Insurer Quinn Direct made a pre-tax profit of €133 million in the first six months of 2007, an increase of 8 per cent on the first half of 2006.

Income from new premiums increased 25 per cent to €483 million over the period, including €15 million from Quinn Healthcare, the private health insurance business it took over when Bupa quit the Irish market.

However, despite the higher premium income, underwriting profit fell from €88 million in the first six months of last year to €84 million in the first half of 2007.

Quinn Direct said underwriting margins had fallen as a result of lower premiums for consumers.

The reductions have not been met by a similar reduction in the cost of claims, it said, with the result that there will be continued pressure on margins.

Offering a low-cost, "no frills" product, Quinn Direct has grown its share of the motor insurance market from less than 8 per cent in 2000 to almost 20 per cent last year and is now the second largest general insurer in the Republic, behind Hibernian.

Investment gains made by the insurer increased 40 per cent to €49 million on the same period last year.

The insurer said its UK business was developing positively and it expected to achieve significant growth in the market. It said its commercial insurance business in the Netherlands and Belgium was progressing well.

The company plans to enter the German market later this year.

Quinn Direct general manager Colin Morgan said the firm was upbeat about the long-term prospects for its private health insurance business but was disappointed by a lack of Government action in addressing "the State-supported, dominant and anti-competitive position of the VHI" in the health insurance market.

Quinn Direct said it was confident that a Garda investigation into a document purporting to be a memo written by a director of the company would prove that the document is a forgery.

The document contains allegations of serious malpractice by Quinn Direct and the insurer is suing the Sunday Tribune in relation to an article based on its contents.

Quinn Direct has also mounted a legal challenge to the powers of the financial services ombudsman, Joe Meade, who has directed the company to refund a €25 administration charge imposed on customers who changed cars.

The charge for transferring their insurance to the new car was not mentioned in Quinn Direct's policy documents.

The High Court last month reserved judgment on the case.