An Insurance Insider report that Hiscox Ltd (LSE:HSX) has received bid approaches from Generali and Sompo should come as no surprise, analysts at Deutsche Bank suggest.
“Regardless of whether this turns out to be substantiated or not, we are not surprised by the emergence of M&A speculation within the sub-sector,” analysts at the German bank said.
Shares in Hiscox jumped 13%, or 150p, to 1267p on Monday, a four-year high, with rival Lloyds-based insurers Beazley PLC (LSE:BEZ) and Lancashire Holdings Ltd (AIM:LRE, OTC:LCSHF) also posting healthy gains.
Prior to the bid the report, the shares had been hit by estimates of the cost of Hurricane Beryl though even with yesterday's rally, Deutsche Bank said the sub-sector must look attractive to foreign buyers at present.
“Fundamentals are strong, cash is plentiful within the industry, and UK valuations are inexpensive," it said.
“We remain positive on all the UK-listed Lloyd's companies, with Beazley (Buy; 661p) remaining our preferred pick.”
Shares in Hiscox today eased 2.7% to 1,233p.