FBD poaches AIB deputy chief executive as insurer sinks into loss
Tomás O’Midheach will join State’s only indigenous general insurer on February 1st
FBD decided last month to scrap plans for a €34.9m final dividend on last year’s earnings.
FBD Holdings has poached AIB’s deputy chief executive Tomás O’Midheach to become its next chief executive. The move came as the insurer reported a loss for the first half of the year after setting aside €30 million to cover potential Covid-19 business interruption claims if it loses a court case later this year.
FBD, the State’s only indigenous general insurer, said on Friday that Mr O’Midheach will join the group on February 1st. The company had been on the lookout for a new chief executive since Fiona Muldoon signalled last October that she was stepping down after five years. Financial sector veteran Paul D’Alton took over in April on an interim basis as Ms Muldoon exited the business.
FBD decided last month to postpone plans for a €34.9 million final dividend on last year’s earnings as it signalled it would be setting aside €22 million in case it loses a test challenge in relation to its business interruption policies.
Litigation between it and a number of its publican customers claiming cover for business interruption as a result of Covid-19 has been scheduled for hearing in the Commercial Court this October.
The company said on Friday that it now expects that a loss of that test case would lead to a cost of €30 million as the result has a wider effect across its pubs policy. Mr D’Alton defended FBD’s decision to contest the case.
“We believe that the test cases are the way to put all the arguments forward and get clarity,” he told The Irish Times, adding that the group is also monitoring a test business interruption case that has been heard in the UK this week and where a ruling is expected as soon as September.
FBD warned in its interim report, issued on Friday, the same day as its annual general meeting, that there are scenarios where the ultimate cost of the business interruption case is “significantly more adverse” for the group. Still, it has attached a low probability to these.
“It is acknowledged that there is a high degree of uncertainty in arriving at the best estimate of likely costs and in addition the group holds a margin for uncertainty over the best estimate of claims liabilities,” it said.
Mr D’Alton declined to give details of the scenarios mentioned, but said that none of them would push FBD’s solvency reserves below regulatory requirements.
The provision for the test case, combined with the group posting a loss on its investment portfolio, led to FBD reporting a €9 million loss before tax for the first half of this year, compared with a profit of €39 million for the same period last year. The investment loss amounted to €3.27 million as a result of volatile financial markets.
Gross written premium across the group fell 7 per cent to €176 million, driven by the impact of Covid-19 premium rebates for motor and commercial customers as economic activity slumped during the coronavirus lockdown.
Motor customers with policies in place at the end of March received a rebate of a €35 One4All voucher as many cars were off the road, resulting in a drop in accidents. Commercial customers’ rebates reflected the reduced exposure to employers’ liability, public liability, and business interruption while businesses were closed during the second quarter amid pandemic measures.
Mr O’Midheach will be coming to FBD after 14 years with AIB, where he held a number of senior executive positions, including that of chief digital officer, before being appointed as an executive director in March 2019. The bank revealed in a stock exchange announcement on Thursday evening that he had tendered his resignation, triggering the six-month notice period in his contract.