OPERATING PROFITS at insurance company FBD rose by 60 per cent to €64.9 million last year despite a 2 per cent fall in written premiums.

Results for the year to the end of December show that gross premium written fell by 2 per cent to €351 million last year, down from €358 million in 2010. However, the decrease compared to a 4.9 per cent decline in the market generally.

The company increased its market share to 12.2 per cent, up from 11.8 per cent in 2010, and increased policy volumes for the first time since 2007.

A fall in the number of claims was the main driver of the company’s strong performance last year, with net claims falling by 14 per cent or €33 million to €201 million during the year.

The reduction in claims reflected a number of factors, including benign weather condition, a reduction in motor claims due to improved safety on the roads and a fall in the volume of traffic, and a general decline in the value of claims reflecting weaker economic activity.

Lower claims pushed the loss ratio down from 77.4 per cent in 2010 to 66.6 per cent, and the overall cost of risk to 90.8 per cent, down from 99.4 per cent in 2010.

The company’s full-year dividend was 34.5 cent, an increase of 9.5 per cent. It is guiding earnings per share of between 145 and 155 cent for 2012, in line with existing forecasts.

The company, which exited Irish government bonds in late 2010, held €406 million of German government bonds at year-end, down from €497 million at the end of 2010, as some of these bonds matured.

Chief executive Andrew Langford said the decision to exit Irish bonds was taken due to solvency requirements, and said the company continued to hold a significant amount of deposits in Irish banks.

He said the company would maintain low-risk asset allocation as volatility continued. “Over 90 per cent of our balance sheet is in cash and European bonds. We predict we will keep this asset allocation in the short term.”