Insurer FBD returned to profit in the first half of 2011 recording pre-tax profits of €20.5 million compared to a loss of €7.9 million for the same period a year earlier.

Operating profits rose by more than 150 per cent to €28.7 million from €11.3 million.

Gross premium written in the first half of 2011 was to €177.5 million, down 3.1 per cent on the corresponding period last year. Net premium earned, at €149.8m, is in line with 2010.

Net claims incurred amounted to €103.2 million compared to €124.4 million for the same period a year earlier. The net loss ratio, including the cost of the severe weather events, improved from 83 per cent in the first half of 2010 to 68.9 per cent in the first half of this year.

The insurance underwriting business recorded a profit of €10.7 million in the six months, as against a €7.8 million loss a year earlier. Non-underwriting profits rose from €1.9 million to €2.2 million.

FBD said the average cost of property and motor claims fell during the first six months of 2011 and that while the severe weather in the early part of the year had led to costs of €2.5 million, this compared to a cost of €12 million for the same period in 2010.

The group today announced it is to establish a joint venture with Farmer Business Developments to own and manage its Irish and Spanish property and leisure operations, subject to shareholder approval.

FBD said the move would allow it to focus resources on its core insurance underwriting business and mean it would be less exposed to property value fluctuations.

The proposed transaction is expected to be marginally earnings enhancing on both a basic and a diluted basis and to lead to a small increase in net asset value per share, the group said.

The interim dividend is to be raised from 10.5 cent to 11.25 cent.