Heath rejects insurer’s offer for 20% of company

Royal & SunAlliance (R&SA) is understood to have offered to buy a minority stake in Heath Lambert.

Senior market sources said the insurer had proposed buying a 20% stakeholding in the broker, which would include a seat on the board. It is believed Heath Lambert rejected the approach.

It was not clear this week whether R&SA will look to make a fresh offer. Sources suggested it could be looking to protect or develop existing accounts. R&SA has not ruled out buying minority shares in brokers, although it has stated it would not follow in the footsteps of rivals and buy brokers.

Heath Lambert is thought to be worth no more than £100m, although two years ago it was valued at about £130m.

R&SA is the latest company to be linked with the broker, which has been the focus of much speculation about its future ownership.

Heath Lambert recently denied being in takeover talks with AXA.

Senior market sources point out that Heath Lambert would be a difficult acquisition, given its high cost base, business portfolio and the need to modernise the business.

In August, Heath Lambert admitted that it was considering a possible sale after appointing boutique advisory firm Hawkpoint. The move prompted speculation that it was trying to start an auction.

US-based broker Arthur J Gallagher was subsequently reported to be interested in making an offer.

In the previous year, talks to sell to larger rival Jardine Lloyd Thompson fell apart in a deal thought to be worth £130m. Willis, Aon and Towergate have also been reported as considering offers.

Heath Lambert’s staff and management own 30% of the company, with 60% held by Royal Bank of Scotland and Credit Suisse and 10% owned by the Pension Protection Fund.

In 2006 it reported pre-tax profit of £11.9m against a brokerage of £106.9m.

Heath Lambert and R&SA declined to comment on market speculation.