FBD plc has reported a sharp fall in profits for the first six months of the year. Operating profit was down from €24.1m to €5.4m, a decline of 78%. Profit before tax was down 83% to €3.3m.

The company is blaming the increased cost of severe and persistent weather and increased frequency of car insurance claims.

Gross written premiums were up 5.1% to €184.9m. Average premiums increased 3.1% while policy volume increased 2%. The group increased its market share during the first half.

It says that 9,000 customers were directly impacted by the severe weather. The severe weather cost in the period was €44.3m, however when re-insurance is taken into account it cost the company €15.3m. Storm Darwin in February cost €30.4m alone -€7.8m net of re-insurance.

The increase in car insurance claims frequency has been sharper than expected due to an increase in Irish economic activity according to the company. This market has been is challenged for some time. The company says that retail sales of fuel in June was up 9% compared to the same time last year indicating that more miles are now being driven.

While in the medium term incresed economic activity will be positive for Irish companies such as FBD, it does have short term impact on profitability as there is a time lag before the increases in claims are fully taken into account.

FBD’s financial services operations (premium installment services and life, pension and investment broking less holding company costs) made an operating profit of €1.7m, down from €2.2m a year ago.

Subject to no further exceptional weather events, FBD has reiterated FY guidance for operating earnings of 70-80c.

- updated at 13.52.