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After announcing an €85m pre-tax loss for 2015 on Monday, the management of FBD Insurance under the new leadership of Fiona Muldoon is making sweeping changes to return the group to profitability by this time next year.
Following the €96m cash injection from Fairfax and Farmer Business Developments last year to strengthen the balance sheet, the task over the last number of months has been for Muldoon to simplify, focus and de-risk the business.
Along with cutting 120 jobs, saving €8m, scrapping the No-Nonsense low-cost insurance brand, rationalising the pension scheme and selling non-core assets, Muldoon has made a number of senior management appointments such as chief financial officer, chief operations officer and chief risk officer.
Selling off non-core assets
The group exited its hotels and property joint venture and sold other investment properties in the UK while it is currently selling the Passage East Ferry company. Just listing these business areas shows how far FBD had moved away from its core insurance business down through the years.
With the new focus implemented by Muldoon, it was inevitable that the current board structure was unnecessary for a more streamlined FBD. On Monday, the group announced it was making changes to its board structure.
Stock markets have reacted positively to the news. While shares are down almost 50% since this time last year, they have steadily improved since the lows of €5.20 hit last August. Shares have gained 28% since then and yesterday closed up 6.5% on the announcement of the full-year results and board changes.
FBD Holdings and FBD Insurance
Currently FBD group is comprised of two main structures. Firstly, there is a holding company – FBD Holdings plc. This is the plc that is quoted on the Dublin and London stock exchanges. FBD Holdings plc was set up in 1988. The company currently has nine directors. Secondly, there is FBD Insurance plc, which is a principal subsidiary of Holdings and was set up in 1967. The company has seven directors.
The current group structure has three common directors and the proposed new structure will have a board of nine. It is likely that some of the members will move across to the new board structure.
The board of FBD Holdings is currently made up of the following: Michael Berkery as chair (27 years), Sean Dorgan (eight years), Padraig Walshe (four years), Brid Horan (four years), Eddie Downey (one year), Emer Daly (one year), Fiona Muldoon (one year), Ruairi O’Flynn (nine months) and Liam Herlihy (five months).
The board of FBD Insurance plc is currently made up of the following: Michael Berkery as chair (32 years), Vincent Sheridan (six years), Martin David (four years), Walter Bogaerts (three years), Sean Dorgan (one year), Fiona Muldoon (one year) and Paul Daly (three months).
It is proposed that the new structure will have a board comprised of nine directors and the dual board structure currently in operation will be retired. This new structure will be implemented over the coming months as appointments are made and regulatory approvals obtained.
Berkery and other directors to leave
Under the current arrangement, both IFA and Farmer Business Developments as the largest shareholder are invited on to the board. FBD has confirmed that this will continue under the new structure.
The group chair, Michael Berkery has also indicated that he will retire from the board at the 2017 AGM.
Emer Daly, Eddie Downey, Brid Horan and Ruairi O’Flynn will continue in office until 29 April, the date of the 2016 AGM, but will not be putting themselves forward for re-election at the AGM.
This is for a variety of reasons, including the regulatory limit in Ireland on the number of directorships of financial undertakings which can be held by any individual.
Walter Bogaerts has been appointed to the board of FBD Holdings PLC with immediate effect.
It is understood that FBD is well advanced in making an additional appointment to the board and will make an announcement once confirmed. It is also working with an external agency to find suitable people with the necessary experience to join the board over the coming months.
This is a positive move for FBD and will provide for simpler reporting and improved governance. The market has reacted positively. Along with the necessary management and business changes, the company looks like it has turned a corner, focused and determined to return to profitability against a very challenged insurance market.
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