Mixed fortunes shared by insurance brokers: Steel Burrill Jones reports loss after restructuring as Nelson Hurst's strategy results in pounds 5.3m profit

TWO small insurance brokers yesterday reported opposing results. Steel Burrill Jones reported a pre-tax loss of pounds 521,000, for the year ended last December, compared with a profit of pounds 13.27m, while Nelson Hurst reported an increase in profits over the same period from pounds 1.4m to pounds 5.3m.

Steel Burrill Jones's poor performance was the result of a range of additional costs in the form of reorganisation, bad debts and litigation.

The company said the total of pounds 4.39m paid for reorganisation over the half year was mainly due to redundancy, property and systems outlay and also included the costs associated with the sale of the business of SBJ Harrison Stuart. At the year end, the group said, approximately half of this charge had 'crystallised'.

Steel Burril Jones added: 'In the interim results, the group made a charge of pounds 3.05m to cover the possible consequences of failed or failing insurers and complex litigation in the international insurance market and other exception costs. At the year end little of this charge had crystallised, but the board considers it prudent to hold the provision until the various circumstances covered by it become clearer, which is not expected to occur before the second half of 1994.'

Commenting on future prospects, the group said: 'Overall, although 1994 may see a slight decline in brokerage, the most important change will be the level of expenses where the cost and efficiency review has achieved substantial savings for 1994 and onwards.'

Nelson Hurst said its stock market flotation last year gave it 'a sound base from which to continue its development'.

'Based on a proven strategy of maximising existing strengths and building new business relationships to establish and sustain meaningful competitive advantage in our chosen business areas, we look forward to 1994 as a year of continued growth,' it said.

The group pointed out that since it was diversified into a range of businesses one poor sector was often counter-balanced by more favourable conditions in another.

David Woodward, group chairman, said last year's results were affected by lower interest rates reducing investment income and the generally weak economic conditions.

Steel Burrill Jones is recommending a final dividend of 6p, making 9p a share for the year, compared with 13.25p a year ealier. Nelson Hurst is recommending no dividend for the 1993 results although an interim dividend will be payable for the year ending December 1994.