BRITISH insurer Guardian Royal Exchange Plc (GRE) yesterday set the stock market alight with better than expected profits and new restructuring plans.

Shares in several major. British insurance firms rose in sympathy despite a 23 per cent drop in GRE's first half trading profits to £137 million sterling from £179 million.

The result was better than analysts' forecasts of £117 million to £131 million. GRE was upbeat seeing signs that insurance rates were starting to recover.

The group was also expected to embark very shortly on another cost cutting programme targeted at its British operations, where it could cut a 6,000 strong workforce by at least 5 per cent over the next 18 months, industry sources said.

Analysts are raising full year profit forecasts by £20 million to £300 million.