Churchill Group is putting the brakes on rises in its motor book having boosted its business volumes by a whopping 56% in the first half.

The rise was due to gross written premiums. The company now has 7.5 million policyholders

According to group managing director John O'Roarke, Churchill was running at an underlying combined ratio of 100%. This compared to a level a year ago of about 102% to 103%, he said.

Poor investment returns as a result of the stock market downturn hampered the overall results. And returns on the motor business, crucial to Churchill, was at a maximum. But O'Roarke said there was room to put prices up elsewhere.

"We won't be putting our rates up on motor. No matter what happens in investment markets I don't see insurers being able to get more margin.

"But commercial is a completely different story. The liability side in particular has been underpriced."

He predicted average rate increases of 20% over the next 12 months.

Continuing turmoil on the stock markets - and the pressure it puts on underwriting to make up for falling investment returns - would prevent a return to the bad old days of undercutting in personal lines, he said.

Churchill's owner, Winterthur , saw premium growth of 9% in the first half of the year and improved its technical result and combined ratio, but was let down by falling investment income.

Winterthur's parent group, Credit Suisse, has launched plans to strengthen the group's capital base.

Winterthur's investment income was down by SFr1.5bn (£0.65bn) against the first half of last year.

This was a result of selling shares from the general insurance operation's portfolio.

In the second quarter of 2002, Winterthur wrote SFr 4.12bn (£1.8bn) of gross premiums, down from SFr4.34bn (£1.9bn).