Sun Alliance, one of Britain's biggest general insurers, yesterday delivered a record 40 per cent leap in pre-tax profits for the first half of 1995, despite a drop in UK premium income.
The first-half increase in operating profits, up to pounds 259m from pounds 180m in the same period last year, was boosted by strong underwriting results in most of the company's divisions.
Scott Nelson, finance director, said the overall rise in premium income vindicated its long-term business diversification strategy outside the UK.
"This has been a consistent part of our planning strategy since the late 1980s," Mr Nelson said. "Premium income from overseas general insurance business is now 53 per cent of our total worldwide. UK premium income is below 50 per cent for the first time in our 300-year history."
He admitted that the absence of serious catastrophes and mild weather had been significant in the group's underwriting success, "but the increase in profits compares with last year, which was equally mild."
However, life operations were gloomier. Total life and pension income in the UK dropped about 13 per cent to pounds 322m. New annual premium business slumped 21 per cent to pounds 30m, while single premium business collapsed by 53 per cent to pounds 47m. Worldwide, total income annual life premiums dropped 11 per cent to pounds 69m, while single premiums more than halved to pounds 89m.
Premium income from Sun Alliance's UK motor division fell 9 per cent to pounds 188m. The drop came despite a 3 per cent increase in the company's new telephone-based direct insurance division.
Swinton, the broker owned by Sun Alliance, suffered in the price war with direct insurers and was forced to close more than 60 of 500 branches earlier this year. But Mr Nelson said: "We think the repositioning is going to work. The telesales unit we have set up is working well and generating business. There will always be people who want that kind of service."
Sun Alliance has recently disposed of a number of smaller, peripheral operations, but is launching Connections, which brings together the company's telephone-based personal insurance business together with a broader range of products, including savings and investments.
The interim dividend was raised to 5.9p; shares closed up 8p to 359p.