TIDMFBH
RNS Number : 6136D
FBD Holdings PLC
04 March 2022
FBD HOLDINGS PLC
4 March 2022
FBD HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT
For the year ended 31 December 2021
KEY HIGHLIGHTS
-- Strong and robust Profit Before Tax of EUR110m compared to EUR4.8m in 2020.
-- Proposed dividend of 100c per share.
-- Our capital position remains strong with a Solvency Capital Ratio (SCR) of 214% (unaudited).
-- Return on Equity of 23%.
-- Combined Operating Ratio (COR) of 71.5%.
-- The quantum hearing judgement delivered on 28(th) January
2022 relating to Covid-19 Business Interruption claims from public
house customers provided considerable clarity on the definition of
business closure and on other matters such as allowable wages. The
Covid-19 Business Interruption best estimate net of reinsurance is
reduced to EUR44m.
-- The application of reinsurance cover to Business Interruption
claims has been agreed with reinsurers for the expected impacted
layers of the catastrophe programme, which reduces the uncertainty
surrounding reinsurance recoveries.
-- Investment portfolio return of 0.3%, reflecting positive investment returns of EUR3.5m.
-- Average premium down 1.3% across the portfolio with Private Motor down 13.9%.
-- Retention levels of existing business increased by 0.5% reaching a five year high.
FINANCIAL SUMMARY 2021 2020
EUR000s EUR000s
Gross written premium 366,328 358,230
Underwriting profit/ (loss) 95,197 (4,379)
Profit before taxation 110,435 4,802
Loss ratio 43.6% 73.3%
Expense ratio 27.9% 28.1%
Combined operating ratio 71.5% 101.4%
Cent Cent
Basic earnings per share 274 13
Net assets per share 1,338 1,095
-- Gross Written Premium (GWP) of EUR366.3m (2020: EUR358.2m) up
2.3%. Excluding EUR3.3m (2020: EUR11.8m) of pandemic related
premium rebates, GWP is in line with 2020.
-- Underwriting profit of EUR95.2m (2020 loss: EUR4.4m),
equating to a 71.5% COR (2020: 101.4%) due to claims frequency
reductions, lower severity of injury claims, benign weather and
positive prior year reserve development of EUR63.6m.
-- Expense ratio of 27.9% (2020: 28.1%) marginally decreased
mainly due to stronger earned premium offset by accelerated
amortisation costs for the policy administration system.
-- Strong investment returns through the Income Statement of
EUR15.7m (2020: EUR10.4m) primarily due to the positive performance
of risk assets. Interest rate increases which reduced bond
valuations led to negative mark to market (MTM) returns of
-EUR12.2m (2020: +EUR4.5m) through Other Comprehensive Income
(OCI).
-- Net Asset Value per share 1,338 cent has increased from 1,095 cent at the end of 2020.
Commenting on these results Tomás Ó Midheach, Group Chief
Executive, said:
"I am delighted to report a strong and robust set of full year
results for FBD.
On the insurance front we saw the introduction of the Personal
Injury Guidelines which have enabled us to reduce premiums for our
customers as we reflect expected lower costs for minor injury
claims. As we move into the full re-opening of the economy and all
restrictions are lifted and as we will see the withdrawal of
Government income supports, the real impact on the economy of the
pandemic will become clearer, while new opportunities and
challenges will arise.
The Business Interruption claims judgement received on the
28(th) January provided clarity on the main substantive issue of
business closure. Interim payments of EUR30m have already been paid
to date and despite many delays due to the complexity of the
issues, the path is now clearer to finalising payments. We
confirmed previously that Government subsidies paid to public house
customers with Business Interruption cover have not contributed to
2021 profits.
We committed to paying an additional amount to all impacted FBD
public house policyholders following the FSPO decision earlier in
the year, in line with the Central Bank of Ireland's Business
Interruption Insurance Supervisory Framework. We have paid over
EUR11m to date with the remaining payments to follow, on receipt of
further requested information.
We reached agreement with our reinsurers on the application of
contract cover for Business Interruption claims for the expected
impacted layers of the catastrophe programme, which reduces
uncertainty around reinsurance recoveries.
We continue to invest in the business to enable growth and
enhance our digital offerings to broaden the avenues through which
our customers can do business with us. We are working with our
partners to deliver new options while ensuring our current
relationships are delivering for our customers.
Our employees are returning to our offices on a phased basis and
we are continuing to adapt and develop a more flexible future
working model. Our people are the backbone of FBD and their
customer service is second to none and has been exceptional
throughout the pandemic. The senior management team and I would
like to thank each and every one of them for their contribution to
these results.
My first year has passed very quickly and has been very
constructive and insightful. I am delighted to say the underlying
business is strong and in a very solid capital position as we leave
the main impacts of the pandemic behind us. I would like to thank
my colleagues for their continuing support and as we begin another
year together, our ambition is to continue to drive value from the
business and deliver for all our stakeholders, including our
employees and our customers in 2022 and beyond. "
A presentation will be available on our Group website
www.fbdgroup.com from 9am today .
Enquiries Telephone
FBD
Michael Sharpe, Investor Relations +353 87 9152914
Drury Communications
Paddy Hughes +353 87 616 7811
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
The Group reported a profit before tax of EUR110.4m (2020
profit: EUR4.8m), supported by a strong underwriting performance
including claims frequency improvements, lower severity of injury
claims, benign weather, strong investment returns of EUR15.7m and
positive prior year reserve development of EUR63.6m.
The Group reported an underwriting profit of EUR95.2m (2020
loss: EUR4.4m) and GWP of EUR366.3m (2020: EUR358.2m) which is in
line with 2020 when the pandemic related premium rebates are
excluded.
The quantum hearing judgement delivered on January 28th 2022
clarified the position for Business Interruption claims in respect
of the definition of business closure and on other matters such as
allowable wages. We agreed the reinsurance recovery levels with our
reinsurers for the expected impacted layers of the catastrophe
programme, clarifying the application of our reinsurance contract
cover. FBD is now ready to move to the next phase of the process
and arrange final claims settlements with our public house
customers.
UNDERWRITING
Premium income
Gross written premium in creased to EUR366.3m in 2021 (2020:
EUR358.2m) and includes EUR3.3m of Covid-19 Commercial rebates
(2020: EUR6.0m Motor and EUR5.8m Commercial rebates). Excluding
rebates, gross written premium is in line with last year, despite
reducing average premium.
Customer policy count increased by 1.3%, with retention rates
increasing 0.5% reaching the highest level in the last five
years.
Average premium reduced by 1.3% across the book. Average premium
for Private Motor reduced by 13.9% as rates reduced to reflect the
Personal Injury Guidelines and benign injury claims trends. Average
premium on Farm was flat with strong retention levels. Home average
premium increased by 1.2% reflecting a change in cover and mix.
Average premium for Commercial increased 8.5% almost entirely due
to a change in mix.
Reinsurance
The reinsurance programme for 2022 was successfully renegotiated
with a similar structure to the expiring programme. The negotiation
of the 2022 renewal reflects market rate increases that incorporate
recent global events and overall we saw an increase in reinsurance
rates of 7%.
Claims
Net claims incurred (Net claims and benefits plus movements in
Other provisions) reduced by EUR85.4m to EUR145.7m (2020:
EUR231.1m). The main change relates to an increase in positive
prior year reserve development from EUR23.3m in 2020 to EUR63.6m in
2021. In addition the Business Interruption claims costs of
EUR54.0m in 2020 did not recur in 2021. These have been offset by
EUR13.2m costs for consequential payments following the application
of the Central Bank Business Interruption Supervisory Framework to
FSPO decisions on Business Interruption complaints.
The positive prior year reserve development of EUR63.6m is
coming from the reduction in the Business Interruption best
estimate, reduced number of large claims and lower attritional
claims frequency and severity in recent accident years.
Motor damage and injury claims frequency, while similar to 2020,
has been lower than pre-Covid levels primarily due to the
Government restrictions on movement. Excluding Business
Interruption claims, Property claims frequency remained relatively
consistent with the 2020 experience. There were no significant
weather events in 2021, Storm Barra in December was a minor event
incurring claims costs of approximately EUR4m.
The average cost of injury claims settlements continues to be
slightly lower than that experienced pre-Covid. This is due to a
change in the mix of settled cases affected by court closures and
the inability to engage in pre-trial negotiation, with a backlog of
cases building up in the courts system. In addition the
introduction of the Personal Injuries Guidelines have had the
desired impact of reducing the awards by approximately 40% for more
minor injuries. As a result we have reflected the impact of this in
premium reductions. It has yet to be seen what impact the new
guidelines will have on claims settled after the PIAB process has
been completed. The average cost of property claims increased 27%
due to a change in mix and inflation, with further inflation
expected on domestic building costs. Motor damage claims continue
to experience high inflation of 8% in the year as costs of parts,
paint and average labour hours per repair increase.
The increase in the movement in other provisions of EUR12.5m
primarily relates to the FSPO consequential payments. The Motor
Insurers Bureau of Ireland (MIBI) levy and Motor Insurers
Insolvency Compensation Fund (MIICF) contribution combined totalled
EUR9.0m (2020: EUR9.7m).
Claims Environment
Covid-19 continued to affect the claims environment throughout
2021. Social distancing restrictions have had a material impact on
the courts, with lengthy delays experienced. While there were six
new judicial appointments recently, we note there remains a backlog
in the court system. Restrictions on our ability to arrange
settlement talks have also impacted on settlement rates which are
showing a marked decline on pre-Covid rates.
The introduction of the new Personal Injury Guidelines continues
to bring caution to the approach of claimant solicitors, who are
reluctant to engage in settlements for such cases and instead are
anxious to determine the attitude of the courts to the adoption of
the guidelines. We are experiencing a build-up of older, higher
value injury claims as a result of slowdowns.
Whilst the changes to Personal Injuries Guidelines introduced in
April are a positive move for the customer and the insurance
industry, there are a number of uncertainties, namely, the extent
of cost changes for future settlements and legal fees, the impact
on the PIAB acceptance rate, and the potential for newly classified
injuries to increase costs. We continue to track injury settlements
and note there have been no court awards as yet.
There are a number of challenges to the Personal Injury
Guidelines before the courts over the constitutionality of the laws
underpinning the guidelines. The applicants' claims include that
the application of the guidelines breaches the separation of powers
between the legislature and the judiciary and their constitutional
right to bodily integrity, property and equality. Whatever the
outcome it is likely to be appealed to the Supreme Court due to the
novelty of the constitutional issues involved.
We welcome all initiatives in place to reduce the cost of claims
including capping of general damages introduced in April and the
passing of legislation dealing with perjury in injury claims.
Submissions were invited regarding the reform of PIAB, in which
Insurance Ireland engaged, and we await the outcome from the
consultation on the determination of who should decide on the
appropriate discount rate.
Weather, Claims Frequency and Large Claims
No significant weather events of note occurred during 2021 which
is consistent with the experience of the previous two years.
December's Storm Barra brought with it the highest number of
property claims in any month of 2021 with a claims cost of EUR4m.
Overall weather claims costs of approximately EUR9m were very
similar to the weather costs experienced in 2020.
As a result of the Covid-19 pandemic and the restrictions put in
place by the Government there continued to be a significant
reduction in Motor and Liability claims during the year when
compared to pre-Covid norms. This was particularly evident in the
first two months of the year when the country was at Level 5
lockdown. Frequency of Motor claims remained below normal levels in
the second half of the year, albeit at much higher levels than
those observed at the beginning of the year. Frequency for
liability claims has reverted back close to pre-Covid norms over
the last few months of the year. The frequency of claims relating
to Farm activities remained relatively stable throughout the
year.
Large injury claims notified in 2021 are 31% lower than the
average of previous pre-Covid years, defined as a value greater
than EUR250k, with Covid-19 affecting frequency and possibly
impacting the normal flow of information.
Expenses
The Group's expense ratio was 27.9% (2020: 28.1%). Other
underwriting expenses were EUR93.4m, an increase of EUR4.8m on
2020. The increase in expenses is primarily made up of accelerated
amortisation in respect of the policy administration system offset
by a higher allocation to claims handling expenses following an
updated cost allocation review.
The expense ratio reduced by 0.2% as a result of higher earned
premium and additional costs allocated to claims handling offset by
accelerated amortisation on the policy administration system.
Excluding the accelerated amortisation the expense ratio would be
26.1%.
General
FBD generated an underwriting profit of EUR95.2m (2020 loss:
EUR4.4m) which translates to a COR of 71.5% (2020: 101.4%).
Investment Return
FBD's total investment return for 2021 was 0.3% (2020: 1.3%).
1.3% (2020: 0.9%) is recognised in the Consolidated Income
Statement and -1.0% (2020: 0.4%) in the Consolidated Statement of
Other Comprehensive Income (OCI). The positive investment return
through the Income Statement is largely due to the strong
performance of risk assets over the year.
Despite new Covid-19 variants and ensuing lockdowns, economic
growth has been strong as economies re-opened and central banks
remained accommodative. The Global equity fund was up 20.3% over
the year and the Emerging Market equity fund was up 3.9%. Interest
rates increased on fears of higher inflation which reduced the
valuation of the Group's bond portfolios leading to negative
mark-to-market returns through OCI. Credit spreads have remained
tight reflecting the positive outlook for corporates.
Financial Services Income and Other Costs
The Group's financial services operations returned a profit
before tax of EUR1.2m for the period (2020: profit EUR2.1m).
Revenue reduced by EUR2.1m reflecting the impact of customer
forebearance measures and lower commission in the Life &
Pension business. Costs reduced by EUR1.1m to EUR6.1m primarily due
to reduced legal and other expenses in the Holding company.
Profit per share
The diluted profit per share was 268 cent per ordinary share,
compared to 12 cent per ordinary share in 2020.
Dividend
The Group's Dividend Policy intends to reward shareholders
through regular annual dividends while retaining sufficient capital
in order to maintain a healthy capital adequacy to support future
capital requirements. The Group has a robust capital position and
liquidity margins. Given the Group's excellent financial
performance in 2021 the Board proposes to pay a dividend of 100
cent per share for the 2021 financial year (2020: nil).
Subject to the approval of shareholders at the Annual General
Meeting to be held on 12 May 2022, the final dividend for 2021 will
be paid on 19 May 2022 to the holders of shares on the register on
22 April 2022. 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 2021 amounted to
EUR472.4m (2020: EUR384.0m). The increase in shareholders' funds is
mainly attributable to the following:
-- Profit after tax for the year of EUR96.4m;
-- An increase of EUR2.7m due to share based payments; and
-- Offset by Mark to Market losses on our Bond portfolio of EUR10.7m after tax;
Net assets per ordinary share are 1,338 cent, compared to 1,095
cent per share at 31 December 2020.
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 invested an
additional EUR40m into its corporate bond portfolio during the year
to earn higher yield while allowing it to maintain sufficient
liquidity. An additional EUR10m was invested in risk assets,
predominantly emerging market debt. The Group continues to maintain
a higher cash allocation to provide sufficient liquidity for
payment of Business Interruption claims.
The allocation of the Group's investment assets is as
follows:
31 December 2021 31 December 2020
EURm % EURm %
Corporate bonds 589 48% 552 47%
Government bonds 303 25% 311 26%
Deposits and cash 175 14% 180 15%
Other risk assets 88 7% 68 6%
Equities 50 4% 49 4%
Investment property 16 2% 17 2%
1,221 100% 1,177 100%
---------- -------- ---------- --------
Solvency
The latest (unaudited) Solvency Capital Ratio (SCR) is 214%
compared to the 2020 SCR of 197%.
RISKS AND UNCERTAINTIES
The principal risks and uncertainties faced by the Group are
outlined on pages 18 to 25 of the Group's Annual Report for the
year ended 31 December 2021. Covid-19 was again a dominant
influence during 2021 with a continuing impact on economic activity
and wider society impacting a number of risks and uncertainties
faced by the Group.
The claims environment continues to be impacted by the Covid-19
pandemic and lockdowns experienced during 2020 and 2021. Reduced
frequency continues despite increased commercial activity to more
normalised levels. In addition we are observing delays in the
settlement of claims due to court backlogs and restrictions in
place leading to difficulties entering into settlement discussions
with solicitors. As a result a higher degree of uncertainty exists
in the environment as the claims payment patterns and average
settlement costs of the more recent Covid-19 years are a less
reliable future indicator and must be carefully considered by the
Actuarial function when arriving at claims projections. Supply
chain issues in respect of materials and labour shortages
particularly in respect of Construction and the Motor industry may
impact claims costs in future years. Increased energy costs are
also a risk that may drive increased general inflation.
With on-going Government supports ensuring businesses continue
in operation, the risk increases when supports are removed that
businesses may close or contract, reducing exposures and premium on
the Commercial account.
FBD model forward looking projections of key financial metrics
on a periodic basis based on an assessment of the likely operating
environment over the next number of years. The projections reflect
changes of which we are aware and other uncertainties that may
impact future business plans and includes assumptions on the
potential impact on revenue, expenses, claims frequency, claims
severity, investment market movements and in turn solvency. The
output of the modelling demonstrates that the Group is likely to be
profitable and remain in a strong capital position. However, the
situation can change and unforeseen challenges and events could
occur. The solvency of the Group remains solid and is currently at
214% (31 December 2020: 197%).
The quantum hearing judgement on Business Interruption claims
was received on 28(th) January 2022 and clarified the definition of
business closures and on other matters such as allowable wages
reducing the uncertainty in respect of the gross claims cost.
The application of reinsurance contract cover to Business
Interruption claims has been agreed with reinsurers for the
expected impacted layers of the catastrophe programme. This reduces
the uncertainty surrounding reinsurance recoveries and is the main
reason for the favourable reduction in the Business Interruption
booked reserves net of reinsurance. Potential future adverse events
are assessed when the Group is considering the margin for
uncertainty which is a provision held as an amount over the best
estimate of claims liabilities net of expected reinsurance
recoveries.
Rising inflation in developed markets has led to increasing risk
free interest rates. A risk remains as to how high inflation will
go and to the policy response in order to control it. Equity
valuations are at near all-time highs and are therefore susceptible
to large drawdowns. Future financial market movements and their
impact on balance sheet valuations, pension surplus and investment
income are unknown and market risk remains high for the foreseeable
future.
The Group's Investment Policy, which defines investment limits
and rules and ensures there is an optimum allocation of
investments, is being continuously monitored. Regular review of the
Group's reinsurers' credit ratings, term deposits and outstanding
debtor balances is in place. All of the Group's reinsurers have a
credit rating of A- or better. All of the Group's fixed term
deposits are with financial institutions which have a minimum A-
rating. Customer defaults are at pre-pandemic levels and support is
provided to customers when required as we monitor the situation
closely.
The Group continues to manage liquidity risk through ongoing
monitoring of forecast and actual cash flows and currently holds a
higher allocation to short-term cash and corporate bonds in order
to meet Business Interruption claims. The Group's cash flow
projections from its financial assets are well matched to the cash
flow projections of its liabilities and it maintains a minimum
amount available on term deposit at all times. The Group's asset
allocation is outlined on page 7.
The recruitment, motivation and retention of employees is key
for the business as the world of work has evolved and flexible
working, wellbeing and continuous development opportunities are
differentiators. We continue to adjust to these changes to attract
and retain a talented workforce.
OUTLOOK
In terms of economic outlook for 2022, almost all pandemic
restrictions were lifted on the 22(nd) January across the economy
and despite continuing high infection rates the severity of the
virus and the impact on the health service is at a manageable
level. Vaccination levels are very high which are supporting the
reopening of the economy and many people are returning to places of
work, and setting the economy on the path to post pandemic
recovery.
We await the recommendations from the public consultation on the
personal injury discount rate in the Republic of Ireland which
started in June 2020 and will increase the cost of awards if the
discount rate is decreased.
Differential pricing requirements when published may result in
significant pricing changes in the market in the second half of
2022, as the insurance industry adapts creating potential
opportunities and challenges.
It is early days for the Personal Injury Guidelines as claims
settlements are at such low levels with Covid-19 impacting the
claims settlement process and the courts. FBD are seeing reduced
awards and are hopeful that consistency in awards and a real
reduction in claims settlements in personal injury cases should
come through, justifying the lower premiums charged to
customers.
We are continuing our sustainability journey as we embed
Environmental, Social and Governance (ESG) factors into the
business and align our existing activities, some of which are
mature and others which are under development. We have disclosed
the Company's climate risk and strategy under the recommendations
of the Task Force on Climate-related Financial Disclosures (TCFD)
for the first time. In future we will further integrate ESG into
our business model and decision making and provide additional
metrics and disclosures to meet increasing investor and stakeholder
expectations.
FBD, our customers and staff have come through a challenging
time with Covid-19 and have demonstrated resilience in the face of
challenging circumstances. Excellent service has been maintained
across the business. The business is solid and has a strong
foundation on which to grow while keeping our customer's needs at
the heart of what we do. We are aware of the need to continually
adapt in an ever evolving world to build future success.
FBD continues to be profitable and believes a target of a
current year COR of approximately 90%, absent exceptional weather,
remains appropriate.
FBD Holdings plc
Consolidated Income Statement
For the financial year ended 31 December 2021
2021 2020
EUR000s EUR000s
Revenue 386,661 380,999
---------- ----------
Income
Gross premium written 366,328 358,230
Reinsurance premiums (32,652) (43,034)
---------- ----------
Net premium written 333,676 315,196
Change in net provision for unearned premiums 571 36
---------- ----------
Net premium earned 334,247 315,232
Net investment return 15,679 10,388
Financial services income - Revenue from
contracts with customers 2,930 4,211
- Other financial services income 4,375 5,172
---------- ----------
Total income 357,231 335,003
Expenses
Net claims and benefits (123,538) (221,403)
Other underwriting expenses (93,369) (88,527)
Movement in other provisions (22,143) (9,681)
Financial services and other costs (6,138) (7,276)
Revaluation/ (impairment) of property, plant
and equipment 937 (734)
Finance costs (2,545) (2,580)
Profit before taxation 110,435 4,802
Income taxation charge (14,026) (412)
---------- ----------
Profit for the financial year 96,409 4,390
---------- ----------
Attributable to:
Equity holders of the parent 96,409 4,390
FBD Holdings plc
Consolidated Income Statement
For the financial year ended 31 December 2021
Earnings per share 2021 2020
Cent Cent
Basic 274 13
-------- -------
Diluted 268 (1) 12 (1)
-------- -------
(1) Diluted earnings per share reflects the potential vesting of
share based payments.
The Financial Statements were approved by the Board and
authorised for issue on 3 March 2022.
FBD Holdings plc
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2021
2021 2020
EUR000s EUR000s
Profit for the financial year 96,409 4,390
----------- --------
Items that will or may be reclassified
to profit or loss in subsequent periods:
Net (loss)/ gain on available for sale
financial assets during the year (11,169) 4,491
(Gain)/ loss transferred to the Consolidated
Income Statement on disposal during
the year (1,033) 14
Taxation credit/ (charge) relating
to items that will or may be reclassified
to profit or loss in subsequent periods 1,525 (563)
Items that will not be reclassified
to profit or loss in subsequent periods:
Actuarial gain on retirement benefit
obligations 280 2,326
Property held for own use revaluation
gain/ (loss) 4 (419)
Taxation charge relating to items not
to be reclassified in subsequent periods (265) (431)
----------- --------
Other comprehensive (expense) / income
after taxation (10,658) 5,418
----------- --------
Total comprehensive income for the
financial year 85,751 9,808
----------- --------
Attributable to:
Equity holders of the parent 85,751 9,808
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2021
ASSETS
2021 2020
EUR000s EUR000s
Property, plant and equipment 24,178 25,085
Policy administration system 27,982 36,721
Intangible assets 9,031 5,100
Investment property 16,055 17,051
Right of use assets 5,078 5,635
Loans 577 601
Financial assets
Available for sale investments 893,715 863,880
Investments held for trading 137,547 116,930
Deposits with banks - 40,000
---------- ----------
1,031,262 1,020,810
---------- ----------
Reinsurance assets
Provision for unearned premiums 1,711 1,033
Claims outstanding 195,249 122,760
---------- ----------
196,960 123,793
---------- ----------
Retirement benefit surplus 10,901 10,849
Current taxation asset - 7,510
Deferred acquisition costs 35,458 34,079
Other receivables 58,047 65,402
Cash and cash equivalents 164,479 129,535
---------- ----------
Total assets 1,580,008 1,482,171
---------- ----------
FBD Holdings plc
Consolidated Statement of Financial Position (continued)
At 31 December 2021
EQUITY AND LIABILITIES 2021 2020
EUR000s EUR000s
Equity
Called up share capital presented
as equity 21,409 21,409
Capital reserves 27,406 24,756
Revaluation reserve 752 978
Retained earnings 422,815 336,838
Equity attributable to ordinary
equity holders of the parent 472,382 383,981
Preference share capital 2,923 2,923
Total equity 475,305 386,904
Liabilities
Insurance contract liabilities
Provision for unearned premiums 184,648 184,541
Claims outstanding 800,756 794,416
---------- ----------
985,404 978,957
---------- ----------
Other provisions 13,492 12,067
Subordinated debt 49,603 49,544
Lease liabilities 5,349 5,843
Deferred taxation liability 2,761 4,127
Current taxation liability 6,437 -
Payables 41,657 44,729
Total liabilities 1,104,703 1,095,267
---------- ----------
Total equity and liabilities 1,580,008 1,482,171
---------- ----------
FBD Holdings plc
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2021
2021 2020
EUR000s EUR000s
Cash flows from operating activities
Profit before taxation 110,435 4,802
Adjustments for:
Profit on investments held for trading (10,839) (5,356)
Loss on investments available for sale 2,429 3,531
Interest and dividend income (8,106) (9,481)
Depreciation / amortisation of property, plant and equipment, intangible assets and
policy
administration system 18,012 11,041
Depreciation of right of use assets 790 821
Share-based payment expense 2,650 1,945
Fair value loss on investment property 996 1,569
(Revaluation) / impairment of property, plant and equipment (937) 734
(Decrease) / increase in insurance contract liabilities (66,720) 54,638
Increase in other provisions 1,425 3,650
Operating cash flows before movement in working capital 50,135 67,894
Decrease/ (increase) in receivables and deferred acquisition costs 5,460 (3,154)
(Decrease) / increase in payables (394) 10,680
Interest on lease liabilities 236 263
Purchase of investments held for trading (58,432) (54,008)
Sale of investments held for trading 48,653 53,835
Cash generated from operations 45,658 75,510
Interest and dividend income received 8,620 10,204
Income taxes paid (75) (6,611)
---------- ----------
Net cash generated from operating activities 54,203 79,103
---------- ----------
Cash flows from investing activities
Purchase of available for sale investments (210,499) (217,013)
Sale of available for sale investments 166,034 166,093
Purchase of property, plant and equipment (1,273) (1,839)
Additions to policy administration system (4,685) (4,796)
Purchase of intangible assets (5,398) (3,593)
Refurbishment of investment property - (1,922)
Sale of investment property - 1,994
Decrease in loans and advances 24 10
Maturities of deposits invested with banks 40,000 40,000
Additional deposits invested with banks - (20,000)
Net cash used in investing activities (15,797) (41,066)
---------- ----------
Cash flows from financing activities
Ordinary and preference dividends paid - -
Interest payments on subordinated debt (2,500) (2,500)
Principal elements of lease payments (962) (984)
Net cash used in financing activities (3,462) (3,484)
---------- ----------
Net increase in cash and cash equivalents 34,944 34,553
Cash and cash equivalents at the beginning of the year 129,535 94,982
Cash and cash equivalents at the end of the financial year 164,479 129,535
---------- ----------
FBD Holdings plc
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2021
Called up Capital Retained Attributable Preference Total
share reserves Revaluation earnings to share equity
capital reserves ordinary capital
presented shareholders
as equity
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1
January 2020 21,409 22,811 - 328,008 372,228 2,923 375,151
Reclassification
to revaluation
reserve - - 1,345 (1,345) - - -
Profit after
taxation - - - 4,390 4,390 - 4,390
Other
comprehensive
(expense)/income
after taxation - - (367) 5,785 5,418 - 5,418
------------ ------------ ------------- ------------ ------------- ------------ ------------
Total
comprehensive
income for the
year - - 978 8,830 9,808 - 9,808
Recognition of
share based
payments - 1,945 - - 1,945 - 1,945
Balance at 31
December 2020 21,409 24,756 978 336,838 383,981 2,923 386,904
------------ ------------ ------------- ------------ ------------- ------------ ------------
Profit after
taxation - - - 96,409 96,409 - 96,409
Other
comprehensive
expense after
taxation - - (226) (10,432) (10,658) - (10,658)
Total
comprehensive
(expense)/income
for the year - - (226) 85,977 85,751 - 85,751
Recognition of
share based
payments - 2,650 - - 2,650 - 2,650
Balance at 31
December 2021 21,409 27,406 752 422,815 472,382 2,923 475,305
------------ ------------ ------------- ------------ ------------- ------------ ------------
FBD Holdings plc
Supplementary Information
For the year ended 31 December 2021
Note 1 Underwriting PROFIT
2021 2020
EUR000s EUR000s
Gross premium written 366,328 358,230
---------- ----------
Net premium earned 334,247 315,232
Net claims incurred (123,538) (221,403)
Other provisions (22,143) (9,681)
Net underwriting expenses (93,369) (88,527)
---------- ----------
Underwriting profit/ (loss) 95,197 (4,379)
---------- ----------
2021 2020
Net underwriting expenses EUR000s EUR000s
Management expenses 92,308 86,858
Deferred acquisition costs (1,380) (897)
--------- ------------
Gross underwriting expenses 90,928 85,961
Reinsurance commission receivable (3,864) (2,872)
Broker commission payable 6,305 5,438
--------- ------------
Net underwriting expenses 93,369 88,527
--------- ------------
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
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:
2021 2020
Earnings EUR000s EUR000s
Profit for the year for the purpose of
basic earnings per share 96,127 4,390
Profit for the year for the purpose of
diluted earnings per share 96,127 4,390
------------- -------------
Number of shares 2021 2020
No. No.
Weighted average number of ordinary shares
for the purpose of basic earnings per
share (excludes treasury shares) 35,138,959 34,992,763
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share (excludes treasury shares) 35,930,762 35,719,059
Cent Cent
Basic earnings per share 274 13
------------- -------------
Diluted earnings per share 268 12
------------- -------------
The 'A' ordinary shares of EUR0.01 each that are in issue have
no impact on the earnings per share calculation.
The below table reconciles the profit attributable to the parent
entity for the year to the amounts used as the numerators in
calculating basic and diluted earnings per share for the year and
the comparative year including the individual effect of each class
of instruments that affects earnings per share:
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
Note 2 EARNINGS PER EUR0.60 ORDINARY SHARE (continued)
Year Year
ended ended 31/12/20
31/12/21
EUR000s EUR000s
Profit attributable to the parent
entity for the year 96,409 4,390
---------- ----------------
2021 dividend of 8.4 cent (2020:
0 cent) per share on 14% noncumulative (113) -
preference shares of EUR0.60 each
2021 dividend of 4.8 cent (2020:
0 cent) per share on 8% non-cumulative (169) -
preference shares of EUR0.60 each
---------- ----------------
Profit for the year for the purpose
of calculating basic and diluted
earnings 96,127 4,390
The below table reconciles the weighted average number of
ordinary shares used as the denominator in calculating basic
earnings per share to the weighted average number of ordinary
shares used as the denominator in calculating diluted earnings per
share including the individual effect of each class of instruments
that affects earnings per share:
Year Year
ended ended 31/12/20
31/12/21
No. No.
Weighted average number of ordinary
shares for the purpose of calculating
basic earnings per share 35,138,959 34,992,763
------------- ----------------
Potential vesting of share based
payments 791,803 726,296
Weighted average number of ordinary
shares for the purpose of calculating
diluted earnings per share 35,930,762 35,719,059
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
Note 3 DIVIDS
2021 2020
EUR000s EUR000s
Paid during year:
2020 dividend of 0.0 cent (2019: 0.0 cent)
per share on 14% non-cumulative preference
shares of EUR0.60 each 0 0
2020 dividend of 0.0 cent (2019: 0.0 cent)
per share on 8% non-cumulative preference shares
of EUR0.60 each 0 0
2020 final dividend of 0.0 cent (2019: 0.0
cent) per share on ordinary shares of EUR0.60
each 0 0
--------- --------
Total dividends paid 0 0
--------- --------
2021 2020
EUR000s EUR000s
Proposed:
2021 dividend of 8.4 cent (2020: 0.0 cent)
per share on 14% non-cumulative preference
shares of EUR0.60 each 113 0
2021 dividend of 4.8 cent (2020: 0.0 cent)
per share on 8% non-cumulative preference shares
of EUR0.60 each 169 0
2021 final dividend of 100.0 cent (2020: 0.0
cent) per share on ordinary shares of EUR0.60
each 35,297 0
--------- --------
Total dividends proposed 35,579 0
--------- --------
The proposed dividend excludes any amounts due on outstanding
share awards as at 31 December 2021 that are due to vest in March
2022 and is subject to approval by shareholders at the AGM on 12
May 2022. The proposed dividends have not been included as a
liability in the Consolidated Statement of Financial Position as at
31 December 2021.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
Note 4 CALLED UP SHARE CAPITAL PRESENTED AS EQUITY
Number 2021 2020
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 408,744 (2020: 598,742). 244,739 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 164,005 (2020: 408,744).
This represented 0.5% (2020: 1.2%) of the shares of this class in
issue and had a nominal value of EUR98,403 (2020: EUR245,246).
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 2021
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 2021.
Details of their shareholdings and related party transactions are
set out in the Annual Report.
Both companies have subordinated debt investment in the Group.
Farmer Business Developments holds a EUR21.0m investment and FBD
Trust Ltd holds a EUR12.0m investment. Interest payments are made
to both companies on a quarterly basis in proportion to their
holding.
At 31 December 2021 the intercompany balances with other
subsidiaries was EUR3,739,000 (2020: EUR3,462,000).
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:
2021 2020
EUR000s EUR000s
Short term employee benefits (1) 4,131 3,801
Post-employment benefits 262 295
Share based payments 1,346 1,012
-------- --------
Charge to the Consolidated Income Statement 5,739 5,108
-------- --------
(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 2021 and 2020 compensation
entitlements and share awards of the Board of Directors is provided
in the Annual Report.
At 31 December 2021 KMP had loans to the value of EUR18,000 with
the Group (December 2020: EUR9,000). KMP loans with the Group did
not exceed these values at any stage during the year.
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 EUR0 (2020:
EUR0).
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
Note 6 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 premium on insurance contracts entered into
during the year and is widely used across the general insurance
industry.
The calculation of the APM's is based on the following data:
2021 2020
EUR000s EUR000s
Loss ratio
Net claims and benefits 123,538 221,403
Movement in other provisions 22,143 9,681
-----------
Total claims incurred 145,681 231,084
Net premium earned 334,247 315,232
-----------
Loss ratio (Total claims incurred/Net premium
earned) 43.6% 73.3%
---------- -----------
Expense ratio
Other underwriting expenses 93,369 88,527
Net premium earned 334,247 315,232
---------- -----------
Expense ratio (Underwriting expenses/Net
premium earned) 27.9%* 28.1%
---------- -----------
* excluding the accelerated amortisation of the policy administration
system of EUR5,884,000, the Expense Ratio would be 26.1%
Combined operating ratio % %
Loss ratio 43.6% 73.3%
Expense ratio 27.9% 28.1%
---------- -----------
Combined operating ratio (Loss ratio +
Expense ratio) 71.5% 101.4%
---------- -----------
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
Note 6 ALTERNATIVE PERFORMANCE MEASURES (APM's) (continued)
2021 2020
Investment return EUR000s EUR000s
Investment return recognised in Consolidated
Income Statement 15,679 10,388
Investment return recognised in Consolidated
Statement of Comprehensive Income (12,202) 4,505
------------- -----------
Total investment return 3,477 14,893
Average investment assets 1,185,036 1,117,036
------------- -----------
Investment return % (Total investment return/Average
investment assets) 0.3% 1.3%
------------- -----------
2021 2020
Net asset value per share EUR000s EUR000s
Shareholders' funds - equity interests 472,382 383,981
------------- ---------------
Number of shares
Number of ordinary shares in issue (excluding
treasury) 35,297,201 35,052,462
------------- ---------------
Cent Cent
Net asset value per share (NAV) (Shareholders
funds / Closing number of ordinary shares) 1,338 1,095
------------- ---------------
Return on equity
Weighted average equity attributable to
ordinary equity holders of the parent 428,182 378,105
Result for the year 96,409 4,390
Return on equity (Result for the year/Weighted
average equity attributable to ordinary
equity holders of the parent) 23% 1%
------------- -------------
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.
Underwriting result: Net premium earned less net claims and
benefits, other underwriting expenses and movement in other
provisions.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2021
Note 7 Subsequent Events
The judgement delivered on 28th January 2022 in respect of
Business Interruption claims for public houses has provided
considerable clarity on the definition of business closure and on
other matters such as allowable wages. While some matters remain to
be clarified, FBD will progress with the settlement of valid claims
for customers.
FBD has agreed with reinsurers how reinsurance recoveries will
operate in respect of the application of reinsurance cover to these
Business Interruption claims for the expected impacted layers of
its catastrophe programme. This reduces the uncertainty surrounding
recoveries from reinsurers and has had a favourable impact on
previously booked reserves net of reinsurance with the net
liability reducing.
The judgement and the reinsurance agreement are adjusting events
for the purposes of the 2021 financial statements on the basis that
they relate to 2021.
Note 8 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 2021 or 2020 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 2021 and 2020 Financial Statements have been audited and
received unqualified audit reports.
The 2021 Financial Statements were approved by the Board of
Directors on 3 March 2022.
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.
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END
FR EAFDDEEDAEAA
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March 04, 2022 02:00 ET (07:00 GMT)
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