Connecticut General Corp. and INA Corp., two of the nation's largest insurance companies, announced today that they would merge.

In what apparently is the largest insurance merger on record, INA and Connecticut General will form a new corporation that the companies tentatively have decided to call North American General Corp. Shareholders of the two insurance giants will become shareholders in the new corporation, provided that they--as well as federal and state regulators--approve the combination.

Goldman Sachs & Co., the investment banking firm that brought the two companies together, said the merger will have a market value of more than $4 billion. Connecticut General stock fell $2.75 a share today to $52.25, while INA declined $2.50 a share to $46.25.

The INA-Connecticut General combination is merely the latest of a round of mergers that is rapidly changing the face of the financial industry from insurance companies to stock brokers.

At a press conference here this afternoon, Ralph Saul, chairman of INA, said the two insurance companies do not expect antitrust problems with the merger. The two companies specialize in different areas of the insurance business.

Connecticut General, with revenues of $5.3 billion last year, is concentrated in the life and health insurance and annuities business. Nearly 80 percent of its income came from those three lines--both individual and group.

INA, on the other hand, is primarily a property-casualty insurer, with 64 percent of its revenues coming from that line of insurance. INA also owned a chain of hospitals, which it sold to Hospital Corp. of America last August.

Hartford-based Connecticut General is the seventh-biggest life insurance company in the United States, while INA, which writes comparatively less life insurance, is the seventh-biggest "diversified-financial company" in the nation, according to Fortune magazine's annual rating.

Connecticut General had $80 billion of life insurance in force at the end of last year, while INA, which has headquarters in Philadelphia, has policies totaling $18.1 billion outstanding.

Property-casualty companies, which specialize in writing policies such as commercial, industrial, automobile, and homeowners insurance, have been in an economic downturn in recent months as inflation has driven up the cost of claims while competition has driven down the price of premiums, according to June Hoffer, who analyzes insurance companies for Bache Halsey Stuart Shields Inc., a big brokerage firm.

Nevertheless, because the companies invest the premiums in high-yielding, short-term investments such as Treasury bills, many companies continue to make a profit.

For example, for the first nine months of last year, INA essentially paid out in claims and other expense $104 for each $100 it earned in premiums on its property-casualty business, while for the first nine months of this year it paid out $106.30. But because of investment income, pretax profits in property-casualty insurance rose 16 percent.

Hoffer said that if interest rates continue to decline, as most analysts expect, property-casualty insurers will face tougher times in the months ahead.

Saul and Connecticut General President Robert D. Kilpatrick said in a joint statement that the merger "will give us the size, people, resources, and financial strength to assume a leadership role as a more effective competitor in the rapidly changing financial services market. Because our businesses complement each other, we will gain enhanced capacity for service and distribution to our customers, expanded market coverage, greater diversification of insurance lines and improved ability to compete in foreign insurance markets."

The so-called financial services industry--from insurance to stock brokerage--has been changing at a rapid pace in recent years as companies seek to offer more services in an attempt to garner more of a customer's dollar.

Prudential Insurance, the largest life insurance company in the country, bought The Bache Group Inc., the sixth-largest broker. American Express, which owns a major insurance company, bought Shearson Loeb Rhoades Inc., the second-biggest brokerage firm. Sears, the nation's largest retailer, just bought the country's largest real estate services firm as well as Dean Witter Reynolds Inc., the fifth-biggest broker.

INA itself owns 25 percent of Paine Webber Inc., the seventh-biggest broker, but says the holding is an "investment."