indemnity (P&I) business to Australian insurer HIH Winterthur Insurance Group, the company said on Friday.

Under the changes, Sphere Drake plans to focus "only on lines of business where it can offer meaningful capacity and support to its customers.'' The agreement in principle is part of Sphere Drake's restructuring, which will see it focus on reinsurance and specialty insurance businesses.

HIH Casualty & General Insurance Limited will acquire the full P&I underwriting and claims teams, all business relationships and is offering quotations for renewal and new business.

HIH Casualty & General will also manage the run-off of Sphere Drake's P&I business although the financial responsibility for the run-off will remain with Sphere Drake.

Financial details of the transaction were not disclosed.

Sphere Drake president and CEO Michael Watson said customers will continue to have access to the fixed premium product they desire.

"From Sphere Drake's point of view, this transaction marks another significant step toward achieving our goal of being a highly focused provider of traditional and alternative reinsurance protection and specialty insurance lines of business.'' Sphere Drake, through its companies in Bermuda and London, provides traditional and alternative reinsurance and specialty insurance, with an emphasis on US based clients.

In January, Sphere Drake announced completion of the sale of the business of Groves, John & Westrup (Underwriting) Ltd., its Liverpool based yacht and cargo underwriting agency, to a Lloyd's of London syndicate.

That move followed the November, 1996 announcement that Sphere Drake would exit the hull and cargo insurance markets and take a $15 million charge over the next three quarters.