Bottom Line: Impressive insurer

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The Independent Online
IT IS always hard to believe that the sales-led managements of insurance companies are sufficiently on top of their job to buck the insurance cycle. So it is impressive to see that little Independent Insurance managed to stay profitable throughout the last downswing, which so recently dumped Britain's biggest insurers in the mire.

Yesterday's prospectus prices Independent's shares at 225p, valuing the UK general insurer at pounds 98.5m. This is at the top end of forecasts.

Independent makes much of its determination to profit from underwriting rather than just from investment income, which is all that the industry giants have done since 1980. It is reassuring to hear of Independent's refusal to chase private motor business, the first market to show signs of returning competition.

The company can make mistakes, and big ones, as the pounds 14m cost of writing stop-loss insurance for Lloyd's demonstrates. One might also worry about its dependence on high street brokers in the era of Direct Line.

The unusual pay packages for Independent's executive directors - school fees and home entertainment on the firm - give further pause for thought, since they smack of private company practice.

Independent relies entirely on the UK, and it has missed a good part of the upswing. However, it is encouraging to see Michael Bright, managing director, and his executive colleagues buy rather than sell shares in the flotation.

Only 5.5 million shares are available in the intermediaries' offer. Those interested in insurance shares should give Independent the benefit of the doubt.