A strategic overhaul at FBD (FBH) is already paying off handsomely, and the Irish farm, small business and personal insurer turned last year's first-half underwriting loss of €1.60m (£1.44m) into a profit of €11.1m. This helped to lift the combined operating ratio (of claims and expenses against income) from a loss-making 101 per cent to a profitable 93.1 per cent.
That figure would have been a less favourable 96.6 per cent without the inclusion of a one-off €5.6m provision release, although that still leaves it comfortably within the mid-to-high-90s targeted range. Gross written premiums rose by 5 per cent to €190m through a combination of new business and an average premium rate increase of 5 per cent.
Net claims incurred fell from €120m to €112m, and the claims environment has been more stable, with claims inflation continuing to moderate from the "very high levels" of 2014 and 2015. However, FBD warned that serious government reform is required to tackle the cost of claims and thus enable premiums to be reduced. The cost of large claims (greater than €0.5m) at €19m was largely in line with the average for the past five years, and net of reinsurance large claims costs fell by €4m.
On the investment side, the low interest rate environment saw the investment return fall to an annualised 0.68 per cent from 1.92 per cent.
Analysts at broker Davy are forecasting a combined operating ratio for the year to December 2017 of 97.0 per cent and pre-tax profits of €15.9m.
| FBD HOLDINGS (FBH) | ||||
| ORD PRICE: | 837.5¢ | MARKET VALUE: | €291m | |
| TOUCH: | 825-850¢ | 12-MONTH HIGH: | 838¢ | LOW: 602¢ |
| DIVIDEND YIELD: | nil | PE RATIO: | 12 | |
| NET ASSET VALUE: | 696¢ | COMBINED RATIO: | 93.1% | |
| Half-year to 30 Jun | Gross writtem premiums (€m) | Pre-tax profit (€m) | Investment return (€m) | Dividend per share (¢) |
| 2016 | 181 | -5.3 | 0.27 | nil |
| 2017 | 190 | 11.9 | 3.90 | nil |
| % change | +5 | - | +1344 | - |
| Ex-div: | na | |||
| Payment: | na |
