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LONDON (Alliance News) - FBD Holdings PLC on Monday said it has "stabilised" after losses widened in 2015, with the Irish property and casualty insurer hit by a EUR95.8 million charge for strengthening its reserves for policies written in previous years.
The insurer expects to make a "modest loss" after tax in 2016, and lowered its return on equity target - a key measure of profitability - to between 10% and 12% from 18% previously, citing higher capital requirements under Solvency II insurance rules put in place across the European Union in January and low interest rates.
FBD will pay no dividend for 2015, compared to 51 euro cents in 2014, as previously guided, after pretax losses from continuing operations widened to EUR85.5 million from EUR4.9 million.
Net premium earned rose to EUR313.2 million in 2015 from EUR303.4 million in 2014, while net investment return fell to EUR20.3 million from EUR26.1 million, helping total revenue to rise to EUR347.7 million from EUR344.9 million.
Net claims swelled to EUR341.3 million in 2015 from EUR252.1 million the year before, mainly due to a EUR95.8 million charge to strengthen the insurer's reserves and an increase in the "margin for uncertainty". Restructuring costs amounted to EUR11.4 million.
"The cost of claims and all of the ancilliary costs associated are affecting everyone in Ireland. Court award levels are at an all-time high. We will work with the industry and the government to tackle the cost of claims for the benefit of all our customers. We urge the next government to make dealing with this a priority," Chief Executive Fiona Muldoon said.
FBD, which provides insurance to agricultural and small business customers, as well as providing home and motor insurance, said there is more to be done to return the business to profitability, and has identified measures, such as a voluntary redundancy programme, to cut costs by EUR8.0 million.
Before exceptional items, the group made a loss before tax of EUR5.3 million in the second half of 2015 following a loss of EUR96.4 million in the first half of the year. After exceptional items the group made a profit of EUR11.6 million in the second half.
Muldoon said that "significant board reorganisation and governance changes" have been put in place to amalgamate the FBD Holdings and FBD Insurance brands to "reflect" the group's focus on its general insurance company and its life and pensions broker.
FBD Holdings and its main subsidiary, FBD Insurance, will have a board comprising of the same directors, with the current dual board structure to be retired, following the disposal of the group's property and leisure joint venture in 2015. Non-executive directors Emer Daly, Eddie Downey, Brid Horan, and Ruairà O'Flynn will continue in office until April 29. They will not seek re-election at FBD's upcoming annual meeting of shareholders.
"This is for a variety of reasons, including the regulatory limit in Ireland on the number of directorships of financial undertakings which can be held by any individual," FBD said.
The changes will see the departure of Chairman Michael Berkery in 2017. FBD didn't name a replacement, though Berkery said he would use his last year "to ensure an orderly handover of responsibility to the next chairman".
Walter Bogaerts, an independent non-executive of FBD Insurance, has been appointed the the FBD Holdings board with immediate effect. He worked for the KBC Insurance Group in Belgium for 34 years.
"The group is well advanced in making an additional appointment to the board and will make an announcement once this has been unconditionally confirmed," FBD said.
Shares in FBD were up 1.6% at 6.45 pence on Monday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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