FBD ‘closer’ to 50% dividend target

FBD’s management has said it is getting closer to its stated goal of delivering shareholders a dividend of up to 50% of annual earnings per share and claims the group can continue to outperform its peers.

As expected, an increase in large claims — particularly during the first quarter of 2013 — affected the insurance giant’s first-half profitability; its interim figures, which were published yesterday, showing a €4m year-on-year drop in operating profit to €24.1m.

Pre-tax profit was down by nearly 13% to just over €19m. Operating earnings per share dropped from 74c to 63c, with gross written premium marginally up on the same period last year, at just under €176m.

The profit dip was also due to a drop in returns on FBD’s global investments, but a lowering of its bond investing stemmed losses.

Chief executive Andrew Langford hailed the performance as “excellent”, given the difficult economic conditions and suggested a return to relatively normal levels for claims in the second half of the year is likely.

“Key strategic initiatives delivered an increase in premium and customer numbers in an insurance market which continued to contract, resulting in further growth in FBD’s market share,” he added.

The interim dividend was increased by 29% to 15.75c; a move which analysts suggest shows FBD is confident it will continue to deliver long-term profit growth.

The group is aiming to reach a point of offering annual dividends of between 40% and 50% of earnings per share, and Mr Langford said the increase marks “another significant step” towards that. He added that the group has never been in a better state financially.

The company grew customer numbers by nearly 2% in the first half and saw a marginal increase in premium rates, in line with inflation. However, its “measure your driving” technology can help young drivers lower their premiums via its “No Nonsense” car insurance offering.

Mr Langford added that management will increase investment in its product and customer service offerings, while its car and home insurance services will soon be available through the broker network.