Tuesday 21 May 2019

Shares in insurer FBD jump as it weathers Ophelia storm

The roof of Douglas Community School in Cork was blown off as Hurricane Ophelia caused massive damage. Photo: Mark Condren
The roof of Douglas Community School in Cork was blown off as Hurricane Ophelia caused massive damage. Photo: Mark Condren
Ellie Donnelly

Ellie Donnelly

Shares in FBD rose by more than 8pc yesterday after the country's biggest stand-alone insurer said the net cost of Storm Ophelia to business will be between €4m and €6m. The cost of claims, net of reinsurance, will be €2.5m, the company said.

Storm Ophelia saw hurricane-force winds hit the country and caused three deaths earlier this month.

Investors had braced for a significant impact on FBD when the storm struck especially hard in rural Munster, a key market for the farmer-backed group.

The estimated cost compares with the €15.2m cost incurred by FBD in the winter of 2014 / 2015 when a series of wind storms culminating in Storm Darwin hit the country.

FBD CEO Fiona Muldoon said that, despite the impact of this month's storm, and other recent weather-related claims, it continued to see a steady improvement in its financial performance from both better risk selection and improved price adequacy.

"Absent further severe weather in 2017, we are now on course to deliver our targeted 'low double digit return on equity' earlier than previously indicated. If the remainder of 2017 is reasonably benign in weather terms, we believe this return is achievable in this financial year," Ms Muldoon said.

Davy analyst Emer Lang said she was not surprised by the low cost of the storm on the FBD balance sheet, as the it had retained more day-to-day exposure. When it comes to a big event, such as Storm Ophelia, the company had improved its cover, she said.

Ms Lang said that Davy was however surprised with the overall improved performance of the company, which was quicker than expected. "The claims trends must be better for them than expected. We had moved our FBD rating to outperform earlier this year on the basis of solvency strengthening. We are reiterating this rating, and clearly, with the share price increasing the market is happy too," Ms Lang said.

FBD declined to comment on the possibility of price rises for customers as a result of Storm Ophelia, when asked yesterday.

"Like any business, costs must be covered by the price charged over time and all prices are regularly reviewed on all products and lines of business to ensure our business is profitable," the company said.

FBD shares were up 8.75pc at €8.70 each in late afternoon trading.

Irish Independent

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