GA's pre-tax operating profit slumped to pounds 55m in the first three months, down from pounds 112m in the same period last year. But the market reacted with relief that the results were no worse than expected and pushed the shares 19p higher to 654p, encouraged by good growth in investment income, and a robust net asset value.
GA provided further much-awaited evidence of the turn-around in motor premiums after a long period of slide, having increased commercial motor rates by 6 per cent in February and private rates by 4 per cent in April. "Motor rates could well continue to move up during the year," said Bob Scott, chief executive.
On the property side, private household premiums are at the same level as a year ago while rates on commercial lines have drifted slightly lower. Mr Scott said there are no plans for rate increases on either of the property lines.
First-quarter investment income at GA was up at pounds 136m from pounds 115m. Net asset value, which many analysts use as a measure of the strength on the business, held up near the top of forecasts at 651p. Operating earnings per share fell to 6.8p from 16.6p a year ago.
Claims from property damage due to the unexpectedly harsh winter in the US and the UK cost the insurer pounds 70m. The world-wide general insurance underwriting result was a loss of pounds 96m compared with a loss of pounds 14m a year earlier.
"There is very little surprise. Really the story is one of severe weather on both sides of the Atlantic. The underlying trend is still pretty difficult," said Rob Procter of Lehman Brothers.
Referring to the recent merger between Sun Alliance and Royal Insurance, Mr Scott said GA had no similar plans and would be making no acquisition moves while it beds down Provident Mutual, the life office which it took control of three months ago. Mr Scott said the focus for expansion would remain Europe, notably France. "We are looking all the time, we have got a few things we are working on, but we are not anticipating doing anything in the immediate future," he said.