Storms hit CGNU profits

Claims from French storms knocked CGNU profits

CGNU, the UK's largest insurance group, has reported lower than expected first half profits largely due to claims arising from French storms in December 1999.

Chief executive Bob Scott said the results had been hit by about £200m in one-off items, entailing £90m in late claims following the storms in France and investments of about £110m in business development, including new online ventures.

"Our general insurance business results were disappointing and we continue to take necessary steps to improve profitability," he said.

Our general insurance business results were disappointing

CGNU chief executive Bob Scott

First half operating profit before tax was £800m compared with £853m in the first half of 1999, CGNU said.

General insurance operating profit fell to £327m from £370m in the corresponding period last year.

Analysts had previously forecast first half earnings for the group of £900m-£1bn.

Online service

The exceptional costs included £41m spent on developing an online UK wealth management service intended to be launched in the fourth quarter of 2000.

CGNU - created earlier this year from the merger of CGU and Norwich Union - also increased its estimate of annual cost savings from the merger to £275m from £250m.

It said the cost of achieving the savings would be about £425m.