Bulk trade triggers speculation
Rumours of a bid for Royal & SunAlliance (R&SA) by AIG are unfounded according to a source close to the US insurance giant.
Sources said that senior directors of AIG have decided against acquiring UK personal lines businesses after dropping out of preliminary talks to buy Churchill Insurance last year.
One source said: "They were in preliminary talks with another personal lines insurer last year, but said they weren't interested in low margin personal lines businesses and wouldn't go near them in the future."
R&SA's share price jumped nearly 8% last week amid rumours AIG was preparing a bid. Although both R&SA and AIG denied the rumours, over £160m worth of shares were traded on 17 November.
The bulk trading was sparked by a broker trying to fill an order for six million shares. After the flurry, the shares levelled off just below the 80p mark. Rumours surrounding the bid put the offer price at around 95p to £1.
Analysts also poured cold water on bid speculation, pointing to continued uncertainty over R&SA's exposure to US workers' compensation claims and the fact the insurer was still going through a restructuring programme.
Though R&SA has been posting profits in 2004, this follows four years of straight losses. In the first nine months of this year the insurer registered a group operating profit of £258m.
R&SA chief executive Andy Haste said the results of all ongoing businesses were ahead of the cross-cycle combined ratio targets.