- Zurich offers 56% premium for Lloyd’s of London insurer Beazley
- £12.80p-a-share cash offer represents a total valuation of £7.7 billion for FTSE 100 index member
- Takeovers added some £29 billion to the total returns from UK equities in 2025, on top of capital gains, dividends and share buybacks
- Swiss swoop makes Lancashire and Hiscox look cheap
“Zurich Insurance’s £7.7 billion bid for FTSE 100 index member Beazley means 2026 is starting with a bang for the UK stock market, whose tempting valuations are proving irresistible to both trade and financial buyers,” says AJ Bell investment director Russ Mould.
“If it goes through, the Swiss swoop will further boost cash returns for holders of UK-listed shares, who enjoyed a powerful combination of capital gains, dividends and share buybacks in 2025 and a repeat performance in 2026 could yet see the FTSE 100 and other benchmarks set fresh all-time highs.
“More than 50 UK-listed firms received bids that are either now closed or still live in 2025, and the total value of the offers from trade and financial buyers, both domestic and overseas, came to more than £29 billion.
“Add that sum to £81 billion of ordinary and special dividends and £57 billion in share buybacks from the FTSE 100, plus £10 billion in dividends and £8 billion in buybacks from the rest of the market, and investors in UK shares raked in £185 billion before the capital gains offered by rising share prices and headline indices.
“That £185 billion sum compared to the FTSE All-Share’s stock market capitalisation of £2.7 billion and thus represented a 6.7% ‘cash yield’ on the index, a figure that comfortably exceeded inflation and the yields on offer from cash in the bank or the benchmark 10-year gilt, or government bond.
“Such maths helps to explain why the FTSE 100 and wider UK stock market confounded the doom-mongers in 2025.
“Granted, the past is by no means a guarantee for the future. But FTSE 100 firms have already announced buybacks with a value of more than £7 billion for 2026, with Prudential one of the earliest movers here, analysts have pencilled in a higher total dividend payment from the index’s members this year of £86 billion and the bid for Beazley means that merger and acquisition activity is off to a fast start as well.
“The one thing that the surge in takeover activity in the UK missed in 2025 was a successful bid for a FTSE 100 member. Only Anglo American was the subject of a firm approach, and BHP’s efforts here came to nought. But the Rio Tinto-Glencore talks and now Zurich’s move on Beazley could really stir animal spirits, especially if investors choose to redeploy the cash received in the event of a successful approach back into UK stocks.
Source: Company accounts, Marketscreener, analysts' consensus forecasts
“This raises the other immediate issue related to Zurich’s bid for Beazley, namely the valuation implications for Lancashire and Hiscox, both of whom also manage Lloyd’s of London syndicates. Their business mixes may be different, in terms of the risk they take on and how they manage them, but Hiscox was rumoured to be the subject of takeover interest from both Japan’s Sompo and Italy’s Generali back in 2024.
Source: Company accounts, Marketscreener, analysts' consensus forecasts. *Beazley based on Zurich bid price. **Historic book value and prospective earnings and dividend forecasts based on £/$ cross-rate of $1.3414. ***Lancashire dividend forecasts assume payment of special dividend
“Hiscox maintained a dignified silence back then and nothing came of the chatter, but its share price has jumped on news of Zurich’s move on a sector peer. Lancashire’s shares are up strongly, too, and it is easy to see why when the price offered by Zurich for Beazley implies a valuation for its target that makes both Hiscox and Lancashire look cheap by comparison, using the metric of price to net asset, or book, value as a metric.
“Neither Hiscox nor Lancashire have a dominant shareholder and the free float in the stock is very high in both cases, so there is little obstacle to any in this respect, should someone decide to take a look.”
