EUREKO Ireland, the insurance group, has recorded a strong recovery in profits based on an increase in life business and strong investment income. It has also announced that it is will soon be offering a range of financial services such as personal loans and car leasing.

Eureko owns the life assurance company Friends Provident and the general insurance firms Celtic Insurance and Touchline, which it has recently acquired. Pre-tax profits for 1996 were £4.4 million, an increase of 57 per cent. Net profits after tax were £3.7 million, compared to a loss of £0.8 million in 1995.

The group recorded operating profits of £1.5 million last year, up 50 per cent, with investment income contributing £3.5 million.

In common with other insurers, Eureko found the going tough in the motor insurance market, although it did manage to cut losses in this area from £8 million to £7 million. Mr Adrian Hegarty, managing director, said the budget was to reduce this loss to £1 million, this year and that he now expected the result might be a break even or, at worst, a small loss.

Eureko increased its motor rates last year and has no immediate plans for a further rise. However, Mr Hegarty said he would not be surprised to see a general increase in rates in the industry later this year, which Eureko would follow.

Further rationalisation of the market can also be expected he said. After its recent acquisition of Touchline, Eureko has no immediate plans for further acquisitions, according to Mr Hegarty although he said that more rationalisation of the motor market is "inevitable" and "Eureko intends to play a leading role in shaping the industry's structure in the future". Friends Provident. the life arm, reported operating profits of £7.2 million, an increase of 20 per cent, boosted by a strong increase in new life business and a 12 per cent rise in investment income to £84.5 million. Net earned premium income in the life business rose 25 per cent to £139,8 million, while net claims rose 26 per cent to £189.7 million. The embedded value of the life company rose from £77.3 million to £89.2 million.

Eureko is also planning to diversify into other areas of the financial services market and has set up a financing company which will offer services such as personal loans and car leases both to its customer base and to the market in general.

Eureko is the Irish division off the pan-European Eureko Group, an alliance of six major financial services companies formed in 1992.