CGNU has announced a 27% increase in its UK general insurance operating profits, to £100m for the first quarter of 2001.

General insurance profits for the whole of the group were £155m, according to its first quarter results released this week – up 38% from £113m for the same period last year.

CGNU insures one in four UK motorists. Mike Biggs, group finance director, said: “The improvement stems from the success of our strategy of focusing on small commercial lines business.”

Chief executive Richard Harvey said its general insurance business had benefited from targeted rate rises and increasingly selective underwriting, particularly in commercial property and commercial motor classes.

The group's underwriting result showed a £62m improvement, reducing last year's loss of £191m to £129m.

Claims from last autumn's storms in the UK and France are predicted to be settled by the end of May. The insurer's combined operating ratio declined to 105% from 107% in the first quarter of 2000, and is expected to fall further to 102% by the end of this year.

CGNU is planning to extend its internet-based total incident management claims service across its whole portfolio of general insurance business.

The company said it was continuing to seek further rating increases across all classes as it reshaped its book of general business. It follows average increases of 20% in its commercial motor premiums and 15% hikes in commercial liability and personal motor premiums.

CGNU said it is prepared to lose business in the commercial property and liability markets unless it was able to obtain adequate rate increases. Group chief executive Richard Harvey said the company was on course to achieve its targeted savings of £275m from the merger of CGU and Norwich Union by the end of 2001.

In the three months to March 2001, integration savings across the group reached £172m, including £65m from CGNU's general insurance division.