Insurer FBD sees 5.3% jump in profits
Shareholders at FBD will be pleased with a 29 per cent increase in final dividend
Insurance group FBD reported an increase in profits this morning, up by 5.3 per cent to €52.9 million, as the group increased its market share to 12.5 per cent and increased its final dividend by 29 per cent.
Andrew Langford, group chief executive, said that 2012 was another "excellent year" for the group.
“In addition to the outstanding results, we invested further in our business to ensure continued delivery of superior performance in future years. The 29 per cent increase in final dividend reflects the board's confidence that the group can continue to outperform its peers,” he said.
Gross premium written by FBD reduced by 2 per cent to €344.3 million in a market that declined by 5.5 per cent. The group said that because market rates were uneconomic in some areas, such as home insurance and larger premium business insurance, it focused on the development of opportunities within its risk appetite. As a result, it increased market share to 12.5 per cent, its highest ever share.
Net claims incurred improved by 5.1 per cent to €191.9 million, resulting in an “excellent” combined operating ratio of 89.1 per cent, compared to 91.4 per cent in 2011. According to the insurer, “significant progress” was made in reducing those elements of claims costs within FBD's control, including risk selection, rating and claims management initiatives, while the low level of weather related claims in 2012 also helped.
Operating earnings of per 60 cent ordinary share increased by 9.6 per cent to 172 cent, and the group further strengthened its capital base and balance sheet with net asset value per share increasing by 14.4 per cent to 721 cent. The insurer had a solvency level of 73.5 per cent of net premium earned as of end-December 2012, up from 66 per cent the previous year.
As a result, the board of FBD decided to increase the full-year dividend by 22.5 per cent to 42.25 cent
“This increase in dividend will help the group move towards its desired pay-out ratio while maintaining a high dividend cover and providing the potential for a progressive dividend in future years,” the insurer said.
FBD's financial services operations reported an operating profit of €5.6 million in “challenging market conditions”, well ahead of the €4.2 million delivered in 2011.
Group operating profit before taxation increased by 9.6 per cent to €66.0 million.
Looking to 2013, FBD expects to further increase penetration of key urban markets, in particular Dublin, and of the business insurance market, in partnership with brokers.
“These channels, together with opportunities provided by No Nonsense through its new low cost 'ready-made' comprehensive motor product and the SmartDriver telematics product, provide the group with the ability to outperform the market again in 2013,” the insurer said.