FBD says levy should not 'eat into its margins'

INSURANCE COMPANY FBD does not expect the levy which is set to be imposed on policies as a result of the collapse of the Quinn Group to significantly eat into margins, the company said yesterday.

Speaking after the company’s annual meeting yesterday, chief executive Andrew Langford indicated that he expects the levy will be passed on by insurance companies directly to consumers, and will result in no competitive disadvantage between providers.

“It is unfortunate for customers, but we expect that levies will be imposed directly to consumers as has been the case with previous levies.”

In an interim management statement yesterday, FBD reiterated its guidance for the year, estimating full-year earnings per share of 130-140 cent.

Operating profit in FBD’s underwriting business in the first quarter of 2011 was ahead of comparable figures for 2010. There was also an improvement in FBD’s non-underwriting division, which comprises its property, hotels and financial services businesses.

In particular, the firm’s Irish hotel businesses saw a surprise pick-up in performance in the first quarter of 2011, boosted by an increase in average room rates.

FBD said it expects an “improved contribution” from the its non-underwriting businesses for the full year. Nonetheless, it warned that 2011 would remain challenging. “Irish domestic demand will continue to decline further in 2011, albeit at a diminishing rate” it said in its statement.