Insurance underwriter Amlin (AML) is set to become the latest to fall under the grip of the industry’s takeover frenzy as management recommend a £3.4 billion bid from Tokyo-based Mitsui Sumitomo. Shares in the Lloyd’s of London insurer have shot up 32.4% to 652.2p on the 670p a share cash offer tabled, a 36% premium to Monday’s 493.5p closing price.
The attraction to the Japanese firm would appear to be the opportunity to diversify outside of its domestic market, which continues to struggle against a shrinking population and limited growth opportunities. Amlin at a stroke would add overseas exposure to property, marine, aviation and motor insurance markets.
This latest takeover comes hot on the heels of the £5.6 billion offer made by Zurich Insurance (ZURN:VTX) for UK giant RSA (RSA) in August, which sold its Latin American business for £403 million on Tuesday, 8 September.
These have not been good times for insurers. Competition and fewer storms have eroded pricing power sending premiums lower. This means that many cannot write new business profitably and so have to return cash to shareholders or buy something.
Several other insurers are up on the news as investors look for the next potential target for a larger overseas buyer. Beazley (BEZ) trades 5% higher at 344.5p, Novae (NVA) rises 5.3% to 873.7p, while Lancashire (LRE) improves 6.8% to 697.7p.