Insurer looks on sunny side of life: The Investment Column

The past month or two have not been kind to Sun Life and Provincial, the insurer floated in July by its French parent, UAP.

The shares, which opened at 235p, dropped to 210p within days as the company succumbed to a hostile market and one or two would-be staggers who dumped shares as soon as they realised quick returns were not in the offing. Since then, they have dragged themselves painfully back up to just below the opening price.

Yesterday's results are the first indication of what can be expected from Sun Life and, despite some problems of comparison with previous years, the figures were encouraging. Group pre-tax operating profits of pounds 103m, reduced to pounds 92.5m after interest, were taken positively by the market.

Sun Life, which specialises in the life and pensions industry, recorded a pre-tax increase of 14.4 per cent to pounds 54.8m in the first half of this year on the back of a 20 per cent increase in premium income, similar to the average recorded by the industry trade body, the ABI. The company differs from its rivals, however, in placing much more emphasis on regular premiums than one-off contributions into its policies, which should protect its long-term income stream.

UAP Provincial, the general insurance arm, saw profits of pounds 44.1m. It recorded underwriting profits of pounds 3.8m, an impressive performance given the high cost of its direct insurance operation, Prospero.

Sun Life claims that, start-up costs aside, most of Prospero's accounts made an underwriting profit.

New Ireland Holdings, the second biggest insurer in the Republic, recorded record premium income figures.

There's no interim dividend but the proposed 10p final payout implies a yield at yesterday's 234p close, up 2.5p, of 5.3 per cent. In line with the industry, it makes the shares fairly priced.