LONDON (Reuters) - British reinsurance broker Benfield Group - which has a Bermuda office with five brokers - raised ?157 million ($262.6 million) in its initial public offering, the UK's largest for a year, sources close to the offering said yesterday.

The sources said Benfield shares would be issued at 250 pence each, near the top of the 200p-260p per share range indicated in the prospectus. One said 62.8 million shares would be issued and that the company would have a market capitalisation of around ?575 million ($962 million).

He said the offering was covered 11 times - indicating demand for ?1.7 billion of shares at the issue price. The stock is due to start trading today.

A successful flotation would back up signs of a tentative recovery in investor appetite for new issues in recent weeks, following a three-year slump.

Unofficial “grey market” prices on Benfield's shares have been lifted by optimism for a strong launch.

Financial bookmaker Cantor Index said its spread for Benfield's share price at the close of trading on June 20 had risen to 283-293p. “Benfield is a play on the current favourable insurance cycle,” said Andrew Hobson, who helps manage ?500 million at Exeter Investment Group.

As an intermediary, Benfield structures and arranges reinsurance programmes and does not undertake risks for its own account. Benfield has offices in 34 locations and has 1,500 staff world-wide. It opened a Bermuda office in Wessex House in December where it has five brokers.

A large proportion of its business goes through Bermuda.

Mr. John Jenks, head of Benfield's new Bermuda office, told that Benfield's total premium throughput is roughly $6.5 billion per year and it places about a third of that into Bermuda.

However, most of this business does not require a physical presence here.

Benfield currently only has a small staff of five brokers on the Island. The majority of their business into Bermuda is actually undertaken over the telephone and via Internet by Benfield's brokers in other offices all over the world.