GRE statement due as possible bidders line up

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The Independent Online
GUARDIAN Royal Exchange (GRE) is to issue a statement to the London Stock Exchange today following its decision to put itself up for sale, with the likeliest buyer being AXA/UAP of France.

GRE's announcement is likely to be no more than a holding statement. However, a host of possible bidders emerged over the weekend following the revelation by The Independent last week that AXA, the world's largest insurer, is considering making a bid for Guardian through its UK unit, Sun Life & Provincial Holdings.

GRE has appointed Morgan Stanley Dean Witter, the US investment bank, to handle the deal. Officially GRE maintained last night that it had "made no response to any of the press reports".

While AXA remains in the lead, other contenders such as AGF, also from France, Allianz of Germany and Norwich Union of the UK have also entered the frame, according to analysts.

Institutional shareholders have put pressure on GRE to find a solution to disappointing results and worsening conditions in world financial markets. Any sale would value GRE at around pounds 3bn.

John Robins, GRE's chief executive, has already made big strides in restructuring the business, by expanding in the US and injecting the UK life businesses into PPP. The UK general insurance business remains to be dealt with, however, and Mr Robins has been forced to reconsider GRE's independence.

GRE's shares closed on Friday at 308p, up 3p on the day. Analysts reckon GRE will ask any buyer for at least 350p a share. The shares reached a record high of 477p in February, before general insurance stocks plunged due to high weather-related claims and an excess of capital in the insurance market.

GRE said last week it was finding market conditions difficult because of "pressure on overall margins,'' and its motor insurance business was having a particularly difficult period.

The company also said last week it would combine its life insurance and long-term insurance businesses in an effort to increase sales of both.

Major UK general insurershave all been hit by severe weather conditions.