FBD intends to dish out a regular dividend of €36 million to its shareholders for the third consecutive year following an impressive performance that aligns with a recent drastic rise in advice. This corresponds to approximately 7.8 per cent dividend yield. The Republic’s single native general insurer is also predicted by experts to be in a good position to distribute a special dividend later this year, having allocated an extra €36 million to shareholders in the previous October in an effort to decrease its excess capital reserves.
Last Friday, FBD announced a 24% increase in last year’s pretax profits, amounting to €81.4 million. The firm had forecast three weeks prior that the result would be around €80 million, significantly surpassing the general analyst estimate of near €55 million at that point.
The unexpectedly positive results were primarily due to the release of €44.4 million in reserves that were initially allocated for claims as expenses were lower than anticipated, in addition to €19.1 million in investment returns. In the year 2022, the company incurred €10.8 million in investment losses.
Gross written premiums saw an 8 per cent rise to €414 million, with farmer and business customers contributed over 70 per cent of the uptick. The average increase of commercial premiums was 5.3 per cent, a direct result of rising sums assured due to burgeoning construction costs and customers escalating their liability cover levels, as mentioned by the firm.
Private motor average premiums saw a 2.9 per cent rise following a 7 per cent cut by FBD in 2022. The industry reported a 22 per cent decline in motor premiums between late 2017 and the end of 2022, as shown by data from the Central Bank, a decline attributed to a drop in claim costs following the approval of new personal injury guidelines by the Judicial Council early 2021. Commercial motor premiums marked an increase of 3.6 per cent in the past year.
Under the leadership of the chief executive Tomás Ó Midheach, FBD stated that the rate increases were executed to balance the escalating costs of motor damage claims arising from inflation in labour, parts, paint costs, and the enhancement in repair and replacement expenses due to advanced technology in recent model vehicles.
The average insurance premiums for tractors experienced a 9.1% spike owing to the influx of newer models, a rise in the worth of existing models, and slight rate hikes to balance out the inflation of damage claim costs. FBD indicated a growth in the occurrences of designated storms in 2023, however, the frequency of regular weather events actually declined, resulting in a neutral effect on weather-related losses compared to the previous year.
Apart from its routine dividend the previous year, FBD distributed a special dividend of €36 million to its shareholders in October, as part of its strategy to disburse surplus funds from its balance sheet. “The nearly €120 million excess capital at the close of 2023 promises favourable prospects for potential special dividends in the future,” opined John Cronin, an analyst with Goodbody Stockbrokers. He has predicted this surplus based on FBD’s median target for its capital reserves.
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