Investors to benefit as FBD continues to grow

INVESTORS in insurance-to-leisure group FBD could be in line for significant dividend hikes.

The strong trading performance could push cash reserves to €100m by the end of 2006.

Davy Stockbroker’s analyst Scott Rankin said FBD is continuing to grow its volumes at a double-digit pace as it benefits not only from the growth in the demand for insurance but from increased brand awareness and keen pricing.

“With excess capital building up even after the recent buy-back (could be €60m by year-end and €100m by end-2006), investors could be in for substantial dividend hikes and/or further buy-backs at some point,” he said.

Mr Rankin pointed out that no formal company policy on the use of cash reserves is in place.

Speaking at FBD’s annual general meeting yesterday, chairman Michael Berkery said the year to December 31, 2004 was the most successful in FBD’s history.

“This success is reflected in the operating profit figure of €126m, an increase of 8.9% on 2003. Earnings per share, at 259 cent, are up 8.7% and net assets per share grew by 31.5% to 888 cent. The dividend has been increased to a new level, signalling the Board’s intention to move dividend cover in line with market norms in due course,” he outlined.

Mr Berkery said that insurance underwriting over the past couple of years have been favourable for insurers and policyholders alike.

“Underwriting results have been positive and policyholders have benefited from significant premium reductions,” he said.

However, Mr Berkery said all interested parties must ensure that the momentum does not stall.

“For example, The Inter Ministerial Committee of the Tánaiste, the Minister for Justice and the then Minister for Transport, played a key role in advancing the reform agenda. However, this Committee was not reconstituted after the Cabinet changes last autumn. In light of the increasing numbers of road deaths and accidents, greater efforts should be made to get the Garda traffic corps up and running,” he added.