Dear friend,

A few years ago when I was working on a stock market advisory newsletter, one of our stock tips was the target of a takeover play.

Subscribers were calling in to our switchboard asking for advice — should we sell now or hold on in case more bids materialised?

I didn’t have a clue so I called our top tipster for advice.

“Never mind what I think, what’s the share price doing?” were his age words.

And a look at the Kiln share price this week would have told you that the market had a good hunch that a Kiln bid was serious. After the initial spike, the price closed steady higher over the week until the agreed bid price emerged this morning.

A cracking deal for all concerned – Kiln shareholders finally get a reward for their patience and Tokio Marine makes off with one of Lloyd’s crown jewels.

Over the long-term Kiln names might feel they have something to worry about, but at least right now the acquirer has made it clear that buying them out is not on the agenda.

Just under half (47%) of Kiln’s flagship syndicate 510’s capacity is still provided by names, making it one of the last great refuges for unaligned capital at Lloyd’s.

Come to think of it this is probably good news even for the remaining names — if shareholders have just got themselves a good deal in the stockmarket, just imagine what names might be able to get in the capacity auctions in 2008 and beyond if Tokio decides to build its share?

When the next auction comes along, one thing is for sure:

We’ll all be sure to be looking at the market, rather than what is being said or written.