Double registration

The first point is that, now that we are a regulated community, such an acquisition is a notifiable event to the Financial Services Authority and requires their approval.

Consequently, you should contact them at the earliest possible stage, understand what further information they will require and ensure that they are satisfied that the proposed new firm will not present any dangers or threats to the insuring public.

Among the points on which they will need to be satisfied will be the solvency of the enlarged firm, how the deal will be funded, the business plan going forward and the methods by which management will be able to control a firm, which, as you say, will be twice the size of the one that existed previously.

The FSA is looking for management to have a sound understanding of the high-level principles of regulation. In addition to the points mentioned, there is also the important one of dealing in an open and co-operative way with the FSA.

Attempting to present a deal such as that proposed as a fait accompli will not only incur the practical problems outlined, but will also send a signal to the regulator that the senior management of your firm has not grasped the principles of statutory regulation.