Direct Line poised to float at 170p-177.5p

Royal Bank of Scotland last night narrowed the price range on Direct Line shares to between 170p and 177.5p as stockbrokers reported strong interest in the flotation from small-time investors.

The deadline for those wanting to take part in the insurer's float passed at 12pm yesterday and retail investors seemed to have ignored warnings from some analysts and investment advisers to steer clear of the listing.

Royal Bank of Scotland was forced by politicians in Brussels to offload the insurance subsidiary, which also owns Churchill, as a condition of receiving a £45bn bailout from taxpayers during the financial crisis.

Richard Hunter, the head of equities at Hargreaves Lansdown, said that applications had "run into the thousands", while rival broker the Share Centre said demand had soared over the weekend.

Critics of the float point out that making profits from car insurance is notoriously tough, and the Competition Commission inquiry into the industry can hardly be good news.

Royal Bank of Scotland, however, hopes to raise up to £975m from floating up to a third of Direct Line.

The initial share price range of 160p - 195p was narrowed last night.

At 177.5p, the top of the new range, Direct Line would have a value of £2.66bn.

Oriel Securities said it was "uninspired" by the initial public offering, despite Direct Line swinging back into profit last year,

A total of 20 retail stockbrokers have been appointed to take orders from potential investors.

Interactive Investor said that 22 per cent of applications made through it were for the £1,000 minimum, "with retail investors feeling more confident", and the largest was for £133,000.