U.S. reinsurers are taking advantage of opportunities to grow their international business wherever they pre-sent themselves.

This could mean through acquisitions, clearly the fastest route to building premium volume.

But it could also mean building an international presence through organic growth. It depends on the particular situation, and neither approach is necessarily mutually exclusive.

One appeal of making acquisitions is that it can be difficult to grow business in an environment of low rates.

If a reinsurer does not already have a strong client base in a particular country, "you have to provide them some reason to switch coverage from an existing carrier to you," said Don Watson, director at Standard & Poor's Corp. in New York.

"About the only way you can do it is by offering lower prices than the next guy, and that means your operating results are going to be worse than the next guy's, because you're going to be taking less profit," he said.

In Europe in particular, "it's going to be easier to build assets through acquisitions. . .because it's not very likely that somebody could move into Europe and seize a very substantial share of existing business from going concerns there. It's a fairly competitive market," said Tal P. Piccione, president and chief executive officer of reinsurance intermediary U.S. Re Corp. in New York.

"It's difficult to get business through organic growth because of the market conditions today," agreed Richard E. Cole, chairman and CEO of Stamford, Conn.-based Chartwell Reinsurance Co., which bought the Archer Managing Agency Ltd. a year and a half ago but continues to grow its international business organically as well. "Today, I would say most companies that are showing growth are doing it through acquisition."

"We chose the 'purchase the company' route," said James F. Billett Jr., chairman, president and CEO of Stamford, Conn.-based Trenwick America Reinsurance Corp., which in February bought Sorema U.K., a unit of the Sorema Group that has licenses in about 30 countries. The unit, which has been renamed Trenwick International, generated about $100 million in premium in 1997.

"Basically, we found an attractive acquisition in terms of price and the terms and conditions under which we bought it. It had a good track record, strong staff and lots of potential. We felt it was a more efficient use of capital to acquire the business than to build the business from scratch," said Mr. Billett.

"We may be looking at additional acquisitions through Trenwick International of both smaller, local companies throughout the world as well as underwriting agencies around the world," he said.

Culture is a factor as well, said Alan Murray, senior vp at Moody's Investors Service Inc. in New York. "I think that experience has shown in the established markets such as Germany and France there are cultural issues, among others, that have made it virtually impossible to enter on an organic basis," he said.

"That largely explains why firms such as Gen Re and Employers Re made the acquisitions they did and paid a premium for those acquisitions, as the only way to enter the market in a significant way," he said.

On the other hand, only a finite number of acquisition possibilities exist, and many of these come with hefty price tags. "There's only so much out there," said Peter T. Pruitt, chairman and CEO of Willis Faber North America Inc. in New York.

"From what we can tell, most of the U.S.-based reinsurers kind of plan to grow (organically) rather than through acquisition," said John L. Ward of the Cincinnati-based Ward Financial Group. "There's been a lot of global consolidation already. The opportunities for acquisition perhaps are not what they were a few years ago."

There are a variety of other factors that may make organic growth more appealing.

Acquisitions also can present difficulties in absorbing a different corporate culture, which is a problem that does not arise with slow, steady growth.

"They've been doing it all along," said Mr. Pruitt of U.S. reinsurers' approach to international expansion. "Most of the U.S. reinsurers I can think of have been expanding in overseas offices organically."

"There are risks associated with taking on a book of exposures from prior years during a time in which the new owner did not have any control or knowledge of the quality of underwriting. Therefore, even though the quicker route would be acquisitions, the organic route could be much safer," said Moody's Mr. Murray.

In addition, in emerging markets in particular, "it's probably much easier for companies to do it organically, simply because the insurance and reinsurance are less developed. There aren't as many barriers to entry," Mr. Murray said.

CNA Re opened its first London office in 1976 and has since expanded into locations such as Zurich, Switzerland; Milan, Italy; and Singapore, in addition to a Lloyd's operation, said William J. Adamson, CEO of the Chicago-based CNA Financial Corp. unit.

"While growing organically is obviously a little bit slower, we found that cultural integration has been much simpler, and we've been able to build a very solid organization which we think is profitable as well," he said.

Although CNA Re's international growth has been organic to date, said Mr. Adamson, "that's not to say we wouldn't make an acquisition. We have looked at many, but for various reasons we have not been able to put those to a final deal. So, in lieu of that, we also found opportunities to attract good people," some of whom have been displaced by other organizations.

Other reinsurers emphasize they are not necessarily wedded to any particular strategy.

"It will be a combination of the two," said Peter Aubrey-Smith, senior vp-international operations in New York for St. Paul Re, which has grown its business both organically and through acquisitions. "We will grow organically, but if there are good acquisition opportunities, St. Paul has always been open to looking at those," he said.

With the exception of the acquisition of a Lloyd's of London underwriting agency, all of financial guarantee reinsurer Capital Re Corp.'s international business, which now accounts for one-third of its total, has been organic, said chairman and CEO Michael Satz.

However, "I do not believe there is a clear, or demonstrable advantage between organic growth and growth through acquisition or merger," he said.

"I think the way you do it may be a function of what you think are your principal drivers at the time and opportunity," said Mr. Satz. "I would not agree with a company that says we only grow by acquisition. I think it's usually a mixture of both approaches."

Bonnie Boccitto, chief underwriting officer at Greenwich, Conn.-based Risk Capital Reinsurance Co., said the company plans to use both strategies in the future. "I don't think that one is necessarily better than the other," she said.