Kiln, the Lloyd's insurer, plans to raise nearly £50m in a deal which hands 20% of the company to US insurer WR Berkley Corporation after revealing a pre-tax loss of £15.7m for 2001.
If the deal goes ahead as planned, WR Berkley's subsidiary Berkley Insurance Company will become Kiln's largest shareholder with a 20.1% holding and two seats on Kiln's board.
The company's result compares to a pre-tax loss of £2.7m in 2000.
The result is equivalent to a loss of 11.62p per share.
Kiln now plans to sell shares to raise money.
A rights issue will offer existing shareholders the chance to buy two new shares at 47p each for every three already owned.
Other shares are to be sold by subscription.
Earlier plans to raise the money through a placement and open offer were shelved on Tuesday because the company's rising share price brought the deal into conflict with UK listing rules.
WR Berkley has agreed to buy 32.8m of the new shares in the subscription as well as taking up its full allocation in the rights issue.
The offer price is cheaper than Kiln's current share price of 58p. The shares rose 4p (7.3%) this morning.
The Kiln announced the deal would raise £47.6m before costs to boost underwriting at its Lloyd's Syndicate 510 to profit from rising rates.
WR Berkley chief executive William Berkley said the deal would help his company benefit from Kiln's experience in the London market.
He said: "We are enthusiastic about our expanding relationship with Kiln plc."
The deal will be put to shareholders on 27 May.
