Outlook: Insurance

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WHO SAID insurance was a dreary old business? Guardian Royal Exchange is doing its best to make a drama out of a crisis, as they say in the trade. Today we await the denouement in that mystery play known as Who'll buy the GRE?

The story so far. GRE, a perennial bid target if ever there was one, is put firmly into play in November when the French insurer, Axa, lets it be known that it is contemplating a bid. An approach at 350p a share gets a polite but firm Non.

The non-execs nevertheless decide it would be a good idea to test the market and, urged on by Sir Anthony Tennant, ask Morgan Stanley to conduct an auction. Sir Anthony happens to be a senior adviser to said American investment bank.

As auctions go, it is not exactly a rowdy affair. Royal Sun Alliance raises its hand with a bid worth 380p to 390p a share when up pops Eureko, a motley bunch of European financial institutions with a rival offer.

But wait, who's this entering stage left? It is John Robins, the GRE's chief executive, clutching an HSBC Securities brokers report saying the business is worth 473p. In his other hand is a plan which says let's keep the GRE independent.

One of the bidders understandably grumbles that perhaps the GRE board is not, shall we say, entirely united. The Takeover Panel is called in to find out whether GRE has been wasting everyone's time. HSBC solemnly swears that it has not been acting in an advisory capacity to Mr Robins, no siree. Anybody who thinks Morgan Stanley has been conducting an auction with one hand tied behind its back is barking up the wrong tree.

Throughout this long charade there have been just two brief Stock Exchange statements. One from the GRE to confirm it was considering a range of options which may lead to an offer. Another from Royal Sun Alliance, confirming it was considering an offer.

In keeping with its Trappist stance, GRE will not say whether today's board meeting to decide the future of the business will be followed by a statement which enlightens the rest of us as to its intentions.

That would be par for the course. But the bidders have the right to know whether to pack their bags or get hostile and shareholders have a right to know whether the board is united and, if so, in whose interests exactly.

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