Alan Frost, chief executive, blamed a poor investment return for the fact that yesterday's figures failed to meet City analysts' expectations.
However, the market was more concerned at the decision to hold the interim dividend at 8p and the fact that the restructuring of the business, announced in February and now underway, has hit sales badly.
Operating profits slumped to pounds 73m, including an exceptional charge of pounds 52m to cover the restructuring. This was pounds 10m lower than was announced earlier in the year. However, the group has been forced to increase its pensions mis-selling provision by pounds 23.4m as well as setting aside pounds 14.4m for a write-off because of problems with a new computer system.
"It's a shocker," said one City analyst yesterday. Some in the City are reviving talk of United as a potential takeover target, or worse - being put into what the insurance industry calls "run-off", effectively shutting it down to new business.
As part of the restructuring the group has pulled out of its industrial branch business and out-sourced its general insurance - starting September - to Churchill, the UK arm of the Swiss Winterthur group. Sales have also suffered as the group pulled off sales staff for retraining. The fact that 1000 staff are losing their jobs has hit morale.
Mr Frost said the savings would start to come through later this year and in 2000.
Mr Frost, who took over as chief executive last year after the merger between United and Refuge failed to deliver the hoped for results, said the decision to hold the dividend was prompted by delays in securing agreement with the regulators over the precise allocation of surplus capital within the group's fund between shareholders and policyholders.
"We have been paying out dividend increases of 15-17 per cent a year," he said. "That is unsustainable in a low inflation environment."