Shares in FBD Holdings fell by 4.8 per cent in Dublin yesterday after the insurer reported a decline of 14 per cent in its operating profits for the first half of this year.

FBD posted operating profits of €65.1 million in the six months to the end of June compared with €75.7 million in the same period of 2006.

FBD said intense price competition and higher claims charges - resulting from increased policy numbers, weather-related events and a higher incidence of severe personal injury claims - reduced its underwriting profit margin.

The recent volatility of global equity markets severely impacted FBD's results, with its pre-tax profits taking a €12.5 million hit due to weak government bond markets and fluctuations in equities.

FBD's pre-tax profit declined from €157.4 million in the first half of 2006 to €49.7 million this year. Last year's number was flattered by a gain of €83 million from the sale of land in Spain.

FBD's shares closed at €26.40 in Dublin, down from its €27.75 closing price on Tuesday.

This reduced its market value by more than €50 million to €913 million.

The results were well below analysts' forecasts, although FBD said it would meet full-year consensus operating earnings expectations of €3.21 a share.

FBD said its gross written premiums rose marginally from €204 million to €205.4 million. Net earned premiums, which excludes policies placed with reinsurers, rose by 1.4 per cent to €175.6 million.

Chief executive Philip Fitzsimons said the company had grown its number of policies during the period by 6 per cent, adding 30,000 new customers. "We're growing the business at a time when premiums are falling, which is encouraging," Mr Fitzsimons said.

The net claims charge incurred was €122.7 million compared with €108.6 million a year earlier. Its net operating expenses rose by 13 per cent to €26.7 million. This gave FBD an underwriting profit of €26.2 million, down from €41.6 million a year earlier.

FBD's other financial activities, hotel, leisure and property interests contributed €11.4 million to its operating profit.