NEW YORK (Reuters) - Kohlberg Kravis & Roberts Co., the canny buyout firm, aims to make a killing in the insurance business this week, as Bermuda-registered Willis Group Holdings Ltd., the world's No. 3 insurance broker, launches its initial public offering.

KKR is not selling any of its 74 percent stake in Willis, which it acquired when it led a buyout of the firm three years ago, but it is hoping to see the value of its investment rise at least as much as other recent insurance flotations.

Shares of life insurers MetLife Inc. and John Hancock have both more than doubled since going public last year, as investors sought reliable alternatives to technology stocks.

The Willis offering up to 23 million shares, or about 16 percent of the company, which could raise as much as $250 million comes in the middle of an upsurge in insurance premium rates.

That means higher commissions for Willis, which specialises in buying insurance for large companies, especially in the United States.

That upsurge has already helped main rivals Marsh & McLennan Cos. Inc. and Aon Corp., the world's No. 1 and 2 insurance brokers, which are both trading at around 25 times earnings.

If Willis's shares fare as well, it will be a triumph for KKR, which led an investment group to take the London Stock Exchange-listed Willis Corroon Group Plc private in 1998, in the middle of the last slump in the cyclical insurance market.

"Things have changed (since 1998)," Deutsche Banc Alex. Brown insurance analyst Alain Karaoglan told Reuters.

"Commercial lines price increases in the past few years have been quite significant, they have more aggressive management, and profitability seems to have turned around from where it was."

Willis, which recently moved from London to tax-free Bermuda, took on a new CEO last October, Joseph Plumeri, who used to run Citigroup's 450-branch Citibank operation in North America.

The broker has also rejigged its operations to focus on its most most important market, the United States, which accounts for about 60 percent of its $1.3 billion annual revenues.

Profits are recovering after a nasty year in 1999. The broker made an after-tax net profit of $9 million in 2000 off revenues of $1.3 billion.

The year before, it made a net loss of $132 million from $1.2 billion in revenues.

The Willis IPO may be paving the way for a full sale by KKR down the line, some say.

"This IPO is just laying the groundwork for an exit strategy for KKR," said one insurance analyst, who asked not to be named.

"KKR are smart enough to know how to buy low and sell high - and insurance brokers are on the verge of peak valuations."