Sturge reduces payout after poor results

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STURGE HOLDINGS, the largest underwriting agent in the Lloyd's insurance market, has slashed its interim dividend for the second year running and abandoned its practice of making a full-year profits forecast.

The dividend falls to 1p, down from 2.75p last year and 5.5p in 1991. David Coleridge, the former Lloyd's chairman who heads Sturge, warned: 'We will not hesitate to take whatever further action is necessary if we believe it to be in the longer-term interest of the group.'

The dividend cut reflects the disappointing results that Sturge expects this year and the uncertainties about next year's underwriting capacity. Capacity of Sturge's 22 syndicates, seven of which it is closing, has already fallen by 30 per cent to pounds 725m.

The company expects to receive pounds 4m of profit commission in its traditionally stronger second half, but limited its full-year forecast to saying it was confident of making an attributable profit for the year.

Pre-tax profits for the half-year to end-March fell again to pounds 325,000 from pounds 2.6m. Insurance agencies lost pounds 2m but the group was kept in the black by interest income of pounds 1.4m and a good profit from Wise Speke, the stockbroking arm, which made pounds 951,000.

Johnston Brown, company secretary, said the growing importance of Wise Speke, where results are closely linked to the stock market, was one of the reasons for dropping the full year forecast.

Sturge's syndicates suffered total losses of about pounds 250m on the appalling 1990 underwriting account despite profits from 11 syndicates covering aviation, motor and non-marine risks. Mr Brown said this represented 21 per cent of Sturge's capacity against a market average of 23 per cent.

Sturge is seeking corporate capital, which is to be admitted under the Lloyd's business plan.