FBD Holdings's half year profits edge lower

Tuesday 27 August 2013 17.44
FBD Holdings CEO Andrew Langford and chairman Michael Berkery
FBD Holdings CEO Andrew Langford and chairman Michael Berkery

Insurer FBD Holdings has reported pre-tax profits of €19.1m for the six months to the end of June, down from €21.8m the same time last year.

The company said the fall in profits was expected and was due to reduced returns in global investment markets and a number of above average claims early in the reporting period.

FBD said its interim dividend for the six months rose by 29% to 15.75 cent.

It also reaffirmed its full year operating earnings per share guidance at between 145 and 155 cent per share.

Andrew Langford, the company's chief executive, said the results are ''excellent'' given the difficult economic conditions.

''Key strategic initiatives delivered an increase in premium and customer numbers in an insurance market that continued to contract, resulting in further growth in FBD's market share,'' he added.

Shares in FBD were 5.5% lower by the close of business in Dublin trading today, finishing on €15.50.

The company said that it generated an underwriting profit of €7.7m in the first half of the year, down from €11.2m in the first half of 2012. It noted that insurable values and risks in the Irish insurance market have reduced every year since 2008 as domestic demand has fallen.

During the first half of the year, it said that the market contracted by about 3%, but FBD's gross written premium rose by 0.7% as it continued its track record of market share growth.

FBD's policy count grew by 1.7%, while the average customer premium reduced by 1%. It said it reduced rates for car insurance customers last year, but it said that as economic activity increases, it is likely that market rates will harden to compensate for the associated increase in risk.

It said that the repositioning of its ''No Nonsense'' car insurance brand has been successful with growth in the six month period.

The company said that severe personal injury claims, which can be very volatile, was ahead of historic norms at the start of the year. But since then it has begun to return to normal levels. Severe weather events and large claims combined cost 18.4% in the first half of 2013 compared to a historic norm of 16.1%.

FBD said its share of the loss of the property and leisure joint venture was €0.4m, an improvement on the €0.7m loss the same time last year. The joint venture's trading has also improved, with growth in occupancy, rate and revenue per room, especially in the Irish market.

It said that sales of units in its La Cala development continued to be strong and the last of the remaining units were sold in July.

Looking ahead, FBD said its board is confident that it will continue to outperform its peers in delivering superior returns to shareholders.

''FBD has demonstrated its capacity to deliver returns in difficult market conditions and is well positioned to deliver long-term profitable growth,'' it said in its results statement.

''The group reaffirms its previous guidance, subject to exceptional events arising, for full year 2013 operating earnings per share of between 145 and 155 cent,'' it concluded.