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Charles Taylor broadens its base

The insurance services company has been integrating CEGA, its most recent acquisition
September 11, 2017

It may seem rather heartless to talk about financial benefit from the catastrophic weather in the US in the past few weeks, but insurance services provider Charles Taylor (CTR) will be put to work. The company has substantial experience providing services such as loss adjusting to insurance clients following flooding and hurricane events. “We’re well positioned to help our clients,” said David Marock, chief executive of the group.

IC TIP: Buy at 260p

The group’s wider strategy is predicated on broadening the range and types of services it can offer. Its half-year results contained a full six-month contribution from the recently acquired medical claims and assistance business CEGA, which helped push revenue up by more than a third (see table).

The bottom line was less impressive, with the increased amortisation of intangible assets associated with the acquisition and other corporate activity pushing pre-tax profit down considerably. On an underlying basis, however, pre-tax profit grew by 1.2 per cent. CEGA has begun to win contracts, bolstering management’s confidence in the prospects of the acquired operations.

The third-party administration business has also been winning work on both sides of the pond, and growing this business is a key priority for Charles Taylor. In the first half of the year it acquired Metro Risk Management, expanding its capabilities on the west coast of the US.

City analysts forecast adjusted EPS of 22.5p for the full year 2017, rising to 23.7p in 2018 (from 22.3p in 2016), according to Bloomberg consensus numbers.

CHARLES TAYLOR (CTR)  
ORD PRICE:260pMARKET VALUE:£178m
TOUCH:250-260p12-MONTH HIGH:330pLOW: 202p
DIVIDEND YIELD:4.1%PE RATIO:20
NET ASSET VALUE:105p*NET DEBT:48%
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2016745.37.193.15
20171013.14.623.31
% change+36-41-36+5
Ex-div:12 Oct   
Payment:10 Nov   
*Includes intangible assets of £95.5m, or 139p a share