Insurance group FBD Holdings has reported pre-tax profits of €162.2m for 2007, down sharply from the figure of €296.8m for 2006 on the back of smaller underwriting profits.
The company said its operating profits rose by 48% to €235.5m from €158.5m reported in 2006. FBD said the 2007 figure includes a non-recurring credit of €107.6m arising from a revision of its claims reserving policy.
The company said its adjusted operating earnings per share fell by 16% to 316.33 cent, down from 376.60 cent the previous year and said it was confident that it will continue to progress in 2008.
Underwriting profits, as expected, fell due to lower margins resulting from premium reductions. Despite the falling premium rates, gross written premiums were marginally ahead of 2006 due to continued growth in customer numbers. Gross written premiums rose to €407.9m, up marginally from the 2006 figure of €407.3m.
FBD said that price reductions have continued this year. It questioned the sustainability of such pricing, however, given the cost/income ratios that insurers are reporting.
'It is the widespread view of industry analysts, however, that the downward trend is about to be reversed,' FBD said.
The company said it has implemented single-digit price increases on some products where ratios warranted rate changes. 'While this action has impacted growth policy, we do not regard increasing our customer numbers at uneconomic premium levels as a viable option, it said.
FBD also said that the challenges facing its leisure, property and financial services businesses faced in 2007 have continued into 2008. On the property/leisure front, the company said that oversupply of product in the marketplace is the key challenge facing our businesses, both in Ireland and in Spain.
In its financial services division, FBD said it is developing new market segments to overcome lower commercial premium levels (FBD Brokers) and the difficult investment climate (FBD Life).
Recently, FBD launched a new stand-alone car insurance brand, aimed at the budget market. The 'No Nonsense Car Insurance' product is an internet only offering and is being marketed in conjunction with Ryanair Money.
'We delivered another strong performance in the year under review,' commented FBD Holding's EO Philip Fitzsimons.
'In our insurance business, we increased our market share in what continued to be a very competitive environment. The plans which we have been pursuing to strengthen and broaden our platform for growth are already achieving positive outcomes,' he added.
After gaining as much as 4% this morning, FBD shares were down six cent to €29.13 in Dublin this evening.
