LOSSES WIDENED at insurance company Friends First in 2009, as the firm was compelled to increase its bad loans provision.
Friends First Ireland made a net loss of €105 million during the year, compared to €21 million in 2008, according to annual results published yesterday by its owner Dutch insurance giant Eureko.
The performance of Eureko’s Irish subsidiary was the worst among its operations although subsidiaries in Russia and Slovakia also made losses. Eureko described Friends First’s losses as “significant” and said the recession had “a considerable impact” on the market for new business.
New life assurance and pension sales at Friends First declined about 15 per cent in 2009 compared to the previous year. However, as the overall market was estimated to have contracted by about 30 per cent, the company estimates its market share has increased to 7 per cent.
The gross value of written premiums were €238 million, down slightly on €253 million in 2008. However, new deposits increased to €291 million, compared to €249 million in 2008.
The finance division of Friends First, which is scheduled to cease operations, made a pretax loss of €93 million in 2009, mainly as a result of a €101 million provision for loan losses.
The company said it would take between five and seven years to complete the closure, which will result in the phased loss of 98 jobs.
On a group basis, Eureko made a pretax profit of €1.5 billion and a net profit of €1.4 billion in 2009, helped by a €1.1 billion settlement with the Polish government over ownership of insurance firm PZU. Eureko sued the government after it walked away from promises to cede control after partial privatisation of PZU a decade ago.
“The financially acceptable exit, after years of fruitless negotiations, ultimately proved to be in the best interests of the group,” Eureko chairman Willem van Duin said in a statement.
2009 “should be seen as a period of recovery”, Mr van Duin said.
The company now sees Turkey as its next big growth market and said it would prioritise its activities there, as well as in Russia and Greece. It may sell some of its weaker international operations, the insurer said.
