€55 million profit at FBD

FBD has announced nearly a four-fold increase in pre-tax profits to €55.36 million for the six month period to the end of June 2003, writes Eric Donald

That's up from €14.12 million for the opening half of 2002. It's more than double last year's full-year pre-tax profits. At operating level, the profit jumped from €17.3 million to €61.7 million.

The main reason for this dramatic improvement in profits is a change in the insurance underwriting result, from a loss of €4.28 million to a profit of €32.17 million.

This reflects an improvement in the underwriting performance particularly on motor and property. FBD point out that this improvement is welcome, given that the group has incurred underwriting losses of €94 million on the motor account over the previous five years. In this opening period, the premium earned improved and the claims were lower, which combined to push up profits. In particular personal injury claims were lower.

FBD have already announced a 10% reduction in insurance premiums. This week the company's new chief executive, Philip Fitzsimons, hinted that further insurance reductions would be in the pipeline if the improvement in the claims situation continued. He pointed out that there has been a fall in the injury accident frequency.

Profits in the group's property and leisure business doubled from €5.1 million to €10.2 million in the first half of this year. The jump in profits is largely due to the sale of apartments in la Cala in Spain. Around 60 units were ready at the end of last year and these were completed in the opening half of this year.

The Hotels business is under a bit more pressure due to the lower tourism activity. Despite this the Tower group of hotels, that are 75% owned by FBD, are to build a new €25 million hotel in Castleknock in county Dublin. The group already has six hotels - two in Waterford, and one each in Killarney, Derry, Sligo and Templebar.

Work on the seventh is due to start now and be completed by December 2004.

This will be a four-star hotel and country club, and it's a joint venture with Monarch properties.

Last year FBD increased its shareholders in the Tower Group from 50% to 75%.

FBD's third main business division is financial services, where again profits nearly doubled for this period from €1.5 million to €2.9 million.