Strategy International Insurance Group Inc. said it plans toacquire RS Group of Companies Inc., provider of RentShield, aninsurance program covering the residential real estate market, in adeal worth more than $120 million.

The Toronto-based Strategy International said it signed a letterof intent to acquire the outstanding shares of RS Group, also ofToronto. The parties said they have a 60-day exclusivity period tocomplete the transaction.

Strategy said it anticipates offering $1.75 per share of commonstock for RS Group. The price is subject to adjustment based on thecompletion of a valuation of the company and receipt of a fairnessopinion, which could affect the final price.

David Zazoff, a spokesman for RS Group, said there are more than70 million shares of RS stock outstanding.

At $1.75 a share, the deal would be worth more than $122.5million.

Shares of RS and Strategy International are traded on the OverThe Counter Bulletin Board.

Strategy International, the parent company of Strategy InsuranceLtd., does insurance, reinsurance and structured risk underwritingtransactions focusing on credit risk and credit enhancement.

It operates through Strategy Insurance Limited, aBarbados-formed and licensed subsidiary. Strategy Internationalreported it has $158 million in assets as of Jan. 31.

RS Group offers insurance and reinsurance products throughoutNorth America.

The core RS Group product is RentShield, with offices in Miami.The offering provides rental managers a guarantee program to payrental income in the case of rental default.

It also covers willful damage by a tenant and provides otherservices for landlords to cover tenants. The company reportedoperating income of $6.5 million for the year ending 2004 onrevenue of more than $16 million. Net income was $305,602.

Mr. Zazoff said the timing of completion of the deal woulddepend on the fairness opinion report and agreement of terms by thetwo parties.