GRE earmarks pounds 1.25bn to spend on acquisitions

Guardian Royal Exchange may spend up to pounds 1.25bn on acquisitions, John Robins, the chief executive, said yesterday.

Rejecting pressure from City institutions for a share buy-back or special dividend to distribute some of the insurer's cash to investors, Mr Robins made clear he had plenty of other ideas for the money.

However, his later remarks about acquisitions depressed the shares, which had earlier risen to 295p after the publication of 1996 profits at the top end of predictions. They closed 4.5p down at 283.5p.

Analysts blamed the fall on the prospect of GRE buying a life insurance business which would require goodwill write-offs. Others said investors were worried about the length of Mr Robins' list of acquisitions and the risk of overpayment.

Mr Robins said that in the US, GRE had investigated four propositions in the last 12 months, but none had met its requirements for return on capital. Two possible purchases are under examination, in the pounds 250m to pounds 500m range.

Another area was life and health insurance in the UK, where a range of investments from pounds 500m to pounds 1bn was being studied. "We aren't prepared to overpay," Mr Robins said. Scottish Amicable, which is now being auctioned off, is outside GRE's price range.

Finally, GRE is interested in buying direct telephone selling operations, several of which are on the market, to add to its own rapidly growing business.

Mr Robins said: "Any small direct writer with fewer than 250,000 policies is not going to survive. They can't afford the information technology investment and particularly the advertising spend. You have to spend a lot of money to get the telephone ringing."

GRE could raise cash of pounds 500m, is ungeared, and could borrow pounds 750m. It would be prepared to spend pounds 750m to pounds 1.25bn on acquisitions, said Mr Robins, who added that it might decide to restrict its purchases to just one of the areas he had listed.

GRE expects UK motor premiums to rise by 8 to10 per cent on average in 1997, following an increase of 3 to 4 per cent in 1996, according to John Sinclair, executive director for the UK and Ireland.

Group trading profit before restructuring costs of pounds 39m was pounds 281m, compared with pounds 340m a year ago. Realised and unrealised investment gains were pounds 409m against pounds 472m a year earlier, giving pre-tax profits of pounds 651m against pounds 812m. The dividend was raised 11.1 per cent to 10p a share. Net asset value was 281p a share.

GRE is the only large insurer to include all investment gains and losses in its pre-tax results, but is confident others will come into line for their 1997 accounts.

Investment column, page 22

PROMOTED VIDEO
News
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
News
i100
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Sport
Louis van Gaal watches over Nani
transfers
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Sport
New Real Madrid signing James Rodríguez with club president Florentino Perez
transfersColombian World Cup star completes £63m move to Spain
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Travel
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst - Banking - Scotland - £380-£480

£380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...

Risk Analyst - (Multi Asset class) £70k - £80k

£70000 - £80000 per annum: Harrington Starr: My client is a leading financial ...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Application Support Engineer (Windows Server, Networking, Perl)

Negotiable: Harrington Starr: Application Support Engineer (Windows Server, Ne...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn