Operating profits plunged by 25 per cent at Irish Life and Permanent in the first half, as a €55 million loss on the equity markets took its toll on life and investment income.
The group posted operating profits of €95.2 million for the first six months, down from €126.5 million in the same period last year.
The decrease has been attributed mainly to a €39 million loss in unit-linked fee income and a €16 million hit from Irish Life and Permanent's associated company, Allianz-Irish Life.
Irish Life and Permanent chief executive Mr David Went said the company was in discussions with insurance giant Allianzover how their relationship could be restructured to avoid such shortfalls on Irish Life and Permanent's balance sheet in the future.
It is thought that the company could seek to sell its 30 per cent holding to Allianz, while keeping an existing distribution deal in place.
Shares in Irish Life and Permanent fell by almost 5 per cent on the back of the results, largely because stock-market losses came in above analysts' expectations.
The price was also affected by the company's acknowledgement that equity losses sustained in the year to date had extended to between €65 million and €70 million.
The impact of €55 million stock-market loss in the first half was offset in overall profits however by an exceptional gain of €98.5 million from the sale of the group's industrial branch to Royal Liver earlier this year.
When the equity hit was stripped out, the company said that total profit was up 65 per cent at €189.7 million. Underlying product earnings, again after the equity-related factors are removed, are reported as €135.8 million, up 13 per cent.
"The story is very encouraging in each of the business units," said group chief executive Mr David Went yesterday.
The company recorded an increase of 55 per cent in sales of life and investment products, while the value of new life business grew by 26 per cent to €31.3 million.
Sales through Permanent TSB's cost-effective bancassurance arm jumped by 174 per cent to €64.4 million, with Mr Went noting that the Government-sponsored Special Savings Incentive Accounts (SSIAs) were of key significance here.
Between equity- and deposit-based SSIAs, Irish Life and Permanent holds a 9.8 per cent share of the overall SSIA market.
"SSIAs were an exceptional opportunity for investors and for us," said Mr Went, admitting however that the scheme had hit sales in related areas that offer higher margins. Looking forward, Mr Went said that he expected life and investment sales to increase by 20 per cent over the whole year.
Growth was also seen in Permanent TSB's mortgage book, which expanded by 16 per cent year on year in a market which Mr Went said remained "very strong", even outside investor business.
In corporate pensions, Mr Went said that a slowing in multinational job creation had stifled demand, although reduced numbers of new schemes had been offset by increased contributions to existing products.
The company is awarding a dividend of 14.3 cents, up 10 per cent on the same point last year. Mr Went attributed this increase in part to the success of the company's €150 million share buy-back scheme, of which €112 million is complete.
Looking forward, Mr Went said the group would be focusing on costs over the remainder of the year. He noted that a one-off saving of €27 million could be expected to come through in second-half figures, as the integration of TSB is completed.
On a corporate level, he said that the sale of an annuity business in the US last year had been "well timed" in light of subsequent market conditions, and that the company was still interested in disposing of its remaining US interest.
"The ultimate timing depends on extracting value for our shareholders," said Mr Went.
The company has also decided to pull back from the sale of its Capital Home Loans business in the UK, again citing unhelpful market conditions.
