Norwich Union keen to shake off takeover rumours

The Investment Column

Norwich Union, the recently floated life and general insurer, yesterday reaffirmed its commitment to remaining independent as it announced operating profits of pounds 288m for the last 24 weeks before its stock market debut in June.

The insurer has been dogged by takeover rumours since its plans to list on the stock market were announced last year, with Halifax, the former building society turned bank, touted as its most likely predator.

However, Allan Bridgewater, chief executive at Norwich Union, said his company had received no takeover approaches from any organisation.

Meanwhile, Norwich Union's entry to the FTSE 100 index of top UK companies was confirmed yesterday. The shares are expected to join the Footsie on 22 September.

Richard Harvey, who takes over from Mr Bridgewater as chief executive later this year, said of the rumours: "I think it is very much a feature of the marketplace that we are in. We do not find it disconcerting."

The company's pre-tax profits of pounds 335m, which compared with pounds 528m for the whole of 1996, were broadly in line with analysts' forecasts. A final dividend for the period ending 31 December will be paid in June next year. Norwich shares gave a muted response to the results, dropping 7.5p to 341p.

Mr Bridgewater ruled out the possibility of Norwich hitting the acquisition trail: "We have no need to make acquisitions. We have a good spread of business and a good spread of distribution."

UK life and pensions contributed pounds 213m to profits with new business growth of 17 per cent compared to the same period last year, single-premium business up 20 per cent and regular-premium income up 10 per cent.

The UK general insurance business produced a pounds 37m operating profit, although Mr Bridgewater conceded that the bottom of the underwriting cycle, in which premiums have been driven down by competition in the household and motor insurance market, had been "flatter and longer" than Norwich Union had anticipated.

"We were a little bit disappointed with the ability of the market to take premium increases," Mr Bridgewater said. "We're probably a few months further behind in the cycle than we would have thought."

The private motor insurance market was showing signs of improvement and rates had been increased, but no upturn in motor fleet rates is expected until the end of the year. Household insurance rates are also static, though Norwich Union hopes to push some increases through later this year.

Underwriting results were slightly better than in 1996 but subsidence claims, at pounds 11m, were ahead of last year's levels.

The group's direct operation, Norwich Union Direct, now has some 550,000 customers, a rise of around 200,000 over last year.