Royal ahead despite bad weather

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The Independent Online
Royal Insurance, the composite insurer, celebrated its 150th annual results yesterday by announcing record pre-tax profits of pounds 421m in 1995, up from pounds 401m the previous year.

However, Royal's general insurance profits in the UK fell from pounds 321m to pounds 235m over the same period.

Richard Gamble, chief executive, described this as a "good result" against a background of worldwide subsidence and bad weather-related losses of pounds 282m, up pounds 104m a year earlier. This included claims of pounds 40m from the December freeze in the UK.

One effect of recent bad weather in Britain may be to stabilise the downward trend in household insurance rates. Insurers were being reminded that they sometimes have to pay claims as well as collect premiums, Mr Gamble said.

Royal's profits from world-wide life business rose by 68 per cent to pounds 99m. However, worldwide annual premiums fell from pounds 99m to pounds 79m, while single premium income dropped from pounds 459m to pounds 334m.

Profits from UK life business rose 23 per cent to pounds 86m on the back of continuing cost reductions. New annual premium sales in the UK showed a 10 per cent drop to pounds 50m.

Single premium sales collapsed from pounds 408m to pounds 220m, a consequence of lack of investor confidence and uncertainty over economic prospects.

Mr Gamble said: "We fully recognise the value that shareholders place on developing the life stream of earnings which have made a significant contribution to total dividend cost."

Royal was looking at ways of expanding its life operations, but was not actively looking to buy a UK life insurer.

"We are not going to going to rush out and overpay for anything, " Mr Gamble said. He specifically ruled out an interest in Clerical Medical.

Analysts, whose highest profits forecast had been pounds 413m, were suprised yesterday by the company's dividend increase, from 12p to 16p.