Storm claims from France and ecommerce investment sliced £130m from CGNU's first reported results since the merger of Norwich Union and CGU last May.
Pre-tax profits for the first six months of 2000 dipped 6% to £800m, compared to £853m for the first half of 1999.
The group's general insurance operating profits of £327m (£370m in 1999) were described as “disappointing” by chief executive Bob Scott.
He stressed CGNU would continue to take necessary steps to boost profitability. Net written premiums worldwide increased by 8% to £6.2bn.
Profits from general insurance were hit by £90m worth of claims caused by December's storms in France. This freak weather damage extended CGNU's existing losses on its French account from £21m last year to £167m. However, the major loss was offset by a £106m increase in UK underwriting and investment returns to £861m.
Ecommerce initiatives including, the “Asserta home” internet estate agency, consumed another £41m in investment costs.
The insurer said continued rate increases, merger savings and better underwriting results have reduced its combined operating ratio from 107% to 106%.
CGNU reported retention levels are improving despite rate increases of 20% in its personal and commercial motor accounts. Estimates of cost savings from the merger have been increased £25m to £275m, including £15m from business disposals, following better than expected progress on integrating the two companies.
But the group said the cost needed to realise these savings has grown by £75m to £425m, despite job losses remaining static at 4,000. UK general insurance brands are to be re-branded under the Norwich Union banner from October 2.
The group has restated its intention
to focus on general insurance markets where it can achieve a top-five leading position. As a result, CGNU has decided to sell its under-performing businesses CGU Holdings in South Africa and GAVAG in Germany, and continue its strategic withdrawal from the US.
