General Accident rules out further UK life acquisitions

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The Independent Online
General Accident yesterday ruled out further life and pensions acquisitions in the UK following last year's purchase of Provident Mutual, saying it would now concentrate on expanding the business organically.

Bob Scott, group chief executive, said the insurance group already derived 25 per cent of its operating profit from this sector but expected this to grow in the years ahead.

"Provident Mutual gave us a strong pension capability... to get strong organic growth," he said.

"We've got the benefits of scale in our major businesses. We don't have to do anything." However, he said GA would be willing to pick up further acquisitions in the US Midwest.

The Perth-based insurer, which yesterday unveiled a pounds 15m fall in group operating profits to pounds 421m for 1996, revealed that it had incurred pounds 16m of costs integrating Provident Mutual into its existing operation. Net of the charges, Provident chipped in pounds 18m to group profits.

Despite the fall in the annual result, the fourth quarter produced a record result of pounds 112m for GA, up from pounds 84m in 1995. Mr Scott said the three months' figures had been boosted by the absence of bad weather during the period and very good results in North America.

Bad weather was part of the reason for the dip in profits earlier in the year. "With a record fourth quarter we have maintained an excellent operating profit in 1996, achieved despite severe weather losses," said Mr Scott.

Analysts pointed out that the pounds 30m rise in severe weather losses more than accounted for the pounds 15m profits shortfall for the year, which was less than consensus expectations. The total dividend for last year is being raised 10.5 per cent to 34.25p, also ahead of forecasts, helping to push the shares 10p higher to 847p yesterday.

The outlook for insurance premium rates continues to be mixed. General Accident echoed recent comments from Commercial Union and Guardian Royal Exchange that there were signs that motor rates were starting to firm.

Mr Scott said: "There are signs that in personal motor, rating increases are coming through. We're putting another increase through in commercial motor." GA sees no signs of rate increases in the home-owner or commercial sectors.

In the US, excluding the effects of bad weather, Mr Scott saw an improving underlying trend in underwriting performance. In Canada, a substantial improvement was achieved and Pilot, its motor insurance subsidiary, produced excellent underwriting results.