TIDMFBH
RNS Number : 3339S
FBD Holdings PLC
18 November 2011
FBD HOLDINGS PLC
Interim Management Statement
18 November 2011
FBD Holdings plc ('FBD' or the 'Group') issues the following
Interim Management Statement covering the period from 1 July 2011
to date, in accordance with the reporting requirements of the EU
Transparency Directive.
Business Overview
FBD has continued to deliver an excellent performance despite
the continuing challenges faced by both the Irish economy and the
insurance industry. The Group has built on its robust first half
performance to deliver strong operating earnings* and profit after
taxation to date in the second half of 2011. It has traded ahead of
market guidance, primarily due to an improved loss ratio in the
underwriting business.
Underwriting
The trend in gross premiums written has improved in the second
half of 2011 to date and, based on this, FBD expects to deliver
second half premium income levels in line with the corresponding
period of 2010. In the same period, FBD has increased policy
volume, the first such increase since the second half of 2008. The
average rate is ahead of the same period of 2010. However, in line
with economic activity in Ireland, insurable risk and values have
continued to reduce, offsetting the benefit of both the rate and
the volume increases.
Multi-channel distribution, which is a critical element of FBD's
development strategy, continues to develop - in particular the
success of the local office network in developing farming business
and the growth of No Nonsense through web and phone. FBD has
achieved greater penetration of key urban areas, particularly
through NoNonsense.ie and FBD.ie, which have continued to attract a
growing number of customers from their respective target markets.
The initiative to develop broker business is progressing well
despite increased competition in the business insurance sector,
particularly for larger risks. FBD remains committed to sustainable
growth and has foregone targeted policy growth in business
insurance rather than compromise underwriting discipline.
The claims environment in the second half of 2011 to date has
been comparatively benign. There has been a continuing improvement
in the frequency of both property and motor claims and FBD's large
claims experience, net of reinsurance, has been better than
expected. Successful underwriting and claims management
initiatives, the benefit of rate increases, reduced road usage and
improved safety and enforcement have combined to deliver an
improved loss ratio.
The October flooding, primarily in Dublin, has been estimated to
cost the Irish insurance industry in the region of EUR125m to
EUR150m. The cost to FBD is not expected to exceed EUR6m, net of
reinsurance, well below its market share. Industry property
insurance rates are likely to increase as a result of the flood
event.
The Group continues to focus on efficiency and productivity
improvements to maintain FBD's competitive cost structure.
As a result of the volatility of global investment markets, the
Board anticipates that market investment returns are unlikely to
revert to historic norms for the next two or three years. Insurers
will require sustainable profits from core underwriting activities
to generate adequate returns for shareholders.
Non-Underwriting
Following the approval of shareholders, the Group has completed
the establishment of a joint venture with Farmer Business
Developments plc to share management and ownership of the Group's
Irish and Spanish hotel, golf and property development businesses.
This will enable the Group to focus resources on its core
underwriting business, while reducing the Group's exposure to
fluctuations in property valuations and reducing both the Group's
debt and loan guarantees. At the same time, the Group's property
and leisure businesses have been provided with a robust financial
structure and solid foundations to realise value over the medium
term.
In very challenging market conditions, the property and leisure
businesses in Ireland and Spain delivered an improved performance
up to the point at which the joint venture was established. In part
this was due to the Irish hotel operation, where an increase in
foreign visitor numbers generated improved yield and occupancy.
Following the establishment of the joint venture, the Property
& Leisure business will no longer be included in Group
operating results. Instead, FBD's share of the result will be
included on a single line within profit before taxation.
FBD's financial services businesses delivered further solid
performances in difficult market conditions and have proactively
managed their cost structures to reflect the economic
environment.
Financial Position
The Group continues to have a strong capital base and balance
sheet and a prudent reserving strategy. The robust reserving
position has been maintained and the solvency ratio has further
strengthened. Given the volatility of global investment markets,
FBD Insurance continues to maintain a low-risk investment
allocation, prioritising capital preservation over rate of return.
Only 11% of investment assets are in real assets at the date of
this report, down from 12% at 30 June 2011. The Board is committed
to maintaining strong solvency and liquidity margins.
Guidance
FBD Insurance will focus on profitable and sustainable growth,
maintaining underwriting discipline and constantly evolving its
business to reflect customers' needs. The programme to increase
penetration of key urban markets, in particular Dublin will
continue. Further opportunities to maintain FBD's cost advantage
will be identified and implemented. The Group is well positioned to
deliver profitable growth and superior returns to shareholders in
the future.
Unless exceptional claims events arise during the remainder of
the year, the Board is confident that, as a result of the excellent
performance of the core underwriting business, the Group will
deliver full year 2011 operating earnings per share of 155 to 165
cent, an increase of 10 cent on previous guidance.
*Operating earnings per share is based on longer term rates of
return.
For Reference
FBD Holdings plc Telephone
Andrew Langford, Group Chief
Executive +353 1 409 3208
Cathal O'Caoimh, Group Finance
Director
Peter Jackson, Head of Investor
Relations
Murray Consultants
Joe Murray +353 1 498 0300
About FBD Holdings plc ("FBD")
FBD is one of Ireland's largest property and casualty insurers
looking after the insurance needs of farmers, private individuals
and business owners.
The following details relate to FBD's ordinary shares of EUR0.60
each which are publicly traded:
Listing Irish Stock Exchange UK Listing Authority
Listing Category Dual Premium (Equity)
Trading Venue Irish Stock Exchange London Stock Exchange
Market Main Securities Main Market
Market
ISIN IE0003290289 IE0003290289
Ticker EG7.IR FBH.L
Forward Looking Statements
Some statements in this announcement are forward-looking. They
represent expectations for the Group's business, and involve risks
and uncertainties. These forward-looking statements are based on
current expectations and projections about future events. The Group
believes that current expectations and assumptions with respect to
these forward-looking statements are reasonable. However, because
they involve known and unknown risks, uncertainties and other
factors, which are in some cases beyond the Group's control, actual
results or performance, may differ materially from those expressed
or implied by such forward-looking statements.
FBD Holdings plc FBD House, Bluebell, Dublin 12
Registered in Dublin, Ireland Registered Number 135882
This information is provided by RNS
The company news service from the London Stock Exchange
END
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