Commercial Union, one of the UK's top composite insurers, yesterday claimed its strategy of world-wide diversification in life and general insurance business was vindicated by a16 per cent profits rise to pounds 381m.
The company's profits rise for the first nine months of 1995 came despite poor performance in the regular premium business in the UK life market. Outside the UK, life operations accounted for 44 per cent of world-wide premiums, leading to a pounds 64m profits rise to pounds 164m.
John Carter, chief executive, said yesterday: "Our operations outside the UK increased their contribution to 56 per cent of territorial operating profits, underlining the importance of our international spread of life and general insurance business. However, conditions for writing new annual premium business remain difficult in a number of markets, including the UK, reflectingconsumers' unwillingness to enter into long-term savings commitments."
Mr Carter blamed the fall in sales on a combination of the new disclosure regime in the UK, the lack of a "feelgood factor", plus the tail-off in public confidence in life and pensions products in the wake of the pensions mis-selling scandal.
He discounted the possibility of a massive rise in subsidence claims, following the warm summer. Although there had been a substantial rise in claims earlier this year, up from pounds 4m to pounds 20, this had begun to tail- off by the end of September.
Profits from general insurance in North America grew from pounds 35m in the first nine months of 1994 to pounds 38m this year, although this was, in part, based on higher investment income. Australia produced profits of pounds 23m, up from pounds 19m last year. The New Zealand operation has been sold.Reuse content