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This morning, one of the largest insurance companies in Europe, the Swiss Zurich Insurance Group AG, said they are cancelling the offer made this summer to buy British rival RSA Insurance Group Plc for £ 5,6 billion ($ 8.8 billion). In the Zurich’s statement, in particular, noted that the reason for the change of plans was the deterioration of financial performance of general insurance division in the third quarter.
According to the published preliminary data on the results of the third quarter of 2015 (final statements for this period will be published by November 5), Zurich will incur a loss of approximately $ 275 million due to the explosions at the container terminal at the Chinese port of Tianjin. In addition, the $ 300 million is the cost of the loss of provisions reversals related to the sale of insurance policies in USA. Taking into account insurance claims of bombings in Tianjin and the revision of reserves, operating loss of Zurich’s general insurance units in the third quarter could be around $ 200 million. Recall that in the first half of the year, operating profit of general insurance Zurich fell 31% compared with the same period of the previous year. Now, according to a company press release, the main task of Zurich will be to "take the necessary measures to achieve the proper results."
The RSA Insurance confirmed the cancellation of the transaction, noting that the reason for this deterioration is financial performance, not any RSA’s problems.
- Zurich confirmed to us that RSA’s financial and legal checks results meet their expectations, and although the process has not been completed, they revealed nothing that would have hindered formalizing the deal on the terms, which were announced on August 25, - said the British insurer. After the announcement of the transaction cancellation, RSA shares fell by 22%in morning trading. Shares of Zurich also fell, but only by 2.3%.
In August, the Swiss insurer Zurich Insurance Group AG made an offer to buy British insurer RSA Insurance Group Plc for £ 5,6 billion ($ 8.8 billion). In late July, the Swiss insurer said they were interested in purchasing less its British rival, which is also currently experiencing serious problems associated with the detection of a large shortfall in its Irish division back in 2013.
The deal was supposed to bring benefits to both companies. Zurich would have gone into the British and Latin American markets, where RSA’s positions are particularly strong, and get access to lucrative offices of RSA in Scandinavia and Canada. For the British company, the deal would have ended the two-year period of crisis: RSA had to drop a number of its assets to pull up the balance after the discovery of fraud reporting in Ireland.
source: wsj.com
According to the published preliminary data on the results of the third quarter of 2015 (final statements for this period will be published by November 5), Zurich will incur a loss of approximately $ 275 million due to the explosions at the container terminal at the Chinese port of Tianjin. In addition, the $ 300 million is the cost of the loss of provisions reversals related to the sale of insurance policies in USA. Taking into account insurance claims of bombings in Tianjin and the revision of reserves, operating loss of Zurich’s general insurance units in the third quarter could be around $ 200 million. Recall that in the first half of the year, operating profit of general insurance Zurich fell 31% compared with the same period of the previous year. Now, according to a company press release, the main task of Zurich will be to "take the necessary measures to achieve the proper results."
The RSA Insurance confirmed the cancellation of the transaction, noting that the reason for this deterioration is financial performance, not any RSA’s problems.
- Zurich confirmed to us that RSA’s financial and legal checks results meet their expectations, and although the process has not been completed, they revealed nothing that would have hindered formalizing the deal on the terms, which were announced on August 25, - said the British insurer. After the announcement of the transaction cancellation, RSA shares fell by 22%in morning trading. Shares of Zurich also fell, but only by 2.3%.
In August, the Swiss insurer Zurich Insurance Group AG made an offer to buy British insurer RSA Insurance Group Plc for £ 5,6 billion ($ 8.8 billion). In late July, the Swiss insurer said they were interested in purchasing less its British rival, which is also currently experiencing serious problems associated with the detection of a large shortfall in its Irish division back in 2013.
The deal was supposed to bring benefits to both companies. Zurich would have gone into the British and Latin American markets, where RSA’s positions are particularly strong, and get access to lucrative offices of RSA in Scandinavia and Canada. For the British company, the deal would have ended the two-year period of crisis: RSA had to drop a number of its assets to pull up the balance after the discovery of fraud reporting in Ireland.
source: wsj.com
