LitComp, the after-the-event (ATE) insurer and medico-reporting agency, saw 18.5% wiped off its share price after announcing a £342,000 net loss in its year end accounts.
As Insurance Times went to press the insurer's share price stood at 47p, down from 63p last Friday.
Litcomp finance director Paul Lavender explained the loss had occurred as a result of the insurer's expansion into the ATE market in March.
He said: "The ATE unit [Elite] started trading in March and is regulated by the Gibraltarian Financial Service Commission.
"As a condition of that regulation our UK marketing arm had to obtain FSA approval, and it effectively delayed the set up of the ATE insurer."
Lavender forecast a hike in profits in the forthcoming year as the ATE insurer begins to trade at full capacity.
He said: "Our broker forecast is to write £3.5m in premiums in the next year. So in our 2007 results we expect to make a bottom line profit of around £1m."