Ireland’s FBD Reports H1 Loss of $97.7M, Versus Profit of $6.8M in 2014

By | August 24, 2015

FBD Holdings plc fell to a five-year low after Ireland’s only publicly traded insurer posted one of its biggest first-half losses on record and said it’s unlikely to be profitable until the end of 2016.

The company will sell as much as 100 million euros [$111.6 million] of subordinated bonds to bolster capital, Fiona Muldoon, who was appointed interim chief executive officer last month, said by telephone on Monday. The stock was down almost 15 percent to 5.8 euros at 9:11 a.m. in Dublin.

FBD is being hit by increasing insurance claims in Ireland, where the company expanded beyond its original rural market to offer products such as motor insurance to urban clients. It’s also being squeezed by European regulations for insurers, known as Solvency II, which will take effect in 2016.

“2015, from a claims point of view, was the worst in FBD’s 40-year history,” Muldoon said. Like others, FBD had also failed to charge enough for its insurance policies, she said.

The insurer increased its reserves to cover claims by 88 million euros [$98.2 million]. That pushed the company into an operating loss of 87.6 million euros [$97.7 million], compared with a profit of 6.1 million euros [$6.8 million] in the year-earlier period.

To help meet the European capital rules, FBD will sell a stake in a property joint venture for 48.5 million euros [$54.1 million] and seek additional cost savings from its employee pension plan, according to the statement.

“There is little to point to in the results which is positive,” David Holohan, an analyst at Merrion Capital, said in an e-mail. “It will be some time before we will be comfortable with the investment case of the company.”

Muldoon said FBD will also focus on its “core” farming and small business customers while “de-risking” the firm’s underwriting strategy.

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