Loss adjuster Miller Pycraft has failed to hit expected revenue targets and incurred higher than expected integration costs, it was revealed this week.

Parent company Miller Fisher Group saw its shares plunge 38% after issuing a profit warning which it blamed on the problems that have occurred since it acquired loss adjuster Pycraft & Arnold for £10.8 million last February.

The fall from 90p last week to 55.5p on Tuesday was the result of a statement which repeated warnings of a profits squeeze, issued last September.

Finance director Richard Horton revealed Miller Pycraft had lost one or two smaller clients but was unable to disclose the insurers' names.

However, he said the board felt the market's reaction was overdone.

"Our trading statement shaved approximately £1 million or about ten per cent off our profits, but by comparison our share price fell 38%."

Horton went on to say: "The directors do not regret buying Pycraft & Arnold because it has made us a much stronger group and helped us to achieve several new panel appointments in 1999."

But he went on to stress that loss adjusting now only contributes 50% of the group's £70m turnover.

Horton explained: "We are trying to build an insurance outsourcing group providing almost every insurance service except underwriting."

The company statement also said the group had incurred exceptional costs relating to its change of residence for tax purposes from Ireland to the UK.

But this was balanced by the news that the group's overall operating profits had reached record levels for the last quarter of 1999.