Wellington Underwriting has placed almost 11.4 million shares on the stock market to raise approximately £15.6m.

The Lloyd's managing agent will be using the profits to help increase its backing for syndicate 2020, in which it currently has a 46.3% stake.

It has indicated it may use the money to increase its share to provide 53% of funding.

Wellington now provides around £230m of the syndicate's funding and will increase its participation to £295m.

The syndicate has a premium acceptance capacity of £500m for the 2001 year of account. On July 11, the authorisations committee of the Council of Lloyd's gave approval to raise this to £640m for 2002.

It said it might also buy additional capacity in the Lloyd's capacity auctions in September and October if it considered prices to be economical and estimated that, following the placing, it could raise its capacity without raising any further capital.

In the first half of 2001, Wellington saw average premium increases of more than 20% and expects rates to continue hardening next year. The company also said it needed the capital to fund the syndicate's new business initiatives.

In 1999, it took on a team of 11 aviation and five personal accident and medical expenses underwriters. Together they are expected to underwrite £80m of gross premium this year.

Wellington also acquired its US subsidiary in March 1999 and it is expected to introduce gross premium of £25m for 2001.

In addition, it has opened three new offices in America and the formation of a UK commercial lines team is expected to generate between 20% to 25% of the syndicate's gross premium income in 2001.

Chief executive of Wellington, Julian Avery, said: “We are raising the money to fund the expansion of our business through growth in the capacity of the syndicate and so that we can meet the increasing rates coming our way.

“Our strategy for the past two to three years is to grow organically and attract new people, teams and, where appropriate, new businesses.”

A senior analyst at AM Best said it seemed unlikely Wellington would seek to acquire a new company, as it would probably need to raise more money. But a leading market player said if the firm became the major backer for the syndicate, it might be looking to eventually acquire it.