FBD shares drop after chairman warns on profits

SHARES IN insurance firm FBD Holdings dropped by 8.6 per cent to €27.88 after the withdrawal of Eureko's approach for the business and an indication from its chairman, Michael Berkery, that turbulence in financial markets has had an "impact" on its profits this year.

Interim chief executive Andrew Langford, in office since the sudden death of Philip Fitzsimons ten days ago, said it was only a matter of time before prices for personal line products went up throughout the sector as current premiums for certain products did not provide adequate returns.

He expected to see low to mid single digit price increases for car and home insurance and told reporters that FBD had introduced single digit price increases on certain products in January.

Mr Berkery told FDB's agm that the "substance" and "intentions" of Eureko did not match up. "We analysed, considered and evaluated the proposal from every possible approach. We could not find compatibility or value," he said.

He stressed that there was no formal offer on the table from Eureko and said some correspondence from that quarter "arrived through the media simultaneously".

Eureko withdrew its approach on Monday, a day after FBD's board dismissed the proposal as being "without merit".

While certain shareholders questioned FBD's response to Eureko, there was applause from the floor on two occasions when speakers praised the firm's stance.

Mr Langford said the company was comfortable with forecasts of adjusted operating earnings per share this year of 250-260 cent, down from 316 cent in 2007.

Mr Berkery said the downturn in financial markets had an impact on "short-term fluctuations in investment return in the year to date" and on pretax profits but said this was "greatly mitigated" by FBD's decision to reduce its exposure to equities in 2007.

"In the year to date reported personal injury incidence levels are similar to 2007. However, our property claims experience is somewhat worse than anticipated.

"The challenging market conditions which prevailed during 2007 in our leisure and property development businesses in Ireland and Spain and our financial services businesses have continued into the current year," Mr Berkery said.

The agm observed a minute's silence in memory Mr Fitzsimons.