Wellington Underwriting, a Lloyd's of London insurer, yesterday unveiled plans to create Britain's largest independent reinsurer and said its non-executive chairman would be Paul Myners, who conducted the Government's review into institutional investment.
Wellington has raised £448m to fund the new reinsurer, which will be called Wellington Re, in the largest-ever private funding of a European financial services company. Private equity companies which have invested include Candover, 3i, Blackstone of America and Phoenix Equity Partners.
Wellington has been trying to raise the money for the venture for nearly a year. It succeeded after investors saw how much insurance premiums rose after the 11 September attacks on the World Trade Centre and the Pentagon, which have hiked up the cost of cover in most areas of insurance. Wellington Re will concentrate on property reinsurance, mainly in America, as well as casualty and commercial reinsurance.
The new reinsurer will start operating in June from a London base, bucking the trend of many new ventures that have recently based themselves in the Bermuda market.
Chris O'Kane, who will become chief executive of Wellington Re, said: "London is where there are amazingly creative minds and the biggest broking community in the world. We realised that there wasn't enough capital for them to use."
Mr O'Kane was Wellington's chief underwriter and is moving over to the new business along with 40 staff, who will be the sole underwriters of the reinsurance business.
The company will be mainly owned by its investment consortium, but Wellington has the right to take up to 28 per cent of Wellington Re's share capital by 28 November.
Wellington shares, which have fallen sharply in the past year, closed unchanged at 87.5p.