Profits at Hibernian Group rise 30% to £24m

Strong investment gains and a greater return from life and pensions business helped pre-tax profits at the Hibernian Group to rise 30 per cent to £24 million from £18 million, for the six months ended June 30th.

But while life and pension operating profits grew from £4.5 million to £6.6 million for the half year, profits from the company's general insurance business dropped from £9.6 million to £7.9 million.

This was mainly due to an overall increase in claims on 1997 and rising motor underwriting losses which went from £5.9 million to £8.5 million for the half year, said the company. As a result, customers may face increased motor insurance premiums.

The results were also boosted by increasing investment returns - realised and unrealised - which rose from £4.3 million to £9.5 million for the six months. This was mainly fuelled by gains made on equities and property.

Turnover rose by 12 per cent from £156.9 million to £175.2 million. Operating profits from the Irish activities increased from £14 million to £14.6 million, with life and pensions accounting for 46 per cent of that rise.

One of the disappointments in the figures was the £100,000 loss made by the group's British business which made a small profit of £100,000 in the same period last year.

Chief executive, Mr Adrian Daly, said the UK business will now be sold and he hoped Hibernian would realise a net gain on the sale, which should be concluded before the end of the year.

Group operating earnings per share increased by eight per cent to 20p reflecting the reduction in the standard corporation tax rate and a change in the mix of earnings.

In the life assurance sector gross premium income rose 15 per cent to £46.4 million. Operating profits from Hibernian's life and pensions business increased by £2.1 million to £6.6 million which it said "reflects an increase in our policy base, favourable investment markets and strong new business sales".

In terms of general insurance, the company says unlike the first half of 1997, "the pattern and value of claims has increased in 1998". But it says weather claims have not impacted on profits and most of the claims arising from Christmas storms have been settled.

Mr Daly said general insurance profits were down on the first half of 1997 because claims last year were unusually low. "We are now seeing the normal pattern re-establishing itself and that has a lot to do with it," he added.

He said that growth in the second half of the year will come by Hibernian extending its product range and distribution network. On the subject of motor insurance and the rate of road accidents, Mr Daly welcomed as a good idea plans by the Government to introduce a penalty points system, where drivers who break the law will pick up points leading to licence endorsements and disqualification from driving.

"We can see from Garda statistics that the situation is truly appalling at the moment," he said. "Any system that punishes bad drivers and awards good drivers has to be a good thing."

With increasing underwriting losses in its motor insurance business, the company said some of its customers may face an increase in premiums. Finance director, Mr Cecil Hayes, said any premium increases would come in the third quarter.

On the company's future, Mr Daly said Hibernian has not received any offer from the giant international insurer Commercial General Union (CGU) which currently owns 28 per cent of the company. There has been some speculation that CGU might seek to acquire all of Hibernian and merge it with its General Accident operation.

Mr Daly said while further consolidation in the industry can be expected, Hibernian's relationship with CGU has not changed. He rejected the view that Hibernian's share price has been strong on the basis of rumours about a takeover by CGU.