"The chance of a claims increase is substantive," unlisted NCM, which is majority-owned by Swiss Re, said in a statement of first-half results. It said the outright favourable economic trend in recent years had been reflected in lower premiums.

"In view of current economic developments and their associated risks, it is to be expected that this trend will be reversed in the short term," NCM said.

NCM reported 1998 first-half net profits before tax and risk provisions of 55.6 million guilders, compared with a year-earlier 54.0 million. After-tax profits amounted to 27.4 million guilders, up from 21.6 million in first-half 1997.

The value of transactions insured rose to 136 billion guilders in the first half of 1998, a 15 per cent increase on the year-earlier half. NCM saidthe worsening situation in Latin America illustrated the domino effect created by increased market globalisation. It was concerned at payment risks in Brazil, particularly the way in which domestic debt, much of it short- term, was being handled.

The Russian situation also continued to give cause for concern as persistent financial problems made it impossible to distinguish qualitatively good financial risks from bad.

It saw small initial signs of modest improvements in the credit risks for Thailand.

"However, the most important risks currently giving NCM cause for concern are a reflection of the continued economic malaise in the economies of Japan, Hong Kong and Malaysia," NCM said.