LONDON (Bloomberg) ? Shares of Chaucer Holdings Plc, a Lloyd?s of London insurer, jumped to their highest in seven years on speculation the company may become a takeover target after it boosted its dividend outlook.

The stock rose as much as 7.25 pence, or 8.3 percent, to 95 pence, it highest since September 1999, and was at 93 pence on Friday. The shares have gained 56 percent this year. Chaucer said on Friday it will raise its full-year dividend by 31 percent to 4 pence and pay a 2007 dividend of 4.5 pence. The insurer will also increase the payment by at least ten percent per year for 2008 and 2009. ?Chaucer is a good business,? said Nick Johnson, a London-based analyst at Numis Securities Ltd. ?Management is very confident on the earnings outlook. It is an obvious candidate in the sector as a target if there is more consolidation.? Johnson, who has an ?add? rating on the stock, raised his target price to 100 pence from 85 pence after the company?s announcement on Friday. Amlin Plc ended talks to buy Chaucer in July last year in a deal that would have created the market?s biggest independent insurer at the time.