Lloyd's insiders expect Cox to begin moving all of its motor business out of Lloyd's if the proposed £81m takeover of Highway is successful.
Though Highway and Cox declined to comment on the takeov …
Lloyd's insiders expect Cox to begin moving all of its motor business out of Lloyd's if the proposed £81m takeover of Highway is successful.Though Highway and Cox declined to comment on the takeover speculation, it is understood that Highway is considering a bid from Cox that values the company at around 40p per share.One Lloyd's underwriter said this week that he expected Cox to gradually move all its business out of its Lloyd's syndicate, Equity Red Star, and into Highway."It's an extremely good deal for Cox - costs are more at Lloyd's because of the drain of the central fund," the underwriter said.Meanwhile, brokers fear that the proposed takeover of Highway could lead to a damaging lack of choice in the market.According to the brokers, if Highway were completely swallowed up in the deal, some brokers could suffer from a decrease in commission income due to a lack of competitive motor rates. Swinton chief executive Patrick Smith said: "It suits us to have a good variety of quality insurers to make up a panel. If this consolidation increases the financial strength of the companies involved then that's a good thing."But he warned that brokers could end up offering less competitive motor rates if Highway disappeared."More variety of capacity is better for the market as a broker depends on offering a variety of products to policyholders - the more carriers you have the more chance you have of offering competitive quotes," Smith said."If one insurer on a [broker's] panel disappears, it could mean sales disappearing."Highway reported a £21.9m pre-tax profit for the year ending 31 December 2003. This compared to a pre-tax profit of £1.1m the previous year.
Highway Insurance: facts and figuresMarket cap: £69mPremium income: £249mNumber of policyholders: 600,000