News Column

FBD Holdings Cuts Operating Earnings Guidance Due To Rising Claims

June 20, 2014

Samuel Agini

LONDON (Alliance News) - FBD Holdings PLC, the property and casualty insurer in Ireland, Friday cut its full-year operating earnings guidance due to an increase in claims, but said it remains committed to increasing its dividend.

In a statement, FBD guided that its full-year operating earnings per share will be between 70 and 80 cents, excluding any further events that would result in more claims. It expects to take a EUR16.0 million hit in 2014 due to the increase in claims frequency and claims due to bad weather. On April 29, FBD had reiterated previous guidance of between 120 and 130 cents for the full-year.

FBD said that motor claims became more frequent because increased economic activity has led to more drivers on the roads and vehicles travelling further.

"The group will continue to monitor claims to ensure that risks are adequately priced and take further action, if necessary. Growth in economic activity will have a positive effect on FBD in the medium term, particularly given the group's track record of outperforming the market. However, it will have a higher-than-expected impact on profitability in 2014 and the first half of 2015," FBD said in a statement.

In addition, FBD said the cost of bad weather over the winter has increased by EUR4.0 million net of reinsurance to EUR44.0 million.

"Premium levels in the Irish insurance market have begun to benefit from the recent growth in economic activity. While the market has continued to be competitive, rates have hardened for both car insurance and business insurance," FBD said.

FBD added that its gross premium written to date is 4% ahead of the corresponding period last year year, primarily through growth in car and commercial insurance. Over 60% of the increase in premium is attributable to average premium and the remainder to policy volume. FBD said that it expects its share of the insurance market is likely to have increased further in the year to date.

Aside from its news on underwriting, FBD said that its actual investment return in the year to date is ahead of budget, while its property and leisure joint venture, which it established with Farmer Business Developments PLC in 2011, is ahead of both budget and the previous year.

FBD shares were Friday quoted at EUR17.00, up 0.3%.

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Source: Alliance News

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