UNDERWRITING PROFITS in the Irish insurance industry dropped 83 per cent in 2008 as the overall value of the industry declined by just over a fifth and investment income fell sharply.
Premium income, which measures the total value of the industry, fell 22 per cent to €35.9 billion last year, according to the Insurance Statistical Review, the Financial Regulator’s annual report on the industry which was previously known as the Blue Book.
Underwriting profits in Irish risk business fell to €121.9 million in 2008 from €704.1 million a year earlier. Irish-authorised companies accounted for €101.5 million of profits, with foreign companies accounting for the remainder.
Investment income earned on Irish risk business dropped 74 per cent to €95.5 million in 2008.
Insuring foreign risk proved more lucrative as companies generated underwriting profits of €126.2 million, down 64 per cent on the previous year.
Of this, Irish companies earned underwriting profits of €142.4 million, which was offset by a loss of €16.2 million from companies authorised overseas.
Investment income on foreign risk business dropped 51 per cent to €86.7 million during the year.
Gross premium income at life assurance companies decreased by 26 per cent to €28.5 billion, comprising €12.5 billion in Irish risk business, down 31 per cent, and €16 billion in foreign business, a decrease of 22 per cent on 2007.
In general insurance, premium income fell 2 per cent to €7.4 billion as the Irish risk business fell 4 per cent while foreign risk business remained unchanged.
Motor insurers saw their profits drop sharply to €35.1 million last year, just under a tenth of what they were in 2007, as the premium income fell 6 per cent to €1.39 billion and the cost of claims climbed 22 per cent to €1.088 billion.
Motor insurance accounted for 37.6 per cent of premium income in the Irish risk market, down slightly on 38.9 per cent in 2007.
Accident and health insurance was the only area to increase its share of the industry as it increased to 15.2 per cent compared with 11.4 per cent in 2007.
In the general insurance market, the country’s largest insurer, Hibernian Aviva, made an underwriting loss of €26.9 million, according to the review, while its health insurance business made a profit of €3.4 million. The company paid a dividend of €110 million to its parent Aviva.
Quinn Insurance, the second largest general insurer, made an underwriting profit of €73.3 million in 2008, down from €150.8 million the previous year, and posted a loss of €201 million on the sale of investments last year.
The loss, the largest incurred by a general insurer on investments last year, related to the company’s interest in Anglo Irish Bank, which was nationalised last January.
