FBD’s shares hit by Storm Ophelia as investors fear flood of claims

Shares in FBD Holdings, Ireland’s only listed indigenous general insurer, slid as much as 4.4 per cent on Monday as investors fretted about the cost of Storm Ophelia to insurers.

FBD chief executive Fiona Muldoon said “while it is too soon to give an estimate of the ultimate net cost of the storm to FBD, unfortunately given its severity, we can be sure that a number of our customers are affected”.

FBD’s stock ended the session down 1 per cent at €7.92. The company’s share decline was cushioned somewhat by a new reinsurance programme it entered into earlier this year, which, according to its interim report, provides “better cover in extreme events”.

Chuck Watson, a disaster modeller at Enki Research in Savannah, Georgia, said on Thursday based on its current forecast track, Ophelia would probably do damage to Ireland worth up to $769 million (€652 million).

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Davy analyst Emer Lang said that the total cost of the storm would "obviously take some time to assess".

However, Ms Lang said that the FBD’s new reinsurance arrangements, where the company has ceded less property risk while increasing its catastrophe protection, should “provide better storm protection” as Ophelia sweeps across Ireland.

Negatively impacted

“Damage estimates from Storm Ophelia are in the range of €500 million to €800 million. We expect FBD to be negatively impacted from damages via a higher loss ratio, if the situation plays out as expected, but new reinsurance cover will likely limit the losses,” said Darren McKinley, an analyst with Merrion Capital.

A spokesman for Insurance Ireland, the industry representative body, said it would be Tuesday before insurers would be in a position to start assessing damage and how much of that is likely to end up in claims.

Since the beginning of the century, only one event, freezing conditions across the country in January 2010, led to claims of close to €300 million for the Irish insurance industry. Flooding in November 2009 was the second-most-costly episode, costing insurers €244 million.

“Insurers in Ireland have paid out over €1.3 billion to help policyholders recover from severe weather events (including storms and flooding) over the last 10 years,” Insurance Ireland chief executive Kevin Thompson said.

The country’s main banks decided to close their branches in the Republic on Monday as businesses took precautions as Ophelia swept across the country.

Meanwhile, Ibec, the employers body, said it expects the overall economic impact of Ophelia, aside from insurance costs, to be “minor”.

Consumer spending

“Upheaval for most businesses will hopefully be confined to a single day’s disruption and we expect that the majority of lost activity, output and consumer spending will be made up over the coming days and weeks,” said Fergal O’Brien, Ibec’s director of policy and public affairs.

“While direct storm damage costs to some businesses will be significant, the overall economic impact should be relatively minor.”

Dublin Chamber said it was too early to quantify the cost of the virtual shutdown of the capital’s commercial trade for the day.

The chamber said, however, that it did not expect the economic costs to be hugely significant, although some individual businesses could fell the effect depending on local damage.

Nationally, retailers were prominent among those businesses that closed for the day, with footfall virtually down significantly in central locations. Aldi, Lidl Dunnes Stores and Tesco all closed on Monday.

SuperValu said “most” of its stores were closed, although much of its network is independently operated by franchisees.

Many retailers said they expect to reopen on Tuesday.