With Michael Faulkner
Biggest mover of the week was Highway. The insurance group’s stock was up nearly 50% as the company announced a £150m recommended cash offer for the business from Liverpool Victoria (LV=).
LV= bid was for 73.35p a share. As Insurance Times went to press, Highway’s share price had soared from 50p on opening last Wednesday to 73.25p.
Shares in RSA also leapt this week during a week of heavy trading as dealers speculated again on a possible bid for the group. Rumours that RSA could be an acquisition target have been gathering momentum in recent weeks, following a strong set of interim results.
Financial services giant Zurich, which recently pulled out of the bidding for Royal Bank of Scotland’s insurance business, has been touted as a potential suitor. As Insurance Times went to press, RSA shares were trading at 163.70p – their highest level since October 2007 - up 12% on the week. Brit Insurance Holdings saw its share price rise nearly 10% this week despite seeing first half profits hit by falling investment returns. Pre-tax profit was £49.9m compared to £106.8m for the first six months of 2007. The group’s investment return tumbled to £2.1m in the first six months of 2008, from £55.9 million a year ago.
Analysts at Citigroup said the performance was in line with its forecasts and demonstrated robust underwriting performance. Brit’s combined ratio experienced only a modest deterioration and prior year reserve releases were at a sustainable level, Citigroup said. It argued that there was a potentially significant valuation upside in Brit’s shares, which were trading at 76% of net tangible assets, if sentiment towards the insurance sector improves. Brit’s shares were trading at 203.50p as Insurance Times went to press. Biggest faller of the week was Chaucer, which posted disappointing interim results. Chaucer shares fell 6.78% this week, as the Lloyd’s group reported that first half profits were down 90% year-on-year on the back of poor investment returns and high claims costs. Pre-tax profit was £3.9m for the six months to the end of June 2008 – well below analysts’ expectations and with a 12 point deterioration in the combined ratio. Chaucer shares were trading at 68.75p. IT