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MONTE CARLO, Monaco-The influx of insurance and reinsurance company capital into Lloyd's of London is raising questions about whether the market will lose its unique qualities.

Some market observers have said Lloyd's will become less a collection of entrepreneurial syndicates and more a collection of insurance companies.

Reinsurance executives attending the annual Rendez-Vous de Septembre, however, generally view the changes in Lloyd's capital base as a positive move that will retain the best of the old alongside the benefits of the new.

"There is a reaction against change. What makes Lloyd's entrepreneurial is the people. There is a big influx of corporate capital, but they aren't replacing people in the market," said Donald S. Watson, director of reinsurance ratings for Standard & Poor's Corp. in New York.

"Inside that building are 50 to 60 (people who are) real underwriting talents, which the old system encouraged and developed. It's going to take a long time for that talent to dissipate," agreed Michael J. Caley, chief executive of Kininmonth Lambert Ltd., a reinsurance brokerage subsidiary of Lambert Fenchurch Group P.L.C. in London.

"Munich, Zurich, New York, Chicago would die for that talent," he said of other reinsurance centers around the world.

Corporate capital coming into Lloyd's in the long term theoretically provides a more stable capital base, said William J. Adamson, chief executive officer of CNA Reinsurance Co. in Chicago. Although there is pressure for change in the market, such as moving to annual accounting and ongoing rather than annual syndicates, "Lloyd's still has a great franchise," he said.

"There's going to be a hybrid of various permutations for some time," Steven Bensinger, president of Chartwell Re Corp. of Stamford, Conn., said of changes wrought by corporate capital.

"You already see some organizations that are actively replacing the traditional sources of capital and seeking to buy additional capacity at auctions," said Mr. Bensinger. "Those companies are leading the way in creating insurance companies under the Lloyd's umbrella," he said.

On the other hand, there are still managing agencies conducting business "the old-fashioned way," though their numbers are declining, he said.

"We still have 10 syndicates under management and have no plans to combine them," said Mr. Bensinger, referring to Chartwell's 1996 acquisition of managing agency Archer Group Holdings P.L.C.

"In today's market, we're not rushing to put our own capacity at risk," Mr. Bensinger said. "We're encouraging traditional sources of capacity to remain in our syndicates."

Given the influx of corporate capital to Lloyd's, "the resilience of the unlimited names is surprising," said David Margrett, CEO of Lambert Fenchurch Group.

Three years after corporate capital first was allowed to enter the market-and one year after the market's reconstruction plan-traditional individual members accounted for 56% of Lloyd's 10.3 billion pounds ($17.64 billion) in total 1997 capacity.

"I'm amazed at the number of offers I get every week to buy my capacity from managing agents and corporate capacity providers," said Mr. Caley, a Lloyd's name. "I've got something that for some reason other people want."

Mr. Margrett observed that corporate investors have acquired the Lloyd's franchise "rather cheaply, especially considering the value of the worldwide access that is given to corporate buyers."

The good results of recent years have increased the flow of capital in to Lloyd's, said Ronald A. Iles, chairman of Aon Re Worldwide Inc. in London.

"Lloyd's will have a fantastic three years in 1994, 1995 and 1996, so there is no shortage of investor interest," he said.

Lloyd's has added to its stature as a result of its resiliency, Mr. Iles said.

"I don't know of any other market that has survived asbestos, pollution and fraud. It will continue to be a very important market," he said.

Chartwell's Mr. Bensinger said Lloyd's' access to global markets was a big factor behind the company's Archer acquisition.

"From a strategic standpoint, we jumped light-years in a single move," he said. "From a shorter-term standpoint, Archer was an opportunity to increase our fee-for-service income."

Not all executives are as sanguine about the changes at Lloyd's.

"Corporate capital may put more pressure on syndicates to bring a return for shareholders," said Bruno Porro, a member of the executive committee of Swiss Reinsurance Co. of Zurich, Switzerland.

"Much progress could be made with better financial management of assets by the old Lloyd's," he said. "Capital and underwriting discipline are a must."

"I've had some clients go to London when they can't get a risk covered on the continent, so there may be an issue of adverse selection," according to Mr. Porro.

Conversely, in the past few years, Lloyd's has lost a significant amount of business to continental reinsurers that it will have trouble winning back, said Herve Cachin, chairman and general manager of SAFR Group in Paris.

Cedents have been worried about the security of Lloyd's and moved their business elsewhere, he said.

"They are still in a profitable position for marine, aviation and catastrophe business, but for other

business they have to recover their credibility," Mr. Cachin said.

The changes the new corporate capital will bring to Lloyd's are still unknown, said James Duffy, president of St. Paul Re.

"There is new capital and new forms of capital that have not been tested yet," he said.

The new capital finds insurance and reinsurance an attractive investment now, but it is still not known whether the capital will remain in the market if Lloyd's suffers significant losses, Mr. Duffy said.

Lloyd's still is evolving and will have to evolve further as the world market changes, said Kate Sliwinska, director of Eastgate Insurance Services Ltd., a London runoff company.

"It's like the British monarchy: They both have to change, and timing is critical," she said.

The new corporate investors will not be satisfied with losses or very small returns, Ms. Sliwinska said.

"Their expectations are far higher than those of the individual names. They want returns on their money, and they are not going to stick around if Lloyd's is not going to make a profit," she said.

Rather than the introduction of corporate capital, "A bigger threat to Lloyd's is that they need to reduce costs and efficiency," said Mr. Margrett of Lambert Fenchurch. "Lloyd's needs to lower its costs of capital," he added.

Lloyd's also needs to maintain its entrepreneurial spirit, said John R. Berger, president of F&G Re Inc.

F&G Re has bought a managing agency in Lloyd's, and the U.S. parent is anxious that the Lloyd's entity maintains its distinct underwriting culture, he said.

However, there is a danger that some other corporate-owned syndicates in Lloyd's may lose their unique flavor and that the corporations will impose their own cultures on the syndicates, Mr. Berger said.

"There is a risk that some of the larger syndicates may become average insurance companies," he said.

"A lot of companies are not going to utilize all their capital and ease back on stamp capacity" while market conditions are soft, said CNA Re's Mr. Adamson. "There's not going to be much top-line growth this year," he said.

The issue of whether runoff reinsurer Equitas Ltd. will prove to be adequate to the task of assuming Lloyd's long-tail liabilities also is open to some debate.

"Equitas is not a closed book. They may have merely delayed the day of reckoning," said S&P's Mr. Watson.

However, Swiss Re's Mr. Porro noted, "Equitas has improved its return on investments quite significantly."