The confirmation of Fiona Muldoon as permanent group chief executive at FBD, the troubled insurance group, has been widely welcomed by analysts.
Ms Muldoon took on the interim CEO role earlier this year as the insurer faced the biggest crisis in its history.
She was formerly the high-profile director of credit institutions and insurance supervision at the Central Bank, between August 2011 and May 2014.
An unprecedented rise in its costs of claims has been blamed for FBD’s slide into crisis.
As the scale of the crisis deepened, shares in the group had sunk from a high in the last 12 months of €14.40 to as low as €5.20. Yesterday, shares were trading at €6.79. The company has signalled it will pay no dividend this year.
In September, FBD struck an agreement for an injection of €70m by Fairfax Holdings through a convertible bond.
That helped shore up funds for FBD, which has been stricken by a record level of claims. It also faced urgent cost-cutting plans after unveiling losses of €96.4m for the first six months of the year.
At the time, FBD said the Fairfax transaction would help it focus on its “core farming and small business customers” and its consumer customers, while maintaining healthy capital reserves. Ms Muldoon took over the top job on an interim basis earlier this year.
“This was as we had expected, given Fiona has held the interim CEO role post the exit of Andrew Langford, as CEO from the group, following a very difficult period for FBD in which the company reported multimillion losses and the share price plummeted by 65% from its peak share price reached in the first half of 2014,” said Darren McKinley, an analyst at Merrion Stockbrokers.
“Upon leaving her role at the Central Bank Governor Patrick Honohan said Fiona had ‘great vision’ and ‘was a real agent for change’. We feel these are key attributes for the new CEO of FBD given the requirement for a significant change. Fiona has held other roles abroad within the insurance industry adding global insurance experience to her list of attributes.”
He said that securing the investment from Fairfax through the bond at a cost of 7% which converts at €8.50 after a three year period was “a significant event”.
Davy Stockbrokers said FBD had also taken moves to bolster its business, including boosting capital to meet industry-wide requirements. It also reformed its pension scheme and disposed of a property investment.
© Irish Examiner Ltd. All rights reserved