Bermuda-based reinsurer the Imagine Group has injected $25.5 million (?15 million) into a new Lloyd's of London syndicate.

Illium Insurance Group told Lloyd's List that Imagine had taken a ten percent stake in Syndicate 4040, swelling its underwriting capacity above ?95 million.

Illium has been cleared by the UK's Financial Services Authority to start underwriting from the beginning of next year.

Illium will start to manage Syndicate 4040 at Lloyd's from January 1, where it will provide employers' and third party liability insurance.

Illium earlier this month was cleared by the Lloyd's Franchise Board to set-up at Lime Street as it announced that US insurer HCC Insurance Holdings would provide ?125m worth of underwriting capacity for 4040's first year.

Employers' liability insurance is a compulsory class for most UK businesses, and provides protection against claims from past or present employees for injury or disease at work.

Illium director and active underwriter Denis Burniston said the decision by Imagine to support the new syndicate was further good news for the UK third party and employers' liability market.

“It brings complementary resources to Illium that support the company's future growth,” said Mr Burniston. “We also welcome the FSA approval, which is absolutely key to the successful establishment of Illium.”

Imagine president and chief executive officer Brad Huntington said the tie-up with Illium would create synergies between the organisations.