FBD boss says insurance costs unlikely to fall in coming months

Irish insurer reports 70% rise in pretax profits over first six months

FBD, closely linked to farming and rural communities, recently opened a branch on Baggot Street in Dublin to target consumers and small enterprises

FBD, closely linked to farming and rural communities, recently opened a branch on Baggot Street in Dublin to target consumers and small enterprises

 

Insurance costs are unlikely to fall in coming months, according to FBD Holdings chief executive Fiona Muldoon.

Irish insurer FBD reported on Wednesday that pretax profits rose 70 per cent to €18.4 million in the first six months of this year despite an extra €6.6 million in damage caused by snow storms in March.

Speaking after the company published its results, Ms Muldoon noted that market volatility left FBD with a 0.4 per cent loss on investments – one of the ways that insurers make money – in the first half of 2018.

“We cannot make money on the investment portfolio, that means that underwriting discipline will continue, so I do not see prices coming down very soon,” she warned.

Rising insurance costs, which the industry blames on generous court awards to claimants, have angered business groups, and prompted calls for action to tackle high awards.

Ms Muldoon said the industry hoped the Oireachtas would shortly pass a law preventing people bypassing the Personal Injuries Assessment Board, which adjudicates damages claims.

Similarly, underwriters hope that the Government will implement some of the main recommendations from the Cost of Insurance Working Group report.

In a more controversial move, the industry wants to fund a specialist Garda unit that will investigate insurance fraud, which Ms Muldoon and her peers claim is another factor in high costs.

“We have a choice between generous awards and lower insurance costs,” Ms Muldoon argued.

Premiums

FBD said premiums rose 1 per cent to €192 million in the six months ended June 30th this year.

Ms Muldoon said that FBD paid out €11 million to customers to cover damage resulting from the Storm Emma blizzards in March, but reinsurance cut this bill to €6.6 million.

The company paid a net total of €104.7 million in claims in the first half, down from €112 million in the first six months of last year.

Overall FBD paid out 88.6 cent of every euro it earned in premium income on claims and other costs during the first half of this year. The comparable figure in the six months ended June 30th, 2017, was 93.1 cent.

Earnings per share rose by more than 50 per cent to 46 cent from 30 cent. Net asset value per share rose 17.8 per cent to €8 from €6.88.

Ms Muldoon said FBD increased the number of insurance policies that it sold by 21 per cent over the second half of last year.

She pointed out that the company had been shrinking the number of policies on its books since 2015, when the insurer had to turn around its business in the face of serious losses.

FBD wants to continue growing this business. The insurer, closely linked to farming and rural communities, recently opened a branch on Baggot Street in Dublin to target consumers and small enterprises.

Very strong

Ms Muldoon described the results as very strong, particularly considering the March snow storms.

“Despite adverse weather, challenging investment returns and a competitive market, the team has delivered a healthy profit of €18 million for the first half of the year,” she said.

FBD said that it was in a strong position to deliver sustainable growth.

In June the insurer hired lawyers William Fry to oversee an investigation into a complaint against Ms Muldoon. The investigation is being carried out on foot of a recent complaint by the company’s human resources director Sarah Ryan against Ms Muldoon. Ms Ryan had joined the company last September from Permanent TSB.

Neither she nor the company would comment on the inquiry beyond saying that it was ongoing, and that FBD was “working to bring it to a conclusion”.