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FBD recorded a profit before tax of €11.9m for the first half of the year, compared to a loss of €3.7m in the same period last year. It made an underwriting profit of €11.1m, compared to a €1.6m underwriting loss in same the period in 2016. There was a €1.7m boost from restructuring cost savings.
A once-off €5.6m MIBI release, arising from the recent Setanta judgement, reduced the reported combined operating ratio, a measure of insurance performance where anything below 100% is positive. This positive result was also driven by underlying improvement in loss ratios from better risk selection and improved pricing.
The group recorded an increase of 4.9% in gross written premiums during the period to €189.7m. Average premium rates are up 5% compared to the first half of last year and 2% in the period.
Commenting on the results, Fiona Muldoon, group chief executive, said: "This is a good set of results and reflects the strong actions taken in the last few years”. She added that the focus on FBD’s farm, small business and consumer customers has returned the business to profit. She also highlighted the strength of the branch network in delivering value and service to customers.
Claims
She reiterated the challenge of the high cost of claims for all insurers and said that urgent reforms are required to tackle injury claims payouts. She said this was having a direct impact on the affordability of insurance for farmers and consumers.
Muldoon added: “In the absence of reform, all insurance customers will continue to pay the too-high cost of these awards through higher insurance premiums."
The business written through brokers decreased 4% as the group continues to focus on its direct operations, which saw business increase 5.5%.
Overall policy volumes have stabilised while new business volumes increased 15% compared to the second half of 2016 and 12% on the same period last year.
It has completed significant restructuring of its financial solutions business, which has now returned to profitability. The ongoing low-return investment environment continues to drag investment performance, which sits at 0.7%. .
On outlook, the group is targeting modest profitable growth and continued stabilisation in policy volumes in the second half of 2017. However, it cautioned that there is still uncertainty evident in the claims environment and said in the absence of meaningful reform, it does not expect to see any downward momentum in underlying claims costs.
Shares closed at €8.40 on Tuesday.
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