As Charles Taylor Consulting, the insurance services group had an image problem. So one of the first steps that new chief executive David Marock took was to drop the word 'Consulting' from the title. It may not seem much, but it makes a difference. As Mr Marock said soon after his appointment: "It's all about client relationships." The task remains for Charles Taylor to make its customers aware of the wide range of services on offer, and, after several years of decline, the signs are encouraging.
- New products and services launched
- Cross selling opportunities
- Nice dividend yield
- Debt falling
- Loss adjusting revenue weak
- Run-off business flat
Steps have also been taken to tidy up the group's products into more easily recognisable units, which now comprise management services, loss adjusting and insurance support. Management has also sown the seeds for future growth by introducing a range of new products and services plus extra financial discipline. On the adjusting side, for instance, the focus has been to drive down working capital requirements by improving the speed of invoicing work and collecting cash - cash collections in the first half were up 11 per cent at £30m.
On adjusting, where the company works to reduce the size of insurance claims and earns a fee for its time, business has been tough mainly because there were fewer large and complex insurance claims to dispute in the London insurance market in the first half of 2012, especially in the energy sector. As a result, profits slipped from £3.8m to £2.7m.
Taylor's run-off business, which manages insurance operations that no longer take new business, now comprises just a small part of the group and is barely profitable. That said, some cash was released from the integration of a closed life insurer, Alico, acquired last year and management hope to add more life operations, but will wind down the non-life side.
| CHARLES TAYLOR | ||||
|---|---|---|---|---|
| ORD PRICE: | 175p | MARKET VALUE: | £71m | |
| TOUCH: | 170-175p | 12-MONTH HIGH: | 187p | LOW: 109p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 71p | NET DEBT: | 53% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 97 | 15.7 | 19.0 | 14.6 |
| 2010 | 99 | 12.5 | 16.8 | 10.0 |
| 2011 | 102 | 6.4 | 12.8 | 10.0 |
| 2012* | 106 | 10.5 | 21.2 | 10.0 |
| 2013* | 110 | 11.4 | 22.9 | 10.0 |
| % change | +4 | +9 | +8 | nil |
Normal market size: 2,000 Matched bargain trading Beta: 0.3 *Peel Hunt estimates (profits & earnings not comparable with historic figures) | ||||
The management services division typically runs insurance services for interest groups that club together. For example, its largest client is The Standard Club, owned by shipowners and formed to insure shipowners, operators and charterers for their liabilities to third parties arising from their operations. So Charles Taylor does the marketing, manages the underwriting and claims and provides regulatory, accounting and administration services. Several new members have been signed up this year, which helped to boost management services operating profits by 44 per cent to £2.6m in the first half.
Insurance support services allows clients to select a specific service that they require, be it financial reporting, investment management or alternative risk services. This made a small loss last year, but broke even in the first half thanks to higher demand for outsourced back office insurance services from Lloyd's of London.
Net debt rose slightly at the half year-end compared with the end of last year, but was down from a year ago by £4.4m at £34.2m. And last year's first-half net cash outflow of £500,000 has been turned into a £3.6m net inflow.
