Executives of Bermuda re/insurers Validus Holdings Ltd and Ariel Holdings Ltd were remaining tight-lipped yesterday as sources reported that the two companies were inching ever closer to a merger agreement.The efforts of Validus to take over Ariel have been the talk of the local insurance industry since reports in the UK trade press suggested talks between the companies had reached “an advanced stage” and that that Ariel had invited Validus to undertake due diligence.After two sources told The Royal Gazette yesterday that a deal was very close, both Jon Levenson, senior vice-president, investor relations, at Validus, and Victoria Guest, general counsel at Ariel, declined to comment on the matter.There is significant overlap between the two businesses, which means that some jobs may be cut should the takeover be finalised. Approximately 50 people are employed at Ariel’s office on the fifth floor of Victoria Place in Hamilton.For Validus, this would be a second acquisition of a fellow Bermuda reinsurer, following the $1.77 billion cash and shares deal to take over IPC Holdings in 2009.There is also the possibility that other companies may be interested in acquiring Ariel, leading to a bidding war, as happened in the case of IPC, when Validus finally beat off competition from Max Capital Group (now known as Alterra Capital), Flagstone Re and several others to complete the takeover.Both Validus and Ariel were part of the ‘Class of 2005’ wave of companies to set up on the Island in the wake of Hurricane Katrina. Ariel is privately held, while Validus trades on the New York Stock Exchange.Ariel had shareholders’ equity of $1.27 billion at the end of September last year, according to the financial statements on its website. During the third quarter, it paid out $400 million in dividends to shareholders, the figures show.Ariel also has offices in Switzerland and Brazil, countries where Validus does not yet have a physical presence.Validus is based in the Bermuda Commercial Bank building on Par-la-Ville Road, Hamilton.Earlier this month, the company reported full-year net income for 2010 of $402.6 million compared to $897.4 million in 2009.The overlap in the two companies’ books of business is considerable. Both write reinsurance in property, marine and energy and aerospace lines, for example. After Validus acquired IPC, 16 of the 30 jobs at IPC were cut.