Liberty Insurance made a profit of €16 million in 2012, its first full year of trading after Seán Quinn's former insurance business was taken over by the Boston-based company and Irish Bank Resolution Corporation.
This was in spite of an underwriting loss of about €20 million last year and a decline of about €10 million in revenues to €180 million.
"Last year was a challenge," said Patrick O'Brien, chief executive of Liberty Insurance in Ireland. He said the profit was the result of €35 million in unrealised gains from its investment portfolio, largely due a strong performance from Government bonds.
Portfolio chunk
"We took a decision when we took on the company that, given the Irish State was a key stakeholder [through IBRC], we would invest a fair chunk of the portfolio in Irish Government bonds," Mr O'Brien said.
“We had strong unrealised gains in our investment portfolio [last year] as a result of an improvement in sentiment towards Ireland.”
He said the firm invested about €200 million in Irish sovereign bonds, some of which carry a coupon of 10 per cent. The reduction in core business was down to two factors.
“The industry as a whole contracted, premiums were down about 5 or 6 per cent year on year. Part of that was due to external factors around the economy and fewer people driving. Part of it was due to a little bit of weakening on the rates side.
“We’re expecting to be more or less break-even from an underwriting perspective and then it depends what happens on the investment side.
“The intention is to reach break even this year and them move into profitability in 2014,” he said.
Significant changes
Liberty has implemented significant changes to the former Quinn business since taking over 18 months ago.
At the end of March, 430 of its near 1,500 staff left the business, including 40 compulsory redundancies. On the layoffs, Mr O’Brien said: “We had an office in O’Connell Street, which we took on for one year. That wasn’t adding much value to us so we shut that down.
"We [also] used to sell from each of our three buildings [Blanchardstown, Cavan and Enniskillen] and we've stopped doing that now." The redundancies cost Liberty €9 million.
Liberty has moved away from Quinn’s focus on young male drivers and is writing more business with females and those over 40. It is also making a bigger play in house insurance, while the commercial business is less focused on construction and more on SMEs.
In late 2012, Liberty exercised its right to acquire the former Quinn business in Britain from administrators Grant Thornton.
Motor business
"We are now writing motor business in the UK, we're excited about that opportunity but it's going to take about 18 months to get our full infrastructure in place," Mr O'Brien added. "It's a tough market and we'll be relatively small to begin with. We'll be distributed via aggregators. Effectively, we're piggybacking off them and using them as our distribution vehicle."
It is planning a "full brand launch" in Northern Ireland at the end of June.
