INSURANCE COMPANY FBD made a pretax loss of €5.2 million in the first six months of the year due to a fall in the value of stock market investments, higher claims and a decline in premium income.
The country’s third largest insurer said earnings this year would be “marginally below” analysts’ consensus estimates of between 211 and 233 cent a share due to claims arising from the flooding over the last month. This would cut earnings per share (EPS) by at least 33 per cent from the 316 cent reported in 2007.
Andrew Langford, who took over as chief executive of FBD in April, said the cost of the flooding to insurers would be “significantly higher” than the €40 million cited as the cost of floods in 2004. Flood claims would cost FBD, which has a 12 per cent share of the property insurance market, “significant less than our market share” as it had “a good geographical exposure”.
Gross premiums fell 3.4 per cent to €198.4 million in the first six months. Mr Langford said this represented “a robust performance” as rivals competed for new business at what the insurer described as “uneconomic rates”.
He said flood claims would push up premiums across the industry and rates would have to rise by at least the rate of inflation.
“I would see rates going up initially in mid-single digits. Maybe some time early next year they would go up a little bit more.”
FBD’s loss for the first half compared with a pretax profit of €49.7 million for the same period last year as the insurer shed €44.1 million on investments due to the financial markets’ decline.
Operating profit fell 37 per cent to €40.7 million, while net claims rose 12 per cent to €127.6 million.
FBD’s expenses rose 14 per cent to €30.4 million as the insurer invested in a support centre in Mullingar, Co Westmeath, and the company’s online operations.
First-half operating EPS fell 33 per cent to 105 cent. The insurer will pay a half-year dividend of 30.25 cent a share, up 10 per cent. It intends to pay €1.50 a share to shareholders, costing €49.8 million, bringing total payouts, excluding dividends, to €546 million since March 2005.
