Storms cost FBD insurers €7.8m

The destruction wrought upon Ireland by the winter storms will cost FBD insurers €7.8m in claims according to the company’s interim management statement.

The statement filed with the stock exchange yesterday morning said that the bad weather had in resulted in a surge in claims during January and February.

“The unprecedented persistent bad weather during January and February will lead to an increase in the cost of 2014 claims and the windstorm that hit Ireland on 12 February is likely to cost FBD €7.8m, net of reinsurance,” the interim management statement read.

Despite the heavy cost of claims, FBD reaffirmed that they would hit their full-year growth targets unless there is another round of freak weather.

While the insurer welcomed a pick up in economic activity and a rise in the underwriting of new premiums they warned that more premiums inevitably results in more claims which may effect profitability.

“Increased economic activity leads to higher claims frequency and there is invariably a time lag before this is fully reflected in market premiums, particularly if activity grows faster than anticipated by the insurance market.

“This will have a short term impact on profitability in 2014 and the early part of 2015,” the statement noted.

The company which has been traditionally focused on the agricultural sector is looking to increase its penetration in urban areas. The company is confident that its business model and brands will help it make headway in these markets in 2014.

Davy analyst Emer Lang said: “FBD plans to continue to increase its penetration of key urban markets, in particular Dublin, and of the business insurance market, in partnership with brokers, and is confident that these initiatives, along with personal lines business written through FBD, No Nonsense and the Clan Insurance brands, will enable it to continue to outperform the market for the remainder of 2014.”