Bermuda based White Mountains Insurance Group is getting close to closing a deal that will increase its asset base from $1.3 billion to $12 billion.

The company is purchasing the US general business of Commercial General Norwich Union (CNGU) -- for $2.1 billion and expects to finalise the transaction at the beginning of April.

This week CGNU announced it is putting a further $200 million into Commercial General Union (CGU) Corp., one of its companies that White Mountains is purchasing.

The $200 million will be used to cover due diligence, management costs and shortfalls in the company pension scheme that need to be settled to achieve regulatory approval for the sale. CGU Corp. is a holding company that owns CGNU's US property and casualty insurance.

The addition comes after an analysis was made of the reserve position of the US business at the year end. This led to the US business strengthening its reserves and purchasing reinsurance to provide some protection against further risks.

Dennis Beaulieu, of White Mountains, explained, "The sale hasn't gone through yet but we hope to close on April 2. The transaction needs approval from the regulatory bodies of the individual states and we are still working this approval from 18 states.'' The sale was agreed with CGNU last year on a basis of $2 billion for the operations plus repayment by CGNU of a $1.1 billion inter-company loan. This sale marks CGNU's exit from the US property and casualty market.

White Mountains has agreed to commit an additional $125 million to the company and it is expected this will be spent on reinsurance cover.

Further amendments to the deal will include an increase in the proportion paid in loan notes which will rise from $210 million to $260 million. There will also be an increase in the maturity of the loan notes from six to 18 months.

CGNU was formed from the merger of CGU and Norwich Union and a condition of the merger was the sale of the US general insurance business. White Mountains outbid Travelers Property Casualty, part of Citigroup, for this business.

White Mountains moved to Bermuda from Delaware in October 1999. It is a holding company and its principle assets are insurance companies. It owns reinsurance and insurance operations Folksamerica and Esurance, an Internet-based provider of personal lines insurance.

Over several years White Mountains has been acquiring and developing various property and casualty insurance operating interests. It has acquired Valley Group, Charter Group and Consolidated International Group, which has subsidiaries Peninsular Insurance, American Centennial Insurance, British Insurance and Waterford Insurance.

White Mountains' investments in unconsolidated insurance affiliates are strategic operating investments in other insurers in which the company has a significant voting and economic interest, but does not own over 50 percent of the equity.