Pre-tax profits at the State's largest motor insurer Guardian PMPA jumped by 83 per cent to £68 million for the first half of 1998. Profit growth came from a strong rise in gains on investments and a sharp reduction in losses at the general insurance operation.
Operating profits - before investment gains of £25.7 million were taken into account - rose by 29 per cent to £23.1 million on premium income which was 26.6 per cent stronger at £248 million. Guardian's underwriting losses - the difference between claims and income - were halved, falling to £3.9 million from £8 million. The improvement followed "corrective action" taken in the motor insurance business, the group spokesman said.
It involved being more selective in the private and commercial motor business taken on as well as segmenting motor business and applying selective price increases where the performance of a segment of business was poor. Segmentation of motor business will continue with selective price increases forecast. But for motorists in categories where claims are below average there may be price reductions or no increases. The corrective action "has allowed us to minimise the need for rate increases among the bulk of our customers despite the increasing number of road accidents and with rising claims costs", according to Guardian. But chief executive Mr Gerard Healy said Guardian is concerned about the number and severity of road accidents.
"We look forward to the introduction by Government of measures that will reduce the present unacceptably high levels," he said.
It is imperative that the measures due to be announced tomorrow are relentlessly enforced in order to drive through a speedy improvement in the present unacceptable situation, he stressed.
"We would like to see specific commitments set out to achieve reductions in deaths and injuries in a short time-frame," he added. Calling for a change in "our poor driving habits", he said Guardian was prepared to "increase substantially" its financial contributions to road safety programmes and other effective mechanisms to reduce the death toll on the roads. Guardian insures about 40 per cent of the Irish private motor insurance market with about 250,000 private drivers as well as commercial vehicles. Other general business includes household insurance where a marketing alliance with AIB helped to push up revenue. Guardian has a life assurance operation and a reinsurance operation based at the International Financial Services Centre. Mr Healy described the first half outcome as "a fine performance in the face of a difficult business environment".
A breakdown of income shows that premiums from general business were 13 per cent higher at £134.8 million. But profits dipped at the life operation. Life premiums increased by 39 per cent to £11.7 million but profits on the business fell to £0.5 million from £0.6 million. New regular premium income increased by 15 per cent to £1.5 million. New annual premium income was 46 per cent higher at £0.7 million while single premium pension business jumped to £4 million from £0.6 million. Revenue from reinsurance jumped by 49 per cent to £101.8 million. But while profits from this business rose to £8 million from £6.6 million, the operating margin fell to 7.86 per cent from 9.65 per cent mainly because of poor claims experience at the parent company in the UK.
Guardian forecast premium income growth to continue at the same rate in the current half which would ensure that it met its target of £500 million for the full year.
