Rumours of a mega-merger in the Bermuda reinsurance market are circulating again.

The latest report comes from Reinsurance magazine, which cites sources who say that Aspen and Ariel Re are "close to signing a merger agreements".

The story quotes London market sources as saying that Aspen is the third suitor Ariel has had this year.

All three times companies have done due diligence on Ariel but a deal with either of the first two failed to transpire, the magazine reported.

Ariel Re chairman and chief executive officer Don Kramer yesterday declined to comment on the story.

And a spokeswoman for Aspen said the it was company policy not to comment on market rumours.

Aspen, set up in 2002, has a market capitalisation of $2.1 billion, and its share price has recovered over the course of the last 52 weeks, advancing 80 percent to its current price of $25.91.

Ariel is a privately held company which was founded in 2005 by Mr. Kramer. It had total shareholders' equity of $1.54 billion, as of June 30 this year.

Mr. Kramer has made no secret of the fact that he would like to see Ariel become a larger, public company with a broader book of business.

In an interview in the November/December edition of The Bottom Line magazine, Mr. Kramer said: "We are privately owned, the next step is to get some recognition and find a way to join the publicly owned fraternity — either through a public offering or a potential merger, so we can continue to build a franchise. That is my goal.

"Staying private worked well for us. But now it is time to look for opportunities to be a broader, bigger company, because size now matters and diversification matters."

Three months ago, this newspaper reported on rumours of a reinsurance mega-merger being circulated by industry sources.

Speculation has continued following two major deals in September — Validus Holdings' acquisition of fellow Bermuda reinsurer IPC Holdings and Bermuda-based PartnerRe's purchase of Swiss company Paris Re.

The level of interest in IPC — Validus was reportedly one of 16 suitors who expressed interest in merging with the reinsurer — indicated the desire of many companies to expand.