owner of Continental Corp. -- the purchase price -- $1.1 billion cash or $25 a share.

Centre Re, the Bermuda-based financial reinsurer controlled by Zurich Insurance Company, has a stake in Insurance Partners.

In October, Insurance Partners invested $200 million in the ailing US company in return for appointing its chairman, according to Bloomberg business news service.

Under the new transaction, Insurance Partners will receive a $17.5 million termination fee.

Boards of both companies have approved the transaction, which will be paid for with long-term debt or a combination of long-term debt and equity.

The purchase creates the seventh largest US insurance company.

Loew's Corp. maker of Kent and Newport cigarettes, owns 84 percent of CNA Financial. Loew's chairman, Mr. Laurence Tisch, is also chairman and chief executive of CBS Inc.

Continental is the latest to join a prestigious list of sellers in the US insurance industry.

Companies involved in recent transactions include; Kemper Corp., Travelers Inc., Transamerica Corp., Aetna Life and Casualty Company, and Mutual Life Insurance Company of New York.

The acquisition was announced after the end of trading Tuesday. Continental stock fell 37.5 cents to $14 while CNA Financial fell 27.5 cents to $63.

The $20 per share price is below Continental's September 30 stated $25 book value, which is assets minus liabilities.

"CNA is bottom fishing with Larry Tisch getting it at a low price and hoping that business improves for the industry,'' said Mr. Ira Zucherman, an analyst with SBS Financial Group in Connecticut.

As at September 30, Continental spent about $1.08 in claims and cost expenses for every $1 collected in premiums.

A transition team is expected to spend the next couple months figuring out how to merge operations and cut costs.

Continental reported a third quarter loss of $313.3 million compared to a profit of $19.5 for previous year quarter.

Continental has been attempting to shore up its positions for some time and retained Goldman Sachs & Co. in August. The company also eliminated its 25 cents quarterly dividend resulting in a savings of $55 million.

Prior to the Insurance Partners attempted bail-out, reports indicated Marsh & McLennan-led Trident Partnership, in which Mid Ocean Reinsurance Holdings has a stake, leveraged buy out specialist Kohlberg, Kravis & Roberts, Assicurazioni Generali, and Tokio Marine & Fire, may also have been interested in Continental Corp.