FBD reports 40% jump in profits

GENERAL insurer FBD Holdings has reported better-than-expected pre-tax profits - up 40% on the year.

Boosted by strong performances in the underwriting business, profits rose to €185.2 million for the year to the end of December from €132m.

Operating profits were 30% up at €162.6m in 2005 from €124.8m in 2004.

Operating earnings per share rose 42% at 363.54 cents from 256.18 cents in 2004.

Total income was €404.5m last year, up from €355m in 2004.

Non-underwriting activities include property developments/leisure, financial services and the investment of non-allocated capital. The group owns Bloxham Stockbrokers and leisure interests in Spain as apart of its non-insurance portfolio of activities.

The contribution to operating profit from these was also well up from €18.1m in 2004 to €27.7m.

A key factor in the figures was the continuing improvement in claims costs, which reflected the better claims environment for the insurance industry that started to kick in a few years ago.

Despite forecasts of a continuing good outlook for the group, the share fell 55 cents by mid-afternoon, a dip of 1.3% to €40.90 in what dealers said was thin trading in the stock.

Chief executive Philip Fitzsimons said the outlook for the year 2006 was good despite continuing pressure on margins due to intense market competition.

The group’s 2005 results were boosted by good volume growth in its main underwriting business and by higher long-term investment returns.

“The main driver of that has been our insurance figures”, said Mr Fitzsimons.

FBD’s underwriting business accounts for about 85% of total operating profit, while its property business and financial services interests make up the rest.

Fitzsimons said the group was aiming to match the 12% growth in new business volumes this year.

The group’s claims charge for 2005 was broadly in line with the previous year and reflected an improvement in overall claims costs in recent years.

FBD said it anticipated further premium reductions in some business lines if claims and pricing trends continue downwards.

Overall the improved claims environment has meant better returns for shareholders and lower premium rates for customers, said Mr Fitzsimons.