St James to sell stake in LAHC

ST JAMES Place Capital, the financial group, yesterday indicated that it was on the verge of selling a stake in the so-called life insurance "vulture fund", LAHC, as the group announced a 67 per cent profits boost in 1998.

The company, founded by life insurance guru Sir Mark Weinberg, said that profits of pounds 86.3m had been lifted by a 20 per cent jump in new business generated by its sales force and by a better-than-average investment performance.

Sir Mark, the group chairman, said St James Place had appointed Morgan Stanley as advisers to sell a 23 per cent stake in LAHC - the Life Assurance Holding Corporation. LAHC buys ailing life insurers and runs them as a closed book of business.

The sale is set to go ahead in spite of a giant contribution to the annual results from LAHC - up from pounds 3.7m to pounds 17.6m in 1998 - flowing from the purchase of GAN Life (UK) and Aegon Life (UK), the troubled life insurers.

"We will dispose of LAHC when a convenient opportunity presents itself," said Sir Mark.

"We like the business and there is still a lot to do, but it will need more capital invested as it goes on to make bigger acquisitions. We want to dispose of it because its profits tend to be either feast or famine, which is a different shape from our business."

St James is instead pursuing a strategy of organic growth. Last year the board appointed Paul Bradshaw to head its international business. Until now, the international life business has been geared to offshore sales to UK customers, representing 15 per cent of sales.

Now, Sir Mark wants Mr Bradshaw, known for his record in setting up international life insurers, to expand into Europe. It anticipates a boom in new business as French, German and Italian markets deregulate.

Analysts yesterday said that St James had produced a solid set of figures in line with expectations, but pointed out that the company was trading on a much more generous multiple than its peers.

The shares rose against the market to close up by 2.5p at 284.5, valuing the group at pounds 1.15bn.

Charles Landa of SG Securities said that this data rated the group at more than four times its embedded value of 68p a share - over twice the level of most of its peers. But the quality of the business justifies the shares as a hold, said Mr Landa.