Aon makes offer for Benfield

By Simon Challis and Clara Ferreira-Marques

LONDON (Reuters) - Aon (AOC.N), the world's largest insurance broker, has made a recommended cash offer of 844 million pounds for rival Benfield BFD.L, in a deal that would create the biggest reinsurance broker.

The two sides said on Friday that the acquisition price of 350 pence per share in the reinsurance broker represents a premium of more than 29 percent to the closing price on Thursday.

Shares in Benfield, whose speciality areas range from arranging cover for earthquakes and hurricanes to shipping, rose 29 percent, changing hands for 349 pence at 12:34 p.m.

Aon said the deal, agreed unanimously by both boards, would lead to Benfield being integrated into Aon's existing reinsurance operations, Aon Re Global.

The deal marks a major consolidation of the reinsurance broking market, where intermediaries arrange cover for insurers for big-ticket risks that are too large for them to keep on their own balance sheets.

"The merged business will be by far the biggest reinsurance intermediary in the world and will have unrivalled access to a global customer base," Benfield CEO Grahame Chilton told reporters.

The acquisition of Benfield will add to Aon's presence in developing markets in Asia and Latin America, its analytical capability, and boosts Aon's standing in the Florida and the southeastern United States property-catastrophe markets, Aon CEO Greg Case said.

The deal is expected to generate 65 million pounds in savings in 2011, largely from shared administration.