A financier is lining up an audacious takeover bid for a Sussex-based insurer.

Andrew Regan, best known for his failed attempt to buy the Co-op, has £2.4 billion-valued insurer Royal & Sun Alliance (RSA) in his sights.

The UK's second-biggest insurer employs about 2,000 at its Horsham headquarters.

Speculation an unnamed high profile UK entrepreneur was working on a bid for the company, which owns the More Than brand, began last week.

It sent shares in the FTSE 100 Index company surging by five per cent.

Mark Withers, a stockbrocker with Charles Stanley in Hove, tipped RSA in January, partly because of its recovery potential and the possibility of a takeover. He said RSA was undervalued and bid action could bring other potential suitors out of the woodwork.

But he was cautious about rumours linking the company with Mr Regan.

While Charles Stanley declined to speculate on any bid, Mr Withers said in his view RSA would be "a very big mouthful for Andrew Regan and his backers Corvus Capital to swallow".

Mr Regan, who made his first fortune from the Cadismark household products business he founded after leaving school at 17, is believed to have been examining a number of potential takeovers, with RSA his top target.

Last month he flew to New York to arrange financing, although there are a number of potential hurdles, including a sizeable pension deficit and the group's troubled American arm.

In 1997, Mr Regan launched a £1.2 billion bid for the Co-op but the deal collapsed amid a series of allegations.

Six years later and after three trials he was cleared of stealing £2.4 million from a company he controlled, money the Serious Fraud Office claimed was used to provide bribes to two CWS executives to agree a food supply contract. Mr Regan said he was the victim of a dishonest Dutch businessman.

A bid for RSA would be seen as an audacious move by Mr Regan, who made his stock market return last year when he took control of Corvus Capital, an AIM-quoted investment vehicle.

RSA has recently shown signs of an improved performance, trebling profits in the first three months of 2005.

The improvement was led by its core markets of the UK, Scandinavia and Canada and came despite further losses in the US, where it has been hit by asbestos claims and compensation payments.

The group has cut its headcount on both sides of the Atlantic and taken steps to reduce its exposure to risk in the United States, where it recorded an underwriting loss of £651 million two years ago.

June 14, 2005