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Benfield moves to kill takeover rumours

Katherine Griffiths
Wednesday 14 August 2002 00:00 BST
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Benfield, the world's largest private reinsurance broker, yesterday issued a rare public statement denying it is in takeover talks with its larger rival Marsh & McLennan.

The company it was not in talks "at the current time" in a bid to quash expectations of an announcement of a deal with US-based Marsh after the rumour gained ground in financial circles this week.

Benfield's statement added: "No third party has undertaken due diligence on the company in relation of a possible offer."

The rumour was sparked after Grahame Chilton, chief executive of Benfield, was seen boarding an aircraft for the United States 10 days ago.

The future of Benfield has been the subject of intense speculation for months. The group is believed to be looking at the possibility of an IPO, which has prompted several interested parties to approach it over a possible deal. Marsh is widely thought to have been one of them, but the discussions have not reached a formal stage. Still, analysts believe Benfield would be a good match for Marsh, which was rumoured in weekend press reports to have offered $1bn (£704m) for Benfield.

Marsh is the largest insurance broker in the world and wants its reinsurance subsidiary, Guy Carpenter, to hold the same position. It would do this if it took over Benfield, creating a considerable distance between itself and Aon, the current number two.

But reinsurance brokers believe the culture of Marsh and Benfield would not fit. "From Benfield's point of view it would have to be money – some of them would not have to work again," one senior reinsurance broker said.

Mr Chilton would be the chief beneficiary in a deal, as the largest shareholder in Benfield with a stake of around 12 per cent.

Most reinsurance brokers are benefiting at the moment from huge hikes in premiums. But apart from the largest ones, reinsurers are hampered because their capital has depreciated.

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