Stockwatch

Takeover speculation continued to be a major theme for insurance stocks with dealers reckoning that AXA is considering a bid for Winterthur, Credit Suisse's insurance subsidiary.

For months, the French insurer has been rumoured to be on the acquisition trail, and was thought to be running its slide rule over life assurer Prudential. However, traders now reckon it is considering paying $8.1bn-$9.7bn for Winterthur.

Credit Suisse has said Winterthur is being prepared for a "capital market operation" - which dealers have largely interpreted as a stock market flotation.

However, a trade sale would let the investment bank dispose of the business in one go, at a time when markets around the world are crashing on inflation and interest rate worries.

Stockbroker Fox-Pitt, Kelton said although AXA shares are not expensive at €25.40, it would "expect the shares to come under some pressure" on the back of speculation it will do a deal.

"It is not obviously compelling in strategic terms and not within AXA's stated priority area for acquisitions."

Lloyd's insurers also came under pressure, reflecting turbulent stock markets and also the start of the hurricane season.

As Alberto this week became the first named cyclone of the season, Amlin was trading at 220p - its lowest level this year.

Numis advised investors to favour insurers with diverse underwriting portfolios. It singled out Brit Insurance, Catlin and Hiscox, giving all three 'buy' ratings.

' Yvette Essen is stock market reporter for the Daily Telegraph