Losses widened at insurance company Friends First in 2009, as the company was forced to increase its provisions for bad loans.
Friends First Ireland made a net loss of €105 million during the year, compared to €21 million in 2008, according to the annual results published today by its owner, the Dutch insurance giant Eureko.
The performance of Eureko's Irish subsidiary was the worst among all of its operations, although its subsidiaries in Russia and Slovakia also made losses.
Eureko described Friends First's losses as "significant" and said the recession in Ireland had "a considerable impact" on the market for new life assurance and pension sales.
New life assurance and pension sales at Friends First declined around 15 per cent in 2009 compared to the previous year. However, as the overall market was estimated to have contracted by around 30 per cent, the company estimates that its market share has increased to 7 per cent.
The gross value of written premiums were €238 million, down slightly on €253 million in 2008. However, new deposits increased to €291 million, compared to €249 million in 2008.
The finance division of Friends First, which is scheduled to cease operations, made a pretax loss of ¤93 million in 2009, mainly as a result of a €101 million provision for loan losses.
The company, which announced the finance division's closure in August 2009, said it would take between five and seven years to complete the closure, which will result in the phased loss of 98 full-time jobs.
On a group basis, Eureko made a pretax profit of €1.5 billion and a net profit of €1.4 billion in 2009, helped by a €1.1 billion settlement with the Polish government over the ownership of insurance company PZU.
Eureko sued the government after it walked away from promises to cede control after partial privatisation of PZU a decade ago.
"The financially acceptable exit, after years of fruitless negotiations, ultimately proved to be in the best interests of the group," Eureko chairman Willem van Duin said in a statement.
The year 2009 "should be seen as a period of recovery", Mr van Duin said. The company now sees Turkey as its next big growth market and said it would prioritise its activities there, as well as in Russia and Greece. It may sell some of its weaker international operations, the insurer said.
Eureko, which is partly owned by co-operative bank Rabobank, is the biggest insurer in the Netherlands, while Friends First is ranked sixth in the Irish life assurance and pensions market.
