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Insurer's profits halve to €3.2m as turnover falls

123.ie delivers €4m interim dividend for its parent company RSA

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Founder: Derek Richardson sold 123.ie to RSA 10 years ago. Photo: Richard Lane Photography

Founder: Derek Richardson sold 123.ie to RSA 10 years ago. Photo: Richard Lane Photography

Founder: Derek Richardson sold 123.ie to RSA 10 years ago. Photo: Richard Lane Photography

Turnover at insurer 123.ie continued to decline last year, falling 17pc to €24.6m, newly-filed accounts for the business show.

Owned by RSA Insurance, profits halved to €3.2m in 2019.

The accounts for the company behind the 123 firm - 123 Money - also show despite the deterioration in its financial performance, the firm still paid a €4m interim dividend to its parent. However, that was less than half the €8.5m paid in 2018.

The 123.ie directors said the revenue decline for 2019 was "slight", and they were satisfied with the performance for the year.

They noted that the cost of sales at the business, which employs about 170 people, rose last year to €1.3m, which compared to €1.2m in 2018. They blamed the increase on higher telephone charges.

The directors also said there have been "no adjusting events" since the end of 2019, but that they continue to monitor the potential impact of the Covid pandemic on the economy.

RSA bought 123.ie in 2010, a decade after it was founded by Derek Richardson.

In 2013, RSA said that it had found a €274m hole in the accounts for its main Irish business.

It was eventually forced to pump almost €400m into the Irish RSA subsidiary.

RSA said earlier this year that its main business here had delivered "excellent" results for 2019.

Its Irish arm posted net written premiums of £327m (€361m) last year, which compared to £312m the previous year.

In a trading update for the first quarter of this year, RSA said premiums at its Irish business were broadly flat. Shares in RSA jumped in May as the insurer estimated its exposure to the coronavirus pandemic at just £25m and said most of its business interruption policies did not offer cover.

There was little effect from the pandemic on RSA's first-quarter results, with business operating profit up by double-digit percentages, the home, motor and commercial insurer said.

Best known in Britain for its 'More Than' brand, RSA also has large operations in Canada and Scandinavia.

Last month, Britain's financial services compensation body said it's "keeping an eye" on insurers facing claims from companies whose business has been interrupted by the Covid-19 pandemic.

Some insurers have balked at paying out on business interruption claims, and the Financial Conduct Authority (FCA) is asking the courts to clarify the wording in policies, which could lead to more claims being valid.

The FCA's Financial Services Compensation Scheme (FSCS) is braced for a rise in claims as some financial firms are expected to go under in the pandemic.

The FSCS is working with the FCA, Bank of England and finance ministry to quantify what could come down the line.

Additional reporting: Reuters

Irish Independent