Insurance company FBD said adjusted operating profit fell to €65.8 million, partly on the rising cost of claims, the company said in a statement today.
A rise in claims costs and a lower return on investments contributed to the profit fall, the company said, adding that this trend was contributing to a rise in insurance premiums for customers.
Gross premiums fell 5.5 per cent to €385.6 million in 2008, the country’s third largest insurer said.
At 12.40pm shares in FBD were down 1.6 per cent at €6.08.
The company claimed its market share rose during the first quarter from 11.3 per cent to 11.6 per cent with FBD saying it had maintained its “underwriting discipline” and was only offering insurance at economic premium rates.
FBD said it is “likely” that total insurance premiums for the Irish non-life market will fall in 2009.
“Further premium increases are required to provide the industry with an adequate return on capital,” the company said, adding it is “confident FBD will continue to outperform its competitors in delivering higher returns for shareholders.”
FBD is recommending a final dividend payment of 10 cent per share bringing the full-year dividend to 40.25 cent, equivalent to 25 per cent of adjusted operating earnings after tax.
In addition to ordinary dividends the company has also paid out €546 million in special distributions, including €50 million last October.
The insurer said further premium increases are needed to provide an adequate return on capital, despite consumer sensitivity to rate increases.
FBD added that price levels are not yet at a point where it is prudent to grow volumes.
It said property-related claims had continues to rise during the first quarter, primarily due to storms in January coupled with an “increase in claims associated with the recessionary period”.
Despite recent reforms in the Irish insurance market FBD said claims costs in Ireland “remain high relative to other economies”.
“Personal injury awards must be brought into line with other jurisdictions to deliver comparable premium levels,” it added.
