Privately owned Lloyd’s insurer Heritage Underwriting Agency plc has confirmed that it has received interest from at least two parties interested in acquiring the group.
Existing shareholders – the US broker Hays Group plc and the investment group Perseverance Ltd – are both understood to have submitted an interest earlier this week opening the prospect of a bidding war for the Lloyd’s insurer, according to The Insurance Insider sources.
In a month that saw one Lloyd’s insurer go public (Omega), another private (Cox Insurance) and a third consider an AIM IPO (Advent), this latest development indicates investors remain interested in the Lloyd’s sector despite falling rates and sluggish share prices.
The Insurance Insider understands the Heritage Board is due to meet next week to discuss the approaches.
Both Hays Group plc and Perseverance own 22 percent each of Heritage and have twenty percent voting rights, but in all the company has 1400 shareholders – many of whom were Lloyd’s Names.
In a 29 April statement, the company said: “Discussions are at a preliminary stage and it is too early for the Board to be able to determine whether these discussions will result in any formal offer for the Company.”
The company would not comment on the identity of the potential purchasers – or how many bids they have received – but The Insurance Insider understands both Hays Group and Perseverance have expressed an interest in acquiring the group.
Perseverance – which already owns the Lloyd’s motor insurer KGM Underwriting Agency Ltd – only came on board last year following a £9.1mn private placement of shares.
US broker Hays Group, on the other hand, has long been a supporter of Heritage’s renowned property underwriter Les Rock.
The group underwrites through two syndicates, 1200 and 3245, with total capacity of £208mn. Following last year’s placement, together with a £3.6mn long-term loan facility, Heritage now provides around 50 percent of its syndicates’ capacity against only 8 percent in 2004.
After restructuring in 2003/2004 – which included the closure of poorly performing Syndicate 1245 and an overhaul of its senior staff – the insurer looks in much stronger shape. Its short-tail, property focused Syndicate 1200 produced the third best result among Lloyd’s syndicates in 2002 and, following last year’s capital raising, third-party Lloyd’s Names now only provide 21 percent of the total capacity.
In its 29 April statement, the company said: “Shareholders will be updated on further developments as appropriate. In the meantime, the Share Transfer Market which Credit Agricole manages will remain suspended until further notice. Shareholders are advised to take no action at present.”