Novae updates on Chaucer deal

Lloyd's insurer Novae has given an update on its ongoing discussions with Chaucer.

In a statement, the company said: "On 28 January 2009 the Group announced that it had made an approach to the Chairman of Chaucer Holdings PLC with a view to starting discussions regarding a possible all-share merger of the two companies. On 10 February 2009, Novae made a subsequent announcement confirming that it had entered into discussions with Chaucer and that due diligence had commenced.

"One of the aims of the due diligence exercise is to confirm the expected material benefits that would arise from a combination of the two groups' complementary operations and underwriting expertise.

"It is anticipated that such benefits would accrue from a more efficient use of capital (including that element of capital which is currently surplus to Novae's short term stand-alone requirements), improved scale and liquidity and synergies in areas such as reinsurance buying and operating infrastructure. Discussions are continuing and a further announcement will be made in due course."

It added: "A merger with Chaucer could bring attractive scale and diversification benefits within the context of the Group’s strategic objectives, but will only be pursued on terms which will be beneficial to Novae shareholders."