Aviva Ireland has warned of the “serious challenge” claims costs continue to pose in the personal motor insurance market as it announced a €43m operating profit in the opening six months of the year.

Shareholders in Aviva Health shared a €12.5m dividend payout from the Irish company last year as its profits increased by close to 45%.

Aviva Ireland has recorded its best financial performance in five years after posting profits of €85m last year.

The Irish arm of UK insurance giant Aviva grew its profits by 13% last year, with management stating the business is now “more sustainable” and well-placed to benefit from the country’s economic recovery.