ABN Amro tests support for £100m Illium flotation

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The Independent Online

ABN Amro is trying to drum up support for the possible flotation of an insurance company, only weeks after pulling plans to list a similar business due to a lack of investor demand.

Corporate financiers at ABN are testing the City's appetite for the general insurance vehicle, Illium Insurance. The move follows a failed attempt by ABN to list the Lloyd's insurer, Creechurch, in February this year. ABN had to abandon the float of Creechurch, the employer's liability insurer, three weeks ago blaming difficult market conditions.

Creechurch had been looking to raise around £70m from a float, but ABN failed to find sufficient support from potential investors. The company is now exploring other options.

ABN would like to line up Illium for a float on the Alternative Investment Market as early as September and could be looking to raise between £50m and £100m, say sources.

Marketing activity on a possible float is thought to be at an early stage and the company may decide to look elsewhere for funding. Many analysts remain sceptical as to whether Illium will succeed in bringing on board enough investor interest.

"The market was pretty dire at the stage when Creechurch first came looking for interest back in February," one insurance analyst said yesterday. "Since then, there has been a bit of a recovery in confidence and there is a bit more optimism for new stocks. But investors are not being reckless and getting a float away now is still not going to be a walk in the park."

The Creechurch failure came as Benfield, the reinsurance broker, enjoyed a successful float. It raised £100m in an offer it claimed was 11 times oversubscribed.

This was the first major new issue of stock this year, and has been heralded as a resurgence of interest in new issues. Stockbrokers such as Teather & Greenwood have said they have a healthy pipeline of companies waiting to come to market and that they expect a number of IPOs in the autumn.

Illium is thought to specialise in professional indemnity (PI) insurance, which professionals such as solicitors and independent financial advisers must hold. Premium rates in this market have been spiralling in the past year, particularly for IFAs, as insurers charge more to cover themselves from mounting mis-selling claims. Some insurers have priced themselves out of the market while premium rates have more than doubled in a year. There is thought to be room for a new listed entity in the PI market, following the acquisition of PRI, a PI specialist, by Brit Insurance.