Insurance customers could be in for further premium hikes before the close of the year as FBD tries to claw itself back to profitability against a difficult backdrop.
Shares in insurance company FBD closed down 4% yesterday on the back of an interim statement which flagged the persistence of tough trading conditions.
FBD said it is committed to returning to profitable growth by focusing on sustainable business and through “risk selection improvements and rate increases where they are merited or required”.
Economic growth will ultimately benefit FBD. However, continuing significant uncertainty in the claims environment will impact the development of booked claims reserves and profitability in 2015.
Underwriting actions taken to date are showing signs of improving profitability. The company has chosen to forego declaring an interim dividend given the current climate while a decision on a final dividend payment will be made once the full year results are known.
Rising premiums in the year for car and business insurance offset decreases in the number of policies.
“Market rates continue to harden for both car insurance and business insurance, while home insurance rates remain weak with increased competition for new business given a benign winter and the absence of significant weather events,” the company said in its interim management statement.
The insurer said it will continue to focus resources on its farming and direct business customers in a bid to consolidate leading positions in those markets.
On the other hand, FBD says it continues to demonstrate underwriting discipline by foregoing volume growth in those sectors of the market which have become unprofitable. The group expects that its share of the insurance market is likely to have remained static in the year to date. Full-year results for 2014 saw the company record a €4.5m loss.
Unusually poor weather conditions eroded FBD’s profitability and led to an extremely tough year with Storm Darwin which battered the country at the beginning of the year wreaking havoc. That six-week period alone resulted in claims costs of €44m.
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