SVB has launched a £75m placing and open offer.

The group plans to invest £35m in distribution business Fusion and its future underwriting, as well as up to £35m towards paying off past losses.

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SVB has launched a £75m placing and open offer.

The group plans to invest £35m in distribution business Fusion and its future underwriting, as well as up to £35m towards paying off past losses.

The capital raising, mooted last month when SVB posted 2002 results, comes as the group expects a fall in financial backing from Swiss Re.

Support via letters of credit worth £76m this year is set to fall by £21m in 2004.

Fusion's booming business in the mid-sized commercial market has sent its gross written premium from £13.2m in 2001 to a projected £114.8m this year.

Its business is expected to be split between about 75% property and 25% liability. with its income at about 13% of SVB's gross written premium this year.

Fusion acts as a virtual insurer, using its relationships with some 230 brokers to write business through SVB.

SVB chief executive Matthew Fosh said: "We're not changing the business model. Even if [Fusion] hits £250m [of gross written premium] in three years, it would probably be about 2% of the total commercial market.

"There are a lot more cherries still to pick."

Fosh denied that SVB was trying to raise money on the back of Fusion's success.

"That would be to completely overlook what's happening with SVB's core business," he said.

SVB has dramatically increased its US business and reinsurance, boosted its direct writing and reorganised its structure to claw its way to a £10m pre-tax profit in 2002.