Ireland’s FBD Holdings Reports Worse-Than-Forecast Operating Loss, Weak Outlook

By | March 2, 2015

FBD Holdings plc plunged in Dublin trading after the Irish insurer’s full-year results missed its own downgraded forecast and its operating profit outlook for 2015 fell short of analysts’ expectations.

FBD declined 14 percent to 10.50 euros at 9:35 a.m., the most since Nov. 11, when it cut its earnings forecast for a second time in five months. The Dublin-based company reported a 13 cent operating loss a share for 2014, wider than the loss of zero to 10 cents it forecast in November.

“2014’s outcome is overshadowed by initial operating EPS guidance of 20 cents to 40 cents for 2015, compared with our current forecast or 86.3 cents,” said Emer Lang, an analyst with Davy, Ireland’s largest securities firm, who rates the shares underperform.

Shares in FBD, founded in 1967, have fallen 42 percent in the last 12 months after it reduced its 2014 forecast twice. This was mainly as a result of “the worst weather in the group’s history, an increase in claims frequency associated with economic growth,” it said. Ireland’s government estimates that the economy grew by 4.7 percent last year as car sales, employment and real estate prices rebounded.

“2014 was a very difficult year for the Irish insurance industry and FBD,” the company said in a statement on Monday. “The claims environment has deteriorated significantly and at a speed which exceeded expectations.”

Prices Rise

To return to profitability, the company increased insurance prices and cut the amount of premiums written, CEO Andrew Langford said in a phone interview. FBD plans to increase premiums by 5 percent to 6 percent this year, with auto insurance customers’ costs set to rise “slightly” more, he told state-owned RTE Radio.

The company’s initial guidance for 2014 “is disappointing,” said Eamonn Hughes, an analyst with Goodbody Stockbrokers in Dublin. “After a tough 2014, the current year appears to be starting in a similar vein.”

Langford said the company has a strong balance sheet, with solvency levels of almost 3.5 times minimum regulatory requirements. It plans to increase its 2014 dividend by 4.1 percent to 51 cents.

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