Liberty Insurance in Ireland will record another loss this year but expects to achieve a "good" profit in 2017 following changes to its business model, according to the head of the Boston-based insurer's international division.
Luis Bonell also said US parent company Liberty Mutual did not regret acquiring the former Quinn Insurance business out of administration in 2011, but he accepted it underestimated the challenge of turning the business around.
In terms of its financial performance, Mr Bonell said Liberty “will be having a loss” in 2016, partly due to costs associated with 285 redundancies announced last June.
It also withdrew from writing business in Britain, where it had clocked up significant losses, and decided to exit certain lines of business in Ireland.
“We feel quite comfortable that 2017 will be a year of good profitability,” he said. “We will get close in 2016 . . . and for sure 2017 we expect good profitability. We also trust that the [Irish] market will accompany that.”
Fine-tuning
On the decision to introduce more redundancies, of which 55 were compulsory, Mr Bonell said: “We had a cost base that was too big. This is something we had to address. We [now] feel good about the cost structure. There is still some fine-tuning that we need to do but the main decisions that we made in order to achieve a competitive cost structure were made.”
Mr Bonell accepted Liberty had made a number of strategic mistakes on entering the Irish market.
“We thought the company had better capabilities at the beginning and we thought there was an opportunity for us to grow at the beginning. This is part of what didn’t work. We tried to grow when our capabilities were weak in a market that was declining and was having problems of profitability.
“We [then] decided to turn around the business and replace management. We have invested in our internal capabilities. We feel much better in terms of our claims processes, much better in terms of our technology, in terms of our data analysis, in terms of our pricing models and these types of things.
He said Liberty did not regret acquiring Quinn Insurance, in spite of accumulating losses of €22 million in its first four years here.
Poor profitability
“I don’t think it was a mistake. It was more costly that what we thought and we failed to read the market. We didn’t expect the Irish market to behave so poorly in terms of profitability,” he said.
“By 2017, all of that will be past. We will have a company with great capabilities, a great return, and a good offer to our customers, which is what matters. Overall, we have no regrets.”
He said Liberty currently has a market share of about 8 per cent, with the business weighted towards motor cover.
