London-based company aims to write £200m of premium

Wellington is set to launch the UK's largest independent reinsurance company after raising £448m.

Wellington Re will be based in London and chaired by influential investment guru Paul Myners.

It plans to write £200m of net premium this year. Up to 30% of its business would be in the UK, where it would concentrate on commercial property and commercial liability.

Its backing comes from venture capitalists - led by Blackstone and Candover.

The investment follows Wellington's announcement in April that it was boosting its Lloyd's capacity to £963m with a deal involving Berkshire Hathaway.

Wellington now plans to raise more equity finance to buy a bigger slice of Wellington Re as well as strengthen its own balance sheet and underwriting.

Chief executive will be Chris O'Kane, who said the company would write six main lines of business, with up to 50% in the US and 30% in London.

"There is so much business in London, people are beginning to lose sight of how important London brokers are," he said.

"There's nowhere in the world that has as many brokers in one place."

Wellington Re's holding company will be domiciled in Bermuda.

About 40 Wellington staff will transfer to Wellington Re later this year. Most will work on the new operation's underwriting teams.

Wellington chief executive Julian Avery predicted that both operations would benefit from hard market conditions that could continue for three or four years.

Increases in 2003 would be between 5% and 25% with some lines of business rising faster.

O'Kane said Wellington was seeing current increases of up to 20 times on its energy book.

Aviation would provide a strong market for a long time to come and conditions would stay favourable for other lines including liability, surplus lines and property, he said.