and the strong pound to increase profits for 1997 and raise its dividend for the first time in two years.

A growing contribution from more stable fee-based business helped profits to rise by six percent to 101.2 million ($165.7 million) over the year, comfortably ahead of consensus forecasts of 98.5 million. The dividend was increased to 7.0 pence per share.

However, the strength of the pound made a big dent in profits over the 12 months, knocking 10.2 million off headline figures.

Sedgwick chairman Sax Riley said the group's strategy of boosting fee-based business was on course and he expressed optimism about the outlook for the coming year despite no sign of a turnaround in deteriorating rates across all classes of business.

"These results, which show brokerage and fees up eight percent, are encouraging in the competitive market in which we operate,'' said Riley. "Our principal businesses all reported good progress and several did particularly well.'' Sedgwick, which currently operates in more than 70 countries worldwide including Bermuda, is on track to meet its target of growing fee-based business to 50 percent by 2000 and Riley told Reuters that he believed there was scope for fee business to become the largest component in the future. In 1997 fees made up 40 percent of business, up from 37 percent the previous year.

"We set the 50-50 target a long time ago and we now believe it should be minimum of 50 percent. We have a number of projects going on around the world which are refocusing our businesses and will give us more fees rather than commission earnings,'' said Riley.

British based operations, Sedgwick Europe Risk Services, now re-named Sedgwick Limited, was restructured in January to focus services further on clients.

Sedgwick had a good record on managing its expense base, said Riley but getting the profit line to move had been a bigger challenge. "We feel strongly that the strategy is working,'' he said.

Profits at Sedgwick Limited rose 15 percent and brokerage and fees increased nine percent. Aviation, UK retail and credit and international broking services all recorded excellent results, said Riley, as did many of the company's continental European businesses.

In North America retail operations grew profits ten percent with brokerage and fees up two percent.

The employee benefits consulting business Sedgwick Noble Lowndes (SNL), reported a 19 percent increase in pre-tax profits to 23.6 million and an increase of 14 percent in commissions and fees.

Sedgwick is exploring ways of expanding SNL's presence particularly in continental Europe and in the US where, it said, the potential for growth was considerable.

The growing importance of fee-based income together with the sale of certain business such as its Dutch underwriting business mean first quarter results are likely to be lower in 1998 than in 1997 and the final quarter to become increasingly important to group results going forward.