said its planned purchase of reinsurer Mid Ocean Ltd. was approved by shareholders of both companies.

Hamilton, Bermuda-based Exel, which holds 26.82 percent of Mid Ocean, is paying about $2.1 billion in cash and stock for the portion of the company it doesn't already own.

Mid Ocean shares rose 4 1/4 to 83 1/4, while Exel stock was up 3 7/16 at 81 1/2.

Exel decided to buy Mid Ocean, also based in Hamilton, to increase its size and reduce costs. It expects to be able to cut $15 million in annual expenses and sell more types of insurance after the combination.

Exel said shareholders holding more than 80 percent of each company voted in favour of the purchase, which is expected to close once the companies receive approval from the Grand Court of the Cayman Islands, which is holding a hearing on August 7.

Both companies are incorporated in the Caymans. Exel said holders of about 3.5 million Exel shares, or about 4 percent of shares outstanding, chose to turn in their holdings for a total of $204 million. Holders of 4.9 million Mid Ocean shares, or about 14 percent of outstanding shares, will receive $96 million.

The rest of the shareholders will receive stock in the combined company. Exel shareholders will get one share for each Exel share they currently own. Mid Ocean shareholders will receive 1.0125 share for each of their shares. Mid Ocean was founded six years ago by Exel, J.P. Morgan & Co., Marsh & McLennan Cos. and the Kamehameha Schools/Bishop Estate, Hawaii's biggest institutional shareholder.