Hedging bets lifts Sedgwick to 70m pounds

SUCCESSFUL hedging of dollar revenues helped Sedgwick, the insurance broking group, lift annual pre-tax profits by almost a quarter to pounds 70.5m, writes Paul Durman.

Sedgwick received a pounds 16.2m boost from the benefits of a stronger dollar, achieving a dollars 1.50 rate of conversion for dollar income earned in the UK.

As anticipated, Noble Lowndes, the benefit consultancy business acquired last autumn, made a loss of about pounds 250,000 in the last quarter, because of a pounds 1.5m shortfall from its US arm. Sedgwick has rationalised the US business, which bore the brunt of 160 job losses.

Sax Riley, Sedgwick's chief executive, said Noble Lowndes was settling in well. It has been merged with Sedgwick's existing financial consultancy business to form Sedgwick Noble Lowndes.

After an 'exceptionally active' 1993, Mr Riley said 1994 would be a year of consolidation. 'We believe that Sedgwick is well-positioned to make progress in 1994.'

The group's brokerage income and fees last year rose 9 per cent to pounds 762m. Underlying growth was 3 per cent, against a 2 per cent rise in underlying expenses.

Sedgwick incurred an increased loss of pounds 6.9m ( pounds 6m) from its 49 per cent stake in River Thames Insurance.

The group said the deterioration in River Thames loss reserves reflected the problems elsewhere in the London market.

Mr Riley expressed concern at the rejection of the offer to settle the Lloyd's litigation. He said Sedgwick was prudently reserved against its own exposure.

Sedgwick is paying a final dividend of 3p, which maintains the total at 6p a share.