City regulator turns eye on Regan's new interest in RSA

City regulators are to seek urgent clarification today from Andrew Regan, the controversial financier who led a failed bid to buy the Co-op, of his intentions towards the blue chip insurer, Royal & Sun Alliance.

City regulators are to seek urgent clarification today from Andrew Regan, the controversial financier who led a failed bid to buy the Co-op, of his intentions towards the blue chip insurer, Royal & Sun Alliance.

It is understood that Mr Regan has begun casting an eye over RSA with a view to a possible takeover of the £2.4bn company. He has identified the company as prime acquisition target, believing its shares are undervalued by the stock market, and has already made steps to seek funding for a possible acquisition.

But reports of his interest towards RSA will spark the attention of the Takeover Panel. Shares in RSA closed up nearly 5 per cent last week after reports that a UK entrepreneur was working on a bid.

Shares in Corvus Capital, Mr Regan's AIM-listed investment vehicle, rose 30 per cent last week. It is understood neither he nor Corvus own shares in RSA.

The Financial Services Authority is also likely to take a close interest should Mr Regan go ahead with a takeover approach. The FSA would have to approve the bid, assessing whether Mr Regan and his team have the financial security to provide guarantees to policyholders. Buyers have to prove they have adequate capital and integrity to ensure policyholder expectations are met.

A takeover of RSA would propel Mr Regan back into the heart of the City's establishment after years of fighting fraud allegations. In August 2003 he was finally acquitted of bribery and theft charges in connection with his attempted takeover of the Co-op in 1997. He was cleared after three trials - the first produced a hung jury and the second trial collapsed amid fears someone was attempting to bribe the jury.

Mr Regan made his return to the stock market last year when he took control of the AIM-listed Corvus, which has already been in trouble with the London Stock Exchange for breaking the investment mandate set out its listing prospectus.

RSA is believed to be one of a number of targets Mr Regan is considering. The insurer has spent the past two years trying to turn around its performance following record losses. Spiralling asbestosis claims have forced the group to radically hike its reserves and carry out a rescue rights issue. It said last month profits for the first quarter had nearly doubled.