Irish Life profits rise 22% to £89m

STRONG earnings from investments and existing products helped boost profits at Irish Life by 22 per cent to £89 million for 1995.

The group is confident that its share of the Irish life assurance market increased last year, but earnings from new business fell.

After stronger than expected embedded value profits, Irish Life shares rose 3p to 254p in a falling market. Profits in a £74 million to £82 million range were forecast.

Shareholders are to get a 10 per cent increase in dividends. The final dividend is rising by 0.75p to 7.75p per share, bringing the total net dividend for 1995 to 11p per share. Managing director David Kingston said this reflected "our satisfaction with the result for the year and our confidence going forward".

The embedded value (EV) profits measure used by Irish Life is a profits measure for life assurance companies. It is based on calculating the current value of the future income stream from new policies sold, earnings from existing business and increases in the value of shareholders investments.

A breakdown of Irish Life's EV earnings shows that earnings from products - policies sold - increased to £69 million from £64 million while investment earnings rose to £17 million from £9 million.

The £5 million rise in product earnings involved a £10 million in crease in earnings from existing business to £63 million and a £5 million fall to £6 million in earnings from new business.

The fall in earnings from new business reflected the start up costs of new operations such as Irish Life International and First Variable in the United States as well as more competitive markets.

Group premium income from businesses in Ireland, the US, Britain and France rose by 8 per cent to £767 million. New business premiums were up 8 per cent to £405 million.

Some 60 per cent of the total premium income came from the Irish market. Irish Life claimed an increase in its share of this market in 1995.

A few companies have yet to report their 1995 results. But Irish Life estimated that the total market fell by 3.5 per cent on an annual premium equivalent sales basis (total annual premium income plus 10 per cent of single premium income) while its annual premium equivalent sales fell by 2.5 per cent.

New business sales in the Irish market increased by 11 per cent to £183.2 million, boosted by a strong rise in single premium (lump sum payments) pension sales. Single premium income rose by 20 per cent to £137.6 million.

In the US, new premium income was flat, with annual premiums of £14.9 million (up from £14.7 million) and single premiums of £161.3 million (from £161 million).

In Britain, new premium income was 20 per cent lower at £24.1 million, reflecting the withdrawal from the appointed representative distribution network.

Irish Life International, the International Financial Services Centre company set up at the end of 1994, reported new premium income of £1 3.8 million from sales in South Africa and Britain.

After paying dividends of £34 million, Irish Life had an embedded value of £664 million at the end of 1995.