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Cathedral is latest Lloyd's acquisition


LONDON—The proposed acquisition of Lloyd's of London insurer Cathedral Capital P.L.C. is the latest in a string of mergers and acquisitions announced this month in the 300-year-old insurance market.

Cathedral's independent directors have recommended that shareholders in the company accept the 140 pence per share offer from Disciple Holdco Ltd., a newly incorporated company funded by the Alchemy Investment Plan. The offer values Cathedral at £113 million ($215 million).

Shareholders representing 71% of Cathedral Capital shares have already accepted the Alchemy offer, according to a statement released by Cathedral.

Cathedral was launched in 1997 as an investment vehicle for Lloyd's Names—private investors at Lloyd's. However, in 2000 the company underwent a major transformation under the leadership of Elvin Patrick, a former deputy chairman of Lloyd's. The company now owns a Lloyd's managing agent and underwrites in the Lloyd's market through syndicate 2010.

In a statement, Cathedral said that, once the offer becomes unconditional, the company's management and employees of Cathedral Capital intend to "continue building a strong independent franchise in the London market." Mr. Patrick, currently chairman of Cathedral, and Peter Scales, currently chief executive officer of Cathedral, will join the board of Disciple.

Peter Scales, chief executive of Cathedral Capital, said: "It is very much business as usual for the team. We believe that this transaction will have a positive impact on our business, clients and employees."

On October 30, Hamilton, Bermuda-based insurer Catlin Group Ltd. made a £591 million offer for rival Wellington Underwriting P.L.C. The deal—should it complete as expected by the end of this year—could create the single largest player in the London-based insurance market.

And earlier this month, Lloyd's insurer Canopius Group Ltd. announced that it has reached an agreement to acquire the entire operations of fellow Lloyd's business Creechurch Underwriting Ltd. Creechurch manages Lloyd's syndicates 1607 and 3786 for the 2006 year at Lloyd's, with combined premium capacity of £90 million ($135 million).

Last year, Lloyd's insurer Amlin decided not to make an offer for another Lloyd's insurer, Chaucer Holdings P.L.C., having previously announced that the two companies were in talks over a possible merger. Also last year, Lloyd's-based Hardy Underwriting Group P.L.C. rejected a takeover bid from Omega Underwriting Holdings P.L.C.