An investment fund backed by Bermuda-based Mid Ocean Re is in talks to inject new capital into a US insurer hurt by liability and hazardous waste clean-up claims.

Home Holdings Inc., a property and casualty insurer, is expected to secure more than $400 million to help turn around its troubled operations.

Cayman-based Trident Partnership, partially backed by Mid Ocean Re and by insurance broker Marsh & McLennan and investment firm J.P. Morgan & Company, is one of three funds involved in the Home Holdings talks with Fund American Enterprise Holdings Inc., and San Francisco-based Hellman & Friedman.

The $400 investment would exceed the $250 million Home Holdings is seeking. In a move to assure investors, Home Holdings' parent -- Trygg-Hansa SPP Holding of Sweden, said last month it would forgive all, or a substantial amount of, its $170 million loan to Home Holdings.

This move would be in addition to the potential $400 million from investors.

The lead investor will likely be Fund American Enterprises Holdings Inc. of Norwich, Vermont., which has $2 billion in assets.

Its chairman, Mr. John Byrne, formerly of Geico Corp. and Fireman's Fund Insurance Co., could become chairman of Home Holdings, Bloomberg Business News said, quoting unnamed sources.

Exchanging an insurance company chairman for a large investment is not unprecedented -- New York-based Continental Corp. announced in October that its chairman, Mr. John Mascotte, will be replaced by a successor chosen by a group of investors who poured $200 million into the financially ailing company.

The loan by Trygg-Hansa is the latest attempt to turn around Home Holdings, which it bought in November 1990 and has since invested $766 million in capital and loans.

Home Holdings' third quarter losses were $131 million, down from $174 million a year earlier.