Chief executive pledges not to pull out, even in a softening market

Cox expects to see private car profit margins come down over the next year after reporting a "market leading" motor combined ratio of 89%.

The Lloyd's-based group jumped back into profit after reinventing itself as a motor insurer by pulling out of commercial insurance.

Its shares jumped 5.5p to 87p on Tuesday as it announced a dramatic turnaround, achieving £42.7m profit before tax last year compared to a loss of £240.6m in 2001.

Chief executive Neil Utley said that its retail business achieved a 61% increase in profits during the year.

He forecast a "plateau" in prices for motor cover but pledged not to pull out, even in a softening market.

Cox's motor insurer, Equity Red Star, was the UK's eighth largest motor insurer and now covers one in four motorbikes.

Prices for private motor business, which accounts for 23% of the retail book of business, were "flat", Utley said, but he added:

"For 2003 I would expect us to make as much profit on private car, but perhaps at a slightly lower margin on a bigger book.

"We are excited about the prospects for special [motor] risks and fleet, but we are by no means not excited about private car. We aren't going to turn our back on any of these markets.

"We aren't pessimistic about a downturn, there's plenty of scope in it and we are here for the brokers long-term."

Cox's broking and insurance operations, which includes Boncaster brokerage and Can Do finance, increased 73% to £19.3m.

Utley said the group was looking to acquire brokers to add to its branch network, insure-shop.

Can Do, a premium finance business, lent more than £100m for the first time and made profits of £2m.

The group's discontinued commercial side was isolated from its continuing operations following an agreement with Lloyd's management.

It ended 2002 with assets of £17.2m.

Former commercial chief, Michael Dawson, will leave Cox at the end of May.

The company would pay no dividend in 2002, but hoped to resume repaying shareholders in 2003.