The European Commission is set to approve the sale of the world's biggest specialist aviation insurer to a consortium of investors after finding there was strong competition in the sector, a source familiar with the insurance market said yesterday.

Under the deal, a consortium led by Warren Buffett's Berkshire Hathaway will buy most of Global Aerospace Underwriting Managers Ltd (GAUM) from Britain's Aviva plc and Royal & Sun Alliance for an undisclosed sum.

The European Commission, which is due to decide by today whether to clear the deal or conduct an in-depth inquiry into it, declined to comment.

The source, who declined to be identified, said the deal was likely to produce "no drama" with regulators.

Berkshire Hathaway will take a 40 per cent stake in GAUM, with the world's largest reinsurer Munich Re and Swiss reinsurer Converium each taking a 25 per cent share. RSA will keep 10 per cent.

RSA said the deal would release capital of about £45 million and said it involved the sale of £12 million of GAUM's assets to the consortium. Aviva said the value of its share of GAUM's assets it was selling was £15 million at June 30, 2002.

Converium said the value of its investment in GAUM was less than $45 million.

London-based GAUM underwrites hull and liability insurance cover for many of the world's leading airlines as well as aircraft manufacturers Boeing and Airbus, which is owned by EADS and BAE Systems plc.

Munich Re and Converium were already members of the GAUM underwriting pool, along with US insurers Chubb and CNA Financial Corp and Japanese insurers Tokio Marine and Mitsui Sumitomo Insurance.

Chubb and CNA are withdrawing from the pool, according to figures provided by Converium. Converium, Munich Re and Berkshire Hathaway will each provide 25 per cent of the capacity, RSA will provide 9.25 per cent, Tokio nine percent and Mitsui 6.75 per cent, it stated.