FBD Holdings has produced a 17.5 per cent increase in operating profit to £7.39 million (€9.39 million) mostly due to improvements in its technical insurance account for the six months to the end of June.

In a statement, the group said the strong trading performance of the first six months had continued into the second half of the year and it was "confident it will be maintained".

The profits were hit by poor investment returns, which fell to €12.11 million from €12.91 million.

This mirrors the lower interest rates and equity returns in financial markets, according to the group.

"This trend places the focus for insurance companies on underlying underwriting performance to an increasing extent."

Net assets were down to €147.6 million from €148.2 million at the beginning of the year. The unrealised losses reflect the weak performance of the Irish stock market, particularly financial stocks, according to the group.

The improvement in the technical insurance account is due to an improving underwriting performance, with losses reducing from €8.82 million to €6.88 million.

According to FBD, this was due to a lower loss ratio on the property account. However, public liability insurance continues to present problems for the company.

At the same time, premium income grew significantly, with gross written premiums up 16.2 per cent at €87.31 million from the same time a year earlier. Premiums increased across all classes reflecting increased volume as well as higher insured valued. Premium increases also contributed.

Other businesses continued to perform "satisfactorily" according to the group, including insurance/ assurance broking, IFSC activities and property investments. Spanish investments had a particularly successful year.

The interim dividend of 6.5 cents (5.12p), a 15 per cent increase on 1998, will be paid on October 22nd.