Charles Taylor snaps up two of Zurich's life books but its shares plummet

Oliver Gill
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The acquisition gives Charles Taylor a foothold in the Isle of Man fund administration sector (Source: Getty)

Shares in Charles Taylor fell over 13 per cent today after its purchase of two of Zurich's £323m life assurance businesses failed to impress investors.

Announcing the acquisition today, the insurance services provider said the purchases – of Zurich International Life Limited and Allied Dunbar International Fund Managers Limited – were part of its strategy to make "tactical acquisitions" to grow its life insurance business.

The market responded negatively, however, after Charles Taylor said that earnings growth would be at "lower than the market's previous expectations for 2017."

"This agreement to acquire the closed life assurance book from Zurich follows our purchase last year of Scottish Widows International. It demonstrates our commitment to grow our life insurance and servicing businesses in the Isle of Man. Over the last five years we have made five life insurance acquisitions," said Charles Taylor's chief exec David Marock.

Read more: Charles Taylor celebrates profit growth

Justin Bates, an analyst at Liberum, said Charles Taylor's purchase of the Zurich divisions were an "attractive acquisition". Nevertheless, he stressed he would review his valuation of the company in the wake of the updated profit guidance.

The firm said the purchase will also provide Charles Taylor the opportunity to enter the fund administration market on the Isle of Man. Marock hailed this is an important step for the firm: "[It] opens up opportunities for us to deliver new services to fund managers in the Isle of Man and other international markets.”

Read more: Charles Taylor to raise £30.6m for acquisitions

Clive Baker, the chief exec of Zurich International Life explained the deal made sense from Zurich's perspective.

“Zurich International Life has not been active in the portfolio bond market for some time... This transaction protects our customers, reduces our risk exposure and is aligned with our strategy, ensuring focus and resources can be directed towards sustained key growth areas of the business," he said.

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