FBD shares increase on bigger-than-expected profits
SHARES in FBD rose sharply yesterday after the insurer said it would make a bigger profit this year than had been expected.
The company climbed nearly 5pc in Dublin after it raised its guidance following what it described as "excellent" trading during the second half of the year.
In an interim management statement covering the five months since the start of July, FBD said it had "continued to perform strongly, building on its first half to deliver strong earnings and profit after taxation in the second half of 2012 to date".
As a result, the company claimed it had "performed ahead of market guidance, primarily due to the continuation of the first half claims performance in the underwriting business".
The firm now expects to post earnings per share for 2012 of between 155c and 165c – 10pc higher than indicated.
In what will be welcome news to consumers, premiums fell "marginally", the company said.
This was due mainly to a slower market, but where that was not the main reason for the change, FBD said it had "maintained its underwriting discipline".
Gross premiums written – a key measure of an insurer's business – was marginally lower year on year but remained ahead of the wider market, which FBD claimed declined 6.3pc in the half-year to the end of June. Year-to-date net-earned premium is marginally ahead of last year.
NCB's Emmet Gaffney said the upgrade came on the back of a "better-than-expected loss ratio in the second half of the year so far".
"FBD is performing well ahead of the market and continues to pick up market share. Net earned premiums are ahead on the year due to the company's decision to retain more operational risk (but less catastrophe risk) – a decision which reflects confidence in the quality of the insurer's underwriting and has served it well so far.
"The earnings upgrade is driven by a better-than-expected loss ratio in the second half, with favourable trends evident in attritional, or day-to-day, claims; large claims have reduced; and severe weather-related claims have fallen as well," he added.
"Overall, this is a very encouraging update."
Since the end of June, FBD has largely unwound its exposure to German bonds with the proceeds moving into corporate bonds. By the close, shares were up 4.89pc at €9.65.