GA improves 24% despite US losses
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General Accident, one of the UK's largest composite insurers, has reported a 24 per cent increase in pre-tax tax profits, despite continuing underwriting losses in the United States and the absence of a recovery in the UK housing market.
Barrie Holder, deputy chief executive, confirmed that the company's strategy will be based on both organic growth and potential acquisitions.
"We are always interested in looking at new business opportunities," he said. "If there were any predictions for future growth, it would be on the life side. Where acquisitions are concerned, it might be Asia and other territories in which we expect business to grow significantly."
The company's interim profits for the first six months of 1995 were pounds 253.6m, compared with pounds 204m in the same period last year.
GA also predicted that motor insurance premiums in Britain would begin to rise within the next year, although they would probably continue at their present levels for another six months. Household insurance premiums will continue to fall.
Nelson Robertson, GA's group chief executive, said: "We have achieved a further and substantial improvement in our operating performance. There has been another good result in the UK, and we are encouraged that profitability has been maintained despite a further increase in competitive pressures during this period.
"We believe that motor rates have levelled out. When things level out, they cannot stay like that forever and it is rare for them to go back down again. In the UK, motorists have had a good run for their money."
Mr Robertson echoed other composite insurers, including Commercial Union and Guardian Royal Insurance, in stating GA's determination not to hold on to market share at the cost of a premium free-for-all.
Elsewhere, the company's UK life operation bucked the trend and reported an increase in single-premium income, which rose from pounds 251m in the first half of 1994 to more than pounds 559m in the first six months of this year.
However, nearly all of this increase was due to the successful launch of a GA guaranteed bond in March and April.
New annual premiums fell pounds 6m to pounds 21.3m in the first half, partly due to a fall in the amount of housing-related endowment business and continuing problems with lack of consumer confidence over personal pensions.
In the UK, General Accident's estate agency chain ran up losses of pounds 8.5m, compared with pounds 5.3m in the first half of 1994. But the company claimed that despite an 8 per cent fall in the number of sales through GA Property Services - down to 16,000 over the past six months - it had still improved its market share.
In the United States, the company gained from favourable weather claims but suffered heavily from involuntary policy claims, where US insurance law meant the company was allocated thousands of poor risks. Losses from the US personal car insurance market rose from $24m to $38m.
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