FBD confident on full-year earnings

Insurer FBD says it will deliver better-than-expected full-year earnings on the back of a strong second-half performance in its core underwriting business.

While gross premiums written by the group were marginally lower than the previous year, they were “well ahead” of the market, which contracted by 6.3 per cent in the first six months of the year, the group says in an interim statement.

It has predicted a full-year operating earnings per share of 155 to 165 cents, an increase of 10 cents on its previous guidance, issued back in July.

“FBD has performed ahead of market guidance, primarily due to the continuation of the first-half claims performance in the underwriting business,” the insurer says.

Following the announcement, shares in FBD Holdings yesterday rose by as much as 48 cents, or 5.3 per cent, to €9.68 on the Dublin market.

In the second half of 2012 to date, the group said policy volumes continued to decline, along with prices in the market for certain insurance products, reflecting the tough trading environment.

In some cases, lower prices were attributable to reducing risk as economic activity declined. “In other cases, this does not fully explain the reduction in premium and, in these cases, FBD has maintained its underwriting discipline.”

The group said a number of factors had combined to provide a healthier loss ratio for the second half of 2012. The continued implementation of sustainable risk selection and claims management initiatives across its operations had meant a “favourable trend in the cost of attritional claims”.

In additional, while FBD saw an increase in large claims during the first six months of the year, these had been “better than anticipated” in the second half to date.

The group also singled out a lower number weather-related claims in the second half as a reason for its strong numbers.

Separately, FBD said it had disposed of land underlying a secured loan at a profit of €4.4 million over its book value as of the June, thereby reducing the remaining balance sheet value of secured loans to €5.2 million.