HHG buoyed by return to profits

British insurer and fund manager HHG was back in the black at the half-year stage today as it recovered from losses of £902m (€1.3bn) last year.

The group – the former Pearl-to-NPI arm of Australian financial services group AMP – took hefty accounting charges in 2003 after a restructuring drive to shore up the financial position of its life insurance business.

This year, HHG profits for the six months to June 30 came in at £46m (€68.3m) as the life division benefited from ongoing efficiency gains to achieve operating profits of £32m (€47.5m), against losses of £40m (€59.4m) last time.

Improved investment returns helped the division, which has 4.6 million life and pensions policies and is closed to new business, improve its embedded value - a key industry measure – to £1.31bn (€1.9bn) from £1.15bn (€1.7bn) a year earlier.

Fund manager Henderson, which has total assets under management of £68.4bn (€101.6bn), improved operating profits by £12m (€17.8m) to £25m (€37.1m) as stock market conditions showed a sharp improvement on a year earlier.

During the half-year, HHG sold its 50% stake in Virgin Money to Virgin Group for £90m (€133.7m) as part of moves to simplify its corporate structure.

Chief executive Roger Yates said: “HHG has a clear strategy and is on track to deliver both its short and long-term objectives. Assuming flat investment markets, we expect to maintain margins for Henderson and achieve further efficiency improvements in life services in 2004.”

Despite the profits return, HHG said it would not pay a half-year dividend as it repeated earlier guidance that payments for 2004 and 2005 were unlikely.