Zurich reduces future valuation of IFA 2Plan to £2m
Insurer’s results reveal that acquisition of adviser firm by its network subsidiary Openwork cost nothing.
Insurance giant Zurich’s half-year results reveal that the future valuation placed on 2Plan, the IFA business acquired last year by its part-owned adviser network Openwork, has been reduced from $4m (£2.5m) to $3m (£1.9m).
The results also revealed that Openwork’s purchase price for the acquisition of 75 per cent of the shares in 2Plan amounted to zero. The transaction completed in July 2011.
The remaining 25 per cent of shares continue to be held by members of the founder management team, who have options to sell their holdings to Openwork at a price based on the achievement of future profit targets by the firm.
The results said: “Based on the final purchase accounting the tangible net assets acquired amounted to negative $5m (£3.17m) and identifiable intangible assets, net of deferred tax, amounted to $2m (£1.27m), consisting of software and capitalised recruitment director fees.
“Goodwill amounted to $3m (initially $4m) and reflects the future value from the group’s improved independent financial adviser proposition and technology offering in the UK.”
Meanwhile, Zurich UK Life has seen its annual premium equivalent rise 14 per cent to £378m in the first half of this year, largely as a result of increased sales within corporate life and pensions and private banking business areas.
In particular, the results pointed to significant growth from the Zurich Corporate Savings business following the launch of Zurich Corporate Savings platform earlier this year
New business value is also up 38 per cent to £62m compared to the same period in 2011.
Gary Shaughnessy, chief executive for Zurich’s UK Life business, said the results showed the company was continuing to deliver on its long-term commitments to distributors and customers in competitive markets.
He said: “These are strong results achieved in challenging times. They reflect our continued focus on expense management and our ability to create profitable growth across the business, whilst at the same time ensuring that we continue to meet the needs of distributors and our customers.
“In the next few months we face unprecedented levels of regulatory change. However by continuing to adapt our propositions to meet changing market needs – in particular with the successful launch of our corporate savings platform earlier this year and the intermediary platform coming on board in the next few months - we will be well-placed to be competitive and successful in the post-RDR world.”