FBH.L Regulatory News (FBH)

26 Apr 2006 12:00

FBD Holdings PLC26 April 2006 FBD HOLDINGS PLC ANNUAL GENERAL MEETING Wednesday, April 26th 2006 HIGHLIGHTS OF CHAIRMAN'S STATEMENT TO AGM UNDERWRITING •Insurance underwriting the main driver of performance •Measures to reduce the incidence of claims and to reform the over-costly claims regime have been key to the underwriting turnaround of recent years •Reforms yet to be implemented can bring further significant benefits •Change of mindset by motorists and adequate enforcement needed NON-UNDERWRITING •Political and economic factors dampen performance of Leisure-Property interests •Intrinsic value of property and leisure assets evidenced by recent conditional agreement for property sale at La Cala •Intention to distribute net proceeds of sale by way of two special dividends CAPITAL ALLOCATION •Appraised on an ongoing basis CURRENT YEAR •Overall business targets being achieved in year to date •Urban and city markets key elements in growth strategy Speaking on road safety and reforms yet to be implemented at the AGM, theChairman, Michael Berkery, said: "I welcome recent moves by the government on this front but caution thatintroducing penalty points, per se, will not deliver the desired improvement inroad accident statistics. What needs to be brought about is a change in mindsetby all motorists, especially younger drivers, underpinned by adequateenforcement of the new and the old traffic laws. Sufficient resources must bedeployed by Government to achieve this. I would suggest that the 2% GovernmentLevy on insurance premiums, which amounted to approximately €80m. in 2005, beapplied specifically in support of this objective". CHAIRMAN'S ADDRESS As I have stated in our Annual Report, 2005 was another highly successful yearfor the FBD Group. It was a year in which we surpassed all previousperformances, with •Operating profit up by 30.3% to €162.6m. •Operating earnings per share, up by 41.9% to €3.64 •Net assets per share up by 29% to €12.51 In view of the excellent results, the Board is recommending a final dividend of37.5c, which brings the total dividend for the year to 57.5c. This represents anincrease of 43.75% on the 2004 figure and is a further indication of the Board'scommitment to increase dividend payout relative to the earnings achieved by theGroup. As you are aware, INSURANCE UNDERWRITING is the core activity of the Group. Ithas been the main driver of our excellent overall performance. Shareholders andpolicyholders alike have benefited from the favourable turnaround in ourunderwriting experience which has been a feature of FBD's and other Irishinsurers' performance in recent times. As a result, FBD shareholders haveenjoyed higher returns whilst policyholders have benefited from significantreductions in premiums. As most people are aware, the critical catalyst in delivering the turnaround inunderwriting performance was the concerted effort made by all interested partiesto introduce measures to reduce the incidence of claims and to reform theover-costly claims regime which hitherto had operated in Ireland. It is widelyaccepted that reforms yet to be implemented have the potential to deliverfurther significant benefits. One immediately thinks of the savings, not only inbroad economic terms but in human trauma also, that would emerge from animprovement in road safety throughout the country. I add my voice, once again,to the ongoing calls that are being made on Government to attend to this matteras a critical national priority and to resolve all of the issues that haveimpeded delivery. I welcome recent moves by the Government on this front butcaution that introducing penalty points, per se, will not deliver the desiredimprovement in road accident statistics. What needs to be brought about is achange of mindset by all motorists, especially younger drivers, underpinned byadequate enforcement of the new and the old traffic laws. Sufficient resourcesmust be deployed by Government to achieve this. I would suggest that the 2%Government Levy on insurance premiums, which amounted to approximately €80m. in2005, be applied specifically in support of this objective. In relation to the Group's LEISURE and LEISURE-PROPERTY businesses, we all knowthat global and domestic political and economic factors impact particularly onthem. In 2005, these pressures continued to feature adversely and dampened theperformance of our interests both in Spain and in Ireland. Given thesecircumstances, a key consideration for the Board is the intrinsic value of theseproperty and leisure assets. In this regard, shareholders will have been pleasedto learn that post year end, the conditional sale of the major portion of ourbuilding land at La Cala in Spain was agreed at a significant premium tocarrying value. The Board has also informed shareholders of its intention todistribute the net proceeds of this sale, which would be up to €120m, by way oftwo special dividends. The utilisation of capital generated in the Group, which has not beenspecifically allocated to one of our existing operating businesses, is a matterwhich the Board appraises on an ongoing basis. Shareholders will recall that, inMarch 2005, €81m. of shareholders' funds was used in a share buyback when KBCplaced their 23% shareholding on the market. The remaining non-allocated capitaland the funds subsequently generated and retained constitute, what the Boardterms, a "capital fund". How best to maximise this capital for the benefit ofshareholders is kept under ongoing review. At this particular juncture, apartfrom the dividend payouts already mentioned, the Board has decided to retainthis capital in the Company and to investigate all possible opportunities toinvest some or all of it in the Group's primary business of insuranceunderwriting, or in related financial service activities. Whilst it isinvestigating such possibilities, the Board does not rule out other options foruse of capital if it deems them to be in the best interests of shareholders. On the CORPORATE front, the placing in the market by KBC of its entireshareholding in our Group in March 2005, which I referred to earlier,constituted a significant change in the shareholding structure of the Company,with many new institutional shareholders coming on board. The sale by KBC marked an historic milestone in the life of FBD. KBC had been asubstantial shareholder in FBD since FBD's foundation in the late 1960s. Theirdecision to dispose of their stake was undertaken for KBC's own strategicreasons and with the full knowledge of FBD. I wish to record my personal thanks,and that of the Board, to KBC for the role they played and the solidshareholding position they maintained in FBD down through the years. Theirshareholding bridged our Group's pre and post Stock Exchange Listing and I ampleased that Johan Thijs, KBC's Non-Life General Manager, agreed to remain onthe FBD Board as a Non-Executive Director. As I have alluded to, the departureof KBC created an opportunity for new investors to acquire stock in the Company.I wish to take this opportunity to welcome them to FBD and to acknowledge theirconfidence in our Group. In February of this year, Mr. John Dillon resigned as a Director. I wish tothank John for his valuable contribution to the Board during the four years heserved as a Director. In March of this year, Mr. Padraig Walshe, the recentlyelected President of The Irish Farmers' Association, was co-opted onto theBoard. I welcome Padraig and I am sure he will make a valuable contribution as aBoard Member. In looking to the FUTURE, we draw confidence from the past year, when FBDexpanded its core business base significantly. Customer numbers grew and theOrganisation has strengthened, structurally and resource wise. New markets weresourced and the momentum for growth was advanced. I am pleased to say that thisprogress has continued in the year to date and that we are achieving our overallbusiness targets. As we have previously signalled, urban and city markets arekey elements in our growth strategy. With clearly defined objectives andappropriate plans being pursued to achieve them, I am confident that FBD'ssuccess will continue. In conclusion, I want to sincerely thank the Board, Management and Staff fortheir hard work and dedication which have yielded the results I am so pleased toreport on. Their commitment and ability are vital in the success we haveachieved, and in maintaining profitable growth in the future. For Further Information, please contact: Mr. Philip Fitzsimons, FBD Tel: +353 1 409 3200 Mr. Joe Murray, Murray Consultants Tel: +353 1 498 0300 Mobile: 086 253 4950 This information is provided by RNS The company news service from the London Stock Exchange