Chaucer is finally picked up by Hanover, so what will that mean for the management team, asks Saxon East
After a long struggle, Chaucer looks like it’s finally being bought. American insurance firm Hanovers offer of 313m looks like a formality that will be accepted by reaming shareholders.
Hanover seemed to have come out of the blue. There was a long list of potential bidders including private equity tycoon Guy Hands, investors TPG and Goldman Sachs, and before that, Brit.
The interesting point will be if Russian private equity firm Pamplona, which holds a 10% stake in the Lloyd’s insurer, will accept the offer, or if will remain a minority shareholder.
My guess is that logic will prevail and the Russian firm, which has the backing of Putin to expand overseas without obstruction, will sell up. It looks likely that Chaucer’s management team will remain, and that Hanover will not make too many changes in the short term.
That’s good news for chief executive Bob Stuchbery, who has always yearned to be in charge of the business. His strategy of pushing forward with nuclear energy and private motor will be seen through. He’s confident, so it will be interesting to see if the strategy boosts Chaucer’s growth.
If it doesn’t, he might just get a call from his new-found American friends. Game on.
Where do we go if the USA isn’t safe?
Aviva took some pain this week after 8% was wiped off its share price, primarily because of sovereign debt fears. The sell-off, which to be fair hit the equities across the world, happened after rating agency Standard & Poor’s put America’s on negative watch over its cherished triple AAA credit rating.
There’s a 30% chance that there could be a downgrade.
A downgrade would severely erode the value of insurance companies investment portfolios, which could lead to unrealised losses on their assets and feed through to the profit and loss account.
A downgrade of the USA would be catastrophic for financial markets across the world, so it’s a case of the whole house burning down.
At the end of the day, there’s little insurance companies can do to mitigate these macro-economic threats. Buying US bonds is the equivalent of shoving money under the mattress and if that’s not safe, what is?
No comments yet