Float could double value of Lombard

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The Independent Online
LOMBARD Continental Insurance hopes to come to the stock market valued at more than twice the pounds 32m paid for the company in a management buyout less than a year ago, writes Paul Durman.

Lombard, a general insurer, plans to raise pounds 15m- pounds 20m of capital and expects the market to value it at pounds 65m- pounds 70m. Management will own up to 10 per cent of the shares, depending on the price they fetch.

Andrew Laing, managing director, said Lombard's results had been stronger than expected at the time of the buyout last May.

Lombard's previous owner, Continental Corporation, a US insurance group, first put its UK arm up for sale in the depths of the insurance recession in the autumn of 1991. But recovery was well under way by the time of the buyout. Continental did not retain a stake.

The buyout was led by Electra Kingsway, the private equity specialists. Other backers included Phoenix Securities, Gartmore, Noble Grossart and Brown Shipley.

Like Independent Insurance, the first insurer to come to the market for many years when it floated last November, Lombard eschews life business and aims to nurture close relationships with selected brokers.

Underwriting losses fell from pounds 7.2m in 1990 to pounds 5.9m in 1991, and to pounds 2.8m in 1992. Last year it made an underwriting profit of pounds 3.1m on premium income of pounds 87.7m.