Giant German reinsurer Munich Re is set to start writing primary insurance in the UK through a subsidiary, Insurance Times understands.

The reinsurer is believed to be using Great Lakes Reinsurance, a public company wholly owned by Canada Life, itself a subsidiary of Munich Re, as a springboard for its operations.

Great Lakes Reinsurance, based in central London, is already licensed by the FSA for classes 1 to 18, allowing it to deal in everything except life insurance.

This development follows Munich Re's announcement last month that it was seeking to move into the primary market.

The reinsurer revealed, when it published its results, that it had a £1bn war chest with which to attack the market, having taken steps to free the cash after selling 5% of its £19.5bn stake in the German insurer Allianz.

A Great Lakes spokesperson declined to comment.

According to the latest available figures from AM Best, the company had gross written premiums of £1.3m in 1998, had 13 employees in 1997 and has primarily been dealing in aviation and property cover.

Munich Re itself is already writing primary insurance in Germany, mainly through ERGO, the country's second largest insurance group.

So far its interests are focused on personal and small to medium business cover. However, there are plans to launch an asset management company, which will also manage investments by third parties.