Kohlberg, Kravis Roberts, the global buy-out firm, is preparing an initial public offering of Bermuda-based reinsurer Alea, The Financial Times reported on Friday.

KKR has appointed Goldman Sachs and Merrill Lynch to prepare Alea for a public listing in London. The flotation is scheduled for the fourth quarter and could raise more than ?400 million.

If Goldman and Merrill are able to get the flotation away, it will be only the second to take place in the depressed insurance sector since the terrorist attacks of September 11, 2001.

Only Benfield, the reinsurance broker, has been successful in finding a place in the UK market, with a ?122 million listing in June.

KKR's plans could also revive aims for flotations in other sectors in the UK, which have been suffering from a drought of new issues after three years of falling stock prices.

KKR is looking to get out of Alea after six years, having bought Rhine Re, the Swiss-based reinsurer, in 1997 and rebranded it Alea Group three years later.

KKR has since made several bolt-on acquisitions, including buying the insurance products business of Bankers Trust.

The private equity firm is thought to be considering a dual listing for Alea, although people who are close to the situation said that it would probably opt for a sole UK listing.

The flotation also marks the first realisation of an investment by KKR since it sold its stake in Idex, a manufacturer of pumps and metering products, in the first quarter last year.

Alea, whose headquarters are in Bermuda, reported a 118 percent increase in net written premiums in 2002. Profit before tax was $56.2 million from net premium of $708.2 million.

KKR is one of the few buy-out houses with an interest in financial services.

The firm floated Willis, the world's third-largest insurance broker, in June 2001 with a valuation of about ?1.9bn. KKR initially retained a large stake in Willis, but has since diluted its shareholding.