Refuge shows scars of failed diversity

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SHARES in Refuge rose 26p to 1,020p as the life insurance group reported results bearing the scars of its unsuccessful diversifications into estate agency and personal lending, writes Paul Durman.

Refuge took an pounds 8.2m loss on Douglas Allen Spiro, the estate agency chain sold last week. The loss, which Refuge treated as extraordinary, included a pounds 5.9m write-off of goodwill that had previously been charged to reserves.

The company also recorded exceptional losses of pounds 6m, including a pounds 3m provision for RLJ Finance, the lending arm that sold most of its performing loanbook last November. Refuge has appointed specialist debt collectors to collect on the non-performing loans.

Tom Booth, Refuge's chairman, said the chances of Douglas Allen Spiro returning to adequate profitability over the next two or three years were considered slim, 'and the associated sales of life policies were insufficient to justify our continuing with the business'.

Profits for last year from the main life insurance businesses rose 10 per cent to pounds 16.5m. Refuge Assurance and Refuge Investments increased from pounds 205m to pounds 229m. The small general insurance arm returned to a profit of pounds 94,000 after a loss of pounds 700,000 in 1991.

Earnings per share rose from 25.8p to 28.1p. An increased final dividend of 21.9p lifts the total by 9 per cent to 31.5p.