Norwegian insurer says 6.3% FBD stake ‘is not strategic’

Insurers shares advance as much as 11% on the news of Protector Forsikring’s holding

Oslo-based Protector Forsikring bought the FBD shares on Tuesday, with Invesco understood to have been the seller. File photograph: Getty

Oslo-based Protector Forsikring bought the FBD shares on Tuesday, with Invesco understood to have been the seller. File photograph: Getty

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Norwegian insurer Protector Forsikring’s chief investment officer said that its purchase of a 6.3 per cent in FBD Holdings “is not a strategic investment” but will be held by the company’s investment portfolio.

Shares in FBD jumped as much as 11 per cent in Dublin on Thursday as news that the Oslo-based group had acquired the stake prompted speculation that it was a precursor to Protector Forsikring taking a strategic stake or launching a takeover bid.

“This is not a strategic stake investment,” Dag Marius Nereng told The Irish Times. He added that the shares will be held within the company’s investment portfolio, which amounts to the equivalent of about €1.5 billion of assets under management.

“We think it’s a good company and like its market position,” he said, adding that this is the first investment in an insurance company made by the portfolio.

Protector Forsikring bought the shares at €7.12 each on Tuesday, with Invesco understood to have been the seller. It notified FBD of the holding within 24 hours, according to a stock exchange announcement on Thursday morning.

A spokesman for FBD declined to comment.

Market value

The Norwegian company’s business model is very different to FBD in that it is a commercial insurer, rather than a consumer one, focusing on public sector and property and casualty coverage.

Shares in FBD were up almost 11 per cent at €7.88 in early afternoon trading, but subsequently eased back from their highs to close up 9 per cent.

FBD said in late February that it had set aside €65 million of provisions for claims and expenses arising from a landmark Covid-19 business interruption pubs test case ruling earlier that month. It put the total cost at €150 million settling claims from more than 1,000 pubs affected by the ruling, but most of it will ultimately be picked up by reinsurance companies that shared the risk. The company abandoned plans to pay a €35 million dividend last year.

Goodbody Stockbrokers analyst Eamonn Hughes issued an upbeat assessment on FBD to clients earlier this week, highlighting that its underlying trading has been strong so far this year, notwithstanding uncertainty over the final cost of the pub claims.

He said the company is sitting on €70 million of excess capital – more than a quarter of its current market value – providing an opportunity for future cash returns to shareholders.

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