Further consolidation in the Lloyd’s insurance sector was forecast this week, causing a number of syndicates to stage a rally.
Following Atrium Under-writing’s announcement that it was recommending a cash £193.2m offer from Bermudan Ariel Re, and with Canopius having recently been rumoured to have received an unsolicited approach from the same predator, traders were hunting for the next target.
ABN Amro predicted further takeover activity and said that smaller companies such as Chaucer, Kiln, Hardy, Highway, Novae, Omega, Advent and Heritage, were likely targets.
Beazley was also in demand as it touched a new high of 169½p. Investors bought into the stock ahead of Monday’s interim results, which they are hoping will be upbeat.
With the recent flooding, investors were trying to calculate the cost to the in-surance industry. Ratings agency Fitch estimated the total bill for underwriters could top £3bn, although it predicts this will have a “limited rating impact on UK insurers”.
As Insurance Times went to press, Aviva, the parent company of the UK’s largest insurer Norwich Union, was trading at a year low of 724p. Earlier this year it was worth over 850p a share. Legal & General was at 151p.
Admiral Group sank to a new year low of 785p. Dealers said the company was still being punished for performing a dramatic U-turn on its plans to sell a stake in online business Confused.com. They said traders were also watching rival comparison website Moneysupermarket.com ahead of its flotation. Cond-itional dealings start this Thursday.
Yvette Essen is stock market reporter for the The Daily Telegraph