Tuesday 27 September 2016

Insurer FBD's shares surge as pre-tax loss less than anticipated

Published 13/08/2016 | 02:30

FBD chief executive Fiona Muldoon
FBD chief executive Fiona Muldoon

Shares in insurance group FBD soared as much as 12pc yesterday as investors bet that the company's fortunes have shifted out of reverse.

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The company posted a first-half, pre-tax loss of €5.3m, which was much better than had been anticipated by analysts. Davy Stockbrokers had pencilled in a €10.2m loss for the period.

The performance was helped by benign weather, lower expenses, and a lower number of motor injury claims.

The shares also soared as FBD slashed its combined operating ratio - a key measure of its profitability - from 167pc at the end of June 2015 to 101pc at the end of last June.

A figure above 100 means an insurer is paying out more in claims than it's getting in premiums.

Chief executive Fiona Muldoon said she expects the ratio to fall below 100pc during the final quarter of 2016, and that the company will be profitable again by 2017.

Including a €1.6m profit booked from the sale of its 70pc share in Passage East Ferry in May, FBD reported a €3.1m loss in the first six months of 2016.

That compared to an €84.3m loss it made in the first half of 2015, when it boosted its prior year claims reserves by €88m.

The group - which has undergone a radical restructuring under Ms Muldoon's leadership - said its gross written premium in the period fell by €4m, or 2pc, to €180.8m.

The figure included a €6.3m increase in premiums generated from direct operations, and a €10.3m decline in the amount of business that was written through brokers.

The group has increased its premiums, with its motor premiums having jumped 18.7pc since last summer.

Across its book, insurance premiums have risen by an average of 27pc since 2014.

Ms Muldoon, the former head of banking and insurance supervision at the Central Bank, took over at FBD in 2015 after initially joining that year as its chief financial officer. She has exited FBD's non-core activities and also raised €70m in backing for the firm from Canada's Fairfax Financial.

Ms Muldoon said that the huge premium increases across the motor insurance sector need to be tackled, with a different system for accessing the courts when claims are being made. She has also called on the Injuries Board to be given more statutory powers.

FBD also insisted that transferring liability for failed insurers such as Setanta to the Motor Insurance Bureau of Ireland (MIBI) is going to result in higher premiums for drivers and other insurance customers.

"I think the costs are going to be passed onto commuters, farmers and small businesses until we all meaningful get serious about this," Ms Muldoon told the Irish Independent. "You can either have high awards and compensation, or you can have cheap insurance for everybody."

Irish Independent

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