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WARREN, N.J. -- Chubb Corp. will buck the trend of consolidation in the reinsurance market by establishing a new reinsurer later this month.

The new Chubb Re unit will be run as a management company, rather than a separately capitalized entity, and will be headed by John R. Berger. Mr. Berger is the former president and chief executive officer of F&G Re Inc., a recently acquired unit of The St. Paul Cos. Inc.

Chubb's new broker market reinsurer will be entering a market awash with capacity and falling rates, but the combination of Mr. Berger's reputation and the backing of Chubb should win the reinsurer a place on some programs, brokers say.

"John Berger is a great guy and Chubb is great security, so it would be dumb not to talk to them," said Steven Bolland, senior vp at Gill & Roeser Inc., a reinsurance intermediary in New York.

Chubb Re does not plan to compete vigorously when it enters the mainstream reinsurance market.

"We are going in with our eyes open, realizing that it's a brutal market, but we are going in for the long term," Mr. Berger said.

Initially, Chubb Re's main focus will be providing finite risk and other non-traditional reinsurance coverages, said Mr. Berger.

The structure of the company should allow Chubb Re to concentrate on profitable business without running up large expenses, he said.

As a management company, Chubb Re will be backed by the capital of Chubb Corp. and it will not have to establish a large infrastructure. Warren, N.J.-based Chubb's total assets as of June 30 stood at $20.12 billion.

Mr. Berger helped Paul Ingrey set up a similar entity when F&G Re was established as part of USF&G Corp. in 1983.

"One of the beauties of being set up as a management company is that you can do a good job and you don't have to do much business to justify the expenses," he said.

Chubb is expecting the reinsurer to write about $100 million in premiums by the end of 1999, according to a spokesman for the company.

Creating a reinsurance unit will allow Chubb to make more efficient use of its capital, Dean O'Hare, chairman and CEO of Chubb, said in a statement.

"Chubb Re will be a low-cost, value-added reinsurer that can respond quickly to market opportunities. It will operate on a global basis and, as with all Chubb operations, its primary goal will be to generate an underwriting profit," he said.

The establishment of a new reinsurer comes amid continued consolidation in the insurance and reinsurance markets.

Many large reinsurance deals have taken place over the past year, including the purchase of USF&G by St. Paul Insurance Cos., both of which have significant reinsurance operations.

In recent weeks, EXEL Ltd. bought Mid Ocean Ltd.; Berkshire Hathaway announced plans to buy General Reinsurance Corp.; and GE Capital Corp. unveiled plans to buy Kemper Reinsurance Co.

Despite the consolidation, reinsurance buyers still have access to plentiful capacity and low rates, brokers say.

But Chubb Re could still succeed in this environment, brokers say, particularly if it is run along the same lines as F&G Re.

"F&G Re was always a well-run, smart, intelligent and creative group," said Mr. Bolland.

Chubb is a well-respected primary insurer, and if the reinsurance arm underwrites carefully in the soft market, it should be able to cash in on other opportunities when the market turns, said John N. Gilbert Jr., president of Holborn Corp., a reinsurance intermediary in New York.

"There is never a right time to enter the business, so if they have the right people and the right business plan, now could be as good a time as any," he said.

Currently, only Mr. Berger has committed to joining Chubb Re, but several other people are lined up to join, Mr. Berger said.

The combination of Mr. Berger and his well-established business relationships, with the long-term commitment of Chubb, could enable Chubb Re to prosper despite current market conditions, said Peter Pruitt, chairman and CEO of Willis Faber North America in New York.

Launches of new reinsurers by other companies and individuals from reinsurers that have been purchased, however, are unlikely, he added.

"It is really a unique opportunity for them," Mr. Pruitt said.