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Irish Times
24-04-2025
- Business
- Irish Times
Insurers' reinsurance deals with overseas parents muddy earnings
The high reliance of Ireland's predominantly overseas-owned insurance sector on reinsurance contracts with their parent companies makes it difficult to use key annual filings to assess the underlying profitability of risk they are writing in the State. A scan through the annual solvency and financial condition reports (SCFR) of the top five insurers in the market shows that they ceded 40 per cent of their combined €3.42 billion of premiums written by the local entities. Most were reinsured with their overseas parents. Take Aviva Insurance Ireland , the third-largest insurer in the market, which generated €668 million of premiums last year (though about €84 million of these are estimates to relate to foreign business written through a UK branch). It reported in its latest SCFR, which it is obliged to submit to regulators annually, that it made an underwriting profit of €15 million last year. However, the unit has an arrangement in place to reinsure 70 per cent of general and health insurance risks – essentially passing on associated premiums – with its immediate parent, UK-based Aviva Insurance Limited. It passes on between 85 per cent and 100 per cent of other business written. READ MORE Aviva Insurance Ireland noted that €70 million in net underwriting profit on business originated by the Irish unit ended up with the UK unit under the reinsurance deal. But at least Aviva gave that level of detail. RSA Insurance Ireland reinsured €306.8 million of its €399.9 million of gross written premiums last year, mainly to its parent. However, it does not disclose the level of profits that were ceded as a result. Allianz Ireland has the third-highest intragroup reinsurance arrangement, with a 50 per cent quota share agreement with Allianz Re Dublin. Axa Ireland , the largest insurer in the Republic, and FBD Holdings , the only indigenous Irish player, reinsured 2.6 per cent and 7.6 per cent of the business they wrote last year, respectively. FBD reinsures with third parties; Axa Ireland did not report any deal with its French parent. To be sure, reinsurance deals with overseas parents help spread risk and shores up the Irish units during bad times – and helps insurers to have more consistent risk appetite. But they – and the related accounting of reinsurance commissions – also muddy the waters and make it more difficult to users of SCFRs and annual reports to assess the underlying profitability – or otherwise – of risk written in Ireland.
Irish Times
23-04-2025
- Business
- Irish Times
Tesla's profit slump and the ‘Elon factor'
Elon Musk's controversial involvement in US politics and a weak line-up saw Tesla report a 39 per cent slump in first-quarter profit after markets closed on Tuesday. Revenue and adjusted net income came in substantially below analyst expectations. Aviva Insurance Ireland gave up €70 million of net underwriting profit to its UK owner last year, lowering the profits of the Irish business, as it reinsured most of the motor, home and commercial insurance business written in the Republic with its parent. And they're not alone among Irish insurers, writes Joe Brennan. Private bus company Go Ahead Ireland says permission for a new bus depot in north Dublin would see it employ up to 450 workers and grow revenue by around €50 million per annum. Gordon Deegan reports on the planning application. In its latest World Economic Outlook report, the International Monetary Fund warns that the increase in tariffs and in the uncertainty caused by US president Donald Trump's protectionist trade measures would lead to a significant slowdown in global growth in the near term. But, writes Eoin Burk-Kennedy, it stopped short of predicting a worldwide recession. READ MORE Eoin separately looks as Central Statistics Office data showing that the State's national debt stood at €218.2 billion at the end of last year, equating to €40,550 for every man, woman and child in the State. Devotees of the 'financial independence retire early' (FIRE) movement adhere to a programme of living frugally, saving hard and investing. Their goal is to build a money pot that will enable them to quit work, sometimes decades earlier than the norm. But how does it work? And is it possible, or even desirable, to live this way? Joanne Hunt investigates. And as Dublin's four local authorities prepare the ground for the tax on hotel stays, John McManus notes that it amounts to little more than getting tourists to pay for local authority services rather than exercising latitude already available under Local Property Tax to raise the same amount from householders, albeit at the risk of an electoral backlash. Back on the news pages, shares in DCC , the energy to technology distribution and services group, fell in London as the £1.05 billion (€1.22 billion) it achieved in a deal to sell its healthcare unit to HealthCo Investment, which is owned by funds run or advised by London-based private equity firm Investindustrial Advisors, disappointed investors. Job postings were up 15.3 per cent in the first quarter compared with the same period last year, Matrix Recruitment says, but it fears the Trump tariffs mean there is potential for sharper-than-expected slowdown. Colin Gleeson reports And Minister for Finance Paschal Donohoe has published the 11th annual progress update on the liquidation of IBRC – home to the remnants of Anglo Irish Bank and Irish Nationwide Building Society. Joe Brennan reports that it has handed over €250 million of surplus cash to the Exchequer last week, bringing total distributions in recent years to €360 million. Stay up to date with all our business news: sign up to our Business Today daily email news digest. If you'd like to read more about the issues that affect your finances try signing up to On the Money , the weekly newsletter from our personal finance team, which will be issued every Friday to Irish Times subscribers.
Irish Times
23-04-2025
- Business
- Irish Times
Aviva Ireland reinsurance deal with parent depresses profit at Irish business
Aviva Insurance Ireland ceded €70 million of net underwriting profit to its UK owner last year as it reinsured most of the motor, home and commercial insurance business written in the Republic with its parent. While the reinsurance deal with its parent – known in the industry as a quota share agreement – allows Aviva Insurance Ireland to share risks written in the Republic more widely across the group, it also depresses the reported profitability of the local entity in good times. Aviva Insurance Ireland, the third largest insurer in the Republic by premium income, reported an underwriting profit of €15 million last year, the company said in its latest annual solvency and financial condition report. The report notes that €70 million in net underwriting profit ended up with the UK unit under the reinsurance deal. The company reported a pretax profit of €22 million for the year, after €20 million of income from its investments portfolio and €13 million of certain expenses were also included, according to the report. READ MORE Aviva Insurance Ireland's gross written premium income rose 11.6 per cent last year to €668.1 million, it said. The figure includes some European commercial insurance business written through a UK branch of the company. Aviva Insurance Ireland reported in February that its business in Ireland generated €584 million of gross written premiums. This suggests that about €84 million of premiums were written through the UK branch. '1 in 5 US households consume Kerrygold' – Ornua CEO Conor Galvin Listen | 33:47 The Irish company has an arrangement in place to reinsure 70 per cent of general and health insurance risks – essentially passing on associated premiums – with its immediate parent, UK-based Aviva Insurance Limited. The deal sees it hand over 85 per cent of its European mobile phone insurance risk and 100 per cent of all other business written, according to the solvency and financial condition report. Of the €668.1 million of business written last year, €506.8 million was accepted by its immediate UK parent – the biggest amount ceded overseas by a general insurer in the Irish market. It equated to almost 76 per cent of total premiums. A spokeswoman for the insurer declined to comment on the intragroup reinsurance arrangements. Of the top five insurers operating in the State, only RSA Insurance Ireland, part of London-based RSA Group, shares such a percentage of risk. RSA Ireland ceded €306.8 million of its €399.9 million of gross written premiums last year. 'The main purpose of the group [reinsurance] treaty is to ensure effective capital, earnings management and to facilitate the company's underwriting capacity for its customers,' a spokesman said. 'The profit or loss ceded to the parent company depends on where the claims arise by lines of business.' The underlying division of income from the reinsurance contracts is complicated, however, by reinsurance commissions received by Irish entities from their parents to cover certain administrative and other costs associated with writing the original insurance coverage. Allianz Ireland has the third-highest intragroup reinsurance deal among the main insurers in the market, with a 50 per cent quota share agreement with Allianz Re Dublin DAC. Both are part of the German-based Allianz Group. Axa Ireland, the largest insurer in the Republic, and FBD Holdings, the fourth-largest and only indigenous Irish player, reinsured 2.6 per cent and 7.6 per cent of the business they wrote last year, according to data in their reports. FBD reinsures with third parties; Axa Ireland did not report any quota share deal with its French parent in its report.
