Royal profit and payout up

A 25 per cent dividend increase and expectations of more to come lifted shares in Royal Insurance yesterday as the composite reported better-than- expected interim results.

Shares closed up 9p at 346p on a 26 per cent increase in pre-tax first- half profits to pounds 241m, and an increase in the dividend to 5p from 4p.

"These results exceeded most expectations," said Charles Landa, of SG Strauss Turnbull. "What is particularly impressive was the very strong increase in net asset value, up 23 per cent to 354p."

Analysts' attention focused on the good profits, the expectation that dividend rebuilding will continue, and the recovery in the key US operations.

Richard Gamble, Royal's chief executive, described the dividend increase as a "further step in the process of rebuilding the level of the dividend paid to shareholders", which analysts took as indicating that a further increase was to come.

The toughness of the domestic insurance market, where Royal has decided to let business go rather than underwrite at cut prices, has been balanced out by better performances abroad, which account for over 50 per cent of premium income.

In particular, the move to a pounds 33m profit from a previous pounds 27m loss in the US, Royal's second market, helped the overall performance.

The underwriting profit reflects a repositioning of Royal in the States, taking advantage of a shift by brokers to large companies with international presence.

Royal also revealed it had paid out a $100m settlement this year, the biggest of six large US environmental claims still outstanding at the end of 1994.

In the UK, profits from general insurance dropped to pounds 151m from pounds 180m, with premiums down 4 per cent. "We continue to focus on margins, refusing to write business rather than underprice it," Mr Gamble said.

Motor and household rates in the UK have declined by 6 per cent over the past 12 months, but Mr Gamble said they were showing signs of stabilising.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border