Royal & SunAlliance (R&SA) was once again in focus as bullish rumours surrounded the insurer.

One tale was that Finnish insurance giant Sampo, could make an offer for R&SA's 70% holding in Codan, the Scandinavian insurer.

The dealer went even further, suggesting that Sampo may find the business so attractive it could launch an offer for the entire company, and not just the division. The rumour is not entirely new, having surfaced in November.

R&SA was trading at 161.5p as Insurance Times went to press. Volumes have also picked up in the FTSE 100 company, over recent trading sessions.

One other upbeat rumour surrounded the stock. Some dealers put the rise in R&SA's shares down to talk that it could lift its dividend, once it sells off its US business.

Investment bank Citigroup issued a note on the stock, suggesting that following the disposal of the division, it could afford to pay a 7p-a-share dividend.

Brokers also liked the look of Hardy Underwriting after the insurer unveiled a trading update on Monday. It put on 2%, to trade at 277p, as KBC Peel Hunt upgraded its estimates for 2006 and 2007.

Analyst Charles Coyne said the update "dovetails neatly with a benign end to 2006 in terms of claims", lifting his target price on the stock from 260p to 300p.

Yvette Essen is stock market reporter for The Daily Telegraph