Business Irish

Wednesday 19 September 2018

FBD shares yo-yo in wake of CEO probe revelation

FBD Holdings CEO Fiona Muldoon is the subject of an internal investigation. Photo: Damien Eagers
FBD Holdings CEO Fiona Muldoon is the subject of an internal investigation. Photo: Damien Eagers

Gretchen Friemann

Shares in FBD yo-yoed yesterday as the market attempted to digest a statement from the company late on Friday that its chief executive is the subject of an internal inquiry.

Shares fell early on Monday, the first chance investors had to react. The stock was down almost 1pc for most of the trading session before rapidly reversing to close up 1.88pc after a late flurry of buying just before the stock exchange closed.

Late on Friday, FBD confirmed it had launched an internal investigation into allegations levelled at Ms Muldoon.

In a statement to the stock exchange, the company described the inquiry as "ongoing" and said Ms Muldoon remains in situ as CEO.

A spokesman for FBD declined to comment yesterday on contingencies being put in place as a result of the investigation.

According to sources, FBD's chief financial officer, John O'Grady, can step in to discharge CEO duties on an interim basis if required.

Mr O'Grady joined FBD in 2016 from rival Liberty Insurance, and like Fiona Muldoon is a director of FBD. He replaced Paul D'Alton, who has been held the CFO role on an interim basis after Fiona Muldoon was promoted to the to job in 2015.

FBD may beef up its management capacity by tapping a temporary top-tier external executive to a senior role amid the ongoing internal probe into Ms Muldoon, the Irish Independent understands.

Yesterday morning shares in FBD fell by 1pc as the market digested the unexpected news but recovered late in the afternoon to close almost 2pc higher at €10.80.

Read more: Analysis: FBD trials come amid speculation about possible takeover action

Ms Muldoon, who also sits on the board of Bank of Ireland, is one of the most prominent businesswomen in the State. At FBD she is credited with turning the insurer's fortunes around after it careered deep into the red in the aftermath of the crash, necessitating a €70m lifeline from Canadian multi-national, Fairfax Financial Holdings.

That debt is convertible into equity, at a strike price of €8.50 a share, from September onwards. Fairfax has until March 2019 to exercise this option which would see it take a 20pc stake in FBD.

The financial giant, founded by billionaire Prem Watsa, pumped in the cash in 2015, after FBD racked up a €96.4m loss in just six months. Fairfax is on course to make a €40m return from the investment as the insurer's fortunes have recovered.

Richie Boucher, the former chief executive of Bank of Ireland, took up a consultative role with Mr Watsa late last year and as the bond conversion date looms, speculation is mounting about Fairfax's intentions.

The Canadian firm has a track record of converting such footholds into larger stakes.

Belgian bank KBC's Irish arm is also known to be eyeing potential acquisitions in Ireland and the bancassurer has long been considered a logical suitor for KBC, which was established in 1969 to provide farm and agri-sector insurance. Former KBC executive Walter Bogaerts has been a director of FBD since 2016.

Irish Independent

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