Independent Insurance posted a drop in pre-tax profits for the first half of the year after its French connection and poor short-term investment returns blemished an otherwise good set of interim results.

Pre-tax profits dropped to £19.1m compared to £24.6m in 1999, but operating profit rose to £35.4m compared to £31.6m, while gross written premium rose 58% to £427.5m.

Underwriting profit rose by 39% to £24m after Independent returned an operating ratio of 90.2%, taking into account the impact of long-term policies. Without this calculation, the operating ratio is 84.8%.

Chief executive Michael Bright admitted that Independent had received “approaches” from other insurers but ruled out a takeover, saying it would bring no benefits.

He added that the relatively small team at Independent ruled them out of acquisition themselves because of the difficulties in imposing their culture on a larger company.

“We are looking at organic growth only,” he said.

Bright blamed a combination of the storms over New Year, the soft market conditions – particularly in commercial motor, and the insurer's self-admitted softness for its losses in France.

However, he added that he was convinced the French market was a good prospect and, with the appointment of a new chief executive officer in France in February, he expected growth of up to 20%.

“The French market is wide open,” Bright said.

Both the Irish and Spanish branches have had good starts.

Independent now expects to capitalise on the hardening of nearly all lines of business, except marine, after investing heavily in both people and systems.

The 50% joint venture with Australian technology company Kookia Pty will enable the insurer to handle up to £2.5bn of premiums by 2002.

Independent also pointed to the success of its bus roadshow, the Absolute 2 Tour, for attracting new business.

“Long-term policies have played a significant part in our growth and we are currently enjoying an 85% retention rate of those invited for renewal, with average premium increases in excess of 6%,” read the chief executive statement.