SVB has sold its majority stake in Fusion Insurance Services to Broomco 3881 (Newco) for £25m.
Newco is a newly formed majority-owned subsidiary of Towergate Underwriting managed by the existing Fusion management team.
The sale is set to generate a cash inflow for SVB of £15m before transaction costs, with proceeds to be used as solvency capital in SVB's Lloyd's underwriting business.
As a result of the sale of its stake in Fusion, SVB will write less income in the short term than anticipated, but expects to rebuild this income in 2006 and beyond by growth in its direct and reinsurance property units following the recent US windstorms.
It also expects income from the steady growth of Novae, SVB's wholly-owned regional liability business, and a developing relationship with Towergate.
Matthew Fosh, chief executive of SVB, said: "This is a good price for a business that had been designed for a sale over a five year time frame. We achieve a significant return, equivalent to 2.5x our investment.
The transaction rebalances the business and allows us to focus our attention and capital on the core Lloyd's business and in continuing to develop Novae."
