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Lloyd's insurer confirms offer talks with rival

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LONDON—Lloyd's of London insurer Wellington Underwriting P.L.C. said last week that it is in discussions with rival Catlin Group Ltd. over a possible takeover bid by Catlin.

A combination of the two companies would create one of the largest managing agencies at Lloyd's, based on 2006 capacity. Wellington provides some £532 million ($914.4 million) of capital for 2006, while Catlin provides £450 million ($773.5 million), according to a Lloyd's spokesperson.

Lloyd's total capacity in 2006 is £14.80 billion ($25.44 billion), with Amlin P.L.C. topping the ranking of largest insurers in the market with £1.00 billion ($1.72 billion) in capacity.

In a statement, Wellington said that it is in discussions with Catlin that "may or may not" lead to a cash and shares offer being made for Wellington.

A spokesman for Catlin confirmed that discussions were taking place but declined to comment further, saying that the Hamilton, Bermuda-based company will make an announcement when appropriate. Wellington said that its board will need to be satisfied that the business plan for the enlarged group is likely to deliver greater value to Wellington shareholders than Wellington's standalone strategic plans.

"In the absence of an offer which satisfies this requirement, Wellington will continue to work towards the delivery of its stated strategic objectives as set out in its interim results for the six months ended June 30, 2006," the company said in its statement. In June, Wellington said that its priorities include growing its U.S. business and the development of new trading platforms to complement existing Lloyd's and U.S. operations.

Catlin has already developed new trading platforms outside the Lloyd's market, where it began in 1984 as Catlin Underwriting Agencies Ltd. In August 2002, the company opened Catlin Insurance Co. Ltd. in Bermuda. It also operates Catlin UK, a London market insurance company, U.S. unit Catlin U.S. and offices in various other countries.