Goshawk suffers 'painful' £31m loss

Goshawk, the struggling Lloyd's of London insurer, yesterday said it had taken a 'painful' six-month loss of £31m after it had to hike reserves and was made to breach some of its banking covenants.

The troubles facing Goshawk have been trailed in two profit warnings from the company this summer, following mounting claims for the Columbia space shuttle disaster and the collapsed personal injury company, The Accident Group.

Shares have fallen 78 per cent this year, closing down nearly 20 per cent yesterday alone. Chris Fagan, chief executive of Goshawk, said: "Considerable pain has been taken in this set of results and the board is now totally confident of Goshawk's ability to trade profitably during the second half of 2003".

The company has been given a reprieve by its bankers, which have agreed to temporarily suspend their covenants. Goshawk said it had entered insurance markets that had been "inadequately researched"without securing sufficient reinsurance cover to offset losses. Despite the increase, however, Goshawk said there was "material uncertainty' over its reserves.

Mr Fagan is still considering a sale of the company, a possibility mooted in July when a strategic review began.

Goshawk also said Paul Spencer, former chief executive of Royal & SunAlliance's UK business, would take over as chairman. David Hooker, the current chairman, agreed to resign earlier this month.