Charles Taylor exits non-life run-off as profit halves

Loss adjuster and consultancy Charles Taylor Consulting has stopped buying non-life run-off businesses after making losses in the area in 2011.

“The market for the acquisition of closed non-life insurance businesses is highly competitive. Further, we do not appear to have any competitive ownership advantages over other market participants,” Charles Taylor’s new chief executive David Marock said in a statement accompanying Charles Taylor’s 2011 results. “As a result we have decided not to acquire further non-life businesses.

He added: “We do, however, believe that we have a competitive advantage in acquiring and operating niche offshore life run-off businesses, thereby creating value for the group, and we will to continue to seek out such opportunities.

While total run-off business only accounted for 3.5% of Charles Taylor’s total revenues in 2011, the business caused group profit after tax to halve to £4.6m in 2011 (2010: £10.6m).

The company attributed the sharp profit drop to “the non-reoccurrence of the large run-off profits generated in 2010.” The non-recurring profits were mainly generated from the release of reserves from a book of UK taxi business Charles Taylor acquired in 2008.

The run-off business as a whole made an operating loss of £700,000 in 2011, compared with a profit of £5.4m in 2010. Revenues from run-off were £3.6m in 2011 (2010: £3.8m).

While the run-off book made a large dent in profits, Marock pointed out that a lot of the pain was absorbed by non-controlling interests of the group. Profits attributable to Charles Taylor’s shareholders were £5.1m, only 23% down on 2010’s £6.7m.

Overall, Charles Taylor’s revenues were up 3.4% to £102.5m (£99.1m) This was mainly driven by a 6% growth in Charles Taylor’s loss adjusting revenue to £50m (2010: £47m). The loss adjusting business accounts for 49% of Charles Taylor’s total revenue.

Despite the steep profit decline, Charles Taylor chairman Rupert Robson was upbeat about the company’s future. “2011 was a watershed year for Charles Taylor. We welcomed David Marock, our new group chief executive officer, to the business in July and he has made an immediate, positive impact.”

He added: “David initiated a thorough business review and planning process to identify and capture profitable growth by building on the group’s strong fundamentals. The new strategy is already delivering benefits.”