SVB is considering selling its distribution business Fusion.

But sources said that a disposal would only take place once the virtual insurer reached a target of £250m in gross written premium (GWP).

Fusion is expected to reach £114.8m in GWP this year.

An SVB source said: "When Fusion gets to £250m, SVB could float it or could sell it off."

Fusion has grown rapidly. Its booming business in the mid-sized commercial property market has increased its GWP from £13.2m in 2001 to a projected £114.8m this year.

If Fusion continues expanding at its current rate, it can expect to reach £250m in GWP in 2004, though more conservative estimates say it will take the business three years to hit this target.

Fusion's 2003 business will be split between property (75%) and liability (25%). Its income will amount to around 13% of SVB's GWP in 2003. Fusion acts as a virtual insurer, using its relationships with around 230 brokers to write business through SVB.

SVB recently launched a £75m placing and open offer. The group said it was planning to invest £35m in Fusion and its future underwriting, as well as up to £35m towards paying off past losses.

At the end of May, SVB said investors had taken up 80.4% of the new ordinary shares under the offer. Of the 85,806,264 new ordinary shares issued, 69,030,779 were taken up.