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Britannic has set aside cash to return to dividend list.

Byline: Nevill Boyd Maunsell

Britannic hopes to return to the dividend list with a final pay-out for shareholders at the end of this year.

Yesterday the insurer's chief executive Mr Paul Thompson said pounds 50 million had already been set aside towards bonuses for 2003 for holders of Britannic Assurance's 1.5 million with-profit policies. This should rise to pounds 110 million for the full year to be split between annual bonuses added to the value of outstanding policies and terminal bonuses for those that mature.

Britannic suspended both dividends and bonuses in January, when it closed Britannic Assurance to new business.

But it also held out the prospect of future 'sustained dividend paying capacity' of between 20p and 25p a share.

Yesterday Mr Thompson said: 'We are reasonably confident of resuming dividend payments by the end of the year.'

While avoiding a formal forecast, he said he hoped this would take the form of a final payment for 2003.

First he has to re-negotiate payment terms for pounds 185 million of borrowings from the Royal Bank of Scotland and HSBC. Of this, pounds 65 million falls due by the end of this year and the rest by next August.

Mr Thompson hopes to agree terms for repayments over the next five years.

The stock market was pleased with this prospect and with an achieved six-month operating profit of pounds 44 million before tax and exceptional items, down from pounds 52 million last time. The shares bounced 24p to 302 1 /2p where dividends totalling of 20p would give them a yield of 6.6 per cent.

On the basis of achieved profits, Britannic gave its shareholders' funds as pounds 987 million, or 502p a shares, unchanged from the end of last year. The pounds 12 million drop in profits from the first half of 2002 reflected a smaller contribution from Britannic Assurance, offset by better performances from the specialised annuity operation, Britannic Retirement Solutions, and the mortgage lender Britannic Money, sold to Paragon for pounds 19 million at the end of June -at the cost of a book loss of pounds 25 million.

Britannic Assurance has boosted its free asset ratio to ten per cent from 6.5 per cent at the end of December. They are proceeding cautiously with Britannic Retirement Solutions, where a focus on profitability rather than growth produced a pounds 4 million operating profit, standing against a pounds 4 million loss last time. Sales dipped to pounds 174 million from pounds 200 million last year.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Sep 3, 2003
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