The company also said it had added an undisclosed amount to reserves against future claims for the second year running.
Reporting a pounds 270m turnround from a heavy group loss in 1992 to a profit of pounds 151m before tax and disposals last year, Royal reported a pounds 66m underwriting loss on liability insurance against a pounds 59m loss in 1992.
It made clear that it expected a rising number and size of claims in this area as unions stepped up campaigns for damages against employers.
Roy Elms, a director, said premiums were rising substantially for firms with a high proportion of clerical workers. They had previously obtained insurance cheaply but it was not unusual to see premiums doubled or even trebled because of the incidence of 'this white finger, repetitive strain or whatever you call it'.
Mr Elms said a large proportion of the pounds 66m liability losses came from employers' liability business. The focus was on repetitive strain injury, though deafness claims still loomed large.
Many claims for upper-limb disorders were union-sponsored, and provision had been made for more potential claims.
Richard Gamble, chief executive, backed Commercial Union's view recently that, though motor insurance rates are falling and many household rates are static, rates for commercial insurance are still rising.
Remarks about the market softening by Guardian Royal Exchange on Tuesday led to a big sell-off of insurance shares. Royal shares initially rose but were down 12p at 278p against the background of a sharply falling stock market.
The dividend was 7.5p a share against the 6.5p forecast at the time of the rights issue last year.
UK general insurance operations produced the expected turnround with a pounds 238m improvement to a profit of pounds 188m.
Mr Gamble said Royal had taken advantage of the move towards direct selling of car insurance because it had two subsidiaries operating in the business. The Insurance Service, launched five years ago, had 400,000 customers, and the new Royal Direct Insurance had made a good start.Reuse content