Profit before tax more than doubled to €38.7m at FBD for the first six months of this year compared to the same period last year.

The strong performance was driven by profitability in writing insurance, with underwriting profits up 54% (€10m) to €29m for the half year.

Premiums fell €2m to €190m for the six months compared to the same period last year due to strong competition, according to the company.

Profitable

The combined operating ratio, which is a factor of how profitable the business is based on the insurance it writes, was 82.5%. This was down from 88.6% in the first half of 2018 (Anything below 100% is profitable).

Investment returns improved from €1m in the first six months of 2018 to €9m for the first half 2019 as a result of improved markets. The cost of claims fell by €10.4m to €94.3m primarily due to benign weather during the first half of 2019, according to the company. It also said that the amount of claims had reduced.

I am pleased with these strong 2019 half year results

There was a prior-year reserve release of €8.8m in the period compared to a €6m release in the first half of 2018.

Group chief executive Fiona Muldoon said: “I am pleased with these strong 2019 half year results.” She told the Irish Farmers Journal that as a business and listed plc “we don’t apologise for making a profit”.

She said the results reflect the absence of a major winter storm. Storm Emma last year cost the company €7m.

Muldoon added that premium levels were down marginally due to strong competition and modest rate decreases. She said FBD wants to grow its business in the face of strong competition but is also committed to underwriting discipline and to writing the risks it understands.

She said the cost of claims continue to increase and reiterated that the average cost of court awards, particularly for soft-tissue injuries, remains too high.

She said there has been no meaningful progress on structural reform and Irish businesses continue to be held to impossible standards in personal injury cases.

Comment

The strong profits come at a time when the insurance industry faces continued pressure over rising premiums. Consumers, businesses and farms are paying more for insurance than they were five years ago.

From a shareholder point of view, FBD is certainly delivering and made a pre-tax profit of €50m in each of the last two years – back to levels reported five years ago.

It raises the question of what is a fair level of profit for insurance companies

The pace of regulatory action to combat fraud and lower claims costs, which should ultimately benefit customers, is disappointingly slow.

It raises the question of what is a fair level of profit for insurance companies. FBD was founded by farmers to provide cost-effective insurance to farm families. It should not lose sight of that founding principle.