FBD cut its full-year guidance range to an operating loss per share of zero to 10 euro cents from a profit of 70 to 80 cents that it expected in August, which was in turn just half the level it had forecast in March.
Shares in the group, which posted an operating profit per share of 136 euro cents in 2013, fell to 10.80 euros ($13.40) by 11:17 GMT, near their lowest level in almost two years.
Its latest claims included an above average level of large claims. It also cut its earnings guidance for the fourth quarter by 10 million euros, citing the recent "unprecedented volatility in claims costs".
"The claims environment in recent months has been far more challenging than expected," the Dublin-based firm said in a trading update.
"Following a detailed review, there is no reason to believe that this development is systemic or that the experience will recur in future periods," it added.
It said the board's dividend policy would remain unchanged and that the growth in economic activity in Ireland, which is expected to be the fastest growing economy in Europe over the next three years, would help the company in the medium term.
The Irish insurance market grew for the first time since 2003 in the first nine months of the year, and FBD's gross premium level written to date is up 4 percent year on year, marginally increasing its market share, the company said.
Davy Stockbrokers said that given the unprecedented level of claims volatility and a lack of visibility, it was revising its rating of FBD to 'underperform' from 'neutral'.
Merrion Stockbrokers said the latest news might further undermine credibility in the FBD investment case, which could take some time to be restored.
(Reporting by Padraic Halpin; editing by Jason Neely and Jane Baird)