Bermuda-based Omega Insurance Holdings said it had received a takeover approach from rival Canopius.
Privately-owned Canopius has offered 65p per share in cash for the entire issued share capital of Omega.
The latter said it would now consult with shareholders and make a further announcement "when appropriate".
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The news did little to excite investors, with Omega's share price rising 0.4% in early trading on Tuesday.
Omega had a tough 2011, doubling its pre-tax losses and cancelling its dividend.
In March it reported losses before tax of $94.7m compared to a loss of $42.9m the previous year, on an income of $304.6m (2010: $356.1m) and net revenues of $257m (2010: $261.4m).
It was hit by a leap in the number of claims made, particularly after the earthquakes in Japan and New Zealand.
Catastrophe losses at the firm totalled $85.6m (2010: $55.0m).
It wasn't all bad news, however, as basic earnings per share rose from 17.6 cents to 36.5c, while cash levels jumped from $37.9m to $52.8m.
