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REINSURERS TOP $100 BILLION AS DEMAND CONTINUES TO GROW, FITCH SAYS -- FITCH FINANCIAL WIRE --

 REINSURERS TOP $100 BILLION AS DEMAND CONTINUES TO GROW, FITCH SAYS
 -- FITCH FINANCIAL WIRE --
 NEW YORK, March 26 /PRNewswire/ -- Over $100 billion, or nearly 20 percent of the financial guaranty industry's exposure, is reinsured, according to a report by Fitch. Use of reinsurance has soared recently because primary insurers' new business has exceeded their capacity to retain the exposure, especially in specific risks.
 Two US monoline reinsurers, Capital Re and Enhance Re, are responsible for about 60 percent of the primary bond insurers' reinsurance. According to Fitch, the heavy concentration of seven primary insurers relying on the same two reinsurers is of concern. Fitch warns that a problem with one of the major reinsurers could adversely affect all the primaries with which it does business.
 Fitch predicts that demand for reinsurance will continue to grow, driven by heavy insured volume in both the municipal and asset-backed market and capacity constraints at the primary bond insurers. Specifically, Fitch expects higher demand for facultative reinsurance on capacity-constrained issuers such as New York, and increased demand for excess-of-loss reinsurance. Finally, there will be demand for additional reinsurers as the primaries attempt to further diversify their reinsurance risk. Additional reinsurance capacity may come from Japan; Tokio Marine and Fire Insurance Co., Ltd. already entered the market in 1991.
 A host of international multiline insurance companies already participate in the industry -- led by AXA Reassurance (France), Mercantile & General Reinsurance Co. (UK/US), Skandia America Reinsurance Corp. (Sweden/US), Trygg-Hansa Insurance Corp. (Sweden), and Winterthur Swiss Insurance Co. (Switzerland). These five have an additional 16 percent of the industry's exposure.
 Of the established primary insurers, MBIA depends least on reinsurance, with ceded exposure at less than 15 percent of their gross outstanding exposure. FSA, CapMAC and AMBAC depend the most on reinsurance, with ceded exposure of 26 percent, 25 percent, and 24 percent, respectively. AMBAC has the greatest reinsurance diversification with its top reinsurer accounting for less than 20 percent of its ceded unearned premiums. Connie Lee and Capital Guaranty have the least reinsurance diversification, with their top reinsurers accounting for 72 percent and 56 percent of their ceded unearned premiums, respectively.
 -0- 3/26/92
 /CONTACT: David Litvack of Fitch, 212-908-0593/ CO: ST: IN: INS SU: RTG


AH -- NY062 -- 2013 03/26/92 13:28 EST
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Date:Mar 26, 1992
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