Shares in Lloyd's underwriter Catlin (CGL) soared 13 per cent after management confirmed that New York-listed insurer XL Group (US:XL) was thinking of bidding for the group. XL's indicative offer comprises 410p in cash and 0.13 of its own shares, valuing the company at 699p a share.
A benign claims backdrop, following several years without big and costly catastrophes, has boosted competition in the sector - and that has helped depress premium rates, especially for catastrophe-related business lines. Against that backdrop insurance analyst Joanna Parsons of broker Westhouse Securities reckons that "M&A is the next stage of a soft market as companies capitulate/look to grow by buying income/expertise". But while Catlin has occasionally been mooted as a takeover target in recent years, bids for smaller rivals - such as Novae (NVA) or Lancashire (LRE) - were previously seen by analysts as more likely to materialise.