Bermuda-based fund management operation that has activities here, BVI, Jersey, London and Luxembourg.

Liberty International Jersey Ltd. is the offshore asset management subsidiary of Liberty Mutual that has exchanged contracts to take an interest in the Bermuda-based Ermitage Group which has funds under management of some $720 million.

Ermitage specialises in hedge fund and fund of funds strategies, using managers with proven track records. Through its Luxembourg operations, Ermitage administers its own funds and certain third party accounts.

A trust operation with the Ermitage Group is not involved with the new arrangement with Liberty International Jersey, which began activities in April 1996.

The Liberty International unit had $850 million in assets under management at the end of last December, which grew to a billion dollars by July 31.

Combined assets under management of the wider Liberty International/Ermitage Group should amount to $1.7 billion, making the combined activities one of Europe's largest offshore fund management groups.

After regulatory conditions have been satisfied, completion of the deal will bring Liberty International Jersey chief executive Ron Mitchell to the Ermitage board as CEO.

Ermitage chairman David Wheeler stated: "Liberty International and the wider Liberty International/Liberty Life Group represents an ideal long term partner for Ermitage, enabling the business to take a major step forward.

"In particular, the exceptional capital strength of the Liberty International Group brings great opportunities and represents a major benefit to our clients and employees.'' Mr. Mitchell added: "We are delighted to have entered into this arrangement with Ermitage, which significantly accelerates the development of the Liberty International Group in the offshore market.

"Ermitage brings greater distribution and a wider range of complementary funds to add to our own highly successful Standard & Poor's AAAm rated money funds and alternative investment funds.''