Towergate Underwriting is "well down the line" to acquiring a further 15 companies, one of which could be Sterling Underwriting, market sources said.

The acquisition strategy, financed by £85m of new capital, was confirmed by Towergate, though the company declined to comment on any link with Sterling.

Group communications director Paul Dyer said: "We are looking at a whole range of new acquisitions over the next two years and have already earmarked £21m of our new funding for current acquisitions."

Towergate's two-year target to double its GWP from £200m to £400m is thought to be a precursor to a possible trade sale or initial public offering (IPO).

Though market rumours centre on a possible sale of Towergate to Norwich Union, Dyer said an IPO was the more likely option.

He said: "That seems logical at the moment, but you can never say never."

The idea that Towergate may be ripe for a sell-off was backed up by the announcement that the three founding partners are to give employees 2% of the equity of the company in the event of a flotation or sale.

The scheme is almost identical to the one introduced at Economic Insurance by Towergate executive chairman Peter Cullum in 1995, nearly two years before its sale.

Of Towergate, Cullum said: "We fully intend to keep reinventing ourselves and recognise that we must never stop learning and developing from our experiences."

Folgate, also chaired by Peter Cullum, is likely to follow the same two-year IPO strategy, according to chief executive Andy Homer.

Sterling Underwriting was unavailable for comment as Insurance Times went to press.