Insurance brokers hold large sums of money in cash or near- cash instruments such as gilts. They also constantly revalue investments in line with market movements, a policy that led to Lloyds profit warning yesterday.
However, analysts were also concerned that Lloyd pointed to continuing weak demand for its services. Before yesterday's news market estimates were for Lloyd to make pre-tax profits of between pounds 19.5m and pounds 21m in the 12 months to today.
But Lloyd said yesterday: 'The board now expects that pre-tax profit for the year will not be less than pounds 18m.' It made pounds 17.4m in 1993.
Despite the bad news Lloyd promised a dividend rise of 16 per cent to 7.8p. At yesterday's closing price the shares will generate a gross yield of 5 per cent.
Lloyd also agreed to pay an initial dollars 3m ( pounds 2m) for 49 per cent of Triangle Holdings, a Bermuda- based insurance broker. Subject to Triangle's profit performance, Lloyd may pay an additional dollars 2.4m. It has an option to buy the remaining 51 per cent in 1997.Reuse content