Insurance premiums likely to fall

INSURANCE premiums could come down next year because fewer people are making motor and property insurance claims.

FBD, Ireland’s second-largest general insurer behind Aviva, said fewer people can afford to own and operate cars, resulting in less motor insurance claims.

The company said it is not increasing premiums this year and if the market continues the way it is then it could even cut premiums next year.

FBD Holdings reported pre-tax profits of €20.5 million for the first half of this year, following a loss of €7.9m in the same period last year.

The company said the average cost of property insurance claims fell, as did claims as a result of severe weather. The impact of severe weather was just €2.5m this year compared with €12m a year earlier.

The company raised its full-year earnings guidance by 11%.

Chief executive Andrew Langford said: “The work that we have put in to date should stand us in good stead and will carry forward into the second half of the year as well.”

The company also announced it was creating a joint venture with Farmer Business Developments, which owns nearly 30% of the voting rights in FBD, to own and manage the company’s Irish and Spanish property and leisure operations.

This means that FBD is separating its property business from its core insurance business.

The company said the deal would replace nearly €123m of short-term debts with longer-term financing and slash the group’s exposure to loan guarantees to €7.5m from €60m.

“It means in future our operating profit will only include our core business,” said Mr Langford. “The whole rationale is to allow us to focus on the core insurance underwriting business.”

The chairman of Farmer Business Developments, Padraig Walshe, who is also the former president of the IFA, said this joint venture represents a “new chapter” in the relationship between Farmer Business Developments and FBD Holdings.

“It’s a relationship that goes back over 40 years to when our shareholders put up most of the original capital which established the FBD group of companies. Over the years, our investment in FBD Holdings has been of immense benefit to this company and to our shareholders. Our interests and the interests of FBD Holdings remain closely bound together,” he said.

FBD’s group operating profit jumped to €28.7m from €11.3m a year ago despite a 3% reduction in gross written premiums.

FBD is also making in-roads into Dublin and said it has a 5% share of the market there. The company said too that it has “almost every farmer in Ireland” on its books. It has 450,000 customers.