FBD has a good year thanks not only to fall in claims but also by embracing internet and using brokers more

AFTER A tough couple of years, FBD posted an impressive set of results for 2011, ahead of analysts’ expectations. The company turned around a €3 million pre-tax loss in 2010 to post a pre-tax profit of just under €60 million last year.

While the strong performance was driven primarily by a fall in claims, more strategic factors were also at work.

FBD grew market share to 12.2 per cent last year, continuing a trend that has seen the insurer incrementally increase its share of the insurance market over the last decade or so, apart from a blip between 2008 and 2009 when its share fell fractionally.

One way this has been achieved is through a diversification of routes to market. For instance, while 100 per cent of the company's new car insurance business came via the company's sales offices in 2007, by 2011 this had reduced to 26 per cent, with 35 per cent now coming from the internet – including FBD's nononsense.iewebsite – and 38 per cent through telephone sales.

The company has also increased the number of brokers it uses, again moving away from its traditional reliance on FBD offices to drive sales, something that has worked in attracting more business insurance customers in particular.

The listed company’s decision to hive off its property business last year as part of a joint venture with shareholder Farmer Business Developments has allowed it to focus on developing its main insurance business.

The company also benefited from a well-diversified market focus. Despite its drive to penetrate the urban market in recent years, its traditional focus on farming customers has paid off. About 22 per cent of its premiums derived from the farming sector last year, leaving FBD well-placed to pick up on the current uplift in the agri-food sector.

Nonetheless, there are challenges for FBD. As chief executive Andrew Langford pointed out, Ireland has a highly competitive insurance market relative to its size, with about six or seven players dominating. How FBD builds on an exceptionally strong 2011 performance in the next few years will be interesting.