The group, one of the world's largest insurance brokers, reported pre-tax profits of pounds 42.5m, compared with pounds 41.1m a year earlier. The dividend cut pushed the shares down 14p to 178p before recovering to 190p by the close of trading.
'We maintained during 1992 the same rate of dividend as had been set in 1990, knowing that many of the adverse influences on our 1992 profits were of a transitory nature and that we were taking a great deal of positive action which would produce good returns in the future,' said Roger Elliott, chairman and chief executive.
'This rate of dividend cannot be sustained following the loss of reserves caused by the substantial deterioration in our discontinued UK underwriting operations,' he added.
'It is in the interests of shareholders and of the group to set a lower level of distribution which will enable the group to build and maintain balance sheet reserves and cash resources.'
Losses from discontinued operations - reflecting the need to add to reserves of Sovereign Marine & General - amounted to pounds 25.7m, higher than most City analysts' expectations.
Mr Elliott said the insurance business continued to be affected by the weak performance of the world's important economies last year. 'Many of our clients have suffered from low demand, high financing costs, uncertain outlook and the need to cut back employment. This inevitably affects their demand for our services and for those of insurers.'
The group has held its own growth in expenses in underlying terms to 2 per cent through controls on staff numbers, pay and all other expense items.
The underlying staff head- count has been reduced by more than 500, mostly in the US.
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