FBD says insurance hikes needed to return industry to profit

FBD said increases in Irish insurance costs so far this year are necessary to return the beleagured industry to profit.

Irish motor insurance costs rose almost 4 per cent on the month in March and over 32 per cent compared with the same period last year, according to the latest figures from the Central Statistics Office. Home insurance rates rose by an annual 9.5 per cent in the same month.

Ireland’s only publicly-quoted insurer, which has been loss-making in recent years, said that it remains focused on “maintaining underwriting discipline and prioritising a return to profitability,” according to its latest trading update.

The country’s insurance industry has been in difficulty of late as companies failed to raise enough money from selling policies to cover rising claims and expenses. Last year, FBD sold €70 million of convertible bonds to Toronto-based Fairfax Financial and a property venture stake for €48.5 million to boost its capital and withstand mounting losses and solvency rules.

Uncertain

While FBD said that the claims environment for injuries in Ireland remains uncertain, it welcomed “the increased attention and debate this is receiving at national level.”

The group, led by chief executive Fiona Muldoon, said it continues to seek reforms in Ireland to tackle rising court awards for injury claims, which are affecting the affordabilty of insurance for farmers, businesses and other customers.

FBD restated its aim to be writing insurance at a profit in the fourth quarter of this year and said it remains on track for recovery. It said its losses amid bad weather earlier in the year have not been severe, while its “low risk” investment portfolio has been largely shielded from volatility seen in financial markets since the start of the year.

“The statement is positive in that there has been no negative surprises related to weather, claimes etc, which have been frequent over the last few years,” said Darren McKinley, an analyst with Merrion Capital. “FEB is on much stronger foundations now.”

Shares in FBD rose as much as 2.2 per cent in early trading in Dublin.