highlighted yesterday in a lengthy feature in the prestigious Financial Times newspaper, which circulates all around the world.

Headlined "Bermuda sunbathes as Lloyd's shivers'', the article illustrates how Bermuda has thrived while the contracting Lloyd's of London market has hit one problem after another.

"For years, the tiny British colony of Bermuda has played a specialised role in world insurance, as the tax-haven home of more than 1,300 captive insurers ...,'' starts the article.

"Now, it is taking advantage of the turmoil at Lloyd's and in the London market to turn itself into a much more rounded reinsurance centre.'' It adds: "The revenues of three of the biggest companies amounted to more than $2 billion in 1992, just less than a sixth of the estimated $13 billion in gross premiums earned by Lloyd's in the same year.

"And the profitability of each of the companies has produced a mood of optimism, which contrasts sharply with the gloom in the London market, where news of losses and closures has virtually become a daily occurrence in recent weeks.

"In the past six months investors have raised or announced plans to raise more than $1.5 billion for Bermuda-based companies.'' The United Kingdom-based FT, which is published in London, Paris, Frankfurt, New York and Tokyo, mentions some of Bermuda's most successful and largest international firms, such as ACE, Centre Re, Mid Ocean, TOPS, American International Group and XL.

It states that AIG, which has more assets in Bermuda than any other international firm, is planning to launch new subsidiaries in Bermuda later this year.

Many of the new company formations in Bermuda initially brought comfort to and complemented the Lloyd's market, says the FT.

Centre Re, for example, is backing a multi-million dollar reinsurance scheme to allow Lloyd's Names to obtain stop-loss, or personal reinsurance.

And Underwriters Capital (Merrett) was formed exclusively to provide reinsurance for the nine syndicates that the Merrett agency manages at Lloyd's.

"However, in other respects, developments on the island present a challenge to the leaders of Lloyd's and the entire London market,'' says the FT article.

"Some business formerly underwritten in London has already been lost.'' Oil companies formed TOPS Insurance in Bermuda to insure catastrophe risks for North Sea oil rigs because they were unable to buy the cover in London, says the FT.

The newspaper quotes Mr. Doyle Stephens, CEO of Bermuda-based OIL Insurance, which manages TOPS, as saying the deal "has major implications for London''.

"As the market has got more difficult, we've seen more broker inquiries in the last year and a half than we have ever seen before,'' Mr. Stephens is quoted as saying.

Mr. Brian O'Hara, president and CEO of XL Insurance, says in the newspaper that his company is winning some contracts that in the past were placed in London.

The FT adds: "Bermudian companies can build up tax-free reserves and companies operate with much lower expenses than many of their competitors.

"In particular, the Bermudian companies are able to avoid the very high so-called `frictional' costs, which are typical of a market -- such as London -- in which dozens of relatively small insurers and brokers combine to insure and reinsure large risks.

"They tend to conduct a small number of high-value transactions, transferring huge blocks of risk on to their own books in exchange for multi-million dollar premiums.'' Centre Re, for example, earned an average of $25 million for each of its 175 transactions currently on its books, says the FT.

"Because Bermudian companies generally dominate their market sectors, they have been able to avoid the rate competition which has been suicidal for many companies and syndicates in London,'' states the FT.

Importantly, the Bermuda market is not exposed to the pollution and asbestosis liabilities, stretching back to the 1940s and 1950s, that are causing problems for the London market and insurers all over the world.

It adds: "For investors attracted by the prospects of increasing reinsurance rates, but worried by the industry's legacies from the past, Bermuda looms as an attractive option.'' FT EXPOSURE -- Mr. Brian O'Hara, president and CEO of XL Insurance.