Terra Nova Insurance Company Ltd. (TN), a UK insurer and reinsurer, yesterday announced the acquisition and renaming of Bermuda-based reinsurer, Underwriters Capital Merrett Ltd. (UCM).

The group's new Bermuda-based holding company, Terra Nova (Bermuda) Holdings Ltd. (TN Holdings), was also announced.

The moves were part of the group's reorganisation to widen its shareholder base and expand international reinsurance activities, according to a release from TN.

UCM, renamed Terra Nova (Bermuda) Insurance Company Ltd. (TNB), will transact reinsurance business in the Bermuda market, and was acquired in a share-for-share transaction.

A Bermuda reinsurance company formed in 1993, UCM provided reinsurance to Lloyd's syndicates and was managed by Merrett Underwriting Agency Management Ltd.

The new Bermudian operating company, TNB, located in Hamilton, will have capitalisation of US$55 million with US$225 million assets under management and will have its own underwriting and investment staff, with operations co-ordinated with TN.

"We believe that successful reinsurance companies will need to have a presence in both (London and Bermuda) and by year-end we will be among those few reinsurance companies to have operations in both principal reinsurance markets,'' said Mr. William Bailey, chairman of TN and TN Holdings.

Mr. John Riddick, managing director of TN, said the new structure was "clearly in the best interests of the London company since it provides us with broadened ownership support and increases our ability to service clients and intermediaries with the competence and security they have always had in their dealings with Terra Nova.'' The holding company was set up with new investors as well as the original principal investors, Aetna Life & Casualty, CIGNA Corp., and Marsh and McLennan. These three will retain a 38.5 percent stake in TN Holdings.

The lead investors in TN Holdings are affiliates of merchant banker Donaldson, Lufkin & Jenrette, with a 18.9 percent stake. TN management have also invested in TN Holdings.

New investors include J.P. Mor gan, Paine Webber, Capital Management, Chemical Venture Partners, the Trustees of the Bishop Estate, Century Capital Management and John J. Byrne & Sons.

The acquisitions and a capital contribution to UCM have been funded by US$106 million of equity provided by the shareholders, and US$85 million of senior debt provided by a number of banks in the UK and US via a syndicated loan arranged by Chase Investment Bank Ltd. of London.

While the Net Asset Value of TN in London, of about US$45 million, is unaffected by the transaction, its underwriting capacity will be enhanced by access to the capital in the Bermuda company through reinsurance arrangements between the two companies.

In 1993, TN was the 24th largest non-life insurance company in the UK, net premiums written.

In the London insurance and reinsurance market, TN is in the top five companies, net premiums written and dedicated capital and reserves.

TN was formed in 1969 and transacts reinsurance and insurance in the London market and through branch offices in Belgium and Canada.

For the year ending December 1993, TN reported profit of $28.2 million and for the nine months ended September 30, 1994, the company's unaudited profit was $35.7 million.

Terra Nova Insurance (UK) Holdings Ltd., and TN will continue to operate out of the UK under the umbrella of the parent company, TN Holdings.

Mr. William Bailey