FBD Insurance has said it will process all business interruption claims as quickly as possible following the landmark ruling by the High Court on Friday.

In a statement, FBD said it was committed to paying out claims following the High Court’s decision, which said the insurer must pay out on insurance claims by made by publicans relating to the forced closure of their premises due to COVID-19 restrictions.

FBD said it had appointed the Thornton Group as a loss adjuster to assess all claims made by publicans and other small businesses.

The insurer said it will make interim payments to its customers as it awaits clarity on the final amounts to be paid for each case.

FBD encouraged its publican customers that hold business interruption cover and have not yet made a claim to get in touch via phone or online.

Exposure

FBD has around 1,300 pub customers in Ireland, meaning it has significant exposure to claims from publicans.

However, it’s understood FBD has re-insured most of these policies with large-scale insurance houses, meaning its financial liability from the ruling is likely to be limited.

In a notice to financial markets, FBD said it will now consider the effects of the High Court judgement with re-insurers to estimate the net cost of paying out all claims related to business interruption cover due to COVID-19.

The insurer said it expects the net cost of claims will be well within its forecasted range for which it has set aside €30m to cover.

Despite the High Court ruling, shares in FBD have rallied almost 7% on Friday [5 February] and stood at just under €7.50 in afternoon trading.

Farmer shareholders

While FBD Insurance is listed on the Irish stock market, a significant percentage of its shares are still owned by farmers.

Farmer Business Developments, a farmer investment company, is the largest shareholder in FBD Insurance, holding a near-25% share in the company.

Additionally, the farmer support organisation FBD Trust holds 8.5% of the shares in FBD Insurance, while the IFA also holds a significant number of shares in the group.

The annual dividend paid by FBD Insurance is an important revenue stream for each of these groups and they will be watching closely to see if the High Court ruling has any impact on the insurer’s ability to pay an annual dividend.

FBD Insurance held back on paying out €35m in dividends in 2020 due to the uncertainty created by COVID-19.

However, the company said it may still pay out this dividend at some stage in 2021.

Farmer Business Developments is due to receive more than €8.5m of this total, while the IFA would receive in the region of €0.5m from the dividend payout.

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