Brit Insurance has become the latest firm from the insurance sector to seek to raise extra funds from its shareholders.

The company, which operates in the Lloyd's of London insurance market, is to launch a rights issue to raise �204m ($317m).

Two new shares will be offered to shareholders for every three they hold at a price of 64 pence, compared with Monday's closing price of 71p.

Brit said it wanted the money to enable it expand its underwriting business next year.

Opportunity

While last year's terror attacks on the US led to huge losses for insurers, the subsequent rise in premiums means companies are now hoping to take on more business and boost their revenues.

"We have seen our business grow with significant rate increases across most classes of business," said chief executive Neil Eckert.

"With support from our shareholders, both old and new, we should be well placed to take full advantage of these very strong market conditions."

News of the rights issue came as Brit Insurance reported an operating loss of �3.7m for the six months to 30 June, compared with a profit of �2.1m for the same period last year.

The company said the deficit was due to losses made on share investments.

Analysts welcomed the move to raise extra funds, but shares in Brit Insurance were hit be the general sell-off in the market, and they closed down 4p at 67p.