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.
Advertisement
Following the July announcement, Zurich chief executive Martin Senn said in a statement that there was a “complementary fit of RSA’s business” with that of Zurich’s. Zurich will focus on improving its general insurance business.
RSA Insurance (LON:RSA) and Zurich have terminated discussions over a potential tie-up, the Swiss group has announced this morning.
Massive explosions at a hazardous goods storage firm in Tianjin, northeastern China, on August 12th killed 161 people.
“Trading results for July and August have been positive and ahead of our expectations”.
The company also warned that weaker-than-expected profitability in the general insurance business in the first half of 2015 could continue into the third quarter.
According to a statement by RSA, Zurich found nothing wrong with the company’s books but had to cancel the bid because its own finances had deteriorated. Its priorities for that money remain unchanged, the company said. Shares in RSA, buoyed over the past few months by the takeover discussions, slumped by more than 100p to 403.5p in early trading.
“RSA will now have to do the tough job of delivering earnings from its reduced size”.
Advertisement
Overall, it expects an operating loss of about $200m from the general insurance business.
