Sale Creates Global Aviation Giant.

A new specialty global aviation insurer, which may immediately become the world's largest, is to be formed after the sale of Associated Aviation Underwriters Inc., the U.S. aviation and satellite pool owned by Chubb Corp. and CNA Financial Corp., to British Aviation Insurance Group, the leading London specialty aviation insurance consortium. BAIG is owned by the United Kingdom's largest composite insurers, CGNU plc and Royal & SunAlliance Insurance Holdings plc.

Both trading names will be retained, but a new holding company, Global Aerospace Underwriting Managers Ltd., will run the merged operation. "It will have the capability of writing nearly three-quarters of a billion dollars on any one risk," said BAIG Managing Director Tony Medniuk. Global Aerospace will be an original insurer but will work with captives and will underwrite some reinsurance, particularly for nationalized airlines in the Far East and Central and South America Medniuk said.

The sale, for an undisclosed price, effectively marks the exit of Chubb and CNA from international airline insurance.

Each pool records annual net written premium of about $300 million, which on a pro-forma basis represents a significant proportion of the global total. BAIG will take over management of AAU in September, until a new pool is formed Jan. 1, 2001. It will replace both the AAU pool, which will dissolve, and the existing BAIG pool, which will be run off.