FBD shares up in spite of allegations against CEO

Following insurer FBD Holdings' shock stock-exchange disclosure on Friday evening that its chief executive, Fiona Muldoon, was under investigation regarding "internal allegations" made against her, someone got up on Monday morning and decided to sell just 16 shares in the company.

By close of business, fewer than 1,000 out of the 34.7 million shares in Ireland’s only publicly-quoted indigenous insurer had changed hands – and the stock had reversed an initial 0.9 per cent drop to advance 1.9 per cent on the day.

It’s not every day that an Irish publicly-quoted company reveals that its board has ordered an examination into the actions of its chief executive. This makes the muted market response all the more puzzling.

It was reported by the Sunday Times over the weekend that the individual behind the allegations was Sarah Ryan, the company's human resources director of just 10 months. FBD and Muldoon declined to comment on this, and Ryan could not be reached for comment.

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Convertible

Also mum were representatives from Canadian investment group Fairfax Financial, which is entitled, following a €70 million bailout loan given in FBD three years ago, to take a 19 per cent stake in the company as soon as next year.

The loan is convertible into stock at €8.50 a piece, provided they remain above that level for 180 days after the third anniversary of the September 2015 investment.

Fairfax is notionally well in the money, with the stock trading at €10.60, having surged by almost three-quarters since the deal was struck.

Impressed

No doubt the Canadian group's founder and chief executive Prem Watsa has been mightily impressed by FBD's turnaround under Muldoon. The company returned to profit in 2016 after major surgery, including the sale of property investments, cutting back on the use of brokers, hiking of insurance premiums and closing of its defined pension scheme to future accruals. It paid its first dividend since 2014 earlier this year.

But FBD’s financial recovery has taken place against the backdrop of a number of senior departures. And now this allegation. Shareholders may be unperturbed by the current investigation, but it’s in the interest of everyone that it’s concluded quickly.