Wellington Underwriting has announced an agreement with Berkshire Hathaway which will increase its capacity from £625m to £963m for the 2002 year of account.
Under the agreement certain of Berkshire Hathaway's wholly owned subsidiaries will provide a 30% qualifying quota share (QQS) reinsurance to Syndicate 2020 for 2002.
They will also to provide the funds at Lloyd's necessary for
Wellington to form a new £150m syndicate which will underwrite on a consortium basis with Syndicate 2020 for this year.
The qualifying quota share reinsurance was arranged through Willis Reinsurance acting as brokers to Syndicate 2020.
The proposed arrangements have been approved by Lloyd's in principle, but remain subject to the approval of capital providers participating on syndicate 2020 for the 2002 year of account.
The arrangement will enable Wellington to progress its longer-term strategic objectives, which are believed to include a capital raising.
Wellington confirmed that it is also in continuing discussions with private equity providers to establish a new London-based insurer.
Wellington's Chief Executive Julian Avery said: "Our agreement with Berkshire Hathaway is very exciting news and is an extremely strong endorsement of the Wellington franchise.
"As insurance rates continue to increase dramatically, the group can now achieve its target premium income of £950m for the 2002 year of account.
"The arrangements will bring significant benefits to shareholders and capital providers and will mean that Wellington is now better positioned than ever before to take advantage of the continuing strong market conditions."
