Amlin unveiled as Chaucer suitor

SHARES in insurance takeover target Chaucer Holdings continued their upwards surge today after Amlin unveiled itself as the mystery suitor.

Shares were up 2½p to 70p in morning trading, a 13p premium on Monday's opening price of 57p after the UK general insurer said it was considering an offer for the company.

Amlin said in a statement on Thursday that there was a very strong rationale for combining the two businesses. A deal would create the leading player in the Lloyd's of London insurance market.

It said that a combination of the two groups would offer substantial synergies through economies of scale, and a programme of mutual due diligence was underway.

Analysts have said that if the deal went ahead it could kickstart consolidation in the Lloyd's market, which has been long overdue because there are too many small listed companies in that market.

In a statement Amlin said: 'There is a strong business fit between the two groups. Chaucer would add strength and depth to a number of classes of business in which Amlin is already a leader and would also bring into the Amlin group a number of complementary business lines in areas such as aviation, energy, specialist motor and property.'

Chaucer has a market capitalisation of about £170m. The group reported a 6.7% rise in pre-tax profits to £38.2m for the year to 31 Dec 2004, while return on equity climbed to 27% from 26.5%.

Shares in Amlin dropped slightly by ¾ to 181¼p on the back of the announcement.