Independent Insurance has warned that its full year profits for 2000 will be £20m below market expectations, following poor results from its French operations and increased provision for future claims in the UK.

The company had warned in its half-year figures that the international division would be hit by its French results and there was a further decline in the last quarter from unprofitable classes within the motor, property and subscription fire accounts.

John Blakemore, an Independent director, said there were some quite large reported claims that had taken a while to come through.

Blakemore said that virtually all the French management team had been replaced last year, with Brian Wood taking over as president director general from Alain Couard.

Unprofitable lines of business, such as insuring blocks of flats, had been cancelled. A more prudent reserves policy had also been adopted.

Blakemore said: “The French operation has been turned round from

personal lines to commercial, but not quickly enough to cover the expenses.”

He said it was fair to say that the French problems would account for around £12m.

In a statement to the City, Independent said January was a good indicator of the trends for the year ahead in the French market, with 40% of business being transacted.

The French operation was said to have seen an increase of gross written premium of more than 30% in January, including a rating uplift of more than 10%.

In the UK, Independent increased its stop loss reinsurance protection to cover what it calls the “increasing propensity to seek legal redress”.

Particularly mentioned was the increasing number of companies offering no win no fee services.

The stop loss arrangement had been entered into to deal with problems resulting from Independent's involvement in the London Market in 1997 and before.

Michael Bright, chief executive of Independent, said: “Having used our best endeavours to deal with the problem of old-year liability business, it is a tremendous disappointment that it is necessary to revise our assumptions to the detriment of what would otherwise have been a very pleasing result.”

Independent's gross written premium rose by 64% to £830m in 2000.