Chaucer talks continue as profit halves

FOR-SALE Lloyd’s insurer Chaucer posted a small profit yesterday and confirmed its takeover discussions were continuing.

Chaucer confirmed it was in talks with potential bidders last month, which have been named as Guy Hands’ Terra Firma private equity firm and a US trade buyer, among others. Sources told City A.M. yesterday Hands was weeks away from formalising a bid.

Chairman Martin Gilbert said talks were subject to due diligence.

“It will take time to ascertain whether an offer for the business may be forthcoming,” he said. “We continue to hold discussions with interested parties with a view to maximising value for shareholders.”

Chaucer, which covers areas such as marine, energy and aviation, saw pre-tax profit more than halve in 2010 to £34.8m from £75m in 2009. Including foreign exchange losses its pre-tax profit was £32.9m, below analysts’ £40m consensus forecast and down from £42m in 2009. It booked $85m (£52.2m) in catastrophe losses and its combined ratio widened to 99 per cent from 93 per cent in 2009. It also said it expected further losses from Australia’s January floods.

But chief executive Bob Stuchbery said the firm’s new strategy was now “driving decision-making within Chaucer” and it was targeting rate rises in its global energy and UK motor insurance businesses in 2011.

Chaucer’s shares closed down 0.85 per cent at 58.50p.