INCREASES in motor insurance charges are imminent, according to the New Ireland which has announced a 6.3 per cent fail in first half profits to £4.95 million.

The life and general insurer attributed the fall in profits for the six months to the end of June to higher underwriting losses at its general insurance subsidiary. Irish National's loss on underwriting the difference between premium income earned and claims paid out rose to £1.98 million from £1.35 million.

While a rise in investment income offset some of the higher underwriting loss, profits before tax at the general business fell from £2.12 million to £1.68 million.

Group secretary, Mr Giles Kerr, said motor business accounted for the rise in the underwriting loss. Irish National has about 5 per cent of the private motor insurance market, insuring about 40,000 motorists. The fall in premium income from general insurance business from £44.3 million to £43 million reflected a decision "not to chase business at uneconomic rates", he added.

In the life assurance business, New Ireland reported a 20 per cent rise in new annual premium income to £13.2 million, reflecting strong sales of pension and protection policies. Single premium income rose to £76.6 million from £40 million reflecting strong growth in group pension funds.

Net income from Irish Life Financial Services - the holding company for group funds management and International Financial Services Centre operations - increased by 75 per cent to £640,000.

Despite the fall in first half profits, New Ireland is increasing its interim dividend payment to shareholders by 10.1 per cent to 4.67p per share. The directors decided to recommend a dividend increase "in the light of the strong underlying performance of the group and their confidence in its future".

Group managing director, Mr Jack Casey, described the latest performance as "satisfactory in a very competitive trading environment".