TIDMFBH
RNS Number : 2660E
FBD Holdings PLC
27 February 2020
FBD HOLDINGS PLC
27 February 2020
FBD HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT
For the year ended 31 December 2019
KEY HIGHLIGHTS
-- Excellent profit before tax of EUR112.5m
-- Proposed dividend of 100c per share
-- Full Year Return on Equity of 30%
-- Combined Operating Ratio (COR) of 72%, driven by strong
current year COR of 84% and positive prior year claims reserve
development of EUR40m
-- Gross Written Premium (GWP) of EUR370m
-- Average premiums down by 2.2%, with Motor premiums down 4.2% and Farm down 2.5%
-- Strong total investment return of 2.7%
-- Growth initiatives performing well:
o New market-leading Farm product with increased Public
Liability and Environmental (pollution) Liability cover as standard
- a first in the Irish market
o New Small Business product launched - a simpler product with
continued good success with shops, pubs and restaurants
o First to market with end to end digital customer journey for
motor customers
o An Post partnership is performing well
o New TaxiFair partnership under way
FINANCIAL SUMMARY 2019 2018
EUR000s EUR000s
Gross written premium 370,063 371,504
Underwriting profit 93,669 63,418
Profit before taxation 112,480 50,065
Loss ratio 46.4% 56.3%
Expense ratio 25.9% 24.9%
Combined operating ratio 72.3% 81.2%
Cent Cent
Basic earnings per share 281 122
Net assets per share 1,068 818
-- GWP of EUR370.1m (2018: EUR371.5m). New business levels
increased by 13% and satisfactory retention rates of existing
customers in a highly competitive market
-- Improved products, solid retention and increased use of
quality business discounts, all key tools to defend our
market-leading position in Farm and to attract new customers in
Commercial and Consumer
-- Net profit before tax of EUR112.5m compared to EUR50.1m in
2018 (2018 included EUR11.8m exceptional loss on the Fairfax Bond
buy back)
-- COR of 72.3% (2018: 81.2%), as a result of strong underlying
profitability and benign weather as well as prior year claims
reserve development of EUR40.1m (2018: EUR28.7m)
-- Good investment return in all asset classes. Income statement
return of EUR17.9m (2018: EUR2.5m), coupled with EUR10.9m (2018:
-EUR7.8m) increase in Mark to Market (MTM) on the Company's
investment portfolio reflected in Other Comprehensive Income
(OCI)
-- Solvency Capital Ratio of 192% (unaudited) after the 2019
proposed ordinary dividend of EUR34.9m (2018: 165%)
Commenting on these results Fiona Muldoon, Group Chief
Executive, said:
"Our FBD team has delivered a great result for 2019 due to our
excellent customer service, our disciplined underwriting, some good
luck with the weather, a rebound in investment markets and strong
claims settlement activity. I am pleased to report that the Board
proposes a dividend of 100c per share for our shareholders.
We welcome the increasing stabilisation evident in court awards
and resulting strong claims settlement activity in 2019. However,
all consumers urgently need claims costs to come down through lower
awards, lower legal and medical costs and the increased recognition
of personal responsibility in injury cases. FBD continues to call
for systemic reform to lower the cost of insurance for all.
FBD's strong out-turn for 2019 has been built from sound
underwriting and risk selection decisions over the last few years
and I am delighted to see those benefits come through so strongly.
I would like to take this opportunity to thank all of my colleagues
who delivered this result and to wish our loyal customers and
shareholders every success for 2020 and beyond. "
A presentation will be made to analysts at 09.00am today, a copy
of which will be available on our Group website www.fbdgroup.com
.
Enquiries Telephone
FBD
Michael Sharpe, Investor Relations +353 1 409 3962
Powerscourt
Jack Hickey +353 83 448 8339
About FBD Holdings plc ("FBD")
FBD is one of Ireland's largest property and casualty insurers,
looking after the insurance needs of farmers, consumers and
business owners. Established in the 1960s by farmers for farmers,
FBD has built on those roots in agriculture to become a leading
general insurer serving the needs of its direct agricultural, small
business and consumer customers throughout Ireland. It has a
network of 34 branches nationwide.
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.
The following details relate to FBD's ordinary shares of EUR0.60
each which are publicly traded:
Listing Euronext Dublin UK Listing Authority
Listing Category Premium Premium (Equity)
Trading Venue Euronext Dublin London Stock Exchange
Market Main Securities Market Main Market
ISIN IE0003290289 IE0003290289
Ticker FBD.I or EG7.IR FBH.L
OVERVIEW
FBD delivered an excellent profit of EUR112.5m before tax and an
exceptional 30% return on equity. This result was driven by a
number of factors primarily our strong underwriting result but also
including unusually benign weather, significant positive prior year
reserve development and better than expected investment returns.
The underwriting profit has increased to EUR93.7m (2018:
EUR63.4m).
In line with our Dividend Policy, the Board has proposed a
dividend of 100c per share (2018: 50c) in respect of the 2019
financial year. This represents a pay-out of approximately 35% of
Group profits after tax (2018: 40%).
UNDERWRITING
Premium income
Strong competition in all customer segments has resulted in a
decrease in Gross Written Premium of EUR1.4m to EUR370.1m (2018:
EUR371.5m). Increases in SME Business and the introduction of the
An Post partnership were offset by reductions in Agri and Consumer
as we reduced prices in the face of strong competition to defend
our book. We continued to maintain our underwriting discipline on
risk selection and price adequacy. We believe that our strong
customer relationships, risk selection and underwriting
capabilities are a core strength. New business volumes grew by 13%,
primarily in personal lines. Retention rates are generally
satisfactory across the book thanks to our excellent customer
service.
Average premiums reduced by 2.2% across the book. Average Motor
premiums reduced by 4.2% and Farm reduced by 2.5%, despite
increases in exposures following the improvements in our
Multi-Peril product with increased cover for Public Liability and
Environmental (pollution) liability. Business premiums increased by
1.8%, primarily due to changes in mix as opposed to rate
increases.
Reinsurance
Our underwriting track record over the past few years supported
the successful renegotiation of our 2019 reinsurance programme at
satisfactory rates.
Claims
Net claims incurred amounted to EUR148.7m (2018: EUR183.4m).
There were positive prior year reserve releases of EUR40.1m as our
claims experience from older years continued to show improvements
relative to provisions (2018: EUR28.7m). These releases have been
driven primarily by better than expected settlements and a very low
large claims frequency in some recent accident years. In particular
our latest view of the 2016 accident year continues to be better
than previous expectations.
The Group incurred a net charge of EUR8.0m (2018: EUR7.1m)
relating to the MIBI levy and its MIICF contribution which are
calculated based on the Group's expected share of the motor market
for 2019 and its motor gross written premium respectively.
Claims Environment
We welcome the increased stabilisation in the Irish claims
environment, in particular:
-- An increased willingness to recognise that plaintiffs have
some degree of responsibility for their own personal safety,
building on the decision in Byrne v Ardenheath (2017). This should
assist businesses who are being held to unreasonably high standards
in personal injury cases. In addition, in the event a plaintiff
succeeds in proving a breach of statutory duty on the part of the
defendant, a causal link must be shown before damages will be
awarded (McCarthy v Twomey (2019).
-- The PIAB (Amendment) Act was enacted in April to address the
non-co-operation of claimants including failure to attend medical
examinations and failure to cooperate with experts. Claimants can
now incur penalties in respect of legal costs but only at the
judge's discretion.
-- The Civil Liability & Courts Act has been amended to
reduce the timeframe of notification of a claim to a defendant from
two months to one.
-- Legislation was passed to establish the Judicial Council and
the Personal Injuries Guidelines Committee. The Judicial Council
was formally established in February 2020 and the Committee is to
follow. We await the findings of the Committee to see if there is
to be real change in award levels.
Currently the level of compensation is too high for soft tissue
injuries in Irish courts and the negligence standards imposed by
courts for farmers and small businesses remain too onerous . The
Personal Injuries Commission found that the average soft tissue
award in Ireland is more than 4 times that in the UK. We believe
important reforms would lower insurance costs for all our
customers:
-- Lower injury awards through the work of the Judicial Council Personal Injury Commission;
-- Speed up litigation and reduce legal costs;
-- Create a pre-action protocol to fast-track rejected Injuries Board awards;
-- Make gross exaggeration an offence;
-- Establish and resource a Garda fraud investigation unit.
In addition, there are remaining issues outstanding that may
further increase the cost of claims such as:
-- The Consumer Insurance Contracts Act, while introducing
reforms for consumers that are generally welcome but has the
potential to increase costs and create upward pressure on
pricing;
-- Brexit implications on our supply chain may lead to increased
costs for motor and property damage repair claims;
-- Further increases in Property repair costs due to demand and labour supply shortages.
While award stability is welcome after many years of
uncertainty, in the absence of real reform of the claims
environment, Irish businesses, farmers and consumers will continue
to bear too-high insurance costs and volatile underwriting capacity
in the market caused by withdrawal of foreign competitors and niche
operators.
Weather, Claims Frequency and Large Claims
An unusually benign 2019 resulted in no weather events of note
and the lowest quantum of weather claims in many years.
There was a modest reduction in Motor injury frequency during
2019 with the benign weather a contributing factor. We are closely
monitoring Employer's Liability claims frequency which was running
at a three year high in the middle of 2019 but is showing more
positive trends in the second half of the year. It is likely that
it is a result of increased economic activity.
The number of large Casualty claims greater than EUR250k
reported in 2019 is slightly higher than the average number
reported in the previous 7 years. The number and size of large
claims can vary greatly from year to year.
Expenses
The Group's expense ratio was 25.9% (2018: 24.9%). Other
underwriting expenses were EUR87.3m, an increase of EUR3.2m. The
increase is explained by EUR1.2m more in commission payments in
respect of our intermediary partner, EUR1.2m in increased salary
costs and a EUR1m increase in marketing costs offset by modest
reductions elsewhere.
General
FBD generated an underwriting profit of EUR93.7m (2018:
EUR63.4m) which translates to a COR of 72.3% (2018: 81.2%).
Investment Return
FBD's total investment return for 2019 was 2.7% (2018: -0.5%).
1.7% (2018: 0.2%) is recognised in the Consolidated Income
Statement and 1.0% (2018: -0.7%) recognised in the Consolidated
Statement of Other Comprehensive Income (OCI). The strong returns
are a result of investment gains across all asset classes.
The Income Statement return reflects the strong performance of
the Company's risk asset portfolio, in particular equities. FBD's
global equity fund was up 24% during the year as this asset class
performed strongly with the easing of geo-political tensions and
challenging low interest environment. Falling interest rates and an
easing of monetary policy in the Eurozone resulted in a strong
positive mark-to-market return on FBD's sovereign and corporate
bond portfolios and this is reflected in OCI.
Financial Services Income and Other Costs
The Group's financial services operations delivered a profit
before tax of EUR3.7m for the year (2018; EUR2.5m). The life,
pension and investment broking operation (FBD Financial Solutions)
increased revenue by 12% to EUR4.3m (2018: EUR3.8m) with marginal
cost increases. Other financial services fees increased by 5%.
Holding company costs decreased from EUR3.5m to EUR2.9m mainly due
to lower legal expenses.
Profit per share
The diluted profit per share was 276 cent per ordinary share,
compared to 112 cent per ordinary share in 2018.
Dividend
The Group has a Dividend Policy whereby it pays 20% to 50% of
full year profits when appropriate, recognising that extreme
weather events and inherent cyclicality are a feature of all
insurance businesses. The Group has a robust capital position
including strong solvency and liquidity margins. Given the Group's
outstanding financial performance in 2019 the Board proposes to pay
a dividend of 100 cent per share for the 2019 financial year (2018:
50 cent). This is equivalent to a pay-out ratio of approximately
35% in respect of 2019 profits (2018: 40%).
Subject to the approval of shareholders at the Annual General
Meeting to be held on 8 May 2020, the final dividend for 2019 will
be paid on 15 May 2020 to the holders of shares on the register on
14 April 2020. The dividend is subject to withholding tax ("DWT")
except for shareholders who are exempt from DWT and who have
furnished a properly completed declaration of exemption to the
Company's Registrar from whom further details may be obtained.
STATEMENT OF FINANCIAL POSITION
Capital position
Ordinary shareholders' funds at 31 December 2019 amounted to
EUR372.2m (2018: EUR283.5m). The increase in shareholders' funds is
mainly attributable to the following:
-- Profit after tax for the year of EUR98.2m;
-- Mark to Market movement on our Bond portfolio of EUR9.6m
after tax in the Statement of Other Comprehensive Income;
-- Share based payments of EUR2.4m;
-- Offset by EUR17.7m dividend payments in respect of the 2018 financial year; and
-- The decrease in the defined benefit pension scheme surplus of
EUR3.7m after tax following a 90bps decrease in the discount rate
to 0.9% and drop in long-term inflation to 1.3%.
Net assets per ordinary share are 1,068 cent, compared to 818
cent per share at 31 December 2018.
Investment Allocation
The Group adopts a conservative investment strategy to ensure
that its technical reserves are matched by cash and fixed interest
securities of low risk and similar duration. FBD allocated an
additional EUR22m to our Risk Assets portfolio during 2019 to move
closer to the Company's target Strategic Asset Allocation.
The allocation of the Group's investment assets is as
follows:
31 December 2019 31 December 2018
EURm % EURm %
Corporate bonds 509 46% 498 47%
Government bonds 302 27% 297 28%
Deposits and cash 168 15% 157 15%
Other risk assets 111 10% 79 8%
Investment property 19 2% 18 2%
1,109 100% 1,049 100%
---------- -------- ---------- --------
Solvency
The latest (unaudited) Solvency Capital Ratio (SCR) is 192%
compared to the 2018 SCR of 165%. The SCR includes the foreseeable
ordinary dividend of EUR34.9m. For the first time the SCR
calculation excludes a substantial portion of the value of the
Company's TIA policy administration system. The TIA system is the
principal operating and core technology platform of the business.
The impact of this change in the SCR calculation is a reduction of
eight percentage points. There is no impact on the Group's IFRS
Financial Statements.
OUTLOOK
Our mission is to be the Irish insurer of choice by putting our
customers and communities at the heart of who we are and what we
do. We believe this approach delivers sustainable returns to
shareholders and ensures the ongoing profitability of FBD.
We welcome the strong stance taken by the judiciary towards
fraudulent and exaggerated claims, the increasing stabilisation of
award levels and some recognition of increased personal
responsibility in court awards. In non-cooperation cases judges may
now issue penalties. Claims may be dismissed if a claimant's
affidavit is false or misleading. FBD contests all suspect claims
and we advocate for penalties for false or exaggerated claims in
order to deter these claimants. However, progress in reducing
injury awards remains the key driver in reducing future costs for
all our customers.
We are operating in a very competitive market. All business, new
and existing is fiercely competed. We believe underwriting and
pricing discipline is key to our future success.
We have successfully renegotiated our 2020 reinsurance programme
at satisfactory rates. The structure of our programme is largely
unchanged from 2019.
We are preparing to limit the operational impacts on our supply
chain following Brexit. However the impact on our customers; the
consumers, farms and businesses around the country, is still very
uncertain. We will continue to monitor this economic impact and to
advocate for sensible solutions as the situation evolves.
For 2020 we are targeting a current year COR in the low 90's,
absent exceptional weather.
FBD Holdings plc
Consolidated Income Statement
For the financial year ended 31 December 2019
2019 2018
EUR000s EUR000s
Revenue 394,639 396,003
---------- ----------
Income
Gross premium written 370,063 371,504
Reinsurance premiums (31,836) (36,735)
---------- ----------
Net premium written 338,227 334,769
Change in provision for unearned premiums (674) 3,134
---------- ----------
Net premium earned 337,553 337,903
Net investment return 17,892 2,482
Financial services income - Revenue from
contracts with customers 4,268 3,754
- Other financial services income 5,557 5,282
---------- ----------
Total income 365,270 349,421
Expenses
Net claims and benefits (148,679) (183,367)
Other underwriting expenses (87,259) (84,054)
Movement in other provisions (7,946) (7,064)
Financial services and other costs (6,081) (6,548)
Impairment of property, plant and equipment (246) (1,034)
Finance costs (2,579) (5,453)
Exceptional loss on purchase and cancellation
of convertible debt - (11,836)
Profit before taxation 112,480 50,065
Income taxation charge (14,255) (7,682)
---------- ----------
Profit for the financial year 98,225 42,383
---------- ----------
Attributable to:
Equity holders of the parent 98,225 42,383
FBD Holdings plc
Consolidated Income Statement
For the financial year ended 31 December 2019
Earnings per share
From continuing operations 2019 2018
Cent Cent
Basic 281 122
-------- --------
Diluted 276 (1) 112 (2)
-------- --------
(1) Diluted earnings per share reflects the potential vesting of
share based payments.
(2) Diluted earnings per share reflects the potential conversion
of convertible debt up until the date of purchase and cancellation
of the convertible debt and the potential vesting of share based
payments.
The accompanying notes form an integral part of the Financial
Statements.
The Financial Statements were approved by the Board and
authorised for issue on 26 February 2020.
FBD Holdings plc
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2019
2019 2018
EUR000s EUR000s
Profit for the financial year 98,225 42,383
---------- ----------
Items that will or may be reclassified
to profit or loss in subsequent periods:
Net gain/(loss) on available for sale
financial assets during the year 11,356 (7,744)
Gains transferred to the Consolidated
Income Statement on disposal during
the year (432) (101)
Taxation (charge)/credit relating to
items that will or may be reclassified
to profit or loss in subsequent periods (1,366) 981
Items that will not be reclassified
to profit or loss in subsequent periods:
Actuarial (loss)/gain on retirement
benefit obligations (4,236) 3,232
Taxation credit/(charge) relating to
items not to be reclassified in subsequent
periods 530 (404)
---------- ----------
Other comprehensive income/(expense)
after taxation 5,852 (4,036)
---------- ----------
Total comprehensive income for the
financial year 104,077 38,347
---------- ----------
Attributable to:
Equity holders of the parent 104,077 38,347
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2019
ASSETS
2019 2018
EUR000s EUR000s
Property, plant and equipment 28,114 28,340
Policy administration system 38,603 40,152
Intangible assets 2,155 355
Investment property 18,693 18,310
Right of use assets 6,115 -
Loans 611 615
Deferred taxation asset 1,222 1,081
Financial assets
Available for sale investments 811,986 795,717
Investments held for trading 111,399 78,778
Deposits with banks 60,000 70,998
---------- ----------
983,385 945,493
---------- ----------
Reinsurance assets
Provision for unearned premiums 1 6
Claims outstanding 66,349 80,919
---------- ----------
66,350 80,925
---------- ----------
Retirement benefit surplus 8,723 12,944
Current taxation asset 3,949 3,949
Deferred acquisition costs 33,182 31,956
Other receivables 63,866 62,868
Cash and cash equivalents 94,982 77,639
---------- ----------
Total assets 1,349,950 1,304,627
---------- ----------
FBD Holdings plc
Consolidated Statement of Financial Position (continued)
At 31 December 2019
EQUITY AND LIABILITIES 2019 2018
EUR000s EUR000s
Equity
Called up share capital presented
as equity 21,409 21,409
Capital reserves 22,811 20,430
Retained earnings 328,008 241,645
Equity attributable to ordinary
equity holders of the parent 372,228 283,484
Preference share capital 2,923 2,923
Total equity 375,151 286,407
Liabilities
Insurance contract liabilities
Provision for unearned premiums 183,545 182,875
Claims outstanding 683,332 738,025
---------- ----------
866,877 920,900
---------- ----------
Other provisions 8,417 7,738
Subordinated debt 49,485 49,426
Lease liability 6,222 -
Deferred taxation liability 4,905 3,610
Current taxation liability 3,128 3,312
Payables 35,765 33,234
Total liabilities 974,799 1,018,220
---------- ----------
Total equity and liabilities 1,349,950 1,304,627
---------- ----------
The accompanying notes form an integral part of the Financial
Statements.
FBD Holdings plc
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2019
2019 2018
EUR000s EUR000s
Cash flows from operating activities
Profit before taxation 112,480 50,065
Adjustments for:
(Profit)/loss on investments held for trading (10,741) 4,411
Exceptional loss on purchase and cancellation of convertible bond - 11,836
Loss on investments available for sale 4,025 4,825
Interest and dividend income (11,102) (12,072)
Depreciation/amortisation of property, plant and equipment and intangible assets 10,503 11,682
Depreciation of right of use asset 771 -
Share-based payment expense 2,381 704
Revaluation of investment property (290) (310)
Revaluation of property, plant and equipment 246 1,034
Decrease in insurance contract liabilities (39,448) (20,480)
Increase in other provisions 679 1,091
Operating cash flows before movement in working capital 69,504 52,786
(Increase)/ decrease in receivables and deferred acquisition costs (2,839) 3,390
Increase in payables 5,082 8,472
Interest payments on convertible debt - (5,130)
Interest payments on subordinated debt (2,500) (589)
Interest on lease liabilities 278 -
Purchase of investments held for trading (29,689) (82,916)
Sale of investments held for trading 7,807 45,075
Cash generated from operations 47,643 21,088
Interest and dividend income received 11,717 11,992
Income taxes paid (14,129) -
----------- ----------
Net cash generated from operating activities 45,231 33,080
----------- ----------
Cash flows from investing activities
Purchase of available for sale investments (152,656) (138,798)
Sale of available for sale investments 143,289 89,101
Purchase of property, plant and equipment (8,932) (13,003)
Sale of property, plant and equipment - 90
Purchase of intangible assets (1,935) (399)
Decrease in loans and advances 4 66
Decrease in deposits invested with banks 10,998 124,987
Net cash (used in)/ generated from investing activities (9,232) 62,044
----------- ----------
Cash flows from financing activities
Ordinary and preference dividends paid (17,714) (8,602)
Purchase and cancellation of convertible bond - (86,059)
Proceeds from issue of subordinate debt - 50,000
Principal elements of lease payments (942) -
Net cash used in financing activities (18,656) (44,661)
----------- ----------
Net increase in cash and cash equivalents 17,343 50,463
Cash and cash equivalents at the beginning of the year 77,639 27,176
Cash and cash equivalents at the end of the financial year 94,982 77,639
----------- ----------
The accompanying notes form an integral part of the Financial
Statements.
FBD Holdings plc
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2019
Called up Capital Retained Other Attributable Preference Total equity
share reserves earnings reserves to share
capital ordinary capital
presented shareholders
as equity
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1
January 2018 21,409 19,726 212,259 18,232 271,626 2,923 274,549
Transitional
adjustment
IFRS 15 - - 2,404 - 2,404 - 2,404
Profit after
taxation - - 42,383 - 42,383 - 42,383
Other
comprehensive
income - - (4,036) - (4,036) - (4,036)
------------ ------------ ------------ ------------- ------------- ------------- -------------
21,409 19,726 253,010 18,232 312,377 2,923 315,300
Dividends paid
and approved
on ordinary
and preference
shares - - (8,602) - (8,602) - (8,602)
Recognition of
share based
payments - 704 - - 704 - 704
Purchase and
cancellation
of convertible
debt - - (2,763) (18,232) (20,995) - (20,995)
Balance at 31
December 2018 21,409 20,430 241,645 - 283,484 2,923 286,407
------------ ------------ ------------ ------------- ------------- ------------- -------------
Profit after
taxation - - 98,225 - 98,225 - 98,225
Other
comprehensive
income - - 5,852 - 5,852 - 5,852
------------ ------------ ------------ ------------- ------------- ------------- -------------
21,409 20,430 345,722 - 387,561 2,923 390,484
Dividends paid
and approved
on ordinary
and preference
shares - - (17,714) - (17,714) - (17,714)
Recognition of
share based
payments - 2,381 - - 2,381 - 2,381
Balance at 31
December 2019 21,409 22,811 328,008 - 372,228 2,923 375,151
------------ ------------ ------------ ------------- ------------- ------------- -------------
FBD Holdings plc
Supplementary Information
For the year ended 31 December 2019
Note 1 Underwriting PROFIT
2019 2018
EUR000s EUR000s
Gross premium written 370,063 371,504
---------- ----------
Net premium earned 337,553 337,903
Net claims incurred (148,679) (183,367)
Other provisions (7,946) (7,064)
Net underwriting expenses (87,259) (84,054)
---------- ----------
Underwriting profit 93,669 63,418
---------- ----------
2019 2018
Net underwriting expenses EUR000s EUR000s
Management expenses 86,499 84,220
Deferred acquisition costs (1,226) (590)
--------- ---------
Gross underwriting expenses 85,273 83,630
Reinsurance commission receivable (2,479) (2,876)
Broker commission payable 4,465 3,300
--------- ---------
Net underwriting expenses 87,259 84,054
--------- ---------
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
Note 2 EARNINGS PER EUR0.60 ORDINARY SHARE
The calculation of the basic and diluted earnings per share
attributable to the ordinary shareholders is based on the following
data:
2019 2018
Earnings EUR000s EUR000s
*Profit for the year for the purpose of
basic earnings per share 97,943 42,101
*Profit for the year for the purpose of
diluted earnings per share 97,943 46,357
------------- -------------
Number of shares 2019 2018
No. No.
Weighted average number of ordinary shares
for the purpose of basic earnings per
share (excludes treasury shares) 34,817,297 34,666,201
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share (excludes treasury shares) 35,472,380 41,507,329
Cent Cent
Basic earnings per share 281 122
------------- -------------
Diluted earnings per share 276 (1) 112 (2)
------------- -------------
* Profit for the purpose of calculating both basic and diluted
EPS is stated after taking into account preference dividends.
The 'A' ordinary shares of EUR0.01 each that are in issue have
no impact on the earnings per share calculation.
(1) Diluted earnings per share reflects the potential vesting of
share based payments
(2) Diluted earnings per share reflects the potential conversion
of convertible debt up until the date of purchase and cancellation
of the convertible debt and the potential vesting of share based
payments
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
Note 3 DIVIDS
2019 2018
EUR000s EUR000s
Paid during year:
2018 dividend of 8.4 cent (2017: 8.4 cent)
per share on 14% non-cumulative preference
shares of EUR0.60 each 113 113
2018 dividend of 4.8 cent (2017: 4.8 cent)
per share on 8% non-cumulative preference shares
of EUR0.60 each 169 169
2018 final dividend of 50.0 cent (2017: 24.0
cent) per share on ordinary shares of EUR0.60
each 17,432 8,320
--------- ---------
Total dividends paid 17,714 8,602
--------- ---------
2019 2018
EUR000s EUR000s
Proposed:
2019 dividend of 8.4 cent (2018: 8.4 cent)
per share on 14% non-cumulative preference
shares of EUR0.60 each 113 113
2019 dividend of 4.8 cent (2018: 4.8 cent)
per share on 8% non-cumulative preference shares
of EUR0.60 each 169 169
2019 final dividend of 100.0 cent (2018: 50.0
cent) per share on ordinary shares of EUR0.60
each 34,862 17,333
--------- ---------
Total dividends proposed 35,144 17,615
--------- ---------
The proposed dividend excludes any amounts due on outstanding
share awards as at 31 December 2019 that are due to vest in March
2020 and is subject to approval by shareholders at the Annual
General Meeting on 8 May 2020. The proposed dividends have not been
included as a liability in the Consolidated Statement of Financial
Position.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
Note 4 CALLED UP SHARE CAPITAL PRESENTED AS EQUITY
Number 2019 2018
EUR000s EUR000s
(i) Ordinary shares of EUR0.60
each
Authorised:
At the beginning and the end
of the year 51,326,000 30,796 30,796
------------ -------- --------
Issued and fully paid:
At the beginning and the end
of the year 35,461,206 21,277 21,277
------------ -------- --------
(ii) 'A' Ordinary shares of EUR0.01
each
Authorised:
At the beginning and the end
of the year 120,000,000 1,200 1,200
------------ -------- --------
Issued and fully paid:
At the beginning and the end
of the year 13,169,428 132 132
------------ -------- --------
Total - issued and fully paid 21,409 21,409
-------- --------
The 'A' ordinary shares of EUR0.01 each are non-voting. They are
non-transferable except only to the Company. Other than a right to
a return of paid up capital of EUR0.01 per 'A' ordinary share in
the event of a winding up, the 'A' ordinary shares have no right to
participate in the capital or the profits of the Company.
The holders of the two classes of non-cumulative preference
shares rank ahead of the two classes of ordinary shares in the
event of a winding up. Before any dividend can be declared on the
ordinary shares of EUR0.60 each, the dividend on the non-cumulative
preference shares must firstly be declared or paid.
The number of ordinary shares of EUR0.60 each held as treasury
shares at the beginning (and the maximum number held during the
year) was 795,005 (2018: 795,005). 196,263 ordinary shares were
reissued from treasury during the year under the FBD Performance
Plan. The number of ordinary shares of EUR0.60 each held as
treasury shares at the end of the year was 598,742 (2018: 795,005).
This represented 1.7% (2018: 2.2%) of the shares of this class in
issue and had a nominal value of EUR359,245 (2018: EUR477,003).
There were no ordinary shares of EUR0.60 each purchased by the
Company during the year.
The weighted average number of ordinary shares of EUR0.60 each
in the earnings per share calculation has been reduced by the
number of such shares held in treasury.
All issued shares have been fully paid.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
Note 5 TRANSACTIONS WITH RELATED PARTIES
Farmer Business Developments plc and FBD Trust Company Ltd have
a substantial shareholding in the Group at 31 December 2019.
Details of their shareholdings and related party transactions are
set out in the Annual Report.
As part of the subordinated debt investment in 2018, Farmer
Business Developments plc invested EUR20.0m and FBD Trust Company
Ltd invested EUR13.0m.
For the purposes of the disclosure requirements of IAS 24, the
term "key management personnel" (i.e. those persons having
authority and responsibility for planning, directing and
controlling the activities of the Group) comprises the Board of
Directors and Company Secretary of FBD Holdings plc and the Group's
primary subsidiary, FBD Insurance plc and the members of the
Executive Management Team.
The remuneration of key management personnel ("KMP") during the
year was as follows:
2019 2018
EUR000s EUR000s
Short term employee benefits (1) 3,501 3,545
Post-employment benefits 305 297
Share based payments 993 316
-------- --------
Charge to the Consolidated Income Statement 4,799 4,158
-------- --------
(1) Short term benefits include fees to Non-Executive Directors,
salaries and other short-term benefits to all key management
personnel.
Full disclosure in relation to the 2019 and 2018 compensation
entitlements and share awards of the Board of Directors is provided
in the Annual Report.
In common with all shareholders, Directors received
payments/distributions related to their holdings of shares in the
Company during the year, amounting in total to EUR27,830 (2018:
EUR3,571).
Note 6 CHANGE IN ACCOUNTING POLICY
IFRS 16 Leases was effective from 1 January 2019 and was adopted
by the Group on that date. The Group has applied the modified
retrospective approach to the standard. On adoption of IFRS16, the
adjustments recognised from the date of initial application are
shown below:
Operating lease commitments disclosed as at 31 December 2018
EUR9.6m
Discounted using the Group's incremental borrowing rate at the
date of initial application EUR7.1m
Less short term leases recognised on a straight-line basis as
expense
(EUR0.2m)
Lease liability recognised as at 1 January 2019 EUR6.9m
Full disclosure on the impact of IFRS 16 is provided in the
Annual Report.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
Note 7 ALTERNATIVE PERFORMANCE MEASURES (APM's)
The Group uses the following alternative performance measures:
Loss ratio, expense ratio, combined operating ratio, annualised
investment return, net asset value per share, return on equity and
gross written premium.
Loss ratio (LR), expense ratio (ER) and combined operating ratio
(COR) are widely used as a performance measure by insurers, and
give users of the financial statements an understanding of the
underwriting performance of the entity. Investment return is used
widely as a performance measure to give users of financial
statements an understanding of the performance of an entities
investment portfolio. Net asset value per share (NAV) is a widely
used performance measure which provides the users of the financial
statements the book value per share. Return on equity (ROE) is also
a widely used profitability ratio that measures an entity's ability
to generate profits from its shareholder investments. Gross written
premium refers to the revenue of an insurance company and is widely
used across the general insurance industry.
The calculation of the APM's is based on the following data:
2019 2018
EUR000s EUR000s
Loss ratio
Net claims and benefits 148,679 183,367
Movement in other provisions 7,946 7,064
----------
Total claims incurred 156,625 190,431
Net premium earned 337,553 337,903
----------
Loss ratio (Total claims/Net premium earned) 46.4% 56.3%
---------- ----------
Expense ratio
Other underwriting expenses 87,259 84,054
Net premium earned 337,553 337,903
---------- ----------
Expense ratio (Underwriting expenses/Net
premium earned) 25.9% 24.9%
---------- ----------
Combined operating ratio % %
Loss ratio 46.4% 56.3%
Expense ratio 25.9% 24.9%
---------- ----------
Combined operating ratio (Loss ratio +
Expense ratio) 72.3% 81.2%
---------- ----------
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
2019 2018
Investment return EUR'000s EUR'000s
Investment return recognised in Consolidated
Income Statement 17,892 2,482
Investment return recognised in Consolidated
Statement of Comprehensive Income 10,924 (7,845)
----------- ------------
Total investment return 28,816 (5,363)
Average investment assets 1,073,429 1,047,711
----------- ------------
Investment return % (Total investment return/Average
investment assets) 2.7% -0.5%
----------- ------------
2019 2018
Net asset value per share EUR'000s EUR'000s
Shareholders' funds - equity interests 372,228 283,483
----------- -----------
Number of shares
Number of ordinary shares in issue (excluding
treasury) 34,862,464 34,666,201
----------- -----------
Cent Cent
Net asset value per share (NAV) (Shareholders
funds / Closing number of ordinary shares) 1,068 818
----------- -----------
Return on equity
Weighted average equity attributable to
ordinary equity holders of the parent 327,856 277,555
Result for the period 98,225 42,383
Return on equity (Result for the period/Weighted
average equity attributable to ordinary
equity holders of the parent) 30% 15%
----------- -----------------
Gross premium written: The total premium on insurance underwritten
by an insurer or reinsurer during a specified period, before
deduction of reinsurance premium.
Expense ratio: Underwriting and administrative expenses as
a percentage of net earned premium.
Loss ratio: Net claims incurred as a percentage of net earned
premium.
Combined Operating Ratio: The sum of the loss ratio and expense
ratio. A combined operating ratio below 100% indicates profitable
underwriting results. A combined operating ratio over 100% indicates
unprofitable results
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2019
Note 8 Subsequent Events
There have been no subsequent events that would have a material
impact on the Financial Statements.
Note 9 General Information and Accounting Policies
The financial information set out in this document does not
constitute full statutory Financial Statements for the years ended
31 December 2019 or 2018 but is derived from same. The Group
Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, applicable Irish law and the listing Rules of
Euronext Dublin, the Financial Conduct Authority and comply with
Article 4 of the EU IAS Regulation.
The 2019 and 2018 Financial Statements have been audited and
received unqualified audit reports.
The 2019 Financial Statements were approved by the Board of
Directors on 26 February 2020.
The Consolidated Financial Statements are prepared under the
historical cost convention as modified by the revaluation of
property, investments held for trading, available for sale
investments and investment property which are measured at fair
value.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR TFMPTMTTTBPM
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