Zurich rumored bid for Royal & SunAlliance

The British-listed stock price of Royal & SunAlliance has skyrocketed on rumors of a planned multi-billion dollar bid for the company by Zurich Financial Services. No comment has been made by either the Zurich or Royal & SunAlliance global head-offices. On the local front, Lyn Whitham, vice president of communications at Zurich Canada, says she cannot comment on the speculation. Whitham’s counterpart at Royal & SunAlliance, Anne Cochrane, says she knows no more than what has appeared in the media. A source within Royal & SunAlliance’s Canadian operation, however, confirms a local staff view that an international deal is indeed in the pipeline.

Market speculation of a Zurich buyout of RSA began just before Christmas of last year, with latest details reported by the Daily Telegraph of London suggesting a takeover price of 7 billion pounds sterling. The market talk sent the Royal & SunAlliance’s share price soaring to 460 pence from a low of last year of 350 pence. The British newspaper reports that Zurich has retained investment bankers Morgan Stanley to structure the deal, which is apparently still in its infancy stage. Zurich also recently employed a former key individual responsible for the Royal & SunAlliance merger in 1995. The Daily Telegraph also claims that Royal & SunAlliance have retained investment bankers Goldman Sachs to prepare a defense against the rumored bid.

Royal & SunAlliance has been the center of takeover rumors since its share price plummeted last year, putting its market capitalization value at around 5 billion pounds. The company apparently turned down a merger proposal by CGU last year. London analysts believe an offer from Zurich at around 550 pence will be welcomed by Royal & SunAlliance shareholders.

Should the deal occur, the combined Zurich and Royal & SunAlliance property and casualty operations will be one of the largest worldwide. On the Canadian front, Zurich/RSA will be a strong contender for one ranking in premiums, and it would be among the top ten insurers in the U.S. market, an Insurance Information Institute (III) spokesperson comments.