Chaucer up on bid talks

SHARES in insurance group Chaucer Holdings jumped 10% in morning trading today after the company said it was the target of a takeover approach.

Chaucer, which operates in the Lloyd's of London insurance market, did not name its suitor. Speculators say it could be another insurer or an overseas rival looking to establish a presence in London.

Shares jumped by 7.25p when the market opened to 67½p, before settling back to 66¼p, giving it a market value of £193.5m. Brokers say recent trading has been strong and that may enable the shares to command the current premium.

The company operates in Britain's highly competitive motor insurance market. It pulled out of its own planned acquisition for competitor Highway Insurance in April after Highway shareholders rejected the offer.

The company reported a pre-tax profit of £38.3m in the last financial year, an increase of 6.7%, despite having to contend with the fall-out from hurricane losses. In addition to Hurricanes Charley, Frances, Ivan and Jeanne, at the end of 2004 there was the Asian earthquake and tsunami, which produced further destruction.

It was formed in 1998 when Hayward, Brick Stuchbery Holdings Limited was merged with Aberdeen Lloyd's Insurance Trust PLC, and the resultant group was renamed Chaucer Holdings PLC.

In a statement the company said: 'The Board of Chaucer Holdings PLC notes the recent rise in Chaucer's share price and can confirm that it has received an indicative approach which may or may not lead to an offer being made.'

Shares have risen steadily since the middle of April when they were at 53p compared to yesterday's close price of 61½p.