AGAINST strong competition in the motor and life business last year, the Hibernian Group produced a 9 per cent rise in profits to £26.8 million.
Good investment returns and some improvement in its underwriting business in the Republic last year offset a slowdown in sales of the group's life and motor insurance policies in 1995, according to its chief executive, Mr Adrian Daly.
For motorists, however, the rising number of accidents and fatalities on Irish roads in the first two months of 1996, left no room for a reduction in its car insurance rates, he said.
In response to increased competition, the group says it has it has allocated £4.5 million in an attempt to improve sales over the next 18 months.
A new "repositioning" strategy will include an aggressive marketing campaign, due to start in May. The funds will also go towards staff training, improving administrative procedures across the group and new technology, enabling staff to spend more time with customers, Mr Daly said.
The group, which includes Hibernian's life and pensions business in Ireland and the UK, experienced a modest increase in its total premium income in 1995 to £277.8 million, up 1 per cent on £275.8 million in the previous year.
The results issued yesterday show that, while its general underwriting performance in the Republic improved last year, a worsening position in the UK brought the group's underwriting losses to £14.9 million in 1995 compared with losses of £13.7 million in the previous 12 months. Its shares, which did not trade in Dublin yesterday, remain at 267.5p.
Poor weather conditions in the UK and an upsurge in claims against the insurer worsened the group's overall underwriting result for the year, according to Mr Daly. However, the group's underwriting performance in the Republic improved significantly, he said, with losses of £9.2 million over the 12 month period, compared with £12.3 million in 1994.
Investment income increased by 6 per cent to £35.5 million compared with £33.6 million in 1994. The group realised £9.2 million on its investments, mainly Government gilts, while another £13.3 million still remains on the group's books as unrealised gains.
Almost £169 million of gross premiums over the 12 month period were written in the Republic, an increase of 1 per cent on 1994.
However, severe competition, particularly from the growing number of direct insurance companies now operating in the car insurance market, affected revenue growth, Mr Daly said. Some pick up in its commercial motor insurance policies in the second half of 1995 had helped to stem its losses to around 3.5 per cent of 1994 levels.
Hibernian, which wrote more than £78 million in motor insurance policies in 1995, took on a "considerable amount" of new business, he said. But this was more than offset by premium reductions on existing risks and policy cancellations.
The second biggest motor insurer in the Republic after the Guardian PMPA Group, Hibernian has retained around 14 per cent of that market, Mr Daly said. The company, which insures 110,000 motorists, showed some improvement in its underwriting performance in Ireland, but insists that it will not be cutting its premiums.
In the UK, its insurance activities made losses of £2.4 million compared with a profit of £0.3 million in the previous year. Its business in the UK, which is primarily in the motor insurance sector, contributed £1.8 million of this operating loss, after an exceptional provision of £1 million for repositioning and streamlining that business is included.
Its most recent acquisition in the UK market, Hallmark, reported losses of £0.6 million in the first nine months of trading within the group, reflecting an "unusual level of large claims", it said.
