Aviva’s shares rallied yesterday as the City was abuzz with talk that Zurich Financial Services was preparing a £17.2bn offer.
The UK’s largest general insurer’s share price closed 16.9p higher at 419.95p as rumours spread that Zurich was preparing a £6-a-share offer. Investors are attracted to Aviva’s 6% yield.
On the general insurance side, investors believe Zurich is a good fit with Aviva as it would marry the Swiss-based insurer’s corporate strength in the UK with Aviva’s strong SME footprint to create a powerful and diversified business.
Zurich’s is aiming to grow its UK personal lines book after cutting back last year, and a consolidation with Aviva would create a personal lines giant of equal strength to Royal Bank of Scotland Insurance, which despite recent problems is still the biggest player in the UK.
The prospect of a Zurich and Aviva consolidation is speculative, but the takeover talk shows the City expects some kind of consolidation in the UK general insurance/life sector which is one of the most mature markets in the world.
