The best part of Hibernian Group's interim statement this week was the decision to sell off its British insurance business subsequently confirmed with the announcement that NIK Scandia would be the buyer for about £37 million.
In Irish pound terms, the British revenue was up. However, reflecting the real position, gross written premiums fell by 1 per cent to £23.3 million sterling (£27 million). The underwriting loss increased from £3 million sterling to £3.4 million.
Unlike the position in Ireland, Hibernian was not able to generate sufficient investment income in Britain to mop up these losses. While this income rose, an operating profit of £100,000 was turned into a loss of £100,000
CGU, the international insurer which owns a crucial 28 per cent of Hibernian, undoubtedly saw the futility in Hibernian pursuing the highly-competitive British market from such a miniscule base.
The latest Hibernian results can best be described as lacklustre. Most of the growth in pre-tax profit, which rose from £18.4 million to £24 million, came from unrealised investment gains which are merely valuations in the balance sheet and do not really represent profits.
The company, however, was not hiding anything as it made it clear that the operating profits from general insurance contracted, while the operating profits from life assurance rose. Growth is anticipated in the second six months.
Hibernian is unlikely to remain independent. Sooner, or later, it is bound to receive a bid, but CGU must be the most likely suitor.
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