Commercial Union plays safe by spreading its business


A good set of figures from Commercial Union confirmed its place at the top of the composite insurance pile. It has a better life business than its peers, a wider geographic spread and so a lesser exposure to the UK where falling premium rates in general insurance will inevitably lead to declining profits.

In the year to December CU's total premium income increased from pounds 6.76bn to pounds 8.65bn, mainly thanks to the inclusion of 1994's big Groupe Victoire purchase, which is increasingly looking to have been a shrewd buy. Underlying operating profits grew 14 per cent to pounds 509m, well above market expectations, which allowed a 7 per cent increase in the full-year dividend to 28.25p.

Heavily skewed to life assurance, the French company's inclusion pushed life premiums to 43 per cent of the total and boosted profits from that source by pounds 87m to pounds 244m. That matters because with the insurance cycle in the UK about to embark on a downswing, diversity of income sources will be crucial.

The integration of Abeille Vie, Groupe Victoire's life operation, boosted French life profits from pounds 21m in 1994 to an impressive pounds 66m last year. Recovery in the Netherlands, where profits improved from pounds 84m to pounds 118m, was the other key driver of the division's better performance, despite the continuing reluctance of consumers in many territories to take on long term savings plans.

In general insurance, the downturn in profits emerged in the dominant UK result, where profits slipped from pounds 250m to pounds 229m as competition bit and subsidence and weather-related claims took their toll.

For the division as a whole, profits moved ahead pounds 97m to pounds 474m with useful growth in investment income and a cushion from overseas results which now account for almost 70 per cent of general premiums.

What pleased the City most, however, was the 30 per cent improvement in shareholders funds from pounds 3.14bn to pounds 4.07bn. It may not be the best measure of the value of an insurance company but it is the most commonly used and CU was in need of a sizeable uplift to support a share price that, in line with the rest of the sector, had enjoyed a buoyant 1995.

Even so, a modest premium to net assets after yesterday's 16p rise to 614p, makes the shares look relatively pricey compared to some of its peers which generally trade at a discount to underlying value. That is reasonable given CU's quality and with the support of a 5.8 per cent yield, but don't expect any fireworks.

Start your day with The Independent, sign up for daily news emails
Ed Miliband and David Cameron are neck and neck in the polls
election 2015Armando Iannucci: on how British politics is broken
Life and Style
Great minds like Einstein don't think alike
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
ebooksA celebration of British elections
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
A voter placing a ballot paper in the box at a polling station
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power