White Mountains Insurance, is a Bermuda-based holding company with US insurance and reinsurance. This company made possible other businesses such as Travelers Property Casualty, which makes up part of Citicorp. Last Monday, the US insurer White Mountains Insurance, decided to purchase the CGNU (the UK group) for $2.06 bn and an additional $1.1 bn loan as well. This sale was being arranged since last February and finally took place in recent news.
             Due to this business merge, White Mountains will change from a small company with $565 million in sales last year to a more prestigious company in the US insurance business. Although the CGNU had premium income of $4.2 bn in 1999, an expected drop below $2bn in sale prices was being expected by analysts. This was the best price considering the fact that the insurance market had been involved in a difficult environment due to tobacco claims.
             CGNU said that it would take everything into official account on September 30 because of the value of the assets being sold and the price it had. It was established that if the deal was completed on August 31 it would have made a pre-tax loss of L1.38bn all together. According to the company, after the disposal of the business some 60 percent of premiums would come from the long-term savings businesses. Shares in CNGU fell about 3 percent.
             Assets: Economic resources owned by a firm. (p536)
             Premium: The fee charged by an insurance company an insurance company for an insurance premium (p.672)
             Long Term Financing: Borrowed capital that will be repaid over a specific time period longer than one year. (p580)
             In this situation the example of the insurance companies demonstrate a macro-environment. Since one company is purchasing an existing company already, together the merged companies become stronger and more competitive. The competitive environment as described can create a stronger company as a whole considering the fact that toge
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