FBD Insurance made a pre-tax loss of €9.3m for the first six months of 2020 due to a fall in insurance premiums coupled with a higher volume of insurance claims, mostly related to business interruption claims.

Announcing half year results on Friday, FBD said gross written premiums had dropped by 7% in the first half of the year to just over €176m due to a decline in motor premiums (-8%), farm insurance (-3%) and home insurance (-2%).

At the same time, the cost of net claims spiked by 25% close to €111m. The company said it also paid out just over €11m in insurance rebates to customers to reflect the reduced car usage on Irish roads during the COVID-19 induced lockdown.

Underwriting losses

FBD said it made an underwriting loss of €4.7m in the first half of the year on all its insurance policies compared to profits of €29m for the same period last year.

Added to this, the insurer said it had a negative return of €10.5m on its portfolio of investments in the first six months, reflecting the impact of COVID-19 on investment markets.

FBD said it has also set aside some €30m as a precaution against a number of claims that had been taken against the insurer over its interpretation of its business interruption insurance policy.

A number of publicans have taken legal proceedings against FBD Insurance and a test case will be heard in the Commercial Court in October to resolve the issue.

FBD believes its business interruption insurance does not cover any loss of business due to the COVID-19 pandemic.

“We have experienced a lot of publicity in recent months regarding business interruption claims by customers. We acknowledge the disappointment and frustration of affected businesses that their business interruption insurance does not respond to cover pandemics. However, we are unable to provide cover for what we believe to be, and are advised is, an uninsured risk not covered by our policies,” said FBD’s interim CEO Paul D’Alton.

Dividend

Back in February, FBD had announced it would pay a dividend to shareholders of €1/share, which would amount to €35m. The company subsequently announced it would hold back on paying the dividend to shareholders following the coronavirus outbreak.

The insurer has updated shareholders to say it continues to deduct the €35m from its balance sheet but said the timing and amount of cash it may be able to pay to shareholders remains uncertain.

New CEO

FBD also announced that Tomás O’Midheach will take up the role as CEO of the company in February 2021. O’Midheach has over 25 years’ experience in the financial services industry and currently serves as deputy CEO of AIB.

“I am very pleased to announce Tomás will join the board and as chief executive officer in February 2021 on the back of an extensive search process and with the approval of the Central Bank of Ireland. He is highly regarded in the financial community and has considerable knowledge of the Irish financial services landscape. We look forward to his arrival,” said FBD chair Liam Herlihy.