FBD posted a solid first six months performance, making a profit before tax of €11.9m, compared with a €3.7m loss in the same period last year. The solid performance saw premiums written increase 4.9% during the period, to €189.7m. This was helped by a 5% increase in insurance prices in the year, which included a 2% rise since January.

FBD has backed away from the business it writes through brokers in recent years, with the business written through brokers down 4%. Meanwhile, its business written directly increased 5.5%.

No sign of insurance price drop

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Fiona Muldoon, group chief executive, said while the results were better than expected, unless urgent reforms to tackle injury claims payouts and the cost of claims take place, insurance customers would continue to pay higher premiums in the years ahead.

Speaking to the Farmers Journal, she said while there were moderate increases in the core book, “competition is keeping a cap on price increases to farmers”.

According to Muldoon, “FBD is competing fiercely to retain and attract farmer customers and this is reflected by an increased number of farmer customers compared to one year ago”.

There were a higher number of large claims in the farm book as a direct result of more farm accidents, and there needs to be a greater focus on farm safety, commented Muldoon. She said there were other parts of the business which were more profitable and warned that insurance costs for farmers are likely to increase modestly in 2017.

“At a minimum increased costs need to be covered” according to Muldoon.

Committed to farmers

As the largest farm insurer, with around 75% market share, Muldoon says she is very conscious of FBD’s farming routes and is committed to growing the farm book and keeping rate increases to a minimum to farmers. She said FBD has been very active in winning back farmer customers in the last year. She says in the period, while FBD has increased prices overall, it has not increased farm insurance rates (farm buildings and tractors) on 2016 levels.

FBD saw new business volumes up 15%, compared with the second half of 2016. Overall, policy volumes have now stabilised and were back only 0.3%, compared with the same period last year. Muldoon said “these results reflect the strong actions taken in the last few years”.

She said weather in the first half of 2017 was relatively benign, which helped the results. The profit figure includes a once-off €5.6m gain, following the successful Supreme Court appeal by the Motor Insurance Bureau of Ireland (MIBI), where other insurers did not need to pick up the tab in the Setanta Insurance collapse.

Travel insurance

FBD recently moved into the travel insurance market. Muldoon said that while this was important to the brand, it would not add significantly to the bottom line. She said “it will give FBD a more rounded offering to customers to include motor, business, home and now travel”.

Travel insurance is the second most-searched type of insurance online after motor and she says this will drive more potential customers to FBD, which gives the opportunity to cross sell. FBD had a €1.7m restructuring charge as part of the ongoing re-organisation to make the group leaner and more efficient.

In light of the solid first six month’s performance, shareholders may be expecting FBD to return a dividend in 2017. Muldoon says that while this is a board decision, it may be 2018 before a modest return is given to shareholders.

Overall, she said it has been a long road over the last two years, but this set of results and underlying numbers demonstrates that FBD is a solid business which can deliver sustainable profits. She highlighted the strength of the branch network in helping to deliver this.