The insurer recorded profits before tax of €11m, up from a loss of €86m in 2015. There was a once-off pension gain of €7m. The combined operating ratio (COR), a reverse measure of profitability to indicate how well the company is performing in its daily operations, fell from 140% to the 99% – anything below 100% is positive. This saw the group record an underwriting profit of €3.2m (2015: loss of €125.4m).

Gross written premiums were down €1m to €361.8m as the group reduced its business written through brokers by €15m. Average premiums increased by 9%. This was offset by a reduction in policy volumes of 5%. Net claims fell from €341m in 2015, to €217.5m in 2016, however 2015 included a €95m charge for strengthening prior year claims.

Farm focus

The group continued to focus on its core Irish farm and small business (SME) market while it moved to a single brand, dropping the No-Nonsense brand last year.

The group said it was rolling out a new IT policy administration system in the second half of the year.

FBD’s total investment return for 2016 was 1.9% (2015: 2.0%). The better than expected investment return reflects market value gains in the corporate bond portfolio as corporate bonds spreads narrowed, as well as a €1.9m revaluation of the group’s investment property.

During the year, FBD divested its 70% shareholding in Passage East Ferry Company for a total consideration of €2.7m, realising a profit on disposal of €1.9m. The group’s financial services operations delivered a profit of €2m.

Brand campaign

FBD has recently started a brand campaign aimed at broadening its customer base. In its outlook for 2017, the group is targeting continued steady improvement of its key COR measure, aiming for the mid- to high 90s range.

FBD group chief executive Fiona Muldoon said: “I am pleased to note that FBD has returned to profit helped by an unusually mild winter so far and our own strong underwriting actions. Our strong customer relationships and the level of service we provide have ensured good retention in our key customer groups despite some of the necessary price increases they have experienced."

Insurance rates to remain high

Muldoon said that while the cost of claims saw some degree of stabilisation, FBD believes insurance premiums in Ireland are and will remain high until structural claims reform is successfully executed.

She welcomed the findings of the Government cost of insurance working group and the focus that it brings to the rising cost of claims for Irish customers.

Muldoon added: "It is important that the Government follows through in translating these recommendations into policies and legislation that will deliver a lower cost, sustainable claims environment for the benefit of all customers."

She warned that if there is no action from the Government on the findings of this report, she believes Irish insurance customers will continue to bear the cost of significantly higher premiums than those seen in other countries.

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