Kathryn Hobbs
DJ Freeman has scooped the legal role on what will be the largest ever flotation on AIM. The firm has advised a new entrant to the professional indemnity (PI) insurance market, PRI Group, on its three-step plan to flotation. PRI aims to raise £130m through its float and is expected to have a market capitalisation of around £140m.
Head of corporate Richard Spiller led a team that took in every department at DJ Freeman. The 13-lawyer team comprised corporate, tax, employment and IT outsourcing practitioners. In less than three months the team provided advice on setting up the company; acquiring an existing, albeit dormant, insurance company, obtaining Financial Services Authority (FSA) approval and an indicative rating; and finally, the float itself. Spiller said: "The part that we're most proud of is simultaneously bringing off all three projects within an extremely tight timetable."
Collins Stewart is adviser and broker to PRI, while Heath Lambert Capital Markets is on board as strategic insurance consultant. Heath Lambert put the project together and invited DJ Freeman and an undisclosed national firm to pitch for the legal work. Spiller said: "They conducted a beauty parade, which we won because we were able to demonstrate experience in all areas, plus a particular insurance focus. We brought together all the elements they wanted. I can't think of another instance where a brand new insurance company floated."
PRI was established with a view to going public immediately. It must raise capital through floating to begin underwriting and to satisfy FSA requirements.
PRI was formed by former Markel executive Andreas Loucaides. High-profile collapses such as Enron's and the increasing threat of litigation has made PI cover a priority for many businesses. Loucaides said the new insurer would target medium-sized professional firms, including law firms. It will focus on the UK market and intends to start underwriting in September, bringing a new player into the dwindling pool of PI insurers covering law firm risks.
The law firm PI market has still to settle down. It is two years since the demise of the Solicitors' Indemnity Fund and the start of an open market and in that time around 10 providers quit the market.
The Lawyer reported (3 June) that the PI market had suffered another departure when Wellington Underwriting decided to pull out. Its exit followed similar moves by Cox and Axa as insurers opt for more profitable lines of business. PI premiums are set to soar in the annual round of underwriting in the autumn. A contracting and hardening PI market means that insurers should be able to demand higher rates for cover.
Spiller concluded: "The PRI float is a shot in the arm for the London market following 11 September and counterbalances to a degree the new capital flowing in to Bermuda."
