Payout leaps at United Friendly

United Friendly, the UK insurer, announced a 24 per cent increase in dividend payments yesterday, despite unveiling significant falls in new premium income across most of its product range in 1995.

The company said yesterday that pre-tax profits rose last year to more than pounds 128m, compared with losses of pounds 32m in 1994. United's figures were boosted by strong investment returns in 1995, which added more than pounds 90m to its profits.

Pre-tax operating profits on the same basis as the previous method of reporting, changed in the wake of new EU regulations last year, were pounds 54.7m, up from pounds 47.6m 1994.

However, the company said ordinary branch annual premium income fell 10 per cent to pounds 19.3m, while new industrial branch business fell by 28 per cent to pounds 9.1m.

Sales of ordinary branch non-linked annual business advanced by 6 per cent. Unit- linked new annual income fell by 31 per cent.

Richard Balding, chief executive, said the premium income figures reflected a "difficult year across the entire life insurance industry". United also hopes to benefit from an anticipated recovery in premium income in the coming year.

Despite the drop in premium income, insurance analysts were happy with the company's dividend payout, up 24 per cent to 24.8p a share. Shares closed up 32p at 809p.

Patrick Wolridge Gordon, at SG Strauss Turnbull, said: "It is the sixth time in the past eight years that the company has increased its payout by more than 20 percent and [it] has a lot more bullets to fire."

Roman Cizdyn, insurance analyst at Merrill Lynch, said: "The figures are basically very good. The dividend increase is a sign of what it's all about."

Among the positive features in last year's results was that despite an increase to pounds 53.1m during 1995 in the company's provision for mis-selling in the pension transfer scandal, the amount was broadly equivalent to the investment return earned on underlying assets.

Shareholders also gained from profits on the orphan assets identified in the long-term fund, which rose to pounds 371.8m last year. The dividend increase reflected "excellent" investment returns, the company said.