General Accident dismisses worries about takeovers

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The Independent Online
General Accident, the Perth-based general and life insurer, yesterday dismissed any suggestion that recent mergers in the industry would increase competition. Bob Scott, chief executive, said consolidation had been a factor in the UK for years. "It won't change the dynamics of the industry. We're competing in segments of the market against some pretty small insurance companies."

General Accident's cost structure would be competitive, he said. The group plans to replace all existing computer systems with an integrated package and hive off computer operations to a new IBM subsidiary dedicated to insurance. The business will be based on GA's 350 computer employees.

Mr Scott spoke as analysts raised profit expectations for the group, prompting a 14p rise in the shares to 678p. Reduced weather losses in the second quarter helped GA claw back some of the damage inflicted by severe conditions across the world in the first three months of the year, although profits before investment gains still slipped from pounds 257m to pounds 194m in the first-half year to June.

Steven Bird at brokers Merrill Lynch said he was raising his full-year forecast to pounds 411m, with net assets per share expected to hit 680p by the year end, up from 657p currently.

The group had had a good second quarter, he said, although he cautioned that reserve movements meant too much should not be read into one quarter's figures.

GA said the integration of Provident Mutual, acquired earlier this year, was going faster than expected. The field force had already been integrated and the head office reorganisation was nearly complete, resulting in 620 staff departures. Integration and transitional costs were now likely to be about pounds 20m this year, pounds 5m less than expected.

Investment column, page 18

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