FBD reports 'strong' profits

Insurance group FBD Holdings said operating profits continued to be strong in the second half of 2010 and trading was "modestly" ahead of market expectations.

Despite what it described as a difficult market environment, FBD said improved underwriting performance in recent months had helped the company trade ahead of last year, with premium rates rising and policy volumes remaining static compared with a year earlier.

"Despite understandable consumer sensitivity to higher premiums, rate increases have been necessary to provide the industry with an adequate return on capital, particularly in light of the unprecedented severe weather claims as a result of the flooding and freezes last winter," the company said in a statement.

Insurable risk and values in the Irish market continued to fall, it said. Gross written premium was marginally up on last year.

The company said its property and leisure businesses in Ireland and Spain have delivered operating profits and cash flows in the second half of 2010. However, it noted that over-supply in the marketplace is a key challenge, and market capacity must reduce.

FBD's financial services businesses recorded solid performances, the company said.

Looking ahead, FBD said it was confident of full-year operating earnings per share of 105 to 110 cent, unless there are exceptional claims events. In April, the company said it had incurred exceptional losses of €12 million due to the extreme weather earlier in the year.

Profits are expected in both the underwriting and non-underwriting businesses in 2010.