planning to move offshore to Bermuda, yesterday announced it has bought a merchant bank which specialises in Insurance.

Arch bought the privately owned Hales, which was founded in 1973, for an undisclosed sum.

Hales is a leading merger and acquisition advisor to middle-market insurance organisations.

It is also the manager of the general partner of Distribution Partners Investment Capital, L.P., a private equity fund with investments in insurance distribution, out sourcing and technology companies.

Hales has offices in Chicago, Hartford, New York, San Francisco and Seattle.

The transaction, which is subject to customary closing conditions, is expected to be completed later this month.

Robert Clements, Chairman of the Board at Arch said: "We are very pleased to be acquiring Hales & Company.

"Hales is a valuable franchise which we believe is not only well positioned for growth, but will also assist us in our pursuit of business combinations and ventures with attractive operating companies.'' Jeffery Cappel, Chief Executive Officer of Hales said: "As part of Arch Capital, we will have the financial resources to continue the rapid growth in our financial advisory, principal investing and research activities.

"This is an excellent transaction for our clients and employees.'' Arch announced earlier in the year that it is seeking stockholder approval of a proposed reorganisation in which the company would be redomesticated in Bermuda and has already filed with the Securities and Exchange Commission.