Shares in property insurance specialist Leo Insurance Services fell 6% as the company announced that one of its business units was likely to lose a major client.

The listed property insurance specialist said its subsidiary, Grafton Insurance Services, was expecting to lose a long-term contract worth over a quarter of Grafton’s revenues.

Leo said in a stock exchange announcement: “Grafton has been informed by Bizspace that it is planning to transfer its insurance services.

“The Bizspace contract is one of two long-term contracts among Grafton’s portfolio of clients.”

Leo said Bizspace, a subsidiary of Highcross, had made the decision after a business reorganisation.

The statement said: “Although Grafton has made a renewed offer to retain this contract, Grafton believes that it is unlikely to do so and, if it does, that it will likely be on less favourable terms than the current contract.”

The Bizspace contract provided approximately 27% of revenues of Grafton in

the six-month period ended 31 July 2007.

Shares in Leo fell to 8.5p from 9p, where they currently stood as Insurance Times went to press.

Leo added: “The potential loss of the Bizspace contract does not affect the long-term contract Leo has with Safeland, the prospects for which remain strong, particularly after the raising of new funds for further acquisitions announced in September.”

Grafton reported pre-tax profits of £155,700 for the year ended 31 January 2007, with revenues of £617,000.

Leo, which owns a 50% share in Grafton, made a pre-tax loss of £159,000 for the year ended 31 January 2007, on a turnover of £308,500.

But Leo swung into the black in the six months to the end of July, reporting pre-tax profit of £17,000.

No one from Leo was available for comment.