Benfield receives £660m bid from US giant

The independent reinsurance broker Benfield Group has received an approach worth about $1bn (£660m) from Marsh & McLennan Companies (MMC) of the US, the world's largest insurance broker.

MMC, whose talks with Benfield are said to be at an advanced stage, contacted Benfield three months ago to set the ball rolling.

While the management structure of the combined organisation has already been agreed on, the pair are said to be haggling over price. Marsh & McLennan is thought to have scaled back its original offer to just shy of $1bn, after carrying out due diligence, from an opening bid of about $1.2bn.

The move comes just seven months after London-based Benfield announced plans for a $1.4bn flotation on the New York Stock Exchange.

While Benfield would prefer to forge ahead with a trade sale, it has not ruled out a stock market listing should the planned deal with MMC fall through. The group's chairman, John Coldman, and its chief executive, Grahame Chilton, flew to New York a week ago to try and thrash out deal with MMC.

Benfield, which merged with Greig Fester in 1997 to become Benfield Greig, is currently the third biggest broker of reinsurance in the world with some 1,700 staff worldwide. Over the past three years, it has beefed up its operations in the US by buying Bates Turner from GE Capital in 1999 and EW Blanch in May 2001 for $179m.

Should Marsh & McLennan, currently valued at around $25bn, succeed in buying Benfield, it would leapfrog Aon to become the biggest reinsurance broker in the world.

Benfield is perhaps best known for its ties with the sporting world. Its former head was Matthew Harding, the vice-chairman of Chelsea Football Club, who died in a helicopter crash in 1996. Its current board includes Keith Harris, who recently resigned as chairman of the Football League.

Neither side was available for comment yesterday.