LONDON (Bloomberg) ? Shares of Goshawk Insurance Holdings Plc plunged yesterday after Nikko Principal Investments Ltd., a unit of Japan's third largest securities company, called off talks to buy the UK reinsurer.

Goshawk shares closed down two pence to 43.5 pence, valuing the company at ?76 million ($141.3 million). Earlierm they fell as much as 8.3 percent.

Nikko, owned by Tokyo-based Nikko Cordial Corp., didn't say why it decided not to make an offer for London-based Goshawk in a Regulatory News Service statement released yesterday.

"Goshawk is in a weak position as a relatively small insurer," Bridgewell Securities analyst Geoff Miller said in a telephone interview. "Unless there's another bidder, I can't see a reason for holding the shares."

Goshawk, which specialises in marine and property reinsurance at its Bermuda-based Rosemont Re unit, stopped selling policies at Lloyd's of London in 2003 after the market rejected its proposal to write new business without injecting new funds.

Chief executive Russell Brooke is trying to take advantage of rising reinsurance prices triggered by hurricanes that struck the US this year.

"Russell Brooke and the Rosemont team have the support of the board and our major shareholders," Paul Spencer, chairman of Goshawk, said in a separate statement.

The UK's Takeover Panel told Nikko to state its intentions by noon tomorrow after the company announced an "initial approach" for Goshawk on September 30. On the same day, Goshawk said it rejected Nikko's approach. Two weeks later, Nikko said it would meet Goshawk's investors to test support for a bid.

Shareholders would probably have accepted an offer for Goshawk above 50 pence a share, Bridgewell's Miller said.

Goshawk stock has gained 20 percent this year, the best performer on the 19-member FTSE All-Share Insurance Index.

The company said in a separate statement today that it expects "favourable market conditions" when renewing reinsurance contracts in January.

Shares of Nikko Cordial fell 2.9 percent to 499 yen in Tokyo.