Transatlantic to spread wings in US and Europe

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The Independent Online
TRANSATLANTIC, the property and life insurance group, plans acquisitions in both North America and Europe.

Donald Gordon, chairman, said the focus of the group would be on expanding insurance interests following the flotation in April of its shopping centre activities. Spinning off Capital Shopping Centres is expected to create the property sector's sixth-largest company.

There was a flurry of speculation last year after Transatlantic, controlled by Liberty Life, the South African insurer, took a notifiable stake in Sun Alliance, the UK insurance business.

Mr Gordon warned, however, that the group, which already owns 50 per cent of Sun Life, would be interested only in an agreed bid.

He was speaking as Transatlantic announced a 19 per cent increase in pre-tax profits from pounds 56.5m to pounds 67m. After a lower tax charge, earnings per share were 59 per cent higher at 13.2p. The dividend was maintained at 12p.

Mr Gordon said a 6 per cent increase in net assets, from 282p to 298p per share, materially undervalued the company. According to UK accounting standards, Sun Life is carried in Transatlantic's books at its 1990 acquisition value together with retained profits.

Mr Gordon said an actuarial valuation would be much higher than the balance sheet figure of pounds 407m. The valuation of the group's shopping centres using open market valuations, the industry standard, was also misleading.

Current valuation methodology takes no account of rising rents from maturing shopping centres, which may not reach their peak value for several years after opening. According to Mr Gordon, they cannot sensibly be valued on the same basis as mature assets such as office buildings.

Insurance and property increased their contribution to profits during the year to December. Transatlantic's share of Sun Life's profits rose 16 per cent from pounds 36.7m to pounds 42.7m, benefiting from a high level of new business.