Shares in Lancashire Holdings, a new Bermuda-based insurer, rose more than 12 per cent during its first day of conditional trading on the Alternative Investment Market (AIM) yesterday, as it announced it had successfully raised $1bn (£566m) in new capital.
The company, which is to specialise in the marine, energy and property sectors, launched on the back of an anticipated raise in premiums over the coming year, following an exceptionally bad few months for the insurance industry.
Hurricanes Katrina, Rita and Wilma - which hit the US and Caribbean this summer - are believed to have collectively cost the global insurance industry more than $40bn, making it the most expensive hurricane season in history. In the UK, the London-listed insurers Goshawk and Alea were among the worst affected by the storms, and have now closed to new business.
Lancashire, which has been founded by a handful of experienced US and UK insurance executives, hopes to cash in on this year's rising premiums. It has received an A- credit rating from AM Best, the specialist insurance credit rating agency.
Unconditional trading in Lancashire, which with a market value of about £600m will be one of the largest companies on AIM, begins on Friday. Yesterday, the stock rose 35p to 319p.
A string of private equity groups, including Capital Z, Crestview Partners and Cypress are investors. Bob Spass, who is a co-founder of Capital Z, will be Lancashire's non-executive chairman, while Richard Brindle, a former Lloyd's of London underwriter, will be chief executive.
Merrill Lynch was the lead adviser on the flotation.