Premium's put on insurance, but oils well and ends swell

Published on Friday 12 August 2005 12:47

THE insurance sector took the headlines this week, but it was kept in check by oil prices escalating to record prices.

Aviva, Britain's biggest insurer, did better than expected over the first six months of its current year, with chief executive Richard Harvey citing a "sustained excellent general insurance performance" for helping it achieve a 21 per cent jump in profits to 1.32 billion.

However, the firm, which trades under the Norwich Union brand in the UK, warned that its margins in the second half would be hit amid fierce competition. Old Mutual, which is based in London, but operates primarily in South Africa, said its first-half profit improved by 29 per cent to 554m. Royal London - which owns city-based Scottish Life - said business had increased by 30 per cent to 115m by the half-year stage.

And new research claimed Standard Life's switch from equities to bonds last year - under pressure from the Financial Services Authority - had cost members and policy-holders 1.25bn in lost profit as the stock market soared in the wake of the switch.

Oil prices broke through the $65-a-barrel barrier to hit record levels as traders pushed the price up on fears of supply problems from the Middle East as terrorism worries grew. The Royal Bank of Scotland's latest Oil & Gas Index showed North Sea production managed a 0.1 per cent year-on-year increase, marking the first reversal in production for two years.

Although the bulk of the banks reported last week, there were a few stragglers who left it to this week. Among them was Standard Charter, which told of a 20 per cent gain in interim profits to 747m. Bradford & Bingley chief executive Steven Crawshaw revealed a six per cent profit rise to 147.9 for the first half. And the latest annual accounts at city-based merchant bank Noble Grossart, headed by Sir Angus Grossart, saw pre-tax profit rise slightly, helped by beneficial accountancy provision, despite a drop in fee income and commissions to 4.05m.

Meanwhile, sources in Asia insisted the Royal Bank of Scotland would seal its deal for a stake in Bank of China "very soon", despite chief executive Sir Fred Goodwin saying just a few days earlier that RBS was "looking rather than leaping".

And the Bank of England downgraded expectations for UK economic growth for the year to two per cent from a previous 2.5 per cent.

ScottishPower's chief executive, Ian Russell, said the firm's planned sale of United States-based subsidiary PacifiCorp should complete by November 2006. At the same time he also delivered news of a 41 per cent increase in first-quarter profits to 147m.

Scottish Enterprise, Scotland's jobs creation agency, revealed a shake-up in its structure, which saw the number of directors cut to six from ten. Lena Wilson, the quango's customer operations head, was appointed as chief executive Jack Perry's number two while also taking on the post of chief operating officer.

City-based brewer Scottish & Newcastle cited strong demand for its main brands, such as Foster's and Strongbow, for helping it to an 8.7 per cent increase in half-year profit as volumes rose by 5.5 per cent.

Airports operator BAA managed to pull off record passenger volumes in July, despite the impact of the London bomb attacks in June, although traffic at Heathrow was down slightly.

Actuarial consultants Lane Clark & Peacock issued a report which showed a fall in the pensions deficit at Britain's biggest companies. The gap in the FTSE-100 pension schemes dropped by 5bn, but still stood at 37bn.

Polls of members by the Institute of Directors and the Federation of Small Business revealed that around 60 per cent had been the victims of business crime, with the average cost to companies 5000 per year.

Construction and infrastructure services firm Morgan Sindall pushed its turnover over the first half up to 615m, from 604m, adding that its Lovell division - which is involved in area regeneration projects in Oxgangs and Southouse - had helped it achieve a 39 per cent boost in profits to 18.2m.