The prospect of potential takeover of Hiscox prompted an investor rush for the specialist insurer and a jump in its stock market value of more than £500 million.
Shares in the FTSE 250 company rose by more than 13 per cent, valuing it at £4.4 billion, after Insurance Insider said that Sompo, of Japan, and Generali, of Italy, were interested, citing unnamed sources. The report said that the putative bidders were seeking to expand internationally and that “other large insurance groups could enter the fray”.
Hiscox greeted the story with complete silence, strongly suggesting it is not in takeover talks as normal rules would require it to issue a statement in those circumstances. However, analysts said that an offer would be no great surprise, given the relatively low valuations for London’s listed specialist insurers, which have never recovered to pre-pandemic levels. In March Ageas, the Belgian insurer, walked away from Direct Line after it had two bids, pitched at £3.1 billion and then £3.2 billion, rejected.
Nevertheless, analysts expressed scepticism about Generali buying in Britain. It has said previously that it was sticking to its existing markets only, which do not include the UK.
The Bermuda-based Hiscox employs 3,000 people in 14 countries. As well as its retail division, focused on well-off families and small companies, it insures bigger-ticket risks through Lloyd’s of London.
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It has slowly recovered from a blow during the pandemic, when it was accused of avoiding paying out on business interruption claims. The dispute between policyholders and Hiscox and other insurers went all the way to the Supreme Court, which found largely in favour of the policyholders and cost the company almost $500 million. Hiscox acknowledged that the episode had damaged its reputation for not quibbling over claims. It also led to the resignation of Bronek Masojada, 62, its long-time chief executive.
In May Aki Hussain, 51, the insurer’s boss, reported “a good start to 2024”, with the value of gross premiums up by 8.3 per cent to $1.54 billion in the three months to March. The company is still betting on a pick-up in demand for cyberattack insurance and has been harnessing artificial intelligence in its processes, cutting the time to produce quotations from three days to three minutes in some cases.
Sompo is the second largest property insurer in Japan and is listed in Tokyo. In 2014 it bought Canopius, the Lloyd’s of London insurer, for £594 million. It declined to comment. Generali is one of the biggest property and life insurers in Italy, writing gross premiums last year of €82.5 billion. It said it did not comment on rumours or speculation. Hiscox is being advised by Citigroup and Peel Hunt.
Shares in Hiscox closed up 150p, or 13.4 per cent, at £12.67.
