FBD Holdings posted strong first half profits yesterday as the volume of new business signed up by the insurance company offset the impact of rate reductions on its premium income.

The firm, which acquired 100 per cent of the Tower Hotel Group in March, reported pretax profit of €106.8 million in the first six months of 2005, up from €57 million in the first half of 2004.

This significant uplift reflected a positive short-term investment return of €21.7 million rather than growth in core business.

Operating profits increased to €86.8 million in the first half of 2005, compared to €67.3 million for the previous half year. Turnover in the first half of the year increased to €263.5 million, up from €240.5 million last year.

Philip Fitzsimons, chief executive of FBD Holdings, said the results also benefited from a particularly favourable insurance claims outcome in the period. He said the forecast for the second half of 2005 was satisfactory.

"Whilst the latter is unlikely to be repeated and rate reductions will have greater significance for earned premiums income in the second half of the year, we are confident of achieving satisfactory full year results," he said.

FBD Holdings divides its business between insurance underwriting, its primary business, and various property and financial services businesses.

The results for FBD Holdings' insurance arm show that gross premiums written increased by 2.4 per cent to €192.4 million in the first half of 2005. net earned premiums grew by 3.7 per cent to €164.5 million. Claims incurred amounted to €91.7 million, compared to €99.6 million in the first half of 2004. The firm said a lower number of personal injury claims had contributed to this improved performance. It highlighted that no major storms had occurred during the six months.

FBD Holdings said it would increase its interim dividend to 20 cent per share in view of the positive results. In the same period 2004 the firm paid a dividend of 12.72 cents per share.

In a research note published after the results Davy Stockbrokers said management were playing down the prospect of any further repatriation of surplus capital in the near-term. But it said the cash generation story was still intact at the firm, despite the 57 per cent increase in dividend payments.

Mr Fitzsimons told The Irish Times yesterday that there was no near-term plans for a further share buyback. He said the firm had already spent €81 million on buying its own shares during the first half of 2005.

Shares in FBD Holdings closed up 3 per cent at €33.50.