Hibernian enjoyed a bumper year in its non-life insurance business, which includes general and motor insurance, but profits at its core life and pensions activities were substantially down.
The group, which is part of the UK-based Aviva, reported a 34 per cent overall rise in profits to €282 million from €211 million in 2003. Hibernian chief executive Bryan Jenkins said the strong performance was due to disciplined underwriting, lower claims costs and fewer-than-expected weather-related events.
"The company has continued its efforts to reduce the cost of insurance cover, particularly motor insurance. Our customers have seen continued premium reduction, including further discounts for those who remain penalty-point free," he said.
The company believes that non-life profits, which swelled from €130.5 million to €224 million last year, have peaked and will reduce by as much as 25 per cent in 2005 as the impact of premium reductions kick in.
Premium income at its non-life business fell from €936 million to €835 million last year following further price reductions.
Hibernian has been offering discounts to motor customers who have not incurred any penalty points, claiming this amounted to 17.5 per cent savings last year. It has also expanded its scheme for inexperienced drivers and offered discounts of more than 10 per cent to customers in the commercial sector.
Dick O'Driscoll, Hibernian's head of underwriting, suggested that there was now only limited scope to further reduce general insurance premiums in the absence of increased road safety enforcement.
Hibernian's core life and pensions business slumped however, with profits falling from €80.5 million to €57.4 million, down 29 per cent. Mr Jenkins blamed tough market conditions and heavy competition throughout most of the year.
During 2004, new business sales rose by 9 per cent to €126 million from €115.4 million in the same period last year. Gross premium income rose from €668 million to €705 million. He claimed that Hibernian had maintained its third position in the life and pension industry, with a market share of 11 per cent, based on new business written last year.
"These conditions did impact on profits as margins on products reduced due to competition," he said.
The outturn was also impacted by a one-off adjustment to its accounts to reflect the loss of business in the future. The company has seen an increase in the number of policies coming off its books as customers are switching funds into PRSAs and funding pensions through the property market.
The amount of funds under management rose from €7.8 billion to €8.8 billion.
This year the company moved to reporting its life and pensions results on a European embedded value basis, in line with the policy adopted by its parent.
Mr Jenkins said the company would continue to work with its customers and the Government to maintain the momentum created by the insurance reform agenda.
