Troubled Britannic back on track

Britannic, the troubled insurer, said today that it would resume annual bonus payments and dividends as it prepares to finalise a restructuring plan.

The group exceeded City expectations by announcing operating profits of ?44m for the six months to June 30, compared with ?52m for the same period last year. Analysts had forecast around ?33m.

The 15% fall reflected reduced profits at Britannic's Assurance unit, but was offset by better performances from Britannic Retirement Solutions and the Britannic Money mortgage unit.

The company has been undergoing a radical restructuring after seeing the value of its assets eroded by three years of stock market falls. The group issued a profits warning in January, forcing it to shed 150 jobs, scrap its dividend, suspend bonus payouts and close its with-profits fund to new business.

Paul Thompson, who replaced Bryan Portman as chief executive in July, has led a shake-up designed to get Britannic back on track after the host of setbacks.

"We are very much concentrating on the management of the business, and I am pleased with the progress we have made in the first half," he said.

The Birmingham-based company sold its mortgage business to Paragon earlier this year, and has been working on a financial restructuring including the renegotiation of its banking arrangements.

Its investment management arm, Britannic Assurance, has boosted its free asset ratio - a key solvency measure which looks at the level of assets a firm has left over after meeting its liabilities and solvency requirements - to 10% from 6.5% at the full year stage.

As outlined in the 2002 full year results statement, Britannic is not paying shareholders an interim dividend this year. But the company indicated that payouts would resume by the end of the 2003 financial year.

Britannic added that it may pay bonuses to some customers this year. Shares soared 7% higher in early trading to 298.5p.