FBD on track to recover but no 'slam dunk', says Muldoon
Published 01/03/2016 | 02:30
Shares in insurance firm FBD jumped almost 8pc at one stage yesterday as it posted a better than expected €85m pre-tax loss for 2015, and continues to refocus the business and hike premiums.
The insurance firm spent last year fire-fighting as it struggled amid a deteriorating claims environment.
Chief executive Fiona Muldoon said the business has now stabilised, with gross written premiums having remained virtually unchanged last year at €363.2m.
The pre-tax loss compares to a loss of €3m in 2014, and reflects higher claims that were made last year.
Most of that 2015 claims increase was reported during the first half of last year.
Last year, Prem Watsa's Fairfax agreed to invest €70m in FBD via a convertible bond, helping the Irish firm to shore up its reserves. FBD also agreed to sell its 50pc stake in its leisure business for €48.5m.
It cut jobs to reduce costs and also closed its defined pension scheme.
FBD is likely to generate a loss of about €1.5m next year before returning to profitability in 2017, analysts expect.
"We have an enormous amount to do during 2016 to make sure we get there," Ms Muldoon told the Irish Independent.
"I think we've gone about doing all the things that we said we would do. I am confident that we have set ourselves the right challenges. It's not a slam dunk to get there. We're going to have to be vigilant and keep ploughing our own furrow."
The company said it's continuing to focus on its core agricultural and small business customers.
She conceded that could mean losing some customers along the way. FBD has been focusing on hardening its rates at the expense of volume. Its rates rose 8.9pc last year, while policy volumes fell 8.9pc.
Other insurers have also been increasing their rates as the amount awarded by courts in claims settlements rises.
FBD also said a current dual board structure will be discontinued. Chairman Michael Berkery will retire next year.
Ex-KBC executive Walter Bogaerts has also joined the board as a non-executive director.