XL rises 4% on takeover speculation
XL Group could be a potential takeover target for Berkshire Hathaway or another stronger peer company, according to an analyst’s report released yesterday.Egan-Jones Ratings Company, which has an above 94 percent accuracy record for its reports over the past 10 years, said that there was a good chance of a takeover based on an improvement in XL’s credit position over the past four quarters, a strong cash position which was larger than its long-term debt.The insurer, which is based in Ireland and has operations in Bermuda, rose by four percent in trading yesterday to its highest level since June 2008. Overall the company is up 12.74 percent year to date compared to a 4.6 percent average increase of the Standard & Poor’s Property & Casualty Insurance Index.Earlier this week Goldman Sachs raised XL to “buy” from “neutral” at $23.35 and on March 11 Citigroup recommended to aggressively buy on weakness at $22.34.In September last year Reuters reported that XL was undervalued and a prime target for a company with $10 billion to spend and with an eye on expanding into Bermuda, according to analysts, with Canada’s Fairfax Financial and Berkshire Hathaway, led by billionaire investor Warren Buffett, or, more plausibly, large European reinsurance groups such as Munich Re, Swiss Re or Allianz, among those cited as potential bidders.As early as the end of 2008, Bloomberg was reporting that Bermuda rival Everest Re, Zurich Financial Services and Ace Ltd were eyeing up the company, while fellow insurers Axis Capital and Arch Capital were also mooted to be interested.