Peter Wood's new direct insurance company, targeting high-risk drivers, has been christened First Alternative.

The pioneer of direct insurance is looking to build on the launch of esure with another joint venture with HBOS. The new company is understood to have capacity of over £50m for its first year. It will offer savings of up to 20% for motorists with high performance cars or a poor driving record, said First Alternative chief executive Colin Batabyal.

He said: "The rating for drivers of higher performance cars has, to date, been poorly understood and therefore very imprecise. Many of these drivers have traditionally paid high premiums and gone to specialist brokers who charge commissions because of the lack of other options."

First Alternative hopes to redress that balance by targeting the opposite risk profile to its sister company esure - a market the company believes has been badly served by the insurance industry.

Batabyal said: "We think it may be up to 40% of the market. We are looking at anything from ABI group 12 upwards."

First Alternative, currently awaiting FSA approval, is due to start trading early next year. It will share infrastructure and referrals with sister company esure.