Independent is at crossroads.

Speculation over the future of Independent Insurance continued this week with analyst Schroder Salom...

Speculation over the future of Independent Insurance continued this
week with analyst Schroder Salomon Smith Barney estimating the company to
be £176m short of the capital needed "to take full advantage of the upturn
now emerging in the marketplace".

In an investment report, it said it expected Independent to raise equity,
suggesting a major international insurer wishing to enter the UK market
"like Chubb, AIG or Allianz" would be well-placed to supply this

Rob Jones, director, and Tristram Whittingham, associate, of ratings
agency Standard & Poor's, added: "We're not saying it's a likely option,
but it's one of the things Independent could consider as a cheaper option
in terms of transaction costs, compared to a rights issue."

Analyst Barrie Cornes of Charterhouse said market worries over the
adequacy of the company's capital base have been overdone, although the
company should be aware of the problem.

"The market concerns that Independent has to do something, is misplaced,"
continued Mr Cornes, adding that they could simply choose to curtail
top-line growth or use the existing facilities put in place for 2001.
These include a quota share reinsurance agreement in place for £200m net
written premiums that can be increased to £500m.

Independent's corporate development director John Blakemore said: "We have
sufficient net assets and quota share reinsurance in place to support
year-on-year growth and retain our solvency target." He refused to comment
on analyst's speculation.
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