Weather helps FBD profit €52.9m

FBD insurance reported strong pre-tax profits for the second year in a row as the weather improved following the freak conditions of 2010.

Insurance group FBD Holdings reported pre-tax profits of €52.9m for the year to end of December, up from €50m in 2011.

The strong performance resulted in a 29% boost in dividends to shareholders.

CEO Andrew Langford said that, despite the large rise in dividends, there remains scope in the future to increase the payment again.

“Our dividend policy has to be sustainable but there is still scope to increase it,” said Mr Langford.

The number of premiums written declined by 2% to €344.3m, slower than the market decline of 5.5%, increasing FBD’s market share to a high of 12.5%.

Significant growth came through the group’s No Nonsense Insurance brand, targeting younger drivers and people who are looking for lower premiums.

There are fears that the EU gender directive, which means insurance companies can not offer lower premiums based on gender, could affect this market.

Mr Langford said FBD was trying to come up with measures to keep prices low for young female drivers.

“We approached it with an effort of neither trying to increase or decrease premiums,” he said. “We set out to minimise the impact on our customers.”

In an effort to keep costs for young females down, FBD aims to introduce telemetric systems which monitor a driver’s performance and lower or raise a driver’s premium accordingly.

Mr Langford said FBD has tested the devices with several customers, and hopes there will be further uptake.

“We have tested this with a small number of customers,” said Mr Langford. “A small amount of information is gathered, usually the number of sudden breaking incidents. Traditionally we have used gender as an indicator of driving habits. This basically says if you are a good driver and will be rewarded.”

FBD is launching an app which lets drivers check if they would qualify for lower rates if they took on a telemetric system.

Davy Stockbrokers said that unless there is another unforeseen weather event, FBD remains on track for a strong performance.

“FBD has a strong capital base, reflected in an increase in its solvency ratio from 66% of net earned premiums at end 2011 to 73.5% at end 2012. On the outlook, FBD reckons any growth in the insurance market will be negligible in 2013, notwithstanding more stable domestic demand.

“Assuming a reversion to more ‘normal’ weather conditions, its initial guidance for 2013 is for operating earnings of 145c-155c.”


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