LONDON (AP) _ Commercial Union PLC is buying General Accident PLC for about $10.56 billion in a merger of two of Britain's largest insurance companies.

The companies said today that the new company will be called CGU and will have a stock valuation of about $24 billion. It will be based in London, where Commercial Union is based.

Based on premium income, the new company would be the fifth largest in Britain.

The partners expect cost savings of up to $370 million within two years, most of that coming from elimination of 5,000 jobs.

``The merger will create a world-scale, international insurance group with strong market positions in the U.K., Continental Europe, North America and the Asia-Pacific regions,'' a joint statement said.

Commercial Union shareholders will hold 53.6 percent of the new company, with General Accident shareholders controlling the remaining shares.

Shares of both insurers initially rose on the merger news but later fell as concerns about regulatory hurdles set in, traders said.

Shares in General Accident were down 5.7 percent on the day by midday on the Londion Stock Exchange while Commercial Union stock was down 2.2 percent.