Bottom Line: Backers will make a buck - but that’s all

Elizabeth Fournier
IF YOU happen to visit Brit Insurance’s website, take a look at the top left corner. Just above the title text you’ll find options to view the page in both Chinese and Japanese – a rare sight on a Lloyd’s member’s homepage.

The translated editions appeared sometime around July last year – shortly before reports emerged that its private equity owners were hawking the firm around to potential suitors including Mitsui Sumitomo and China Re.

Though foreign suitors have so far refused to bite, Brit’s private equity owners are going for the next big thing; a flotation on the UK’s relatively buoyant public markets. The company’s mooted listing price of more than £1bn will deliver a healthy profit for CVC and Apollo.

Having taken Brit private in 2011 for just £888m, its owners have spent three years dissecting the company – including selling off its UK general insurance unit to Fairfax for £190m. Though CVC and Apollo will be locked into whatever stake they don’t sell for 180 days, this looks like a full exit waiting to happen.

But investors should be wary. While Brit’s latest set of results – a 20 per cent rise in 2013 profits – look solid, that level of growth is very recent. Punters may be attracted by the promise of a base interim dividend of £25m, but pressure on premiums and competition across the industry means that might be the best they end up with. Shareholders – including CEO Mark Cloutier – have a lot to gain from a flotation, but newcomers face a less certain outlook.

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