FBD announces AGM date and postpones 2019 dividend payout

FBD has announced a rescheduled date for its 2020 annual general meeting (AGM), as well as its intention to postpone its proposed dividend for the 2019 financial year.

The board of FBD has decided to reschedule its AGM to July 31, 2020. It was originally scheduled to take place on Friday, May 8, but was postponed in light of Covid-19, the group noted.

Formal notice of the AGM with details of all business to be conducted will be issued to shareholders shortly, it added.

The format and attendance at the AGM will be determined in accordance with the latest public health advice.

On Thursday, February 27, the board proposed a final dividend for the 2019 Financial Year of 100c/share.

It was intended that this dividend proposal be brought forward for approval at the AGM, the firm said, adding:

“However, taking into account the statement issued in April by the European Insurance and Occupational Pensions Authority (EIOPA) urging the suspension of all discretionary dividend distributions, the heightened uncertainty resulting from Covid-19 and the importance of maintaining capital in the business, FBD has decided not to proceed at this time with the proposed dividend payment for the 2019 Financial Year.

The board will keep the timing of the distribution of capital to shareholders under continuing review and is confident that capital can be returned when the uncertainty from Covid-19 has receded and the impact is more fully understood.

FBD said that the solvency of the group remains robust and is currently estimated at 178% even while continuing to deduct the 2019 dividend, treating it as foreseeable.

Business Interruption Claims

On May 25, FBD noted that it announced an update in respect of business interruption claims received, in particular with regard to those sold to publicans, and the firm’s approach to seek a test case to have the issues resolved as quickly as possible to achieve clarity and minimise costs for all parties.

We confirmed that litigation between FBD and a number of publican customers claiming cover for business interruption as a consequence of Covid-19 public health measures, has been scheduled for hearing in the Commercial Court in October 2020.

“FBD remains strongly of the view that our business insurance policies do not provide cover for a pandemic of this nature,” the company said.

“However, a precautionary reserve of €22 million has been made to cover costs that may be incurred and will be included in claims costs in the half year financial results to June 30, 2020.”

General trends and outlook

In a statement regarding general business trends and outlook, FBD Gross Written Premium (GWP) trends were strong in the early part of 2020 but are now being impacted by the deterioration in the economy due to the Covid-19 pandemic.

In the five months to May 31, 2020, GWP is 3% lower than the same period in 2019. This is before accounting for Covid-19 related premium refunds to customers.

“Policy numbers have increased in the year to date by 1% and there has been strong retention of existing customers. This has been offset by reduced average premium due to competitive pressures and a reduction in sums insured driven by the deterioration in the economic environment.”

FBD noted that it is also in the process of refunding motor customers as a result of the reduced car usage during the Covid-19 lockdown, which will cost approximately €7 million.

“Refunds are also being offered to commercial customers whose businesses have been closed for the Employers Liability/Public Liability/Business Interruption elements of their cover for the closure period. We expect commercial refunds to be an additional €7 million approximately.”

The impact of these premium refunds on profits are offset by a reduction in the frequency of motor injury, damage and liability claims experienced from mid-March to date, the company added.

“Overall, motor liability and property claims experience has been benign and no significant weather events have occurred.

Investment markets have been severely impacted by Covid-19. Our portfolio has been impacted primarily by falls in risk assets and increasing credit spreads and the return on the portfolio year to date has been approximately -1%.

“Overall, current claims experience will help mitigate the impact on profitability of refunds and business interruption costs.

“We remain confident in the underlying profitability, future growth prospects, capital strength of the business and in our ability to continue to provide excellent service to our customers,” FBD’s statement concluded.