THE SHARE price of FBD Holdings tumbled almost 4 per cent yesterday after the insurance group said its claims costs for 2009 would rise by up to €9 million due to recent severe flooding.
In an update to its interim management statement released on November 19th, the firm predicted yesterday that the cost to the insurance industry of the “unprecedented” flooding in the south and west of Ireland would exceed that of any previous weather-related event.
It said FBD’s net incurred claims costs for 2009 would increase by between €8 million and €9 million.
The added claims would also reduce its earnings per share by 21 to 24 cent.
In November, FBD predicted that its operating earnings per share for 2009 would be ahead of expectations as market rate increases compensated for falling market volumes and cover.
Analysts had guided average operating earnings at 86 cent a share.
The company said yesterday it was confident that, barring further exceptional claims, full year operating earnings per share would be in the range of 75 cent to 80 cent.
The firm’s stock price finished 25 cent lower at €6.60 yesterday, a fall on the day of 3.65 per cent.
In a research report published yesterday, Davy Stockbrokers noted that insurance premiums have continued to rise steadily due to “recessionary-related claims” and lower investment income.
It predicted that the upward trend in pricing was set to continue.
“Recent flooding will mean even more rate hikes,” it said.
Ireland had its wettest November since records began, and the insurance industry expects flood damage insurance costs to significantly exceed the claims bill of almost € 100 million that followed serious flooding in August 2008, which, at the time, was a record payout.
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