Zurich Insurance scraps RSA takeover plans

Zurich Insurance Group’s anticipated £5.6bn takeover of RSA Insurance Group has fallen through as a result of recent deterioration in the trading performance of Zurich’s general insurance business.

Zurich said discussions relating to its potential offer “have now been terminated, and that Zurich does not intend to make an offer” to buy RSA.

The company said a series of explosions at a container storage station in China in August meant it is now estimating pre-tax losses of $275m.

Aviva completed a £5.5bn takeover of Friends Life earlier this year, while this month has seen the £3.5bn sale of the Lloyd’s of London insurer Amlin to its Japanese rival Mitsui Sumitomo.

It added that Kristof Terryn, who will take up the role of CEO of general insurance on October . 1, following the resignation of Mike Kerner for personal reasons, is “conducting an in-depth review of the business”.

Zurich blamed “recent deterioration” in its General Insurance business for its cold feet.

It also emphasised that the Swiss spurner’s due diligence ‘had not found anything that would have prevented from proceeding with the transaction’.

Last week, the British benchmark declined 0.2% (http://www.marketwatch.com/story/ftse-100-falls-paring-weekly-gain-as-fed-flags-growth-concerns-2015-09-18) as equities in Europe and the USA were weighed by the Fed flagging concerns about the health of the global economy in its Thursday decision to leave US interest rates unchanged. The share were at 437.8 pence before Zurich announced its intention to bid for the company. This resulted to RSA shares plunging 21 percent.

In the FTSE 250 Index there was more gloom for engineering manufacturer Rotork after it was hit by a profit warning last week Shares fell a further 6 per cent, or 11.5p, to 175.1p, after a downgrade from brokers at JP Morgan Cazenove.

“Order intake is the key lead variable for Rotork but order visibility is low, timings of orders are seeing heightened uncertainty and when they are received they are with extended delivery times”, analysts at Credit Suisse said in a note.