Last Thursday’s announcement that Michael Bright, the founder and CEO of the U.K.’s Independent Insurance Co., had resigned has ignited speculation in the City of London that the company is ripe for a takeover bid.
Bright, who founded Independent in 1986 with the purchase of Allstate’s U.K. operations, apparently had lost the confidence of key investors after the company announced poor results, and significantly strengthened its reserves in the face of criticism that they were inadequate to meet expected claims. He will continue as Deputy chairman while Garth Ramsay takes over as executive chairman.
According to a report in London’s Financial Times, Independent raised its reinsurance cover from $134 million ($192.3 million) to £254 million ($365 million) last year. It cited the increasing number of compensation claims, and the higher awards U.K. juries have been assessing in personal injury cases as the principal reasons for the increases.
Despite the fact that its reserves were significantly lower than companies like Royal & Sun and CGNU, many analysts felt that they were nonetheless adequate, as the more recently formed insurer had fewer long-tail liabilities than older companies.
Independent’s shares are currently trading at close to their net asset value, increasing speculation that it’s become a prime takeover target and won’t be “independent” much longer. The price in fact jumped after Bright’s resignation adding new fuel to the rumors. One report in the Daily Express indicated that Chubb Corp. was already building a stake.
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