Still, if further consolidation is to be the order of the day, GRE can only be a winner.. BRITISH ENERGY was the company that dared not speak its name. Even the big boys with their economies of scale are finding the going exceptionally tough, as results from Royal & Sun Alliance and CGU demonstrate. This is obviously good news for consumers; for investors, the position is a more worrying one. Low inflation and improvements in technology and information, mean that companies can predict their claims costs with a high degree of accuracy.That, combined with the problem of overcapacity, is leading to an overcrowded and intensely competitive market. At the same time there are new moves to attack the cost base and improve the profitability of the life business.

The old with-profits life fund will be closed and all new business conducted through a recapitalised fund which will be 100 per cent owned by shareholders.Nobody can accuse GRE of not trying, but is it going to be enough? In the City there is still scepticism; this is an overcapitalised market, both in the UK and the US, many point out. GRE is the subject of more or less persistent takeover speculation, and with good reason. It is the smallest of the big four general insurers in the FTSE 100 index by a long way, and the only one not to have gone through a big consolidating merger in the last two years. All this should stand him in good stead for the challenges that lie ahead in insurance markets – they seem to become more competitive by the minute.Whether GRE will remain independent long enough for Mr Owen to get to the hot seat is another matter. Peter Owen, who will be eased into the job first by taking over as group executive director for the UK and Ireland, is both an outsider, having joined the group only last February, and a comparative newcomer to the insurance industry.
Mr Owen’s background is in airlines – first as operations director at British Airways and later as chief executive of Aer Lingus. He joined GRE this year following the acquisition of the PPP healthcare group, where he was chief executive.

John Robins, chief executive of Guardian Royal Exchange, is therefore establishing a likely successor in good time for his own planned retirement towards the end of next year, or so it appears

The choice is an interesting and a bold one. did the Environment Agency mention, or hint at prosecution in respect of the existence of the line [the pipework],” the judge said.He concluded that, since the EA knew and had “acquiesced” to the existence of the pipeline, “to commence a prosecution .. is manifestly unfair and oppressive”.. IT DOESN’T pay to leave the management succession open to debate, as Sir Richard Greenbury, chairman of Marks & Spencer is discovering to his cost. However, the agency is disputing the sum and a hearing to decide the final amount to be received by Petrus is expected to be held later this month.An agency spokesman yesterday declined to comment because a number of issues in the case, including a number of additional charges, remain outstanding.In a judgment which was made in September but published only on Friday last week, Judge Tonking said that the EA’s attempt to prosecute Petrus on environmental grounds was “manifestly unfair and oppressive”.The government quango wanted to prosecute Petrus for the installation of some pipework at its refinery in Burlsem, which was built in August 1996.During a week-long hearing at Stoke Crown Court last month, the agency argued that it did not authorise the installation of the pipes and that the addition was a departure from the original plans.However, Petrus responded that the environmental watchdog had been aware of the existence of the pipes and had not raised the matter with the company during a number of inspections it carried out in 1996 and 1997.Judge Tonking ruled that EA inspectors visited the refinery on a number of occasions between September 1996 and July 1997 to investigate complaints of foul smells coming from the plant.However, “at no time during that period … In one of the biggest setbacks the agency has suffered since its establishment in 1996, a Crown Court judge threw out the environmental watchdog’s prosecution against Petrus Oil, the company that owns an oil recycling refinery near Stoke on Trent, Staffordshire, and ordered the EA to pay the company’s legal costs.
Petrus Oil is claiming pounds 155,000 – a sum which would dwarf any previous payout made by the EA. Fingers crossed that it will be more successful than in Japan..

THE ENVIRONMENT Agency could be forced to make the highest payout in its history after an embarrassing court defeat at the hands of a small oil company in a dispute over some pipes, it emerged yesterday. This has happened in Japan, and it could happen in continental Europe too.That would be a grave danger. The tacit assumption behind the “new Keynsians” of continental Europe is that a larger deficit will boost demand. But deficits of 6 to 7 per cent of GDP failed to do so in the UK in 1992 and are failing now in Japan. This week we have caught a glimpse of the way continental Europe will seek to curb the numbers of its jobless. If, as happened in Japan, the response to the government borrowing more is for the rest of the country to save more, then a widening fiscal deficit fails to boost demand. I don’t think that is a danger in the next few months, but you could see a position in a couple of years’ time where a sovereign borrower such as Italy could come under serious suspicion.Unthinkable? It is not a direct parallel, but the present level of the “Japan premium”, which Japanese banks pay to borrow funds, would have been unthinkable five years ago.The second worry is that widening fiscal deficits won’t work.