London, June 27: CGU is considering a 10 billion pound ($15.9 billion) offer for Royal & Sun Alliance to create Britain's largest insurance group, the Sunday Telegraph said. "Senior City advisers believe an all-share offer could come within weeks,'' the newspaper said, without giving other sources.The new group would be worth upwards of 22 billion pounds, overtaking even the Prudential Corp Plc, and be run by CGU Chief Executive Bob Scott. Neither company could be contacted immediately to confirm the report, which comes hot on the heels of a major link-up that will create a new giant rival to the Prudential.On Wednesday, Lloyds TSB Group Plc, Britain's biggest retail bank, said it was buying mutually owned life insurance and pensions group Scottish Widows for around seven billion pounds.
The deal, expected to be completed early next year, will create Britain's biggest bancassurance group and the second largest provider in the life, pensions and unit trust (mutual fund) market behind the `Pru.' Royal &Sun has suffered a string of poor results recently which the newspaper said would make a deal welcome in the City. Its shares closed on Friday at 540-1/2 pence.
The Sunday Telegraph said the CGU's Scott was thought to be keen on a deal because he feared his business could be vulnerable to a bid from a big foreign group such as Germany's Allianz.
It named Allianz, which is keen to expand in to Britain, as one potential parties which might come up with a counter-offer for Royal & Sun if CGU makes a move.
Royal & Sun is one of few large insurance groups trading at a discount to estimated assets.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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