Good afternoon folks,

I can't see anything of interest in today's RNS feed, so I'm going to circle back to look at Charles Taylor (LON:CTR), which was requested in the comments yesterday.




Charles Taylor (LON:CTR)

Share price: 243,25p
No. shares: 67.4m
Market cap: £164m

Final Results

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The difference between statutory and adjusted PBT is down to amortisation (£3 million worth) and "other adjustments" (£1.3 million).

There are plenty of moving parts within this insurance group; in simple terms the core Professional Services segment saw a small reduction in Operating Profit, while the Owned Life Insurers segment swung into profitability from breakeven (due to an acquisition).

Dividend continues to rise gently and the shares are currently yielding over 4%.

Reading through the various divisional performances, it sounds like a solid if unremarkable period on the whole.

I've read online that 2016 was the worst year for natural catastrophe losses since 2010 - which should have been good news for insurers (those who can afford the payouts, at least). In insurance, you want strong demand for what you're selling, and you want high premiums, and you don't get these when there are no catastrophes.

In relation to its adjusting business, Charles Taylor remarks:

The level of insured claims in the market as a result of catastrophic natural and man-made disasters increased, although the market for larger and more complex insured losses of the type principally handled by Charles Taylor, remained challenging throughout 2016.  There are, however, signs that loss activity may be increasing.

So it sounds like there has possibly been a bit of bad luck for CT in relation to the specific types of event they adjust for.

Outlook: performance so far is in line with expectations, and the strategy of organic growth plus acquisitions is unchanged.

My opinion

The adjustments are as you'd expect given the company's overall growth strategy, and relate to various acquisition and set-up costs. So while it's true that statutory PBT fell in 2016, the growth in underlying PBT is certainly worth noting.

I haven't studied this company in-depth before but it looks like it could be a decent share to buy-and-hold. The strategy appears to be working reasonably well, and while I do generally prefer organic vs. acquisitive growth, I could make…

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