The successful bid by a Bermuda-based reinsurer to get in on the United States insurance business has seen the company's share price more than double in the last week.

White Mountains Insurance bought a US car, business and home insurance company -- the US division of CGNU -- for $2.1 billion last week.

It has borrowed money from Lehman Brothers and Berkshire Hathaway group agreed to buy convertible preferred stock to help with the cash for the deal, fighting off some of the US industry heavyweights to secure the buy-up. "We were up against the biggest, smartest financial companies in the world,'' said White Mountains chief executive Jack Byrne at a press conference in Boston just after the deal was revealed on September 25. "But lightning struck and we are the ones standing here today.'' The move could make the little-known reinsurance company a household name in the States and its shareholders rich.

White Mountains has seen its price go from between $120-$160 to a high of $292, falling resting at around $260 this week. The company's 52-week low listed the share prices at just over $100.

The take-over will see White Mountains, which is domiciled in Bermuda but based in Hanover, New Hampshire, become a leader in the US property/casualty market through the company's car, home and business insurance.

As part of the deal White Mountains, has agreed to repay about $470 million in debt to the US unit's parent, CGNU, in the United Kingdom.

The agreement, which is expected to be sealed in the next few months, adds about $4 billion in personal and business insurance premiums to White Mountains' operations.

White Mountains currently writes about $500 million in premiums a year, mainly from reinsurance. This move will take it into direct competition with US insurers who have been crying foul over Bermuda-based insurers having to pay less tax through being domiciled off-shore.

The US unit was put up for sale in February as CGU announced it was merging with UK life group Norwich Union -- making the company the UK's largest insurance company and one of the top five in Europe.

The US arm was at the time ranked number 16 in the United States insurance market. The units were sold for 38 percent less than their net asset value, according to CGNU. White Mountains, which said it will keep on all 1,370 of CGU employees, outbid Boston's Liberty Mutual and Travelers Group to secure the deal.

Insurer's share price jumps White Mountains, which is much smaller than the US unit it is buying, had the help of billionaire investor Warren Buffett, chief executive of Berkshire Hathaway, in setting up the deal.

Mr. Buffett is a long-time friend of White Mountains' chief executive officer Jack Byrne, who in the 1970s turned around a cut-price car insurance operation with the help of his millionaire friend.

Mr. Buffett, whose Berkshire Hathaway now owns all of GEICO, is to invest up to $300 million in convertible shares of White Mountains which will give him a stake worth 23 percent of the company.

Mr. Buffett's reinsurance unit National Indemnity has also agreed to reinsure up to $2.5 billion of the unit's old liabilities -- which will take years to pay off -- for a premium of $1.25 billion.

A $1 billion loan to pay for the purchase is being provided by investment bank Lehman Brothers. Management and a group of private investors -- including insurance investor Leucadia National Corporation, Bank One Corporation, and money managers Franklin Mutual Advisers and Alleghany Corporation, have also committed $300 million to a specially formed acquisition vehicle in return for 18 percent of its stock.

Mr. Byrne will become chairman of the White Mountains holding group, and Robert Gowdy, CGU's president and chief executive, will stay in charge.

White Mountains, which has a market capitalisation of $1.55 billion, was formerly Fund American Enterprises Holdings. It provides property/casualty insurance and reinsurance products.

The firm, which sold its subsidiaries Valley Group (insurance) and Source One (mortgages), operates a reinsurance company, Folksamerica. It also holds a 50 percent stake in property/casualty insurer Main Street America Holdings, jointly owned with National Grange Mutual Insurance.

White Mountains also owns about a quarter of guaranty insurer Financial Security Assurance Holdings. Mr. Byrne owns about 20 percent of the company.