FBD reports strong profit growth

FBD generated pre-tax profits of €58.9 million for the six months to end June 2004 and has committed to a €30m loyalty discount to core customers.

Further cuts in the cost of motor and general insurance have also been flagged as the underwriting environment improves.

FBD also announced yesterday it has entered a 12-month sponsorship deal of the RTÉ soap Fair City to boost its national profile.

The first-half results reflect strong growth across its divisions.

Apart from general life assurance and pensions, activities include tourist facilities, including an hotel, apartments and golf courses in southern Spain.

Gross premiums were up 5.6% to €187.8m in the six months and earnings per share rose 9.4% to €1.38.

Key points:

Motor rates cut by over 20% on average.

Home rates cut 25%.

Broad-based business rates cut by between 15% and 28%.

Pre-tax profit came in at €58.8m, up from €55.3m, while operating profit was €65.9m, compared to €61.8m last time.

Directors have increased the interim dividend to 12.72 cent from 10.60 cent in 2003, up 20%.

Gross premiums grew to €187.8m from €177.8m last year. Net claims incurred amounted to €99.7m, up from €93.7m.

FBD said the resultant claims/premium ratio delivered a €42.5m underwriting result. FBD said the group’s interests in the La Cala Resort and Sunset Beach on the Costa del Sol in Spain, and its 75% shareholding in the Tower Hotel Group in Ireland, contributed €2.1m to profit, compared with €11.2m last year, but that included the profits of sales of apartments in La Cala.

The company said the downturn in tourism impacted negatively on the half year performance.

Prospects for the rest of the year are positive.

“Recent favourable underwriting performances should be further consolidated through implementation of the Insurance Reform Agenda, which insurers, government and customers have set and which all parties are committed to pursuing,” the company said.

FBD said the underwriting result enables it to offer a special loyalty discount off renewal premiums to its core policyholders. It will apply to specified policies in force in October 2004, which are renewed for the succeeding year.

The total value of this discount will be €30m.

Group chief executive Philip Fitzsimons added that if trends continued and the claims environment reforms were effected, FBD hoped to cut premiums further.