The value to shareholders of the life and pensions business tumbled 7 per cent to pounds 407m as Britannic was forced by the interest rate fall to re-assess the finances of the business.
The entire life insurance sector has been hit hard by the fall in long- term interest rates last year from 6.3 to 4.5 per cent, the lowest rate since 1966.
Britannic was also hit by a series of one-off costs including a further pounds 150m to cover the second phase of the pension mis-selling review. The company has now set aside pounds 300m to compensate mis-selling victims.
In spite of a 15 per cent jump in new business, the City was taken aback by further one-off costs, including spending on modernising computer systems.
Analysts are increasingly concerned about the value of shareholders' funds within the companies. As long-term interest rates fall and finances are reviewed, funds have diminished.
Finances have also been affected by the fact that people are living longer than actuaries expected when policies were issued.
Charles Landa, of SG Securities, said: "Everyone has been caught out by the life insurance results, especially the impact of lower rates on the [underlying] value of the business."
In spite of the rate fall, Britannic is financially stronger than most of its rivals. Brian Shaw, chief executive, said market pressures could force rivals to consider selling. "Britannia is strongly capitalised. In this low-rate environment, there will be opportunities as others who are weaker came under pressure."
In December, Britannic was beaten by AMP, the Australian insurer, in the race to buy NPI.
Yesterday's fall in share price means the company is trading at a 17 per cent premium to net asset value - compared to a 50 per cent premium for competitors such as Legal & General. With the bad news already in the price, SG recommends a buy.