Insurer warns of rating 'bloodbath': The talk is of fighting, food and pharmaceuticals as more companies get ready to make their market debut

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INDEPENDENT Insurance yesterday combined publication of the pathfinder prospectus for its stock market flotation with a warning that motor insurers were heading for a 'rating bloodbath'.

Independent is raising pounds 25m to support its rapidly growing premium income. It is the first general insurer to seek a listing since the Second World War.

Michael Bright, chief executive, fears that insurers are starting to make unjustified cuts to their premium rates, heralding a return to the dismal losses of recent years. He said one Lloyd's syndicate had recently reduced rates by 15 per cent.

He added: 'Everything we see points to an emerging rating war.'

Independent prides itself on profitable underwriting and sees no room for itself in such an over-competitive market. Although Independent's private car business has increased sharply so far this year, Mr Bright said this market 'will gradually withdraw from us'.

Premium income in the first eight months of this year reached pounds 138.8m, more than 50 per cent up on the same period last year and almost as much as the pounds 141.8m written in the whole of 1992.

Independent made pre-tax profits of pounds 7m in the period to August despite a pounds 5.2m provision against stop-loss insurance provided to Lloyd's syndicates for the disastrous 1989 and 1990 underwriting years.

The stop-loss episode has cost Independent about pounds 14m. Despite this, it has remained profitable during the recession while much larger rivals suffered enormous losses.

Independent has net assets of pounds 58.9m. It plans a final dividend of 4.75p to make a total of 8.25p.