Insurers will complete their recovery this year with a return to profit on underwriting in the Irish market for the first time in a generation, according to the Department of Enterprise, Trade and Employment, writes Dominic Coyle.
A report out yesterday shows that Irish-supervised firms' underwriting accounts were already back in the black in 2002, with sharp rises in premiums reversing spiralling losses on their motor insurance business. But when firms operating in Ireland but supervised elsewhere are included, the industry as a whole lost €42 million.
This figure marks an improvement of 89 per cent on 2001 and continuing realignment of premiums is expected to see the whole sector return to profitability by year end. The performance has been welcomed by the Tánaiste, Ms Harney, who expects to see lower premiums for customers as a result.
Firms with their head offices here and whose solvency comes under Irish supervision, saw claims and expenses come in more than €25 million below their total income before investments. Once investment gains of just over €221 million are included, the firms were €246.16 million in the black on their Irish risks.
Firms operating here but regulated in other jurisdictions, made underwriting losses totalling $67 million. When investment gains were taken into account, the overall loss was just under €20 million. The biggest loser was Royal & Sun Alliance which had underwriting loss of €58 million and an overall deficit of €22.4
But the overall underwriting profit figure for Irish regulated firms hides sharp disparities. Quinn Direct, the most recent domestic arrival on the insurance scene, reported an underwriting profit of €46.7 million. On the other hand, Hibernian, one of the biggest players in the Irish market, recorded a loss on day-to-day business of €37.8 million, while mutual Irish Public Bodies was €20.5 million in the red. Listed domestic insurer FBD also lost €4.8 million on underwriting,
"This pattern has continued into 2003 when, it is understood, the industry made a profit on the underwriting account," the Department said in a statement.
Investment returns in 2002 were affected by falling equity markets though this was offset by the dramatic upturn on the underwriting side. On Irish non-life risks, investment income fell 15 per cent to €268 million.
The Department, which until the arrival of the Irish Financial Services Regulatory Authority (IFSRA), supervised the insurance sector published the figures in the Insurance Annual Report, know as the Blue Book.
"I am keeping my promise [on insurance sector reform\] with the Personal Injuries Assessment Board," said Ms Harney. "And coupled with the court reform programme and the continued emphasis on the road safety strategy, I expect further significant cuts in premiums."
The motor insurance business recorded a profit of €18.35 million, though two of the main players - Royal & Sun Alliance and Hibernian - had underwriting losses of €60 million between them. AXA and Allianz both recorded a substantial underwriting profit.
Losses on liability insurance fell back to €124.8 million in 2002 having risen to €165 million in 2001 from €133 million in 2000.
The property sector produced solid returns with an underwriting profit of €47.66 million after losses of €67 million and €25 million in the previous two years.
Total premium income in Ireland rose 12 per cent in the year to €21.22 billion. Of this €14.8 billion of business was secured by the life sector, a rise of 8.8 per cent. Total gross new premiums amounted to €11.3 million, up fractionally on the €11.2 million in 2001.
Irish risk business saw an increase of 18 per cent in net premium income to €8.4 billion, which the report says is probably attributable to the Government's special savings incentive scheme, which closed during that year.
