Insurer FBD Holdings has said it now expects to make an operating loss for the year as a result of a challenging claims environment. 

Its shares slumped over 18% in Dublin trade today.

FBD cut its full-year guidance range to an operating loss per share of zero to 10 euro cents from the 70-80 cent profit it expected in August. That in turn was just half the level it had forecast in March.

The group posted an operating profit per share of €1.36 in 2013. 

In an earlier than expected interim management statement, FBD said it under-provided for a number of claims related to accidents which occurred in 2011 and 2012. 

It said that factors such as the deterioration in claimants' medical conditions or an increase in the probability of liability have contributed to the costs of those claims being significantly higher than provided for at the time. 

But it added that there is no reason to believe the €13m charge it is taking is systemic or will recur in the future. 

In addition, FBD said it is dealing with a small number of very large accident and liability claims which have significantly increased its claims costs over the third quarter of this year. 

The insurer said that despite this charge its reserves are well in excess of regulatory minimums and are more than adequate to meet customers' claims at all times.

"Given the unprecedented volatility in claims costs in recent months, the group is reducing the forecast result for the final quarter of the year by €10m.  As a result, the group is guiding full-year 2014 operating loss per share of zero to ten cent, excluding any exceptional events that may arise," the company stated in its trading update.

In today's trading update, FBD said the board's dividend policy would remain unchanged. 

It added that growth in economic activity in Ireland - which is expected to be the fastest growing economy in Europe over the next three years - will have a very positive effect on the company in the medium term.

FBD also noted that the Irish insurance market grew for the first time since 2003 in the first nine months of the year and that its gross premium written to date was up 4% year on year, marginally increasing its market share.