Bermuda-based reinsurer Ariel Re has been linked in the British press with a takeover bid for Lloyd's of London insurer Chaucer Holdings.

The Independent on Sunday yesterday reported that Ariel was being advised by banking group Hawkpoint, which acted for it during the £193 million acquisition of Atrium, another Lloyd's entity in 2007.

Ariel is a privately held company run by chief executive officer Don Kramer, who founded Ariel in 2005 with $1 billion in capital.

Chaucer shares have halved in price in 2008, closing on Friday at 44.75 p, which gives the company a market valuation of £156 million.

Chaucer's pre-tax profits for the first six months of the year were £3.9 million, against £47.9 million a year earlier. It has suffered losses on investments in shares and private equity, as well as from hurricane claims.

Chaucer was described last month as "a sitting duck" for a takeover, amid speculation last month that Lloyd's insurer Amlin, which runs a reinsurance unit in Bermuda, could be preparing a bid.