Primary Group has set up its own insurance company in Ireland.

Primary Insurance has been licensed in the Republic of Ireland and will cover both UK and Irish risks, starting this month.

John Perham, former Aon International Risk Management Group managing director, will run the new company.

It will cover accident, sickness, fire and natural disasters, property damage, general liability, miscellaneous illness, legal expenses as well as European motor assistance.

The group is anticipating a £12m written premium income for next year.

Group marketing director John Bibby said the creation of the new company did not mean Primary Group would sever its links with its insurers.

"We'll stand alongside them so they can be more confident that we're choosing risks that are profitable," he said.

Bibby said tax breaks were not the main reason the new company was registered in Ireland.

"The Irish licensing gives us access to Europe. Ireland has good infrastructure for establishing an insurance company and the regulator is easy to deal with," he said.

The group would seek regulatory approval for the new company to deal in all EU countries by 2003, he added.

He said the group had no immediate plans to start writing business other than its own, but would not rule out such a move in the future.