OPERATING PROFITS at insurance company Hibernian fell to €90 million in the first half of 2008, a drop of 46 per cent on the corresponding period in 2007.

Its life and pensions business had a 24.5 per cent drop in operating profits from €48.9 million to €36.9 million as new business on present value of new business premiums basis fell by 36 per cent to €842.8 compared to €1.3 billion in the first half of 2007.

The slowdown in the housing and property markets and continuing volatility in investment markets are contributing to a reduction in sales at its life and pensions division, said Stuart Purdy, chief executive of the Hibernian Group.

“The economic slowdown has had a clear impact on the savings and investment market generally and Hibernian is not immune to this. In comparing these results to the same period in 2007, it is important to acknowledge the very different market conditions last year when the market benefited from the significant and one-off impact of maturing Special Savings Incentive Accounts and stronger consumer confidence,” he said.

Operating profit at the general insurance business was down 55 per cent to €52.7 compared to the same period last year as general insurance premium income in the first six months fell to €351.2 million from €375.9 million in 2007. Mr Purdy described trading conditions as “challenging” and said that, against a steady increase in claims costs and expenses, premium income was falling.

“Prices in the Irish general insurance market are now at unsustainable levels given the intense competition over the past number of years,” he said.

As part of cost-cutting measures, Hibernian recently said it would cut more than a quarter of its workforce or 580 Irish-based jobs over the next three years and outsource them to a low-cost operation in Bangalore, India.

“These steps have focused on investments for growth and prudent decisions to improve efficiencies and reduce costs,” said Mr Purdy. “We are confident that these decisions are the right ones to allow us to maximise . . . Hibernian’s business in Ireland.”

The firm, which recently acquired health insurer health insurer Vivas, said that health insurance gross-written premium rose to €49.9 million from €30.9 million in 2007.