CITY AND SUBURBAN
Laughter and tears with the Comical Onion, splashing out on a costly hobby
CHRISTOPHER FILDES
Ido hope that the Comical Onion has got it right this time. Its foreign forays have not always been happy, and here it is, splashing out £1.4 billion on Victoire, the French insurance company, after the previ- ous owner had lost money on it and a potential buyer had rejected it. This is to establish CU at the heart of Europe: along with economic and monetary union, why not Commercial Union? Earlier, Guardian Royal Exchange chose to enter through Italy, and found that it had been dealing with — how shall I put it? — olive oil exporters. Sun Alliance, without leaving these shores, posted the biggest loss ever sustained by a British company and carried on paying the dividend as if nothing had happened. Carrying on as if nothing had happened is our insurance companies' forte. They do not, as the onion-men would say, make a drama out of a crisis. They calmly allow a Scottish bank, armed only with a red telephone and a good idea, to come from nowhere and become the mar- ket leader in motor insurance. Only then do they concede that Direct Line's idea is worth imitating, though they grumble that it creams off the good risks. (Which risks do they think it should cream off?) Their life assurance business gets a golden oppor- tunity, from a government that believes in personal pensions and will pay to get pen- sion liabilities off its own back. What do they do with it? They contrive to make funded pension schemes look straightfor- ward and fair. They let themselves in for huge fines, with more to come by way of compensation. They have to hope (with varying degrees of confidence) that their portfolio managers will make enough money to pay for it all. How true it is that, as Robin Angus says, an insurance compa- ny is an investment trust with an expensive hobby. Bon voyage, oignon comique.
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