Highway PLC Acquisition Unlikely to Affect Chaucer Ratings Says S&P

Standard & Poor’s Ratings Services indicated that its “3” Lloyd’s Syndicate Assessment (LSA) on Chaucer – Syndicate 1084 (Chaucer or the syndicate) is “unlikely to be affected by the March 18 announcement that Chaucer Holdings PLC (Chaucer Holdings; not rated), the dominant provider of capacity to the syndicate, is in talks to acquire Highway Insurance Holdings PLC (Highway; not rated).”

S&P noted: “The fact that the proposed consideration will be in the form of Chaucer Holdings shares limits the capital strain that might otherwise be felt by Chaucer Holdings (and, by implication, the syndicate) as a result of the completion of this transaction.

“Furthermore, Standard & Poor’s expects that a significant portion of the enlarged group’s motor business would continue to be written within Lloyd’s (A/Stable), thereby protecting the diversification benefits that the motor segment brings to Chaucer’s overall business mix. Over the medium term, the syndicate’s motor franchise could benefit from the emergence of cost-based synergies and Chaucer Holdings’ ability to gain leverage from Highway’s established brand. Standard & Poor’s will review the position again as and when the details of the offer are finalized.”