Bottom Line: Tough job at GRE

JOHN ROBINS, shortly to take over as chief executive of Guardian Royal Exchange, is joining a business in rude health. Unfortunately, his task will be to prepare the insurer for the coming downswing of the insurance cycle. This is much more difficult than making money by jacking up premium rates.

The 16p fall in GRE's share price to 318p indicated that the stock market was much more interested in the 'regrettable signs of market softening' that the insurer has seen than in its first substantial profits for four years. Pre- tax profits for last year were up from pounds 3m to pounds 183m - or from pounds 150m to pounds 751m on GRE's curious method that includes inevitably erratic investment gains.

GRE said it was determined not to be drawn into a price-cutting scramble for business, and was instead responding by seeking to improve service and offering loyalty incentives to policyholders. It must be hoped that the terrible losses of 1990 and 1991 will dissuade insurers from chasing loss- making business - but history offers few grounds for optimism.

Mr Robins must also get to grips with GRE's life business, which has been going nowhere for several years while management battled with the well-publicised problems of rogue salesmen and bad investment performance.

GRE is set to lose the 30 per cent of its life insurance sales that it receives from Nationwide Building Society. GRE says it has no plans to sell its life insurance arm, but continuing stagnation is not an option. On balance it would be best to take profits.