Amlin looks to the US for non-catastrophe business

Lloyd’s insurer Amlin has confirmed it is looking for acquisitions in the US – and that it will probably diversify by buying a non-catastrophe business.

Growth in the insurer has been primarily achieved organically but this year it bought two UK commercial brokers and AFU, a French underwriting agency.

An Amlin spokesman said: “We continue to consider acquisitions that might help strategically to build the diversity of our business in the long term.

“With our catastrophe book having grown following the successful start-up and growth of Amlin Bermuda, we are looking for opportunities to balance this growth with additional non-catastrophe exposed business. As the major global property and casualty market, the US is an obvious market to consider, although we are in no particular hurry to make an acquisition.”

Merrill Lynch said the AFU purchase built on the group’s non-catastrophe business. “We expect any future acquisitions to follow this direction.”

Meanwhile, Amlin has denied reports that it is in discussions with fellow Lloyd’s insurer Chaucer (see Stockwatch, below). Chaucer’s share price climbed 5% to 57p last Thursday after rumours that it was being targeted by Amlin. Last Friday Amlin’s share price was flat but Chaucer’s shares jumped another 5.04% following the speculation. An Amlin spokesman refused to comment.

In a report issued to investors, Merrill Lynch said: “Although the potential market turnaround in the US takes away some of the pressure for a US acquisition, we believe it likely that Amlin will acquire over the next three years.”

Analysts and investors are divided on Chaucer as a target, but agree that it was an attractive proposition.

“Chaucer is a good catch. It won’t necessarily be Amlin who will buy it, but if you look at Chaucer it’s under half the rating of Amlin so it would be a good way of increasing their book. Amlin would be a good name to have a crack at it. It wouldn’t surprise me,” said an investor who refused to be named.

But analyst Rakshit Ranjan said Lloyd’s insurers were more in danger of being taken over by rivals outside the UK.

“We don’t see M&A intra Lloyds happening because of clashes with businesses and management teams. Lloyd’s insurers could be targets within the coming months outside of Lloyd’s because there is a need to diversify for the Bermudans and European insurers.

“Lloyd’s is the best place for diversification because capital and the regulatory requirements are more efficient than anywhere else.”