Erinaceous is said to be seeking £100m for its profitable broker division
Zurich is believed to be in the final stages of negotiating a deal to acquire Erinaceous Insurance Services (EIS), the 30th largest broker in the UK.
Talks are thought to have stalled over price. Sources close to EIS said that Zurich had failed to match the broker’s asking price, believed to be in the region of £100m.
A spokesman for Zurich would neither confirm nor deny the company had been in talks with EIS, adding that Zurich would be making no announcements this week.
A spokesman for EIS said that discussions with a number of parties were at different stages, but insisted that no decision had yet been taken on the future of the company.
The company maintained that a sale was one of a range of options being pursued as part of an ongoing strategic review of the parent group.
On 14 January the group announced it was taking offers for EIS after receiving significant interest from private equity, insurer and broker sources.
Last month, EIS executive chairman Lesley Goodman said: “If a prospective buyer does not meet our expectations, we won’t sell.”
A sale, however, would help relieve pressure from the group’s banks to reduce its debts, currently standing in excess of £200m.
EIS posted pre-tax profits of £14.4m in 2006, and £4.9m in its interims. It has market-leading margins across its entire insurance portfolio, including the social housing, and landlord and tenant referencing markets – areas in which Zurich is a major player.