LONDON -- The big are getting bigger at Lloyd's of London, as merger activity reduces the number of players in the market.

Angerstein Underwriting Trust P.L.C. is the latest Lloyd's spread investor to merge with an agency, with the announcement last week that it has agreed to terms with ML (Bermuda) Ltd., the holding company for Murray Lawrence.

Angerstein's merger follows an announcement by LIMIT P.L.C., the largest single investor at Lloyd's, that it was buying the remaining portions of Bankside Insurance Holdings Ltd. and Janson Green Ltd. it did not already own. The purchase effectively converts the spread investor into a Lloyd's-dedicated insurance company. LIMIT last week issued proposals to acquire L536 million ($880.2 million) of capacity on the nine syndicates in the group, paying from 1 pence per pound (1.6 cents) of capacity on syndicate 1036 to 32 pence per pound (52.6 cents) on syndicate 386. The agencies will merge next year.

Angerstein's move will have a similar effect. If the deal -- currently awaiting regulatory and shareholder approval -- goes through, Angerstein will become an integrated insurance group, rather than an investment company.

This is not Angerstein's first Lloyd's-related acquisition. Three years ago, it bought a rival Lloyd's spread investment company, Delian Lloyd's Investment Trust P.L.C. More recently, it took over Stace Barr Holdings Ltd., P.B. Coffey (Underwriting Agency) Ltd. and J.E. Mumford (Underwriting Agencies) Ltd. Angerstein has already said it will merge P.B. Coffey and J.E. Mumford.

The breadth of Murray Lawrence's business interests would expand Angerstein's business outside Lloyd's for the first time. The Whittington Group, part of Murray Lawrence, provides various specialist services, such as claims management and runoff for both insurance companies and Lloyd's-related businesses. It recently opened a unit in San Francisco to extend its services to U.S. clients.

At the beginning of this year, Angerstein put up L188 million ($310.4 million) of capacity to underwrite at Lloyd's, down from the L197 million ($337.4 million) it put up for 1997 because of deteriorating market conditions. Angerstein's board has stated that it wants an increasing amount of its capacity supporting group-managed syndicates.

Currently, it manages two: syndicate 902, with L38 million ($62.4 million) of capacity; and syndicate 1141, with L77 million ($126.4 million) of capacity. Angerstein's members agency Stace Barr looks after the interests of members that supply Lloyd's with around L522 million ($857.2 million) capacity this year -- more than 5% of the L10.13 billion ($16.64 billion) capacity throughout Lloyd's.

As one of the leading underwriting groups, Murray Lawrence also controls substantial amounts of capacity.

At the beginning of this year, it merged its six syndicates under a single umbrella syndicate, 2001, which has L530 million ($870.4 million) spread across the six units. Combining the two organizations will mean the new company -- yet to be named, but unlikely to carry either "Angerstein" or "Murray Lawrence" in its title -- will have L644 million ($1.06 billion) on its syndicates in 1998.

The merged group will have a capital base of L210 million ($344.9 million), and it aims to increase the share of the capacity it contributes to its syndicates from the current L158 million ($259.5 million). As part of this effort, Angerstein will scale down the amount of capacity it puts on non-group syndicates.

Richard Keeling, executive chairman at Murray Lawrence, will become chief executive officer of the new organization. "This merger will strengthen substantially our insurance business and, we believe, will create a strong and secure platform to continue achieving excellent returns and significant value for both sets of shareholders," he commented.

Angerstein's CEO, John Stace, will become deputy CEO of the new entity.

Although the proposed merger needs shareholder approval, already almost three-quarters of Murray Lawrence shareholders, including its three main institutional investors -- State Farm Fire & Casualty Co., Fund American Enterprises Holdings Inc., and Lehman Brothers Holdings Inc. -- have approved the deal.

State Farm currently owns 40% of Murray Lawrence Corporate Ltd., along with Fund American, and it supplies L116 million ($190.5 million) of capacity. Almost 20% of the new business will be owned by Murray Lawrence and Angerstein employees.