FBD recorded profits before tax of €11m, up from a loss of €86m in 2015. There was a once-off pension gain of €7m. The combined operating ratio (COR), a reverse measure of profitability to indicate how well insurance companies perform their daily operations, fell from 140% to 99%; anything below 100% is positive.
The group recorded an underwriting profit of €3.2m (2015: loss of €125.4m). Average premiums increased 9%, while policy volumes decreased 5%.
Despite the planned reduction in broker business (down €15m or about 44%), total written premiums held up remarkably well and were only down €1m to €362m. Brokers now make up less than 6% of the business.
Net claims fell €123m to €218m in 2016. However, 2015 included a €95m charge for strengthening prior-year claims.
FBD’s total investment return for 2016 was 1.9% (2015: 2.0%). The better than expected investment return reflects market value gains in the corporate bond portfolio, as well as a €1.9m revaluation of the group’s investment property.
Over the course of the year, FBD increased its level of investment in corporate and government bonds, reducing the amount it carried in deposit investments. Bonds now make up 67% of its total investment portfolio, which are low risk yet return better than cash deposits in the current environment.
During the year, FBD divested its 70% shareholding in Passage East Ferry Company for a total consideration of €2.7m, realising a profit on disposal of €1.9m. The group’s financial services operations delivered a profit of €2m. FBD recently started a brand campaign aimed at broadening its customer base. Shares closed at €7.85 on Tuesday, up 16% over the past 12 months.
Muldoon says:
“Our strong customer relationships and the level of service we provide have ensured good retention in our key customer groups despite some of the necessary price increases they have experienced.
“Insurance premiums in Ireland are and will remain high until structural claims reform is successfully executed. The past year has been one of significant change at FBD. Those working in the business are a core part of our service offering and FBD is committed to delivering for its customers and the people who serve them.
“I welcomed the findings of the Government working group report on the cost of insurance and the focus that it brings to the rising cost of claims for Irish customers.
“But it is important that the Government follows through in translating these recommendations into policies and legislation that will deliver a lower cost, sustainable claims environment for the benefit of all customers.
“If there is no action from the Government on the findings of this report, Irish insurance customers will continue to bear the cost of significantly higher premiums than those seen in other countries.”
While the insurer had been expected to make a profit in the last quarter of 2016, these results were slightly better than expected in that the business made a profit for the full year. 2016 may be seen as the inflection point after weathering a stormy two- to three-year period.
It is particularly impressive to see that premiums have held up considering the drop in broker business. This would suggest that its core customer base has held up, demonstrating the loyalty of the FBD customer.
After a turbulent 24 months, FBD is a simplified business, with a single streamlined board, a single brand, and a refocus on its farming root customers.
It has improved its claims settlement, changed its financial solutions business model and reduced costs through a voluntary redundancy scheme. It has de-risked its business through improved pricing and underwriting actions along with focusing on direct customer relations rather than brokers. Thanks to last year’s capital actions, which strengthened the balance sheet, a full new senior management team and a new reinsurance programme, FBD is much stronger and prepared to now focus on fresh commercial expansion.
With its new brand and targeted marketing campaign, to attract high-quality urban customers, along with right pricing of premiums, it would seem that FBD, under the leadership of Fiona Muldoon, is on track to deliver four profitable quarters in 2017.
No doubt the sector has its problems, but she is taking a leadership role in driving the momentum necessary to change the claims environment and hence insurance costs.
Given the capital resourcing required last year, it is unlikely that the board will pay a dividend on 2017 performance. This may be the most prudent strategy in the long-term interest of FBD.
Read more
20 minutes with Jim Ryan, FBD Insurance
FBD recorded profits before tax of €11m, up from a loss of €86m in 2015. There was a once-off pension gain of €7m. The combined operating ratio (COR), a reverse measure of profitability to indicate how well insurance companies perform their daily operations, fell from 140% to 99%; anything below 100% is positive.
The group recorded an underwriting profit of €3.2m (2015: loss of €125.4m). Average premiums increased 9%, while policy volumes decreased 5%.
Despite the planned reduction in broker business (down €15m or about 44%), total written premiums held up remarkably well and were only down €1m to €362m. Brokers now make up less than 6% of the business.
Net claims fell €123m to €218m in 2016. However, 2015 included a €95m charge for strengthening prior-year claims.
FBD’s total investment return for 2016 was 1.9% (2015: 2.0%). The better than expected investment return reflects market value gains in the corporate bond portfolio, as well as a €1.9m revaluation of the group’s investment property.
Over the course of the year, FBD increased its level of investment in corporate and government bonds, reducing the amount it carried in deposit investments. Bonds now make up 67% of its total investment portfolio, which are low risk yet return better than cash deposits in the current environment.
During the year, FBD divested its 70% shareholding in Passage East Ferry Company for a total consideration of €2.7m, realising a profit on disposal of €1.9m. The group’s financial services operations delivered a profit of €2m. FBD recently started a brand campaign aimed at broadening its customer base. Shares closed at €7.85 on Tuesday, up 16% over the past 12 months.
Muldoon says:
“Our strong customer relationships and the level of service we provide have ensured good retention in our key customer groups despite some of the necessary price increases they have experienced.
“Insurance premiums in Ireland are and will remain high until structural claims reform is successfully executed. The past year has been one of significant change at FBD. Those working in the business are a core part of our service offering and FBD is committed to delivering for its customers and the people who serve them.
“I welcomed the findings of the Government working group report on the cost of insurance and the focus that it brings to the rising cost of claims for Irish customers.
“But it is important that the Government follows through in translating these recommendations into policies and legislation that will deliver a lower cost, sustainable claims environment for the benefit of all customers.
“If there is no action from the Government on the findings of this report, Irish insurance customers will continue to bear the cost of significantly higher premiums than those seen in other countries.”
While the insurer had been expected to make a profit in the last quarter of 2016, these results were slightly better than expected in that the business made a profit for the full year. 2016 may be seen as the inflection point after weathering a stormy two- to three-year period.
It is particularly impressive to see that premiums have held up considering the drop in broker business. This would suggest that its core customer base has held up, demonstrating the loyalty of the FBD customer.
After a turbulent 24 months, FBD is a simplified business, with a single streamlined board, a single brand, and a refocus on its farming root customers.
It has improved its claims settlement, changed its financial solutions business model and reduced costs through a voluntary redundancy scheme. It has de-risked its business through improved pricing and underwriting actions along with focusing on direct customer relations rather than brokers. Thanks to last year’s capital actions, which strengthened the balance sheet, a full new senior management team and a new reinsurance programme, FBD is much stronger and prepared to now focus on fresh commercial expansion.
With its new brand and targeted marketing campaign, to attract high-quality urban customers, along with right pricing of premiums, it would seem that FBD, under the leadership of Fiona Muldoon, is on track to deliver four profitable quarters in 2017.
No doubt the sector has its problems, but she is taking a leadership role in driving the momentum necessary to change the claims environment and hence insurance costs.
Given the capital resourcing required last year, it is unlikely that the board will pay a dividend on 2017 performance. This may be the most prudent strategy in the long-term interest of FBD.
Read more
20 minutes with Jim Ryan, FBD Insurance
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