UPDATE 3-Insurer Hardy rebuffs bid approach by Beazley

* Insurer Beazley makes 300 p/share approach for Hardy

* Hardy rejects 155 mln stg cash approach

* Beazley says committed to constructive dialogue
* Beazley shares up 4.7 pct, Hardy up 16.8 pct

(Adds fresh analyst comment, updates shares)

By Lorraine Turner

LONDON, Oct 18 (BestGrowthStock) – Lloyd’s of London [LOL.UL]
insurer Beazley (BEZG.L: ) said it still hoped to clinch a
takeover of Hardy Underwriting (HDU.L: ) after its smaller peer
rejected an initial 300 pence per share approach this month.

Dublin-based Beazley said its proposed cash offer on Oct. 6
valued Hardy at about 155 million pounds ($247.9 million).

The approach, which represented a 36 percent premium to
Hardy’s closing share price on Oct. 5, was rejected by the
Bermuda-based insurer in a letter dated Oct. 8.

Hardy said the offer substantially undervalued the company
and its board had rejected it unanimously as an opportunistic
attempt to buy the group. [ID:nWLA5636]

Hardy’s thinly traded shares were up 16.8 percent at 285
pence by 1047 GMT, trading around levels last seen in mid-March.

Shares in Beazley rose 4.7 percent to 119.9 pence, making
the company the second-biggest riser in the FTSE 250 share
index.

Analysts said the rise reflected prospects that Beazley
would earn a positive return on its cash reserves — generating
almost no returns now because of low interest rates — if the
deal goes ahead.

CATASTROPHE BLIP

Consolidation among Lloyd’s insurers, which offer cover
against large-scale risks such as natural disasters, has long
been mooted as cyclically low insurance prices weigh on their
shares, although deals can be difficult to secure.
[ID:nLDE65A0K3]

Brit Insurance (BRE.L: ) agreed to a 850 million pound offer
from buyout firm Cinven Capital Partners and Apollo Management
last month. [ID:nLDE68G1UV]

Beazley, which in July said its first-half profit nearly
quadrupled, said on Monday it would continue talks with Hardy’s
board and shareholders with the aim of agreeing a recommended
deal. [ID:nLDE66L1TN]

“Beazley believes that the two groups are highly compatible.
Both have well-regarded underwriting teams, renowned track
records of profitability and a shared objective to develop a
diverse speciality insurance franchise,” the insurer said in a
statement.

But some analysts questioned the rationale behind the bid.

“Beazley has made a cheeky approach to acquire Hardy …
that contains little detail on why the acquisition would make
sense and what it would add to shareholders,” said Mark
Williamson at KBC Peel Hunt.

“I don’t believe that this is a situation of two plus two
makes five; I think it may well be three. The implication has to
be that the only logic is that it sees the opportunity to pick a
quality asset up on the cheap and on this basis it makes no
sense for shareholders to accept such an offer,” he added.

Hardy suffered more heavily than its peers this year from a
string of catastrophes such as the Chilean earthquake and
Australian hail storms, which cut heavily into its first-half
profit. [ID:nWLA0209]

Williamson said Hardy’s underwriting performance record is
strong and the insurer is likely to regain its premium rating
after the blip this year.
(Additional reporting by Myles Neligan; Editing by Michael
Shields)
($1=.6252 Pound)

UPDATE 3-Insurer Hardy rebuffs bid approach by Beazley