Cgu's third quarter results have suffered from a series of large claims including £20 million for Hurricane Floyd which tore up the US east coast.
Pre-tax profits before merger costs at the insurer dipped to £603m in the nine months to September, compared to £618m for the same period in 1998.
Bob Scott, CGU chief executive, said: "Strong action continues to be taken to increase general insurance profitability, and improved underwriting results were achieved for the nine months, although progress in the third quarter was held back by large claims and the imposition of a goods and services tax in Australia."
Rate increases have been applied in most lines of business, but the market remains competitive, CGU said.
The best underwriting results were achieved in motor classes where premium rates have increased by 20% and in the household market marked by an increase of five per cent.
The insurer said that despite its action to improve underwriting results, general insurance premiums were 11% lower in the UK.
Another factor affecting CGU's results was a nine per cent downturn in its investment returns which raised £923m.
The group said it has completed the vast majority of its Y2K preparations at a cost of £130m to date, including £30m for the current nine months.
However, its cautious underwriting stance on the Y2K issue has led to a £40m reduction in premium volumes since the beginning of the year.
n More detail on CGU's third quarter results on our web site at: