Bullish Britannic to resume divi and bonuses

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The Independent Online

Britannic drew a line under a difficult two years yesterday, saying it was on track to resume bonuses for most policyholders and dividends for shareholders.

The troubled life insurer, which was put under severe pressure by falling stock markets, stopped paying dividends 15 months ago. It said it would resume payments with an allocation of 10p a share for 2003.

It was also bullish about the way its programme to revitalise its business had gone after it was forced to close its life and pensions operations to new business and sell its mortgage lending business.

The life assurer said its restructuring had been successful and it was now back "in good health". Its shares, which slumped to 101p in January when the company announced plans to drop bonuses and dividends, rose 7.5p to 285.25p.

The figure of 10p a share was in line with market expectations and analysts believe in the longer term that Britannic will pay 20p-25p per share before debt capital payments.

Britannic said it had reorganised its debt pile, having repaid £50m of £185m of bank borrowings and refinanced the remaining £135m with a new five-year facility.

Most of the UK's insurance industry has been hit by plunging share values - which have eaten into their capital as well as putting off customers from buying equity products.

But Britannic has had a particularly torrid time, having parted with two bosses in two years. In January it issued a dire profit warning, knocking 50 per cent off its market value in a day. Since then the company has taken various steps to slash costs and conserve debt, including selling its loss-making Britannic Money business.

Paul Thompson, who became chief executive this July, said: "I am very pleased at the prospect of resuming dividend payments and annual bonuses for most Britannic Assurance with-profit policyholders. I look forward to the future with confidence."