of $3.85 billion. The company's shareholders' equity was $1.7 billion, of which $1.5 billion was retained earnings. Total invested assets increased to more than $3.3 billion and for the year investment income rose 11 percent to $182 million.

Net income for the year was $144 million or $2.65 a share, down from $379.2 million or $6.82 a share the year before.

EXEL has continued a several years old policy of purchasing clash cover to protect the results of its underwriting operations, even though the company writes all of its business on a net line basis and does not purchase reinsurance for individual insureds.

A review of the benefits provided by the coverage concluded that it was no longer necessary to purchase separate cover to protect against clash exposure.