Strong investment gains and lower claims costs helped elevate pre-tax profits at Hibernian Group to £18.4 million from £13 million for the six months to end of June. Operating profits at the general insurance business were 32 per cent higher at £9.6 million but profits from life assurance business were 15 per cent higher at £4.5 million. Confirming the insurance company's agreement with the Bank of Ireland-owned Premier Direct to underwrite all Premier's motor insurance business from January 1st, 1998, the chief executive, Mr Adrian Daly, said Hibernian was interested in opportunities to expand its distribution capacity.

It would continue to seek strategic arrangements with financial institutions on home, motor and pensions business while continuing the development of its 27 branch offices as direct sales outlets, he said.

A further increase in motor insurance premiums this year is unlikely, according to Mr Daly, who described the claims environment as "more benign" than it was at the beginning of the year when the company raised its motor rates by 4 to 5 per cent. Hibernian has about 13 per cent of the Irish motor insurance market. Group operating profits at Hibernian rose by 26 per cent to £14.1 million. The general insurance business provided £9.6 million, or 68 per cent, of operating profits, with the £4.5 million balance generated by the life business.

Operating profits at the general insurance business rose by 32 per cent, helped by lower claims costs and improved investment income. Of the gross premium income of £117 million, some 75 per cent came from the Irish market at £87 million, with £24.6 million from the UK market and £5 million from reinsurance business. The group's underwriting loss on general business was down to £9.5 million from £10.3 million, while investment income rose to £19.1 million from £17.6 million.

Profits at the Irish general business rose by 26 per cent to £8.1 million. At £87.1 million gross premium income was only marginally higher. Hibernian said it had strong new business growth but had to reduce rates in competitive markets.

A lower claims bill meant the underwriting loss came down by £1.4 million to £6.3 million, or 8.4 per cent of earned income. Hibernian had a smaller number of large (over £250,000) claims over the period, Mr Daly said. Income from motor insurance improved after a price increase of 4 to 5 per cent at the beginning of the year.

In the UK market Hibernian generated an operating profit of £0.1 million after a loss of £1.3 million. Gross premiums were 13 per cent higher at £23.5 million sterling, boosted by good growth in motor business, though commercial business was down. The underwriting loss fell to £3 million sterling from £3.6 million, despite "an unusually high level of claims in the first quarter".

Gross premium income from life assurance rose by 14 per cent to £40.2 million. Overall recurring premium income was 11.3 per cent higher while single premium income increased by 19.3 per cent. But new annual premium business was 4 per cent lower at £6.3 million with pension sales down 5 per cent to £4 million. In a strong pensions market Mr Daly attributed his company's lower new annual pension sales as "a definitional issue". Investment gains helped the pre-tax result contributing £4.4 million, up from £1.9 million in the corresponding period of 1996.