Bad weather losses blast Commercial Union results

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The Independent Online
Commercial Union, one of Britain's largest composite insurers, yesterday blamed heavy weather-related losses in the United States and Britain for a 15 per cent drop in pre-tax profits in the first half of this year.

CU said a pounds 56m increase in weather claims from the US and the UK forced profits before investment returns down to pounds 216m, against pounds 248m in the same period last year. However, strong profit growth from Continental Europe helped to offset the losses.

Shares in the company closed 4p higher at 617p after analysts said that, despite the drop in profits, CU's results were at the top end of their forecasts.

CU said that in France profits from Abeille, its life and general insurance business bought in 1994, increased by pounds 22m to pounds 58m, while returns from the Netherlands rose to pounds 88m. Profits from CU's life and pensions businesses across the group, including the UK, grew 14 per cent to pounds 117m.

John Carter, chief executive at CU, said: "These strengths helped to reduce the effect of increased weather claims and competitive general insurance markets in the UK."

General insurance rates in the UK remained competitive, but there were signs of selective increases in some areas, mostly in motor cover. CU made an underwriting loss in Britain of pounds 26m, down from a pounds 36m profit at the same point last year.

The IRA bomb attacks in London in February and in Manchester in June cost CU pounds 9m, Mr Carter added.

The insurer is hoping to cut costs by introducing new information technology.