Britannic to resume dividend payments

The Britannic Group cheered investors yesterday with news that its fortunes are starting to recover, leaving it able to resume bonus and dividend payments.

The company warned shareholders and policyholders in January not to expect payments this year after its profits took a tumble. Britannic drew close to breaching its solvency margins and was forced to close to new life insurance business.

Paul Thompson, who became chief executive when Bryan Portman resigned in July, said the group had made £44m in operating profits in the first half of the year, at the top end of expectations.

"We are very pleased with the progress we have made in repositioning the group and improving our financial strength," Mr Thompson said yesterday.

The company's with-profits fund is now only 30 per cent in equities and its free asset ratio is now 10 per cent including implicit items. This stability means the company has been able to put money aside for bonuses and that, while there would be no interim dividend, a final dividend would be paid for 2003.

"The company has been de-risked and they are out of the woods, but what are they left with?" Roman Cizdyn, an analyst at Commerzbank, said.

Mr Thompson did indicate, however, that the group may turn itself into a vulture fund of other closed insurance books, which it could administer on a low-cost base. Reserves for endowment mis-selling have had to be increased in Alba Life, the closed with-profits fund Britannic bought in 1999, but Mr Thompson said he was now comfortable with its capital position. He declined to say whether he had received any approaches for the group.