Flood claims to add €9m to FBD losses

GENERAL insurer FBD warned yesterday that claims resulting from recent flood damage will add up to €9m to its underwriting losses in the current year.

Those losses will result in the group’s forecast earnings per share (EPS) suffering a hit of 21c to 24c from to its recent forecast.

In its latest update the group said: “It is likely that the cost to the Irish insurance industry of this unprecedented flooding will exceed the cost of any previous weather-related event.”

November was the wettest November on record, the Met Office said.

“Barring further exceptional claims events during the remainder of the year, the group is confident that full-year operating earnings per share will be in the range of 75 to 80 cent”.

In last month’s trading update the group said it expected EPS for the year to be ahead of average broker forecast of 86 cent a share.

Following the forecast downgrade shares in the company fell by over 7% but recovered to end the day down at €6.51, a fall of 4.96% or 34 cent on the day.

As the sector counts the cost of the flood disaster nationally a spokesman for Hibernian Aviva, which accounts for 20% of the market, believes the total cost of claims facing the sector will exceed €250m nationally.

Hibernian’s share of that cost “will be proportionate to its market size” the spokesman said.

That suggests an extraunderwriting charge of €50m for the Aviva owned group which has suffered significantly from its exposure in Cork, with a claim of €10m alone understood to be winging its way to the group for the damage suffered by UCC.

Last year the group’s total cost of claims was €430m in the general insurance side.

It looks as if that figure will be breached significantly in the current year.

Hibernian said the group was making no further comment on the size of the losses facing its general insurance business in Ireland at this point.

“Our focus now is on taking care of our significant client base, many of whom have been traumatised by the recent flood damage,” he said.

At the time of its trading statement in November FBD said at the time it was confident that full yearoperating earnings per share would beat expectations.

It said at the time that it had achieved a solid trading performance with operating profits seen through the second half of 2009.

It noted at the time the results were looking good despite the “challenging market conditions”.

The extent of the unprecedented flood damage across the country has undermined that forecast, forcing the group to cut its full-year forecasts.