Profits 36% up at restructured GRE

Guardian Royal Exchange, one of the UK's largest composite insurance brokers, yesterday announced a 36 per cent increase in trading profits for the first six months of this year.

The increase, from pounds 131m in the first half of 1994 to pounds 179m in the six months to June, follows a radical restructuring of the group.

GRE claimed that the restructuring, designed to hand managerial responsibility to subsidiaries, means it is achieving greater profits through better quality of business rather than high volumes.

Premiums written in the first six months of 1995 remained relatively flat at pounds 1.928bn, compared with pounds 1.968bn in the first half of 1994.

The company's strong results reflect diversification in Germany and the US, each of which account for about 20 per cent of GRE's business.

In the US, GRE is integrating two specialist car insurers, bought in the past two years, into its own operation. Its German subsidiary has been given responsibility for GRE's operations throughout Europe.

Despite these successes, GRE's group chief executive, John Robins, admitted that life business in the UK has suffered substantially, partly as a result of the decline in the housing market. But he argued that the results, in which new life premiums were down from pounds 254m in the first half of 1994 to pounds 229m in the same period this year, were broadly in line with the market.

"What we have done is to take a close look at our costs and decided to close down our distribution channels where we did not believe that they were profitable. We are now concentrating on distribution through independent financial advisers."

In general insurance, Mr Robins said the likelihood of hardening premiums was high, although this was unlikely to manifest itself for at least another year on personal lines.

Despite heavy competition from other direct insurers, GRE's telephone- based operation, Guardian Direct, was doing far better than expected, he added.

Interim dividends rise by 8.8 per cent to 3.1p per share. Shares rose 6p at close to 224p.