Motor, house insurance to rise, says FBD

MOTORISTS AND property owners are facing hikes in their insurance costs over the coming year, according to the Republic’s second biggest underwriter.

Insurers FBD published results yesterday showing that operating profits fell by more than half in 2009 to €29 million, from €65.8 million the previous year.

The severe winter cost the company an extra €13.5 million in 2009, net of reinsurance, and it expects a further €12 million in additional claim costs arising out of the fact that very bad weather persisted into January.

Chief executive Andrew Langford said yesterday that the insurance industry estimates the final payout will be €550 million, and that in that context, FBD’s €25.5 million bill was a reasonable outcome.

The increase in the cost of claims was likely to push up insurance premiums across the industry. Mr Langford said that his company intended to increase its charges in some cases.

It will raise motor insurance by around 3 per cent across its book. However, Mr Langford added that this increase will not be applied uniformly to everyone, and that loyal customers will face lower hikes, or possibly none at all.

FBD is likely to raise its property insurance charges by between 3 per cent and 10 per cent, depending on the circumstances and individual customers, Mr Langford said.

A loss on its investments and a reduction in property values, which came to €57.8 million in total, left the company with a pre-tax loss of €34.6 million, 9.6 per cent lower than the €38.6 million deficit recorded in 2008, when it wrote off €92.3 million against its investments.

The company’s figures show that the biggest loss, €31.9 million, was recorded against its hotel and golf resort properties in Ireland and Spain. However, Mr Langford said these businesses performed well during the year.

FBD has a conservative investment strategy, with government gilts and cash making up 36 per cent of its portfolio. During the year, it invested €115 million in these instruments.

Gross written premium, the amount of insurance that the company sold, fell 7 per cent to €357.2 million, from €385.6 million. The company said the rate of decline in written premium is slowing.

Operating earnings per share fell 55 per cent to 75 cent from 172 cent. The company intends paying a final dividend per share of 30 cent, down 25 per cent on the 40 cent it paid shareholders last year.