Fillip for Lloyd's as CU takes stake in agency

The Lloyd's of London insurance market received a shot in the arm yesterday when Commercial Union became the first UK composite insurer to take a controlling stake in a Lloyd's underwriting agency.

The arrival of CU at Lloyd's, following hot on the heals of big American and Bermudan agency purchasers, marks a further stage in the restructuring of the insurance market as individual names give way to corporate investors.

The British composite plans to use the pounds 5.8m acquisition of a 51 per cent stake in Marlborough from the Blenheim Partnership as a springboard for further growth. Peter Rice, CU's UK divisional director, said: "If others [agencies] were attracted to us we would be interested in talking to them." Marlborough underwrites business worth pounds 80m, but CU said it planned to increase this by building up its own capacity in Marlborough syndicates.

CU expects the agency to become a prime participant in the Lloyd's market.

However, CU insisted that Marlborough would be managed as a separate business and not subsumed into the composite insurer's empire. Traditional names, who still make up about half of Marlborough's investors, would not be replaced.

CU is to buy a 51 per cent stake in Marlborough, which is a world leader in the insurance of cruise ships like the QE2 owned by Cunard, and North Sea platforms. It also provides professional indemnity cover for lawyers.

Marlborough, which until 18 months ago was a classic, family-owned Lloyd's concern known as Barder & Marsh, has been extremely profitable. Its three basic syndicates ran up profits as high as 26.4 per cent of their capacity in their last financial year, which was1994, under Lloyd's rules.

Angus Sladen, managing director of Marlborough and himself a name, said the tie-up with CU would give his agency the "good source of stable capital" that was now needed. While market conditions had been good in the past, the future was tougher.

The CU acquisition, which involves an initial pounds 2.9m cash payment followed by a further pounds 2.9m contingent on business activity, was welcomed by Lloyd's chairman, Sir David Rowland.