FBD bucks tough insurance market to post 41% rise in operating profits

GIVEN the tough market conditions in the general insurance sector, FBD reported strong operating profits that rose 41% to €40.7 million in 2010.

At the pre-tax level, loses were down dramatically from €34.6m a year previously to just over €3m.

Cost cutting and prudent risk management helped the strong surge in the group’s operating performance.

It has also benefited from steady increases in the cost of premiums introduced at a modest pace since 2008.

For those reasons, chief executive Andrew Langford said the group did not feel any need to raise rates in the current year, although he forecast further increases in the insurance market in the current year.

With regard to the recent EU ruling that insurance companies are guilty of gender discrimination by charging men more for car insurance than women, Mr Langford said FBD would work to find ways round the issue which could see the cost of insurance for women drivers rise substantially.

Mr Langford said there was no doubt that women drivers pose significantly less risk than male drivers and the company will work to find ways to justify the different risk ratings it applies in the car insurance sector.

FBD will look for solutions that will allow them to continue to charge women less without breaking the proposed directive.

“We want to be able to find a way to reflect that risk,” he said.

Over 14 months, the group paid €90m in claims to 14,000 customers who were victims of the severe flooding and freezing weather conditions.

Reflecting on the year, Mr Langford said the group delivered “another strong operational performance and made significant progress in advancing its strategic priorities in 2010.

He noted the group has grown market share in nine of the last 10 years reaching 11.85% in the last 10 years.

The farming community continues to be a major part of the group’s operation and its 30-plus offices around the country are geared to meeting the needs of its strong farming base which accounts for about 45% of its insurance and related businesses.

The group said net claims fell by 11% to €234.3m, reflecting the fact that non-weather related claims including motor injury settlements all fell.

Last year the group recorded a growth in premiums written of 0.3%, the first increase since 2007.

Opportunities for growth in the current year will be limited but the group said its continuing focus on cost control and underwriting discipline would yield improved profits.

Its non-underwriting business including property and its hotels operations made profits of €4.5m, down form €6.5m.