Octavian Syndicate Management Ltd., which manages five insurance underwriting syndicates on the Lloyd's of London insurance market.

Terra Nova, an insurance and reinsurance company, will inject 25 million ($38 million) in total into the syndicates in 1996 to increase their underwriting capacity. This contribution could climb to more than 100 million over the next five years depending on the need for underwriting capacity.

Terra Nova will create a new managing agency to handle Octavian's future business while the present agency will be responsible for managing the syndicates' business for 1995 and earlier.

No purchase amount was given for the sale, which is expected to be completed in early January, pending approval from Lloyd's.

"Ready access to secure capital and the growing strength of Terra Nova's balance sheet will enhance our syndicates' ability to provide reliable capacity to meet the needs of brokers and clients,'' said Nigel Rogers, managing director of Octavian.

Octavian's syndicates currently have an underwriting capacity of about 190 million, which should climb to between 220 million and 230 million in 1996 with the added corporate capital, said William Bailey, chairman of Terra Nova.

The new managing agency and the five syndicates it runs will operate as a unit within Terra Nova. The five syndicates underwrite policies for marine, aviation, automobile and general insurance. The current staff will join the new agency.

Agents of Lloyd's of London have been seeking corporate investors to boost, or maintain, their underwriting capacity as individual investors, called "Names,'' withdraw from the market.

As capacity declines, an agent's ability, and therefore the market's ability, to underwrite insurance risk is diminished so companies seeking insurance may turn to other markets to fulfill their insurance needs.

"Corporate membership provides us with the opportunity to participate in the world's oldest insurance and reinsurance market following implementation of the reconstruction and renewal plan at Lloyd's,'' said Bailey in a statement.

Lloyd's investors will vote on the insurance market's 2.8 billion debt relief, settlement and reorganisation package next spring.

The plan is intended to end litigation and refinance and reconstruct Lloyd's following five years of losses totalling 8 billion through 1992, the last year for which Lloyd's has reported its accounts.

Terra Nova (Bermuda) Holdings Ltd. is the parent company of Terra Nova Insurance Co., a UK-based insurer, and Terra Nova (Bermuda) Insurance Co.

Ltd., which focuses on reinsurance.