Would it surprise you to learn that a sizeable subsector of the London Stock Exchange is close to being wiped? Amlin is the latest of its members to succumb to the lure of foreign capital. The insurer, operating at Lloyd’s of London (and in Bermuda), has just fallen to a £3.5bn bid from Japan’s Mitsui Sumitomo Insurance (MSI).
The insurer has been in the sights of predators for a while now. The clue to the game being up came a month ago when its chief executive, Charles Philipps, said “we are not for sale”. When a chief executive says that it’s rather like a football chairman insisting his manager has his full backing after a run of 12 consecutive defeats.
Naturally, Mr Philipps sang a different tune upon the deal’s announcement, twittering about the “compelling” combination between the two companies and the “high regard” he and his pals have always had for MSI. He’s clearly happy about the chunky buyout premium he’s achieved, and the City loves the fees, but should we feel the same way?
Only four broadly similar companies remain on the LSE when there used to be twice as many. Barring an earthquake (and that’s not a metaphor because an earthquake is the sort of thing that calls a halt to deal making among insurers) there will be fewer still in a year’s time.
Formerly known as “integrated Lloyd’s vehicles” they emerged from the reforms that allowed corporations to be admitted to the insurance market as members; they then set about listing their shares and diversifying their businesses. The latter process resulted in them moving their incorporations en masse to Bermuda to take advantage of the island’s tax breaks.
More of them could, and perhaps should, have got together in the meantime; but deals proved hard to do because self-interested executives and their boardroom colleagues were none too keen on consolidating their own jobs. So they stood pat until overseas buyers arrived with pots of gold that were too big to resist.
We’re in the endgame now, and to be honest, few will mourn their demise. Lloyd’s is awash with capital, and the insurance sector is thriving. The big players have been foreign-owned for a long time and it doesn’t seem to have mattered much.
As we say sayonara, it’s pushing it a bit even to describe the few remaining ILVs as UK businesses anyway. They are, to all intents and purposes, Bermudan operations, so parting shouldn’t generate much sorrow, sweet or otherwise.
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