Lloyd’s of London insurers Lancashire Holdings Plc and Novae Group Plc may be the next in line for takeover offers after Brit Plc became the second U.K. firm within weeks to agree to be acquired.

Lancashire, which gained access to the world’s oldest insurance market in 2013 after buying Cathedral Capital Ltd., could be a candidate for bids, according to UBS Group AG. Novae and Beazley Plc may also be targeted, analysts at Shore Capital and Westhouse Securities said.

“London market consolidation rolls on,” Jonny Urwin, an analyst at UBS, wrote in a note to clients Tuesday. “Given current industry dynamics, it is most likely there is more consolidation to come. The next candidate, based upon valuation, could be Lancashire.”

Brit shares soared 11 percent after Prem Watsa’s Fairfax Financial Holdings Ltd. agreed to pay $1.88 billion for the specialty underwriter, becoming the latest firm to strengthen its position amid increasing competition from hedge funds and others to take on insurance risks. XL Group Plc bought Catlin Group Ltd. in January for 2.8 billion pounds ($4.3 billion).

Founder Stephen Catlin, who approached XL’s Mike McGavick more than a year ago, said last week that any insurer with a market value of as much as $5 billion could be acquired. That would include London’s publicly traded insurers, Lancashire, Novae, Beazley, Amlin Plc and Hiscox Ltd.

Officials for Beazley and Hiscox declined to comment. representatives from Lancashire, Novae and Amlin weren’t immediately available for comment.

‘Juggernaut Continues’

The merger and acquisition “juggernaut continues with just five players left,” said Eamonn Flanagan, an analyst at Shore Capital in Liverpool, England. “All eyes will focus on the next potential candidate. The spotlight is likely to settle on Beazley, Lancashire and Novae, all of which offer the much sought after presence in Lloyd’s.”

Shares of Novae and Beazley both rallied to their highest intraday prices since XL and Catlin agreed a deal on Jan. 9. Lancashire fell in London trading after closing at a three-month high last week.

Lloyd’s, whose history dates back more than three centuries, is used by companies globally to guard against large or complicated risks such as shipping or aviation. An official for Lloyd’s said it’s “always positive” to have strong participants in the market regardless of size.

M&A Targets

Standard & Poor’s Ratings Services said in a report Monday that the consolidation highlights the challenges insurance executives face to defend their market positions amid falling prices and an influx of third-party capital. Fitch Ratings said firms looking to increase scale, cuts costs and diversify will stimulate further deals.

“Novae and Lancashire remain our other preferred M&A targets as they are easy to swallow, both in terms of size of business and size of any potential offer,” said Joanna Parsons, head of research andinsurance at Westhouse Securities in London. “There is no reason why Amlin, Beazley and Hiscox could not be bid for as all are high quality operations, but the exit multiple/cost makes them harder to be acquired.”

Consolidation got under way in North America in November, after RenaissanceRe Holdings Ltd. struck a deal to buy Platinum Underwriters Holdings Ltd. Axis Capital Holdings Ltd. announced its plan to merge with PartnerRe Ltd. in January to create an $11 billion reinsurer.