CU growth disappoints shareholders

Investors in Commercial Union were yesterday disappointed by the insurance company's latest financial results. At prevailing exchange rates, profits for the nine months to September grew a pedestrian 3 per cent.

The results contrast with figures earlier this week from the rival General Accident, which announced a 23 per cent jump in profits. CU shares fell 7 per cent yesterday to 745p.

The strong pound was partly to blame. Under constant exchange rates, operating profits for the group grew 15 per cent.

Though performance was strong in the life sector, which accounts for just under half of CU's business, general insurance had a difficult time. The UK underwriting operation has lost pounds 85m so far this year.

Despite yesterday's tumble in CU shares, analysts' remained pessimistic. "CU shares have been buoyed by recent takeover speculation," said one analyst. "I think a [share] price nearer to 700p would be more reasonable," added another.

- Lea Paterson

Investment column, page 27