Insurance premiums will fall further this year, after a fundamental turnaround in business, Irish insurer FBD Holdings said yesterday.

Increased sales, a fall in the number of claims and lower settlement costs combined to push FBD to a €59.3 million profit on underwriting, compared with a loss of €5.3 million in 2002.

The company turned an underwriting loss of €10.2 million on motor insurance in 2002 into a profit of €22 million last year. More notably, it recorded a €10.4 million gain on its public liability operations against a loss of €13.86 million in 2002.

"The fall in claims incurred was driven primarily by improvements in both motor and liability," FBD said in a statement accompanying its results for 2003.

It said these two areas produced an underwriting profit of €32 million in the year compared with losses of €140 million over the previous five years.

Chief executive Mr Philip Fitzsimons said the bulk of the €26.4 million reduction in claims costs was accounted for by lower settlements on claims from previous years.

"We do not expect these savings to be repeated to the same extent in 2004 and beyond," the company said in a statement.

Gross written premiums rose 13.1 per cent to €368.6 million in 2003, more than offsetting reductions in premiums for customers over the past year. These amounted to 12 per cent in motor insurance and from 10 per cent upwards in other areas.

Operating profit in the insurance division rose sharply to €93.7 million from €25.3 million in 2002. Added to growth in FBD's financial services division and in its property and leisure interests, it boosted group operating profit to €110.5 million from €37.5 million.

Profits in the property and leisure division were helped by the completion and sale of an apartment complex on Spain's Costa del Sol.

The group's Irish Tower Hotels chain performed satisfactorily "in a year that was particularly challenging for the tourism and leisure sectors", the group said.

FBD plans to increase its presence in Dublin, arguing that "in the changed insurance landscape, FBD's focus for premium growth will be increasingly based on growing customer numbers".

The firm announced a final dividend of 17 cents per share, bringing the full-year dividend to 27.6 cents, a rise of 25.5 per cent.