Both companies said they remained optimistic that plans to create a pan-European insurance giant would go ahead - despite what they described as "an exceptionally bad first quarter".
Canada's worst ice storm in living memory battered profits at GA, which is the country's biggest insurer. Profits sank by 45 per cent to pounds 40m as the insurer paid out pounds 72m. While CU was less exposed to Canada, its profits plunged by 61 per cent to pounds 40m after it was hit by January storms in Britain and a spate of large fire claims.
Both companies also suffered from an ongoing squeeze on insurance rates for commercial business. Many insurers are believed to be running losses to offer cheaper premiums.
Bob Scott, who is to be chief executive of the new group, said: "We had significant claims from those areas affected by the ice storm: they were very difficult claims and we have only just been able to settle them. There is also continuing competition in all of our major markets."
Mr Scott said the company would begin to raise rates wherever possible. "It's important despite the very tough conditions to monitor the profitability of our products."
Executives said the results underlined the need for a merger, which would result in savings to shareholders of pounds 225m a year. The combined group would command a huge volume of small commercial insurance business around the world.
Sir John Carter, who will step down as chief executive of CU in June, said the merger was on schedule. The first and second tier of management had already been appointed. He added that no decisions had yet been taken on redundancies.
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