FBD expects claims costs to rise

FBD has no plans to increase home insurance premiums, but it expects to see a rise in claims costs on the back of the harsh weather conditions.

After the publication of the group’s annual results yesterday chief executive Andrew Langford said it is still too early to know how much FBD will need to pay out, but estimated February storms could cost the insurance industry as a whole €130m in additional claims, before reinsurance effects.

Mr Langford said, however, that FBD budgets for around two such weather events per year and doesn’t expect a slew of such extreme conditions. In January, FBD said December’s storms were set to cost it €4.5m in additional claims and reduce earnings per share, for last year.

Yesterday’s results showed a 20% fall in operating earnings per share (to 136c) and a 1.5% dip in pre-tax profit, to €51.4m. Net claims incurred rose by about 5% to €201m.

But with gross premium written up by nearly €7m to more than €351m, customer numbers up about 20,000 (helped by the group’s relatively new use of broker networks) and market share ahead by nearly 1% to 13.4%, Mr Langford said the 2013 figures represented excellent results.

He said despite the marginal drop in pre-tax profit due to a small number of very large claims, a third consecutive year of profits over €50m marked a good performance in a difficult economic environment. He said he was most pleased with growth in customer numbers, market share and the company’s top line.

FBD’s progressive dividend policy also continues; 2013 seeing a 16% rise to 49c per share; the company gradually moving closer to its intended target of paying a 50% dividend of its annual earnings per share. For 2014, FBD expects to outperform the market and deliver operating earnings per share of 120c to 130c.