Zurich Insurance Group has abandoned its proposed 5.6 billion pound ($8.7 billion) bid for British insurer RSA Insurance Group after forecasting a $200 million loss in its general insurance business due to explosions at the Chinese port of Tianjin. Grace Pascoe reports.
Zurich Insurance ditches its proposed takeover of Britain's Royal & Sun Alliance. Less than a month after its announcement The deal has been pulled from under RSA. Matthew Beesley is from Henderson Global Investors. (SOUNDBITE) (English) HENDERSON GLOBAL INVESTORS, HEAD OF GLOBAL EQUITIES, MATTHEW BEESLEY, SAYING: "Today's decision by Zurich to walk away will be a blow to RSA. But really post the very sharp falls we have seen in the stock today following that announcement investors will realize that RSA still is a business with a lot of self-help that can be administered by the Chief Executive Stephen Hester." The Swiss insurer is blaming the deadly chemical explosions at the Chinese port of Tianjin. With Zurich having to shell out around 200 million dollars. Instead of purchasing RSA for 5.6 billion pound - that's around 8.7 billion dollars - Zurich will now put the spotlight back on its own general insurance business. Shares plummeted 23 percent at RSA, known for its "More Than" insurance brand. Despite this disappointment- the London-listed insurer reported a positive summer of trading. (SOUNDBITE) (English) HENDERSON GLOBAL INVESTORS, HEAD OF GLOBAL EQUITIES, MATTHEW BEESLEY, SAYING: "There is still room for a reorganization of the portfolio with some assets still to be sold and the ability to reinvest in other new growth assets. While today's move is a reflection of that bid speculation ending. There is still lots of organic opportunities for investors in RSA to still be confident in the future of the stock from here." Zurich says it's still committed to achieving its financial targets for 2014 to 2016. But to expect weaker profitability ahead.