Esure rallies on stake sale speculation

Insurer Esure rallied on Monday following a report that its founder, Sir Peter Wood, was looking to sell his stake in the company.

According to the Sunday Times, Wood has held "informal discussions with potential buyers" about his 31% stake, which could trigger a bid for the whole group.

Shore Capital said the idea that Peter Woods might be considering an exit was not surprising. The brokerage said the forthcoming reversal of the Ogden discount rate moves is likely to lead to a rate war, as previously impacted companies seek to regain the market share they lost these past six months to the likes of Esure and Hastings.

"In the meantime, the recent renewal of Esure's reinsurance policy (July renewal date) has weakened its price competitiveness whilst the group still remains heavily reliant upon ancillary and instalment income, which accounted for over two thirds of the underlying profits in H1 17.

"Finally, the abject failure of esure, Admiral and Hastings to carve out any material foothold in the UK household market leaves them all highly reliant upon personal motor to satisfy their growth ambitions."

Shore recommended that shareholders follow the speculated lead of Peter Woods and sell their stock in Esure.

At 0840 BST, the shares were up 5.5% to 277p.