Financial News - Investors push for small firm mergers.

(From Post Magazine)

Byline: Ralph Savage.

The performance of the UK's smaller stock-market-listed insurers received praise from industry analysts this week, after it produced an average return of 13.5% to shareholders.

Both Joanna Parsons at ABN Amro and the insurance team at investment bank Numis have given glowing reports to the sector, highlighting strong earnings in a softening market and investment returns turning positive.

However, Ms Parsons pointed out that the numerous failed mergers - particularly those in Lloyd's - could reflect badly on the market, which has produced comparatively slow growth. "It is clear that investors are keen to see consolidation in this sector and will encourage deals, especially among the smaller insurers where the underwriting may be good, but where the businesses are deemed too small and illiquid for long-term share price performance.

"Just being a good underwriting operation is probably not enough for the small businesses ...