Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I would like to welcome our guests as well. I will be relatively brief. I refer to the Judiciary's interpretation of the book of quantum. The fundamental point is that it cannot be too loose. If there is still a significant degree of discretion I am not sure we will solve anything. If the judge merely has to have regard to the new guidelines it is a waste of time. The application has to be much tighter than that. We will have to watch that very carefully in the course of the legislation, otherwise we will not make the progress we want.

On the overall financial performance, I take Mr. McMahon's point that insurance companies have to be profitable. It is a risk-based business. I was looking at the annual figures. Profit before tax of €50 million equates to a 15% return on equities. The gross written premium is €372 million. Profit before tax is therefore about 13% of the premium. Is that typical of what the market would expect FBD Insurance to deliver as a public limited company, PLC? FBD Insurance has investors. I am not sure what the profile of its shareholders is. I assume there are significant institutional shareholders among them. Is that typical of what would be expected? If that figure was 20%, 30% or more would the witnesses accept it was too high? I appreciate that it is not at that level now.

Mr. Jackie McMahon:That is what the investors expect. That is what we target on their behalf. They invest on that basis. I can certainly understand the concern but I would just like to say that as an insurance company and a PLC our accounts are open. They are published and audited. We are the only insurance company in Ireland whose accounts are available. The rest are folded into their parents in the UK or elsewhere. To give some comfort to members of the committee I note that we are in a very competitive market. People and investors need a return but we also need to grow our business. It is basic economics. If the profits increase excessively, sellers will want to sell more as a result. This drives prices down and profits return to a normal level. Those are the forces of the market within which we operate. Competition is sometimes quite brutal but the free market will ensure that we continue to make a normal profit.