Business Irish

Sunday 25 February 2018

Troubled insurer FBD is 'infected by an IFA culture'

Fiona Muldoon, CEO of FBD Holdings. Photo: Damien Eagers
Fiona Muldoon, CEO of FBD Holdings. Photo: Damien Eagers
Michael Cogley

Michael Cogley

Troubled insurer FBD has been criticised for having a flawed strategy and a questionable culture similar to that of the Irish Farmers' Association (IFA) by one of its own shareholders.

The chairman of publisher The Agricultural Trust, Matt Dempsey, said many of the same people involved in the IFA controversy have had a role in navigating FBD to its current position.

"We have seen the IFA debacle, which partly dragged the sector into the gutter. Too many of the same personalities that were involved with too many unanswered questions that are similarly driving FBD to where it is needed to raise almost €200m because of a flawed strategy and a questionable culture," Mr Dempsey said.

FBD is one of the worst performing shares in the Irish market in 2015 as shares have fallen by 42pc in the year to date. Mr Dempsey was speaking at the company's extraordinary general meeting (EGM) in the Irish Farm Centre in Bluebell, Dublin, yesterday.

Mr Dempsey also said shareholders were being asked to give up some of their rights after the FBD chairman, Michael Berkery, told shareholders that the company would consider blanket farmer participation.

"When we last met on the 22nd of October, you chairman assured us that of course they would look very seriously at a blanket farmer participation in the new bond. But yet the deal with Fairfax was done on the 23rd of September, a full month before.

"Either, chairman, your assurance, with your usual charm, was delivered to simply pacify us or you were labouring under a misapprehension yourself. But it cannot be both, there is a fundamental contradiction there," Mr Dempsey said.

At the EGM, shareholders agreed to the final details of the company's €70m in fundraising to help improve the firm's financials to bring it in line with the rules of Solvency II. Shareholders voted on a €70m convertible bond being issued to Fairfax, a Canadian company headed up by Prem Watsa.

Speaking at the meeting, chief executive of FBD, Fiona Muldoon, who was appointed in October, said she doesn't believe there is a questionable culture in FBD and that the €70m deal with Prem Watsa was the best option for the company.

"I don't believe there is a questionable culture. I think the culture at FBD is a very proud culture, it's a very strong culture, it's a culture based around doing what's right.

"For as long as I am entrusted with the leadership, and I think you are entrusted with the leadership, I don't believe that we will have anything other than an open and honest culture around both our mistakes and our successes."

Speaking after the meeting, she said: "We went through every option we felt was viable, some more than others, some more economic from the shareholders point of view. We came up with the bond as both the most practical and viable and the most economic, from a number of perspectives for the shareholders.

"We felt it was the best result for the shareholder."

Former IFA president Eddie Downey, said the deal being done with Fairfax was not of FBD's own timing. "Could we find other ways to get us there over a longer period of time and get a better deal? Maybe we could maybe we couldn't. But, have we got a party that we can work with?"

Another former IFA president, Tom Clinton, warned the meeting that changes were needed to be made to ensure the future of the company.

"I think the structure on the ground has weakened over the last number of years and if we don't cure that the board may go home anyway. But I am putting down a marker that if you don't change the structure on the ground you'll have no company," Mr Clinton said.

Irish Independent

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