claims-paying ability rating on hold due to news it is the target of a merger offer.

And the senior debt rating of Terra Nova Insurance (UK) Holdings plc is also on "rating watch'' as the full details of the merger bid by an unnamed company unfolds.

The rating agency announced the hold yesterday after Terra Nova revealed late last week that the group was undertaking a review of "strategic alternatives'' following the receipt of an unsolicited merger proposal.

International specialty lines writer of property and casualty insurance and reinsurance Terra Nova (Bermuda) Holdings Ltd. also announced it is in the final stage of talks with a view to acquiring a US company.

But on the same day it posted quarterly results showing it had taken an after-tax charge of $25.2 million due to a decision to withdraw from UK private motor business, light aircraft and general aviation classes.

Duff & Phelps issued a statement yesterday that it expects the "ratings watch'' to be resolved at the conclusion of the strategic review.

The rating agency currently has claims-paying ability ratings of single-A-plus on Terra Nova (Bermuda) Insurance company Limited, Terra Nova Insurance Company (UK) Limited and Compagnie de Reassurance d'Ile de France or (Corifrance).

It rated the senior debt of Terra Nova UK Holdings plc at triple-B-plus.