PMPA premiums to rise again

CAR insurance premiums are set to rise again this year, despite strong financial results reported by the State's largest motor insurer, Guardian PMPA. It has announced a 12 per cent increase in pre-tax profits to £97.9 million (€124.3 million) last year. The company, the Republic's largest non-life insurer, said results on the motor side of the business continued to improve, following average price increases of 5 per cent in each of the last two years. However, there remained "some way to go" before it reached a satisfactory position.

It said its income on investments continued to fall due to lower interest rates. Over an extended period, this would necessitate an upward movement in insurance costs to the customer.

"We must anticipate some further increase in motor premiums during 1999 but not of the scale of those applied in the last two years," Guardian said.

A company spokesman said the firm was still in the process of deciding how much premiums should increase by and this would be announced in coming weeks.

Overall, Guardian announced a 19 per cent increase in premium income to £465.3 million with its Irish non-life business recording a 13.5 per cent rise while the life business grew by 42 per cent.

Its direct business in Northern Ireland, which started operating two years ago, has grown strongly and the company said it now had 20,000 customers there.

Guardian said the improvement in its underwriting loss was a particularly welcome element of the results. It fell to £17.4 million (€22.09 million) from £19.6 million (€24.89 million) in 1997, despite the impact of the severe storms in the final week of the year. Storm damage in the western counties cost Guardian's house and commercial property accounts nearly £5 million.

The company reported investment income of £35.3 million, down from £36.2 million in 1997, while its small life business reported a profit of £1.0 million, down from £1.2 million despite the premium growth.

However, the improvement in the underwriting result meant the company's operating profit rose by 6 per cent to £18.9 million (€24 million) before investment gains of £51.5 million were taken into account. This was up on the 1997 figure of £50 million, mainly because of strong gains in both gilt and equity values during the year.

Guardian also earned a profit of £27.5 million from its overseas reinsurance business in the International Financial Services Centre (IFSC), up from £20 million the previous year.

The company's British parent Guardian Royal Exchange (GRE) is currently the subject of an approved takeover by French insurer Axa which has offered around £3.4 billion sterling (€4.95 billion) for the group.

Guardian declined to comment further on the deal, which is not expected to have any significant impact on employment in the Republic. Axa, which is based in Paris but has operations throughout Europe, will buy GRE through its British arm Sun Life and Provincial Holdings. It has only a small presence in the Irish market, however, providing commercial insurance through Colonia, which is a branch of Axa Colonia Versicherung AG while it also operates two companies at the IFSC.