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Operating profit achieved by the Group in the period amounted to 75.7m (H1 2005: 86.8m), somewhat ahead of target, due to a better out-turn in its primary underwriting business. Total income amounted to 207.2m (H1 2005: 199.3m). It included net premiums earned of 173.2m (H1 2005: 164.5m) and investment income (calculated on the basis of longer term returns) of 23.8m (H1 2005: 21.8m), both of which arise in the Groups insurance underwriting business. The remaining 10.3m (H1 2005: 13.0m) represents the net income, i.e. after expenses, that arises in the Groups non-underwriting activities. Expenses amounting to 131.5m (H1 2005: 112.5m) related to the Groups underwriting business. They consist of claim costs amounting to 108.5m (H1 2005: 91.7m) and operating expenses of 23.0m (H1 2005: 20.8m). Of the Groups operating profit, 65.4m (H1 2005: 73.8m) is attributable to underwriting and 10.3m (H1 2005: 13.0m) to non-underwriting. Profit arising from the proceeds of the La Cala Resort, Spain first tranche land sale, amounted to 83.6m. Short term fluctuations in investment returns amounted to 0.3m (H1 2005: 21.7m). The profit before taxation, after charging finance costs of 2.2m (H1 2005: 1.8m), was 157.4m (H1 2005: 106.8m). Operating earnings per share, based on longer term investment returns, amounted to 173.11c (H1 2005: 192.07c) in the period. Underwriting. Insurance underwriting (FBD Insurance) is the Groups primary business activity. Gross written premiums (i.e. before reinsurance) amounted to 204.0m (H1 2005: 192.4m), an increase of 6% on the corresponding 2005 period. This increase is attributable to strong volume growth which more than offset the negative impact of premium reductions which had been implemented in the preceding 12 months. Net earned premiums amounted to 173.2m (H1 2005: 164.5m), an increase of 5.3%. The net claims incurred charge, which is comprised of the movement in net outstanding claims provisions of 13.8m (H1 2005: 13.6m) plus net claims paid of 94.7m (H1 2005: 78.1m) amounted to 108.6m (H1 2005: 91.7m). The increased claims charge, relative to first half 2005, reflects the increased exposure arising from growth in policy numbers, combined with what FBD term "the particularly benign claims outcome experienced in the comparative period." The claims charge, nonetheless, was within our budgeted range. Savings on prior year provisions had a considerable positive impact on the claims incurred charge, in keeping with recent accounting periods. We anticipate that for the year as a whole, such savings will be on a par with 2005. Net operating expenses amounted to 23.0m (H1 2005: 20.8m). The additional investment in the business infrastructure (i.e. staff, training, technology, facilities and marketing) necessary to deliver our growth objectives, resulted in increased expenses, as anticipated. Special Dividend When FBD announced in February 2006 that a conditional agreement had been entered into for a La Cala, Spain land sale, shareholders were advised of the Boards intention to distribute the net cash proceeds arising from the overall transaction. On foot of the proceeds received for the first tranche of land on 22nd June 2006, a special dividend of 1.60 per share was declared, amounting to 55m. This dividend was paid on 11th August 2006. Interim Dividend FBD has declared an interim dividend of 24.00c (H1 2005: 20.00c) per share. This represents a 20% increase on the 2005 interim dividend.
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