Merger fever reached new heights in the Lloyd's insurance market after Tokyo-based Mitsui Sumitomo Insurance (MS&AD) announced an agreed bid for Lloyd's of London insurer Amlin (AML) for an eye-watering £3.47bn in cash. The deal is worth 670p a share and represents a 36 per cent premium to the closing share price the day before. News of the bid sent Amlin's shares up by a third to 657p. The offer is equivalent to 2.4 times Amlin's net tangible book value, and on this measure is the highest multiple paid for any Lloyd's insurer.
A glut of funds in Japan and meagre investment returns have prompted outward investment by Japanese companies, and the specialist insurance market has already seen the likes of Catlin and Brit succumbing to bids by overseas companies. Even before the Amlin deal, global insurance deals so far this year have totalled around £50bn.
MS&AD already has a Lloyd's operation, which will merge into Amlin, and provide an avenue to expand its business into Europe and North America. Amlin's veteran chief executive Charles Phillips is expected to keep his job, but only two weeks ago, after reporting a drop in first-half profits and further pressure on reinsurance premiums, he stressed that the insurer was not up for sale.
