LONDON (Alliance News) - FBD Holdings PLC on Monday reported a sharp swing to a loss in the first half, and said it is taking action to strength its reserves and moving to concentrate on its farming and agriculture book of business.
The property and casualty insurance business in Ireland reported a EUR96.4 million pretax loss in the six months ended June 30, compared with a EUR4.0 million pretax profit in the corresponding half the prior year, hit as net claims and benefits swelled to EUR215.8 million from EUR117.2 million. FBD did not pay and interim dividend and said no such payment will be made for the full year.
"This is a difficult day for FBD, our shareholders and our staff. These results reflect very serious increased claims costs in our industry. We are taking decisive action now to de-risk our strategy and return to profitability by the end of 2016," Interim Chief Executive Fional Muldoon said in a statement.
In a statement, FBD said it is selling its stake in its FBD Property & Leisure Ltd joint venture to Farmer Business Developments, a move designed to replenish capital in its core insurance business. As well as selling the shareholding, FBD is redeeming its loan notes in the joint venture. It will receive EUR48.5 million from the deal.
FBD Property & Leisure - FBD Holdings controls 28.7% of its voting rights - owns and manages Irish and Spanish property and leisure operations.
The proposed deal is expected to result in a "marginal reduction" in earnings per share and to be neutral in terms of net asset value. The proceeds will be put into FBD Insurance, the company's core general insurance underwriting subsidiary.
"The previously signalled claims uncertainty in Ireland has continued and deteriorated further. The existing business strategy has not delivered profitable growth and, given the significant losses reported today, the group has reviewed its strategic direction," FBD said in a statement.
FBD said that strengthening its capital position comes ahead of the implementation of the new Solvency II insurance rules across the EU on January 1, 2016.
The insurer said it has agreed with staff to close its defined benefit pension scheme to future accrual in a move that will help its preparation for Solvency II.
"The changes which include closing the scheme to future accrual, severing the link with final salary, ceasing the advance funding for discretionary pension increases and de-risking the invested assets will significantly reduce the Solvency II capital charges that the scheme attracts," FBD said.
FBD shares were down 13% at EUR6.00 on Monday morning in London.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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F.b.d.hldgs (FBH)