HWY Highway Ins.

RNS Number:8993I
Highway Insurance Holdings PLC
22 February 2005


For immediate release

Not for release, publication or distribution in whole or in part, in or into the
United States, Canada, Australia, Japan or any other jurisdiction if to do so
would constitute a violation of the relevant laws of such jurisdiction.



22 February 2005

          Highway Insurance Holdings Plc ("Highway" or the "Company")

              Profit estimate for the year ended 31 December 2004
        Update on discussions regarding a possible offer for the Company

The Board of Directors of Highway (the "Directors") announces that the Company's
financial results for the year ended 31 December 2004 will be materially higher
than current market expectations.  In the absence of unforeseen circumstances,
the Directors estimate that profit before taxation for the year ended 31
December 2004 will not be less than #19.5 million.

The Company has stated previously its objective of returning positive
underwriting profits from its motor insurance business throughout the insurance
cycle.  Highway maintained a disciplined approach to underwriting during 2004
and, despite increasingly difficult prevailing market conditions, the Company
now expects to report an operating ratio for the year ended 31 December 2004
that is marginally better than the 97.9 per cent achieved in 2003.

Conditions in the investment markets remain challenging.  However, the new
investment strategy implemented by Highway in November 2003 has generated
investment returns significantly in excess of previous benchmark levels.  As a
consequence, the Company now expects to achieve an investment return in excess
of 6.0 per cent in respect of the year ended 31 December 2004.

On 4 January 2005, Highway announced that it had received approaches from a
number of parties who had expressed an interest in making an offer for the
Company.  The Directors confirm that they continue to hold detailed discussions
and that the Directors remain of the opinion that these discussions could result
in a formal offer being made for the Company.  A further update will be provided
on 17 March 2005 when the Company is scheduled to release its audited
preliminary results for the year ended 31 December 2004.

Basis of Preparation:
     
1.   The profit estimate has been prepared using the accounting policies
     normally adopted by Highway

2.   The profit estimate takes into account the results shown by the Company's 
     unaudited interim results for the six months ended 30 June 2004 and the 
     results shown by the unaudited management accounts of Highway for the six
     months ended 31 December 2004 taking into account the assumption outlined 
     below

Assumption:

1.   The only assumption on which the profit estimate is based is that there 
     will be no material adjusting post balance sheet events



                                    - Ends -

Contacts:

Highway Insurance Holdings Plc
Andrew Gibson, Chief Executive                       Tel:  01277 266 576

M: Communications
Nick Fox                                             Tel:  020 7153 1540

FWD
Michael Gaughan                                      Tel:  020 7623 2368



The Directors of Highway Insurance Holdings Plc accept responsibility for the
information contained in this announcement.  To the best of the knowledge and
belief of the Directors of Highway Insurance Holdings Plc, who have taken all
reasonable care to ensure that this is the case, such information is in
accordance with the facts and does not omit anything likely to affect the import
of such information.

This announcement does not constitute an offer to issue or sell, or the
solicitation of an offer to acquire or buy, any shares in the Company to any
person in any jurisdiction.

Lexicon Partners Limited, which is authorised and regulated by the Financial
Services Authority, is acting for Highway Insurance Holdings Plc in connection
with any possible offer for the Company and the matters referred to above and
no-one else and will not be responsible to anyone other than Highway Insurance
Holdings Plc for providing the protections afforded to its customers or for
providing advice to any other person in relation to a potential offer for the
Company or the matters referred to above.

Lexicon Partners Limited has given and has not withdrawn its written consent to
the issue of this announcement with the inclusion of its letter and the
reference to its name in the form and context in which it is included.

KPMG Audit Plc has given and has not withdrawn its written consent to the issue
of this announcement with the inclusion of its letter and the reference to its
name in the form and context in which it is included.
     
The above statements regarding the financial performance of Highway Insurance
Holdings Plc for the year ended 31 December 2004 constitute a profit estimate
within the definitions set out in the City Code on Takeovers and Mergers.
Accordingly, the following statements are required.





                           Letter from KPMG Audit Plc
                        Relating to the Profit Estimate


"The Directors
Highway Insurance Holdings Plc
Highway House
171 Kings Road
Brentwood
CM14 4EJ

The Directors
Lexicon Partners Limited
No.1 Paternoster Square
London EC4M 7DX

                                                                22 February 2005

Dear Sirs

Highway Insurance Holdings Plc

We have reviewed the accounting policies and calculations for the estimate of
profit before taxation of Highway Insurance Holdings Plc ("Highway" or "the
Company") for the year ended 31 December 2004 (the "Profit Estimate") set out in
the Company's announcement dated 22 February 2005.  The Profit Estimate has been
prepared by and is the sole responsibility of the directors of the Company.

The Profit Estimate takes into account the results of the unaudited interim
accounts for the six months ended 30 June 2004 and the management accounts of
Highway for the six months ended 31 December 2004.

On the basis of our review we report that in our opinion the Profit Estimate, so
far as the accounting policies and calculations are concerned, has been properly
compiled by the directors of the Company on the basis of the assumption set out
in the announcement dated 22 February 2005 and is presented on a basis
consistent with the accounting policies normally adopted by the Company.

We conducted our work in accordance with Statements of Investment Circular
Reporting Standards issued by the Auditing Practices Board of the United
Kingdom.

The work we have carried out on the Profit Estimate is solely for the purposes
of reporting to the directors of the Company and hence to the existing members
of the Company, and to the directors of Lexicon Partners Limited.  As a result,
we assume no responsibility to any offeror in respect of, or arising out of, or
in connection with, our work on the Profit Estimate.


Yours faithfully
KPMG Audit Plc"



                      Letter from Lexicon Partners Limited
                        Relating to the Profit Estimate

"The Directors
Highway Insurance Holdings Plc
Highway House
171 Kings Road
Brentwood
Essex CM14 4EJ

                                                                22 February 2005


Dear Sirs

Highway Insurance Holdings Plc

We refer to the estimated profit before taxation for the year ended 31 December
2004 (the "Profit Estimate") of Highway Insurance Holdings Plc ("Highway" or the
"Company") as set out in the Company's announcement dated 22 February 2005, for
which the Directors of Highway are wholly responsible.

We have discussed the Profit Estimate, including the bases and assumptions upon
which it has been prepared, with the Directors of Highway. We have also
discussed the accounting policies and calculations for the Profit Estimate with
KPMG Audit Plc, auditors of the Company, and have considered their letter of 22
February 2005 addressed to ourselves and Highway on this matter.

This letter is provided to the Directors of Highway solely in connection with
Rule 28.3(b) of the City Code on Takeovers and Mergers and for no other purpose.
We accept no responsibility other than to the Directors of Highway in respect
of this letter.

On the basis of the foregoing, we consider that the Profit Estimate, for which
the Directors of Highway are solely responsible, has been prepared by the
Directors of Highway with due care and consideration.


Yours faithfully
for and on behalf of
Lexicon Partners Limited

Mark Hennessy
Director"




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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