FBD has become the second Irish insurance firm to signal that the cost of cover for consumers and businesses could be on the point of declining as the full effects of the penalty-point system are felt.
FBD's chief executive, Mr Paul O'Callaghan, said the company would look at freezing, or even reducing, premiums as soon as it succeeded in cutting its underwriting losses to zero. Similar remarks were made by Hibernian executives at the end of last month.
Underwriting losses at FBD fell from €15.1 million in 2001 to €5.3 million last year.
The reduction was attributable mainly to a €12 million decline in motor losses, which last year amounted to €10.2 million.
"We would hope that the improvement would continue," Mr O'Callaghan said, adding that initial indications for 2003 were positive.
"There is some evidence of a reduction in the incidence of claims," he said. "People are beginning to realise that it's not just the insurance company that's paying."
FBD has reported a pre-tax profit of €25.2 million for last year, down 12 per cent on 2001.
Mr O'Callaghan cited falling equity markets as the main drain on the company's performance but said underwriting trends augured well for the future.
Operating profits were more robust, increasing by almost 25 per cent to €37.5 million. About €25 million of this came from insurance, €9 million from property investments and the remainder from FBD's financial services operations.
Gross premiums at the company grew by 31 per cent to €325.8 million last year, with much of the growth due to increased penetration in Dublin's small- to medium-sized business sector.
Mr O'Callaghan said FBD had mopped up custom which had previously been rejected by other insurance firms on the basis of risk. Commercial business currently accounts for half of total premium income and Mr O'Callaghan is expecting the Dublin market to drive most growth in 2003.
He added that the company will continue to focus on its property portfolio, which was enhanced by a €9 million investment in the Tower Hotel Group last October.
FBD closed at €5.80 last night, up 15 cents on the day.
