Investors welcomed Domestic & General's annual results, giving the stock a 20p boost last week, despite falling profits and higher claims.

The hike in the share price, which closed at 480p on 22 August when results were announced for the year ended 30 June, reflected confidence in strong top line growth.

Turnover was up by 37% to £158.4m with the same percentage rise in the company's all-important UK warranty division, which sells insurance for household goods.

Group profit before tax fell to £14.7m from £17.9m last time, a 17.9% decline.

Its UK expenses rose by 10.8%. nearly as much as the 11.5% increase in income.

The company put the higher expenses down to an increase in work to support the turnover growth, but claims rose, too.

The claims ratio for the UK warranty and insurance business increased to 51.2% from 46.7% the year before, putting it at the top of the band between 47% and 52% where it has been for most of the last ten years.

Deputy managing director John Scrivener said profits would improve despite an expectation that the claims ratio would stabilise at the top of its traditional band.

"The earned income line will begin to increase, the claims ratio will stabilise and our support services will grow," he said.