INSURANCE FIRM FBD Holdings has revised its earnings outlook for the year downward by 10 per cent as it struggles with a higher than expected claims charge for the second half of the year.
In the firm's interim management statement published yesterday, covering the period from July 1st to date, FBD said full-year earnings would be some 10 per cent lower than analysts' estimates of between 195 cent and 205 cent a share, "barring any further exceptional claims events".
Although the firm said it had maintained a solid trading performance in the second half of 2008, poor weather and the increasing cost of property claims in recent months had "resulted in a higher than previously expected claims charge in the second half".
FBD said these factors were being felt across the insurance industry and "reinforce the need for rate increases".
Earlier this year, FBD, which is the third-largest non-life insurer in Ireland, increased its rates, leading to an increase in the average premium per policy. However, the company's decision not to match the "uneconomic rates" being offered by some insurers had restricted policy volumes.
The group's leisure, property development and financial services businesses also faced "challenging" market conditions.
Equity holdings have been reduced since the half-year to leave the group with € 50 million invested in equities out of total insurance investments of € 942 million.
FBD added that its balance sheet remained "very strong".
With regard to the sale of a second tranche of land at the Spanish golf and spa resort of La Cala, which the insurance company owns, FBD said its advisers believed it "remains achievable" that planning can be delivered before the June 2009 deadline.
FBD shares closed down 25.1 per cent yesterday at €8.50.
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