The world's sixth-largest property and casualty insurer Millea Holdings will gain a stronger foothold in the Bermuda and London markets if it succeeds in its bid to buy Kiln for $902 million.

The potential sale was confirmed on Friday with Tokio Marine and Nichido Fire, a unit of Millea, confirming that it had irrevocable undertakings from shareholders holding just over a 20 percent stake in Kiln to approve the proposed deal.

Speculation about who was trying to buy Kiln, which recently shifted its holding company base from London to Bermuda, was sparked by an announcement from the company at the start of last week that it was in discussions with a potential bidder.

With a foot in both the Bermuda and Lloyd's of London marketplaces, Kiln is seen as a tempting prize for acquisition within an insurance sector awash with capital after two benign years (in terms of catastrophe losses).

According to details of the proposed deal there will be no job losses at Kiln as a result of the acquisition. The Royal Gazette has also been told that it is not anticipated there will be any effect on Tokio Marine's current Bermuda operation at Tokio Millennium Re.

"The Kiln board believes the acquisition represents an excellent outcome for Kiln, its shareholders and employees," said Edward Creasy, group chief executive officer of Kiln.

"We believe Kiln's strategy will be facilitated by becoming part of a major international group, which recognises the strength of our brand, respects our existing culture and which will provide exciting opportunities for Kiln's employees."

Mr. Creasy said the established national and international presence and strong balance sheet of Tokio Marine, together with its matching values with Kiln, made the joining of the firms one that would provide "excellent opportunities."

Tokio Marine's parent Millea is listed as the sixth-largest property and casualty insurance firm in the world, according to Fortune's Global 500 listing. Its most recent yearly reported revenue is $36 billion with annual profit of $795 million.

Kiln shareholders can look forward to a good return from the deal as the offer equates to £1.50 per share ($3) - some 41 percent more than the closing price recorded last Monday when Kiln revealed it was in bid talks.

The company is recognised as the fourth-largest insurer, in terms of underwriting, in Lloyd's of London. During the first half of 2007 its profits fells 14 percent to £20.8 million ($42 million).

Tokio Marine & Nichido Fire president Shuzo Sumi said there had been a close and lasting relationship between the companies since Kiln was formed in 1962.

"This agreement represents an important milestone in our stated strategy to expand internationally and we believe Kiln, with its underwriting expertise, skilled employees and strong brand, represents the perfect partner," he said.

The Japan-based Tokio Marine is developing a strategy of growth in insurance and reinsurance in the UK, US, Europe and Asia.

In a statement outling the proposed cash acquisition, Tokio Marine reveals it has reached "irrevocable undertakings" with a number of shareholders, including Berkley Insurance Company, which collectively hold just over a 20 percent stake in Kiln and have agreed to recommend the deal.

Kiln has agreed to pay Tokio Marine £4.4 million if the deal falls through.

In a Bloomsberg report, Hideyasu Ban, a Tokyo-based analyst at Morgan Stanley said: "The domestic market is not really a source of growth. If the management (of Tokio Marine) is seeking a certain level of growth they have to look at outside markets."

While Richard Gradidge, a London-based analyst at Numis Securities said the deal looked attractive as it worked out at about 1.7 times Kiln's book value.

AM Best has placed Kiln and Kiln (UK) Holding's issuer credit ratings of "bbb+" under review with "positive implications."

The rating company said it viewed the acquisition as something that "may improve Kiln's financial flexibility."