Insurer Zurich said it is determined not to overpay for RSA Insurance amid speculation it is working on a lower-than-expected offer for the More Than owner.
RSA saw shares come under pressure as figures revealing an 84 per cent surge in half-year earnings were overshadowed by a report suggesting Zurich is considering an offer worth £5.4bbn, against hopes for at least £5.6bn.
Zurich, which also posted its half-year results, said it saw “significant benefits” from a takeover of RSA, but added that “any capital deployment would need to meet the same hurdles that we apply to any other investment”.
The European insurance giant said last week it was considering an offer for RSA, with reports suggesting a bid might be worth £5.6bn, or 550p a share.
But it is thought Zurich is putting together a bid of around 527p.
RSA shares fell two per cent at one stage, in spite of interim results showing group operating profits rose 84 per cent to a better-than-expected £259m compared with last year, driven by higher underwriting profits, fewer weather-related claims and stable investment income.
RSA has advised its shareholders to take no action as regards a potential bid from Zurich.
Shore Capital analyst Eamonn Flanagan said the release of RSA’s robust half-year results meant the “gloves have come off and the bidding process can start in earnest”.
He said RSA had “a suberb number of assets around the globe”, adding it may also be attractive to rivals such as Allianz and Generali.
RSA is run by chief executive Stephen Hester, the former boss at Royal Bank of Scotland, who was hired to revive the insurer’s fortunes after it was hit by a series of profit warnings more than 18 months ago.