The runoff decision was made for a firm that rating agency, A.M. Best Co. had rated as "A" (excellent).

Mr. Bridges said that as a non-public company, OPL could not raise funds on a level with industry powerhouses like "ACE and XL that have new capital" to exploit the rise in reinsurance rates.

OPL was created in 1983 as a spinoff of United Parcel Service of America, with former and current UPS employees as shareholders.

Mr. Bridges said the company had been operating a successful shippers risk program that it ran with American International Group, but after an unfavorable tax court ruling UPS decided to terminate the program in 1999.

The company went through a rebuilding process as a result, but Mr. Bridges noted the company serviced "a unique shareholder base" which allowed the UPS employees to keep their investment liquid by cashing in their shares at will through stock buyback programs. Regular dividends were also a feature.

However, "every dollar we buy back is a reduction in capital," he noted.

Mindful of its 98,000 shareholders' desire for liquidity, the OPL board said it could not grow and compete in the current reinsurance market.

OPL said yesterday it would discontinue writing new business in Bermuda and put its operations there, OP Re, OPAL and OPFinite business into runoff.

The company said Renaissance Reinsurance Ltd. would assume the policies of its OPCat operation and that it was in the process of selling Overseas Partners US Reinsurance Company in Philadelphia.

Mr. Bridges said he expected the 55 employees in Philadelphia would continue working for the new owner and that the company was "trying to find new homes" for 15 to 20 people in Bermuda.

The CFO said that the company with $1.3 billion in capital is not insolvent.

A.M. Best, after the company's announcement, put it under review with negative implications. Elizabeth Farrell, a Best vice president in Oldwick, N.J., said the rating agency continues to call its "A" rating correct because the reinsurance organization was actuarially sound.