Company name FBD Holdings PLC
Headline Half-year Report


RNS Number : 4534H
FBD Holdings PLC
01 August 2019
 

FBD HOLDINGS PLC

1 August 2019         

 

FBD HOLDINGS PLC

Half yearly Report

For the Six Months ended 30 June 2019

 

KEY HIGHLIGHTS

·    Gross Written Premium (GWP) €190m compared to €192m in 2018

·    Profit before tax of €39m

·  Disciplined underwriting in the face of strong competition delivered excellent Combined Operating Ratio ("COR") of 82.5%; driven by solid current year profitability, exceptionally benign winter weather and prior year reserve release of €9m. 

·    Investment income was €9m for the period (€1m in 2018) as a result of the recent market rally

·    Continued progress in developing our business offering to all customers

New business policy count growth increased 5% year on year

New Farm product launched - environmental (pollution) cover is a first in Irish market

New advertising media campaign launched in April

An Post Insurance partnership progressing well

 

FINANCIAL SUMMARY


2019

€000s


2018

€000s

 

 

 

Gross written premium

189,716

191,985

Underwriting profit

29,214

18,934

Profit before taxation

38,661

18,423

 

 

 

Loss ratio

56.4%

63.3%

Expense ratio

26.1%

25.3%

Combined operating ratio

82.5%

88.6%

 

 

 

 

Cent

Cent

Basic earnings per share

97

46

Net asset value per share

896

800

 

·    GWP of €190m: (2018: €192m). Retention remains healthy with increased new business in Commercial and Private Motor

·    Underwriting profit of €29.2m, €10.3m higher than 2018 (€18.9m) as a result of disciplined underwriting and benign weather

·    Net profit before tax of €38.7m, compared to €18.4m in 2018

·    2019 COR of 82.5% versus 88.6% in 2018. This includes prior year reserve release of €8.8m (2018: €6.0m)

·    Positive investment income of €8.6m and a €14.0m gain in Mark to Market (MTM) compared to losses in second half of 2018 emphasising the volatility of returns and the need for continued underwriting discipline

·    Expense ratio of 26.1% is 0.8% percentage points higher year on year predominately due to increased marketing and salary costs

·    Strong growth in Net Asset Value per share to 896 cent from 800 cent in 2018.

 

 

 

 

 

Commenting on these results Fiona Muldoon, Group Chief Executive, said:

 

"I am pleased to announce these strong 2019 half year results reflecting our excellent underwriting discipline, an exceptionally benign winter, some prior year reserve releases and supplemented by strong investment returns in the period.

 

Our premium levels are down marginally due to strong competition and modest rate decreases. FBD seeks to grow our business in the face of strong competition but we are also committed to underwriting discipline and to writing the risks we know and understand.

 

Our litigation claims costs continue to increase. The average cost of court awards, particularly for soft tissue injuries, remains too high. Despite some judicial progress in limiting court awards we have seen no meaningful progress on structural reform and Irish businesses continue to be held to impossible standards in personal injury cases.

 

We are committed to developing our business offering and we recently launched our new Farm product. It offers additional cover for pollution risks as well as extending public liability protection.  We will launch a flexible new small business product soon that will suit many family owned businesses. FBD aims to be the Irish insurer of choice in a crowded and competitive market.

 

These strong results position us well to support our core farming customer base amid the challenges posed by Brexit to the Irish economy." 

 

A presentation will be made to analysts at 9.00am today, a copy of which will be available on our Group website www.fbdgroup.com.

 

 Enquiries

Telephone

 FBD

 

 Michael Sharpe, Investor Relations

+353 1 409 3962

 

 

 Powerscourt

 

 Jack Hickey

+353 83 448 8339

 

About FBD Holdings plc ("FBD")

FBD is one of Ireland's largest property and casualty insurers, looking after the insurance needs of farmers, consumers and business owners.  Established in the 1960s by farmers for farmers, FBD has built on those roots in agriculture to become a leading general insurer serving the needs of its direct agricultural, small business and consumer customers throughout Ireland. It has a network of 34 branches nationwide. 

 

Forward Looking Statements

Some statements in this announcement are forward-looking.  They represent expectations for the Group's business, and involve risks and uncertainties.  These forward-looking statements are based on current expectations and projections about future events.  The Group believes that current expectations and assumptions with respect to these forward-looking statements are reasonable.  However, because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the Group's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

 

The following details relate to FBD's ordinary shares of €0.60 each which are publicly traded:

 Listing

Euronext Dublin

UK Listing Authority

 Listing Category

Premium

Premium (Equity)

 Trading Venue

Euronext Dublin

London Stock Exchange

 Market

Main Securities Market

Main Market

 ISIN

IE0003290289

IE0003290289

 Ticker

FBD.I or EG7.IR

FBH.L

 

 

OVERVIEW

The half year results for 2019 demonstrate solid underlying profitability and also benefit from the performance of investment markets, benign weather and prior year reserve releases. The profit before tax was €38.7m. We paid a dividend of €17.7m in May in respect of 2018 results.

 

Premium growth has not materialised as we operate in an increasingly competitive environment despite new business growth and high retention levels. We continue to focus on underwriting discipline and writing risks we know and understand.

 

The Group reported profit before tax of €38.7m (2018: €18.4m) including an underwriting profit of €29.2m (2018: €18.9m) and a gross written premium decrease of 1% to €189.7m (2018: €192.0m).

 

UNDERWRITING

                                          

Premium income

Gross written premium decreased €2.3m to €189.7m (2018: €192.0m). There were premium reductions in all channels with the exception of the broker channel which increased marginally.

 

New business volumes increased by 5% on the first half of 2018. Retention remains satisfactory as we leverage our loyal customer relationships and quality products.    

 

Reinsurance

The same reinsurance programme is in place in 2019 as 2018. This programme limits our exposure to adverse weather events. We have also achieved some modest reductions in reinsurance rates compared to 2018 reflecting the strong underwriting result improvement in more recent years.

 

Claims

 

Net claims incurred reduced by €10.4m to €94.3m (2018: €104.7) primarily due to benign weather in 2019 and prior year reserve releases of €8.8m compared to €6.0m in 2018. Positive prior year reserve releases are coming from accident years 2014 to 2018 while some stability has led to improved settlements.

 

The average frequency of claims has reduced because of the absence of a major storm and better underwriting of risk. Increased labour costs continue to drive increases in the cost of property claims.

 

The Motor Insurers Bureau of Ireland (MIBI) and Motor Insurers Insolvency Compensation Fund (MIICF) levies were €6.2m (2018: €2.1m). The 2018 figure is net of an over-accrual of €1.8m in 2017 due to the later than anticipated introduction of the MIICF levy.

 

Claims Environment

Limited progress has been made on reform of the claims environment. There continues to be a very high level of compensation paid for soft tissue injuries in Irish courts.  

 

FBD has contributed to a public and political debate advocating for claims reform in order to reduce the cost of insurance. FBD has submitted data for inclusion in the National Claims Information Database and for various government reports. FBD has assisted with the first stage of the Motor Third Party Liability (MTPL) insurance database and is in the process of implementing amended non-life renewal regulations which will provide additional information to customers on renewal of their insurance policies. While improving customer transparency none of these initiatives address the underlying issue of personal injury (and in particular, soft tissue) award levels.

 

However FBD notes certain progress on awards to date which we expect to have some limited impact on the cost of claims including:

·    The Court of Appeal overturned a number of cases citing the Byrne v Ardenhealth Company ruling. This case requires the exercising of reasonable care by individuals for their own personal safety and should assist businesses who are being held to unreasonably high standards in personal injury cases

·    The PIAB (Amendment) Act enacted in April attempts to address the non-co-operation of claimants and their legal representatives including failure to attend medical examinations, failure to cooperate with experts etc. Claimants can now incur penalties in respect of legal costs but only at the judge's discretion

·    The Civil Liability & Courts Act has been amended to reduce the timeframe of notification of a claim to a defendant from 2 months to 1 month. This will assist claims defence

·    A second amendment to the Civil Liability & Courts Act currently in the Oireachtas if passed would allow a claim to be dismissed if a claimant's affidavit is false or misleading. The claimant could also be referred to the DPP at the judge's discretion 

·    A section of the Judicial Council Bill was passed that will enable the establishment of a Personal Injuries Guidelines Committee to provide guidelines on soft tissue injuries. If this happens and if the guidelines are followed by judiciary we believe we would see award levels fall.

 

However further action is outstanding on other issues:

·    Use the new Bill to provide and implement guidelines to address the level of soft tissue injury awards

·    Reform the legal system to speed up litigation and reduce costs

·    Enshrine pre-action protocol in legislation to fast-track rejected Injuries Board awards through a more simplified litigation process

·    Establish a fully functioning integrated insurance fraud database to detect patterns of fraud

·    Make gross exaggeration an offence

·    Establish and resource a Garda fraud investigation unit.

 

In addition and on the other hand it should be noted that the Consumer Contracts Bill, currently before the Oireachtas, proposes a number of changes which will make it more difficult for insurers to repudiate exaggerated claims and consequently risks increasing the cost of claims further.

 

Weather, Claims Frequency and Large Claims

No weather events of note occurred in the period. 2019 weather to date has been benign compared to the major snow - Storm Emma in March 2018.


There was a modest reduction in Motor injury frequency in H1 2019. Employer's Liability claims frequency is being monitored closely as the upward trend continues driven largely by economic activity.

    

The average number of large casualty claims has been redefined as greater than €250k. At 30 June 2019 the number of such claims is in line with the average number reported in the previous 7 years. The average estimated cost after 6 months is lower than the average cost at the same period in the previous 7 years. It should be noted that the number and size of large claims can vary greatly from year to year and the cost of an individual large claim can vary significantly over the lifetime to settlement.

 

Expenses

The Group's expense ratio was 26.1% (2018: 25.3%). Other underwriting expenses were €43.7m, an increase of €1.8m. The increase is driven mainly by increased marketing spend in a highly competitive environment and increased salary costs.

 

GENERAL

FBD's Combined Operating Ratio ("COR") was 82.5% (2018: €88.6%) generating an underwriting profit of €29.2m (2018: €18.9m).

 

 

Investment Return

FBD's total annualised investment return for the first six months of 2019 was 4.3% (2018: -0.4%). Annualised investment income is 1.6% (2018: 0.3%) and annualised MTM 2.7% (2018: -0.7%) in Other Comprehensive Income (OCI). This reflects the rally in investment markets in early 2019 following losses in Q4 2018.  The positive MTM is driven by credit spreads narrowing on the corporate bond portfolio and reducing interest rates as lower-for-longer accommodative monetary policy is implemented by the ECB. Risk assets delivered positive returns partly as a result of geo-political stabilisation particularly between the US and China.

 

A large decrease in the discount rate has not impacted the pension surplus significantly as the assets and liabilities are reasonably well matched. This is a positive result of the structural changes made to the pension scheme in 2015 and 2016.

 

Financial Services

 

The Group's financial services operations returned a profit before tax of €2.1m for the period (2018: €1.4m). Revenue increased by €0.2m while costs decreased from €3.2m to €2.7m as a result of lower legal expenses in FBD Holdings plc.

 

Profit per share

The diluted profit per share was 95 cent per ordinary share, compared to 44 cent per ordinary share in 2018. 

 

Dividend

The shareholders approved the final dividend proposed by the Board for 2018 at the Annual General Meeting on 10 May 2019 and a dividend of €17.7m was paid on 17 May 2019 in respect of 2018 results.

 

The Group dividend policy targets an annual pay-out range of 20% to 50% of full year profits when appropriate given the inherent cyclicality of all insurance businesses.

 

STATEMENT OF FINANCIAL POSITION

 

Capital position

Ordinary shareholders' funds at 30 June 2019 amounted to €311.7m (December 2018: €283.5m). The increase in shareholders' funds is driven by the following:

·    Profit after tax for the half year of €33.8m

·    Mark to market gains on Available for Sale investments of €12.3m after tax

·    €17.7m reduction due to the dividend and an increase of €1.2m due to share based payment

·    A decrease in the defined benefit pension scheme surplus of €1.4m

Net assets per ordinary share are 896 cent, compared to 818 cent per share at 31 December 2018.

 

 

Investment Allocation

The Group has a conservative investment policy that ensures that its technical reserves are matched by cash and fixed interest securities of similar nature and duration. FBD has increased its allocation to Risk Assets modestly over the first 6 months of 2019 in line with the company's Strategic Asset Allocation and increases in shareholders' funds.

 

The allocation of the Group's underwriting investment assets is as follows:

 

 

30  June 2019

31 December 2018

 

€m

%

€m

%

Corporate bonds

507

47%

498

48%

Government bonds

304

28%

297

29%

Deposits and cash

152

14%

146

14%

Equities

31

3%

24

2%

Investment property

18

2%

18

2%

Other risk assets

59

6%

55

5%

 

1,071

100%

1,038

100%

 

Solvency

The audited Solvency Capital Ratio (SCR) of 165% at 31 December 2018 as reported in the Solvency and Financial Condition Report.  The Group is committed to maintaining a strong solvency position.

 

Risks and uncertainties

The principal risks and uncertainties faced by the Group are outlined on pages 18-24 of the Group's Annual Financial Statements for the year ended 31 December 2018 and remain unchanged for the next six months.

 

OUTLOOK

 

The half year results for 2019 are strong driven by disciplined underwriting, a rebound in investment markets, a good winter and prior year reserve releases. Despite new business growth, overall premium levels are down modestly reflecting a difficult competitive environment including aggressive competition and sustained price pressure.

 

The Group has a clear strategy that will deliver sustainable growth in book value through a customer centred approach, underwriting discipline and careful risk selection. The combined operating ratio of 82.5% reflects that underwriting discipline. 

 

The claims environment continues to moderate although inflation is still present. We continue to call for substantive reform in the level of personal injury awards and a rebalancing of personal responsibility vis à vis the impossible standards small businesses are held to in injury cases. FBD continues to tackle fraud and exaggerated claims to help but soft-tissue injury awards must come down for real progress to be made.  

 

Brexit uncertainty continues and we view a hard Brexit as negative for Ireland's farm and agri industry particularly and rural Ireland generally. Our business is planning for some limited operational impacts that may arise to support the continuing needs of our customers.

 

The Group targets a COR in the low 90's (absent exceptional weather) and a low double-digit return on equity (ROE) through the cycle. Given the strong performance in the first six months of this year underpinned by a number of one-offs and assuming a more normalised second half, the Group expects that the full year 2019 ROE will be mid to high teens.

 

FBD HOLDINGS PLC

Condensed Consolidated Income Statement

For the half year ended 30 June 2019

 

 

 

 

 

Notes

Half year
ended
30/06/19

(unaudited)

 

Half year

ended

30/06/18

(unaudited)

 

Year ended 31/12/18                 (audited)

 

 

€000s

 

€000s

 

€000s

Revenue

3

202,062

 

204,261

 

396,003

Income

 

 

 

 

 

 

Gross premium written

 

189,716

 

191,985

 

371,504

Reinsurance premiums

 

(16,104)

 

(20,260)

 

(36,735)

 

 

 

 

 

 

 

Net premium written

 

173,612

 

171,725

 

334,769

Change in provision for unearned premiums

 

(6,405)

 

(6,215)

 

3,134

 

 

 

 

 

 

 

Net premium earned

 

167,207

 

165,510

 

337,903

Net investment return

 

8,627

 

1,297

 

2,482

Financial services income - Revenue from contracts with customers                 

 

1,905

 

2,026

 

3,754

                                               - Other financial services income

 

2,873

 

2,522

 

5,282

 

 

 

 

 

 

 

Total income

 

180,612

 

171,355

 

349,421

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Net claims and benefits

 

(88,139)

 

(102,596)

 

(183,367)

Other underwriting expenses

4

(43,699)

 

(41,873)

 

(84,054)

Movement in other provisions

 

(6,155)

 

(2,107)

 

(7,064)

Financial services and other costs

 

(2,673)

 

(3,163)

 

(6,548)

Revaluation of property, plant and equipment

 

-

 

-

 

(1,034)

Finance costs

 

(1,285)

 

(3,193)

 

(5,453)

Exceptional loss on purchase and cancellation of convertible debt

 

-

 

-

 

(11,836)

 

 

 

 

 

 

 

Profit before taxation

 

38,661

 

18,423

 

50,065

Income taxation charge

 

(4,860)

 

(2,308)

 

(7,682)

 

 

 

 

 

 

 

Profit for the period

 

33,801

 

16,115

 

42,383

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Equity holders of the parent

 

33,801

 

16,115

 

42,383

 

 

 

 

 

 

 

 

 

 

FBD HOLDINGS PLC

Condensed Consolidated Income Statement

For the half year ended 30 June 2019

 

 

 

 

 

 

Notes

Half year
ended
30/06/19

(unaudited)

 

Half year

ended 30/06/18

(unaudited)

 

 

Year ended 31/12/18 (audited)

Earnings per share

 

 

 

Cent

 

Cent

 

Cent

Basic

7

97

 

46

 

122

Diluted

7

951

 

442

 

1123

 

1 Diluted earnings per share reflects the potential vesting of the share based payments.

2 Diluted earnings per share reflects the potential conversion of the convertible debt and share based payments.

3 Diluted earnings per share reflects the potential conversion of the convertible debt up until the date of purchase and cancellation of the convertible debt and the potential vesting of the share based payments.

 

 

 

 

FBD HOLDINGS PLC

Condensed Consolidated Statement of Comprehensive Income

For the half year ended 30 June 2019

 

 

 

 

Half year

ended 30/06/19

(unaudited)

 

 

 

Half year ended 30/06/18

(unaudited)

 

 

 

Year ended 31/12/18 (audited)

 

€000s

 

€000s

 

€000s

 

 

 

 

 

 

Profit for the period

33,801

 

16,115

 

42,383

 

 

 

 

 

 

Items that will or may be reclassified to profit or loss in subsequent periods:

 

 

 

 

 

Net gain/(loss) on available for sale assets

14,007

 

(3,474)

 

(7,845)

Taxation (charge)/credit relating to items that will or may be reclassified to profit or loss in subsequent periods

 

(1,751)

 

 

434

 

 

981

 

Items that will not be reclassified to profit or loss in subsequent periods:

 

 

 

 

 

Actuarial (loss)/gain on retirement benefit obligations

(1,544)

 

1,002

 

3,232

Taxation credit/(charge) relating to items not to be reclassified in subsequent periods

 

193

 

 

(125)

 

 

(404)

 

 

 

 

 

 

Other comprehensive income/(expense) after taxation

10,905

 

(2,163)

 

(4,036)

 

 

 

 

 

 

Total comprehensive income for the period

44,706

 

13,952

 

38,347

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the parent

44,706

 

13,952

 

38,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FBD HOLDINGS PLC

Condensed Consolidated Statement of Financial Position

At 30 June 2019

 

 

 

 

 

 

 

 

 

ASSETS

 

30/06/19

(unaudited)

 

30/06/18

(unaudited)

 

31/12/18

(audited)

 

Notes

€000s

 

€000s

 

€000s

 

 

 

 

 

 

 

Property, plant and equipment

 

67,297

 

66,093

 

68,492

 

 

 

 

 

 

 

Intangible assets

 

1,159

 

-

 

355

 

 

 

 

 

 

 

Investment property

 

17,500

 

18,000

 

18,310

 

 

 

 

 

 

 

Right of use asset

 

6,500

 

-

 

-

 

 

 

 

 

 

 

Loans

 

598

 

574

 

615

 

 

 

 

 

 

 

Deferred taxation asset

 

1,224

 

4,167

 

1,081

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

Available for sale investments

 

811,807

 

744,224

 

795,717

Investments held for trading

 

89,079

 

81,228

 

78,778

Deposits with banks

 

50,000

 

178,286

 

70,998

 

 

 

 

 

 

 

 

 

950,886

 

1,003,738

 

945,493

 

 

 

 

 

 

 

Reinsurance assets

 

 

 

 

 

 

Provision for unearned premiums

 

2

 

6

 

6

Claims outstanding

 

78,432

 

93,326

 

80,919

 

 

 

 

 

 

 

 

 

78,434

 

93,332

 

80,925

 

 

 

 

 

 

 

Retirement benefit surplus

 

11,400

 

10,900

 

12,944

 

 

 

 

 

 

 

Current taxation asset

 

3,949

 

3,934

 

3,949

 

 

 

 

 

 

 

Deferred acquisition costs

 

32,356

 

31,621

 

31,956

 

 

 

 

 

 

 

Other receivables

 

74,058

 

68,518

 

62,868

 

 

 

 

 

 

 

Cash and cash equivalents

 

106,195

 

35,572

 

77,639

 

 

 

 

 

 

 

Total assets

 

1,351,556

 

1,336,449

 

1,304,627

 

 

 

 

 

 

 

 

 

 

FBD HOLDINGS PLC

Condensed Consolidated Statement of Financial Position (continued)

At 30 June 2019

 

 

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

30/06/19

(unaudited)

 

30/06/18

(unaudited)

 

31/12/18 (audited)

 

Notes

€000s

 

€000s

 

€000s

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Ordinary share capital

6

21,409

 

21,409

 

21,409

Capital reserves

 

21,608

 

20,225

 

20,430

Retained earnings

 

268,638

 

217,609

 

241,645

Other reserves

 

-

 

18,232

 

-

 

 

 

 

 

 

 

Equity attributable to ordinary equity holders of the parent

 

311,655

 

277,475

 

283,484

Preference share capital

 

2,923

 

2,923

 

2,923

 

 

 

 

 

 

 

Total Equity

 

314,578

 

280,398

 

286,407

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Insurance contract liabilities

 

 

 

 

 

 

Provision for unearned premiums

 

189,276

 

192,225

 

182,875

Claims outstanding

 

731,442

 

765,091

 

738,025

 

 

 

 

 

 

 

 

 

920,718

 

957,316

 

920,900

 

 

 

 

 

 

 

Other provisions

 

11,945

 

7,331

 

7,738

 

 

 

 

 

 

 

Convertible debt

 

-

 

53,268

 

-

 

 

 

 

 

 

 

Subordinated debt

 

49,455

 

-

 

49,426

 

 

 

 

 

 

 

Lease liability

 

6,558

 

-

 

-

 

 

 

 

 

 

 

Deferred taxation liability

 

5,138

 

4,543

 

3,610

 

 

 

 

 

 

 

Current taxation liability

 

6,895

 

-

 

3,312

 

 

 

 

 

 

 

Payables

 

36,269

 

33,593

 

33,234

 

 

 

 

 

 

 

Total liabilities

 

1,036,978

 

1,056,051

 

1,018,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

1,351,556

 

1,336,449

 

1,304,627

                                                  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FBD HOLDINGS PLC

Condensed Consolidated Statement of Cash Flows

For the half year ended 30 June 2019

 

 

 

Half year
ended
30/06/19

(unaudited)

 

 

Half year ended 30/06/18

(unaudited)

 

 

Year

ended 31/12/18 (audited)

 

 

€000s

 

€000s

 

€000s

Cash flows from operating activities

 

 

 

 

 

 

Profit before taxation

 

38,661

 

18,423

 

50,065

Adjustments for:

 

 

 

 

 

 

(Profit)/Loss on investments held for trading

 

(5,942)

 

1,960

 

4,411

Exceptional loss on purchase and cancellation of convertible bond

 

-

 

-

 

11,836

Loss on investments available for sale

 

2,153

 

2,368

 

4,825

Interest and dividend income

 

(4,165)

 

(3,675)

 

(12,072)

Depreciation/amortisation of property, plant and equipment and intangible assets

 

 

4,955

 

         

6,125

 

 

11,682

Depreciation of right of use asset

 

386

 

-

 

-

Share-based payment expense

 

1,177

 

             499

 

704

Revaluation of investment property

 

810

 

-

 

(310)

Revaluation of property, plant and equipment

 

-

 

-

 

1,034

Increase/(decrease) in insurance contract liabilities

 

2,309

 

3,529

 

(20,480)

Increase in other provisions

 

4,207

 

684

 

1,091

Operating cash flows before movement in working capital

 

44,551

 

29,913

 

52,786

(Increase)/decrease in receivables and deferred acquisition costs

 

(13,382)

 

(6,927)

 

    3,390   

Increase in payables

 

4,316

 

5,994

 

7,883

Interest payments on convertible debt

 

-

 

(2,450)

 

(5,130)

Interest payments on subordinated debt

 

(1,250)

 

-

 

-

Lease obligation repayments and interest

 

(328)

 

-

 

-

Purchase of investments held for trading

 

(6,416)

 

(82,916)

 

(82,916)

Sale of investments held for trading

 

2,057

 

45,075

 

45,075

Cash generated from / (used in) operations

 

29,548

 

(11,311)

 

21,088

Interest and dividend income received

 

5,956

 

5,851

 

11,992

Income taxes paid

 

(1,450)

 

-

 

-

Net cash generated from operating activities

 

34,054

 

(5,460)

 

33,080

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of available for sale investments

 

(95,748)

 

(49,075)

 

(138,798)

Sale of available for sale investments

 

91,512

 

57,694

 

89,101

Purchase of property, plant and equipment

 

(3,709)

 

(3,967)

 

(13,003)

Sale of property, plant and equipment

 

-

 

-

 

90

Purchase of intangible assets

 

(855)

 

-

 

(399)

Decrease in loans and advances

 

17

 

107

 

66

Decrease in deposits invested with banks

 

20,998

 

17,699

 

124,987

Net cash generated from investing activities

 

12,215

 

22,458

 

62,044

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Ordinary and preference dividends paid

 

(17,713)

 

(8,602)

 

(8,602)

Purchase and cancellation of convertible bond

 

-

 

-

 

(86,059)

Proceeds from issue of subordinated debt

 

-

 

-

 

50,000

Net cash used in financing activities

 

(17,713)

 

(8,602)

 

(44,661)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

28,556

 

8,396

 

50,463

Cash and cash equivalents at the beginning of the period

 

77,639

 

27,176

 

27,176

Cash and cash equivalents at the end of the period

 

106,195

 

35,572

 

77,639

 

 

FBD HOLDINGS PLC

Condensed Consolidated Statement of Changes in Equity (UNAUDITED)

For the half year ended 30 June 2019

 

 

Called up

Capital

Retained

Other

Attributable to

Preference

Total

 

share capital presented as equity

Reserves

 

 

earnings

Reserves

Ordinary shareholders

share capital

equity

 

€000s

€000s

€000s

€000s

€000s

€000s

€000s

 

 

 

 

 

 

 

 

Balance at 1 January 2019

21,409

20,430

           241,645

             -

                              283,484

2,923

286,407

 

 

 

 

 

 

 

 

Profit after taxation

-

-

            33,801

-

33,801

-

33,801

 

 

 

 

 

 

 

 

Other comprehensive income

-

-

10,905

-

10,905

-

10,905

 

 

21,409

 

20,430

 

286,351

 

-

 

328,190

 

2,923

 

331,113

 

 

 

 

 

 

 

 

Dividends paid and approved on ordinary and

preference shares

-

-

(17,713)

-

(17,713)

-

(17,713)

 

 

 

 

 

 

 

 

Recognition of share based payments

-

1,178

-

-

1,178

-

1,178

 

 

 

 

 

 

 

 

 

Balance at 30 June 2019

 

21,409

 

21,608

 

268,638

 

-

 

311,655

 

2,923

 

314,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2018

21,409

19,726

212,259

18,232

271,626

2,923

274,549

 

 

 

 

 

 

 

 

Profit after taxation

-

-

16,115

-

16,115

-

16,115

 

 

 

 

 

 

 

 

Other comprehensive expense

-

-

(2,163)

-

(2,163)

-

(2,163)

 

 

 

 

 

 

 

 

 

21,409

19,726

226,211

18,232

285,578

2,923

288,501

 

 

 

 

 

 

 

 

Dividends paid and approved on ordinary and

preference shares

-

-

(8,602)

-

(8,602)

-

(8,602)

 

 

 

 

 

 

 

 

Recognition of share based payments

-

499

-

-

499

-

499

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

21,409

 

20,225

 

217,609

 

18,232

 

277,475

 

2,923

 

280,398

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 1 Statutory information

 

The half yearly financial information is considered non-statutory financial statements for the purposes of the Companies Act 2014 and in compliance with section 340(4) of that Act we state that:

 

•     the financial information for the half year to 30 June 2019 does not constitute the statutory financial statements of the company;

•     the statutory financial statements for the financial year ended 31 December 2018 have been annexed to the annual return and delivered to the Registrar;

•     the statutory auditors of the company have made a report under section 391 Companies Act 2014 in respect of the statutory financial statements for year ended 31 December 2018; and

•     the matters referred to in the statutory auditors' report were unqualified, and did not include a reference to any matters to which the statutory auditors drew attention by way of  emphasis without qualifying the report.

This half yearly financial report has not been audited but has been reviewed by the auditors of the Company.

 

Note 2 - Accounting policies

 

Basis of preparation

The annual financial statements of FBD Holdings plc are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union.

 

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for a period of not less than twelve months from the date of this report.  Accordingly, they continue to adopt the going concern basis of accounting in preparing the condensed financial statements.

 

Consistency of accounting policy

The accounting policies and methods of computation used by the Group to prepare the interim financial statements for the six month period ended 30 June 2019 are the same as those used to prepare the Group Annual Report for the year ended 31 December 2018 except as described below. 

 

Standards adopted in the period

 

The Group applied a number of new or amended standards issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2019.

·      IFRS 16 Leases

·      IFRIC 23 Uncertainty over Income Tax Treatments

·      Amendments to IAS 19 Employee Benefits

The adoption of these standards has not had a material impact on the Financial Statements of the Group. Further detail with respect to IFRS 16 Leases is included below.

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

IFRS 16 Leases

IFRS 16 Leases became effective on 1 January 2019 and was adopted by the Group on that date. The Group has applied the modified retrospective approach and have not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard.

 

On adoption of IFRS 16, the Group recognised a lease liability and a right of use asset for each of the leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. All leases are property leases.

 

The lease obligations were measured at the present value of the remaining lease payments, discounted using the Group's Incremental Borrowing Rate (IBR) as of 1 January 2019. The weighted average IBR applied to the lease liabilities on 1 January 2019 was 4.41%.

 

The adjustments recognised on adoption of IFRS 16 from the date of initial application are shown below:

 

Operating lease commitments disclosed as at 31 December 2018                                                    €9.6m

Discounted using the Group's incremental borrowing rate at the date of initial application          €7.1m

Less short term leases recognised on a straight-line basis as expense                                               (€0.2m)

Lease liability recognised as at 1 January 2019                                                                                         €6.9m

 

The right of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement of Financial Position as at 31 December 2018. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

 

The Group has elected to apply the practical expedient permitted by the standard to recognise operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases. The Group has also elected to apply the practical expedient to use hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

 

The adoption of IFRS 16 affected the following items on the Statement of Financial Position on 1 January 2019:

Right of use asset                           €6.9m

Lease liability                                  €6.9m

 

The adoption of IFRS 16 did not have a material impact on the key metrics or alternative performance measures (APMs) of the Group.

 

Standards and interpretations not yet effective

 

IFRS 17             Insurance Contracts1

IFRS 9               Financial Instruments2

1 Effective for annual periods on or after 1 January 2022, with earlier application permitted.

2 Consolidated financial statements only. Effective for annual periods on or after 1 January 2022, with earlier application permitted.

 

 

 

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

 

IFRS 17 Insurance Contracts

IFRS 17 Insurance Contracts is effective for annual periods beginning on or after 1 January 2022.

 

IFRS 17 is expected to have a material impact on the Consolidated Financial Statements of the Group. There is a project team in place and training has been provided on the impact of the new standard. The Groups implementation programme is progressing in line with expectations.

 

IFRS 9 Financial Instruments in respect of the Consolidated Financial Statements is being considered as part of the project for the adoption of IFRS 17 Insurance Contracts.

 

Critical accounting estimates and judgements in applying accounting policies

The critical accounting estimates and judgements used by the Group in applying accounting policies are the same as those used to prepare the Group Annual Financial Statements for the year ended 31 December 2018.  While there have been some changes in estimates of amounts in the current financial period these changes do not have a significant impact on the results for the period.

 

Note 3 - Segmental information

 

(a)        Operating segments

 

The principal activities of the Group are underwriting of general insurance business and financial services. For management purposes, the Group is organised in two operating segments - underwriting and financial services.  The profit earned by each segment is reported to the chief operating decision maker, the Group Chief Executive, for the purpose of resource allocation and assessment of segmental performance.  Central administration costs and Directors' salaries are allocated based on actual activity. Restructuring costs and income taxation are direct costs of each segment. Discrete financial information is prepared and reviewed on a regular basis for these two segments. The accounting policies of the reportable segments are the same as the Group accounting policies. There has been no material change to the assets by reportable segment from the disclosure in the 2018 Annual Report.

 

 

 

 

 

 

 

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

 

The following is an analysis of the Group's revenue and results from continuing operations by reportable segments:

 

 

Half year ended 30/06/2019

 

Underwriting

Financial
Services

 

Total

 

€000s

€000s

€000s

 

 

 

 

Revenue 

197,284

4,778

202,062

 

 

 

 

Result before taxation

36,556

2,105

38,661

Income taxation charge

(4,570)

(290)

(4,860)

 

 

 

 

Result after taxation

31,986

1,815

33,801

 

 

Half year ended 30/06/2018


 

Underwriting

 

Financial
Services

 

 

Total

 

€000s

€000s

€000s

 

 

 

 

Revenue

199,713

4,548

204,261

 

 

 

 

Profit before taxation

17,037

1,386

18,423

Income taxation charge

(2,130)

(178)

(2,308)

 

 

 

 

Result after taxation

14,907

1,208

16,115

 

 

 

 

 

Year ended 31/12/2018


 

Underwriting

 

Financial
Services


 

Total

 

€000s

€000s

€000s

 

 

 

 

Revenue 

386,967

9,036

396,003

 

 

 

 

Profit before taxation

47,577

2,488

50,065

Income taxation charge

(7,165)

(517)

(7,682)

 

 

 

 

Result after taxation

40,412

1,971

42,383

 

 

(b)        Geographical segments

 

The Group's operations are located in Ireland.

 

 

 

 

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 4 - Underwriting result

 

 

Half year ended 30/06/19 (unaudited)

 

 

Half year

ended 30/06/18

(unaudited)

 

 

Year

ended 31/12/18

(audited)

 

€000s

 

€000s

 

€000s

 

 

 

 

 

 

Gross premium written

189,716

 

191,985

 

371,504

 

 

 

 

 

 

 

 

 

 

 

 

Net premium earned

167,207

 

165,510

 

337,903

Net claims incurred

(88,139)

 

(102,596)

 

(183,367)

Motor Insurers Bureau of Ireland Levy

(6,155)

 

(2,107)

 

(7,064)

 

 

 

 

 

 

 

72,913

 

60,807

 

147,472

 

 

 

 

 

 

Gross management expenses

(43,129)

 

(41,867)

 

(84,220)

Deferred acquisition costs

400

 

254

 

590

Reinsurers' share of expenses

1,227

 

1,492

 

2,876

Broker commissions payable

(2,197)

 

(1,752)

 

(3,300)

 

 

 

 

 

 

Other Underwriting expenses

(43,699)

 

(41,873)

 

(84,054)

 

 

 

 

 

 

Underwriting result

29,214

 

18,934

 

63,418

 

The Group's half yearly results are not subject to any significant impact arising from the seasonality of operations.

 

 

Note 5 - Dividends

 

 

Half Year ended 30/06/19

(unaudited)

 

Half Year ended 30/06/18

(unaudited)

 

Year

ended 31/12/18

(audited)

Paid:

€000s

 

€000s

 

    €000s

 

 

 

 

 

 

2018 dividend of 8.4 cent (2017: 8.4 cent) per share on 14% non-cumulative preference shares of €0.60 each

 

113

 

 

113

 

 

113

2018 dividend of 4.8 cent (2017: 4.8 cent) per share on 8% non-cumulative preference shares of €0.60 each

 

169

 

 

169

 

 

169

2018 final dividend of 50.0 cent (2017: 24.0 cent) per share on ordinary shares of €0.60 each

 

17,431

 

 

8,320

 

 

8,320

 

 

 

 

 

 

Total dividends paid

17,713

 

8,602

 

8,602

 

2018 dividend payments were approved by the shareholders at the Annual General Meeting on 10 May 2019 and paid on 17 May 2019.
 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 6 - Ordinary share capital

 

Half year ended 30/06/19 (unaudited)

 

Half year ended 30/06/18 (unaudited)

 

Year

ended 31/12/18

(audited)

 

Number

 

€000s

 

€000s

 

€000s

(i)  Ordinary shares of €0.60 each

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Authorised:

 

 

 

 

 

 

 

At beginning and end of period

51,326,000

 

30,796

 

30,796

 

30,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued and fully paid:

 

 

 

 

 

 

 

At beginning and end of period

35,461,206

 

21,277

 

21,277

 

21,277

 

 

 

 

 

 

 

 

(ii)  'A' Ordinary shares of €0.01 each

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Authorised:

 

 

 

 

 

 

 

At beginning and end of period

120,000,000

 

1,200

 

1,200

 

1,200

 

 

 

 

 

 

 

 

Issued and fully paid:

 

 

 

 

 

 

 

At beginning and end of period

13,169,428

 

132

 

132

 

132

 

 

 

 

 

 

 

 

Total Ordinary Share Capital

 

 

21,409

 

21,409

 

21,409

 

The number of ordinary shares of €0.60 each held as treasury shares at 30 June 2019 was 598,742. At 31 December 2018 the number held was 795,005.

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 7 - Earnings per €0.60 ordinary share

 

The calculation of the basic and diluted earnings per share attributable to the ordinary shareholders is based on the following data:

 

Half year

ended
30/06/19 (unaudited)

 

Half year

ended 30/06/18

(unaudited)

 

Year

ended 31/12/18 (audited)

 

€000s

 

€000s

 

€000s

Earnings

 

 

 

 

 

Profit for the period for the purpose of basic earnings

 

 

 

 

 

per share

33,801

 

16,115

 

42,383

 

 

 

 

 

 

Profit for the period for the purpose of diluted earnings

 

 

 

 

 

per share

33,801

 

18,909

 

46,639

 

 

 

 

 

 

Number of shares

 

 

 

 

 

Weighted average number of ordinary shares for

 

 

 

 

 

the purpose of basic earnings per share (excludes treasury shares)

 

34,770,837

 

 

34,666,201

 

 

34,666,201

 

 

 

 

 

 

Weighted average number of ordinary shares for

 

 

 

 

 

the purpose of diluted earnings per share (excludes treasury shares)

 

35,436,482

 

 

43,329,630

 

 

41,507,329

 

 

 

 

 

 

 

 

 

 

 

 

 

Cent

 

Cent

 

Cent

Basic earnings per share

97

 

46

 

122

Diluted earnings per share

951

 

442

 

1123

 

1 Diluted earnings per share reflects the potential vesting of the share based payments.

2 Diluted earnings per share reflects the potential conversion of the convertible debt and share based payments.

3 Diluted earnings per share reflects the potential conversion of the convertible debt up until the date of purchase and cancellation of the convertible debt and the potential vesting of the share based payments.

 

The 'A' ordinary shares of €0.01 each that are in issue have no impact on the earnings per share calculation.

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 8 - Retirement Benefit Surplus

The Group operates a funded defined benefit retirement scheme for qualifying employees that is closed to future accrual and new entrants.

The amounts recognised in the Statement of Financial Position are as follows:

 

 

30/06/19

 

30/06/18

 

31/12/18

 

(unaudited)

 

(unaudited)

 

(audited)

 

€000s

 

€000s

 

€000s

 

 

 

 

 

 

Fair value of plan assets

103,400

 

97,900

 

96,378

Present value of defined benefit obligation

(92,000)

 

(87,000)

 

(83,434)

 

 

 

 

 

 

Net retirement benefit surplus

11,400

 

10,900

 

12,944

 

 

Note 9 - Financial Instruments and Fair Value Measurement

(a)     Financial Instruments

 

30/06/19

 

30/06/18

 

31/12/18

 

(unaudited)

 

(unaudited)

 

(audited)

 

€000s

 

€000s

 

€000s

Financial Assets

 

 

 

 

 

At amortised cost:

 

 

 

 

 

Deposits with banks

50,000

 

178,286

 

70,998

 

 

 

 

 

 

At fair value:

 

 

 

 

 

Investments held for trading

89,079

 

81,228

 

78,778

Available for sale investments

811,807

 

744,224

 

795,717

 

 

 

 

 

 

At cost:

 

 

 

 

 

Loans

598

 

574

 

615

Other receivables

74,058

 

68,518

 

62,868

Cash and cash equivalents

106,195

 

35,572

 

77,639

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities

 

 

 

 

 

At amortised cost:

 

 

 

 

 

Convertible debt

-

 

53,268

 

-

Subordinated debt

49,455

 

-

 

49,426

Lease liability

6,558

 

-

 

-

 

 

 

 

 

 

At cost:

 

 

 

 

 

Payables

36,269

 

33,593

 

33,234

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 9 - Financial Instruments and Fair Value Measurement (continued)

(b)    Fair value measurement

The following table compares the fair value of financial assets and liabilities with their carrying values:

 

 

30/06/19

30/06/19

30/06/18

30/06/18

31/12/18

31/12/18

 

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(audited)

(audited)

 

Fair
value

Carrying value

Fair
value

Carrying value

Fair
value

Carrying value

 

€000s

€000s

€000s

€000s

€000s

€000s

Financial assets

 

 

 

 

 

 

Loans

717

598

689

574

738

615

Financial investments

950,886

950,886

1,003,738

1,003,738

945,493

945,493

Financial liabilities

 

 

 

 

 

 

Convertible debt

-

-

66,406

53,268

-

-

Subordinated debt

52,105

49,455

-

-

49,817

49,426

Lease liability

6,558

6,558

-

-

-

-

 

The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of their fair value:

•     Other receivables

•     Cash and cash equivalents

•     Payables 

The following tables provide an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

•     Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

§ Investments held for trading and available for sale investments - quoted debt securities are fair valued using latest available closing bid price.  UCITS funds are valued using the latest available closing NAV of the fund. 

§ Deposits with banks and cash and cash equivalents are valued at the placement value.

 

•     Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

§ Investment property and property held for own use were fair valued by independent external professional valuers, CB Richard Ellis, Valuation Surveyors at 31 December 2018 (refer to note 14 and note 16 in the Group Annual Report for year ended 31 December 2018). An adjustment has been made to the investment property to reflect updated market data since 31 December 2018. 

§ Subordinated debt is valued using a discounted cash flow methodology using a discount rate based on observable market yields for a similar instrument.  

§ Lease liability is valued using a discounted cash flow methodology using market interest rates.

§ Loans are fair valued using market interest rate.

 

•     Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).  Among the valuation techniques used are cost, net asset or net book value or the net present value of future cash flows based on operating projections.

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 9 - Financial Instruments and Fair Value Measurement (continued)

 

 

30 June 2019 (unaudited)

Level 1

Level 2

Level 3

Total

 

€000s

€000s

€000s

€000s

Assets

 

 

 

 

Loans

-

717

-

717

Investment property

-

17,500

-

17,500

Property held for own use

-

17,184

-

17,184

Financial assets

 

 

 

 

Investments held for trading - quoted shares

52

-

-

52

Investments held for trading - UCIT Funds

89,027

-

-

89,027

AFS1 investments - quoted debt securities

811,184

-

-

811,184

AFS1 investments - unquoted investments

-

-

623

623

Deposits with banks

50,000

-

-

50,000

Cash and cash equivalents

106,195

-

-

106,195

 

 

 

 

 

Total assets

1,056,458

35,401

623

1,092,482

 

Liabilities

 

 

 

 

Subordinated debt

-

52,105

-

52,105

Lease liability

-

6,558

-

6,558

 

 

 

 

 

Total liabilities

-

58,663

-

58,663

1Available for sale

 

 

30 June 2018 (unaudited)

Level 1

Level 2

Level 3

Total

 

€000s

€000s

€000s

€000s

Assets

 

 

 

 

Loans

-

689

-

689

Investment property

-

18,000

-

18,000

Property held for own use

-

14,754

-

14,754

Financial assets

 

 

 

 

Investments held for trading - quoted shares

292

-

-

292

Investments held for trading - UCIT Funds

80,936

-

-

80,936

AFS1 investments - quoted debt securities

743,380

-

-

743,380

AFS1 investments - unquoted investments

-

-

844

844

Deposits with banks

178,286

-

-

178,286

Cash and cash equivalents

35,572

-

-

35,572

 

 

 

 

 

Total assets

1,038,466

33,443

844

1,072,753

 

Liabilities

 

 

 

 

Convertible debt

-

66,406

-

66,406

 

 

 

 

 

Total liabilities

-

66,406

-

66,406

1Available for sale

 

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

Note 9 - Financial Instruments and Fair Value Measurement (continued)

 

 

 

 

 

 

 

31 December 2018 (audited)

Level 1

Level 2

Level 3

Total

 

€000s

€000s

€000s

€000s

Assets

 

 

 

 

Loans

-

738

-

738

Investment property

-

18,310

-

18,310

Property held for own use

-

17,185

-

17,185

Financial assets

 

 

 

 

Investments held for trading - quoted shares

262

-

-

262

Investments held for trading - UCITs

78,516

-

-

78,516

AFS1 investments - quoted debt securities

795,094

-

-

795,094

AFS1 investments - unquoted investments

-

-

623

623

Deposits with banks

70,998

-

-

70,998

Cash and cash equivalents

77,639

-

-

77,639

 

 

 

 

 

Total assets

1,022,509

36,233

623

1,059,365

 

 

 

 

 

Liabilities

 

 

 

 

Subordinated debt

-

49,817

-

49,817

 

 

 

 

 

Total liabilities

-

49,817

-

49,817

1Available for sale

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

A reconciliation of Level 3 fair value measurement of financial assets is shown in the table below

 

 

30/06/19

30/06/18

31/12/18

 

(unaudited)

(unaudited)

(audited)

 

€000s

€000s

€000s

 

 

 

 

Opening balance Level 3 financial assets

623

844

844

Additions

-

-

-

Disposals

-

-

(250)

Unrealised gains recognised in Consolidated Income Statement

-

-

29

 

 

 

 

Closing balance Level 3 financial assets

623

844

623

 

 

Available for sale investments grouped into Level 3 comprise unquoted securities and consist of a number of small investments.  The values attributable to these investments are derived from a number of valuation techniques including the net present value of future cash flows based on operating projections.  A change in one or more of these inputs could have an impact on valuations.  The maximum exposure the Group has in relation to Level 3 valued financial assets at 30 June 2019 is €623,000 (30 June 2018: €844,000; 31 December 2018: €623,000).

 

 

Note 10 - Transactions with related parties

 

For the purposes of the disclosure requirements of IAS 24, the term "key management personnel" (i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the Group) comprises the Board of Directors and Company Secretary of FBD Holdings plc and the members of the Executive Management Team.  Full disclosure in relation to the compensation of the Board of Directors and details of Directors' share options are provided in the Report on Directors' Remuneration in the 2018 Annual Report. An analysis of share-based payments to key management personnel is also included in Note 40 of the 2018 Annual Report.

 

Note 11 - Contingent liabilities and contingent assets

 

There were no contingent liabilities or contingent assets at 30 June 2019, 30 June 2018 or 31 December 2018.

 

Note 12 - Information

 

This half yearly report and the Annual Report for the year ended 31 December 2018 are available on the Company's website at www.fbdgroup.com.

 

Note 13 - Approval of Half Yearly Report

 

The half yearly report was approved by the Board of Directors of FBD Holdings plc on 31 July 2019.

 

 

 

 

 

 

FBD HOLDINGS PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2019

 

RESPONSIBILITY STATEMENT

 

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Central Bank of Ireland and with IAS 34, Interim Financial Reporting as adopted by the European Union.

 

We confirm that to the best of our knowledge:

a)     the Group condensed set of interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;

b)    the interim management report includes a fair review of the important events that have occurred during the first six months of the financial year, and their impact on the condensed set of interim financial statements and the principal risks and uncertainties for the remaining six months of the financial year;

c)     the interim management report includes a fair review of related party transactions that have occurred during the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period, and any changes in the related parties' transactions described in the last Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.

 

 

 

On behalf of the Board

 

 

 

 

 

Liam Herlihy                                                   Fiona Muldoon    

Chairman                                                         Group Chief Executive

 

31 July 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX

ALTERNATIVE PERFORMANCE MEASURES (APM's)

 

The Group uses the following alternative performance measures: Loss ratio, expense ratio, combined operating ratio, annualised investment return, net asset value per share, return on equity and gross written premium.

 

Loss ratio (LR), expense ratio (ER) and combined operating ratio (COR) are widely used as a performance measure by insurers, and give users of the financial statements an understanding of the underwriting performance of the entity. Investment return is used widely as a performance measure to give users of financial statements an understanding of the performance of an entities investment portfolio. Net asset value per share (NAV) is a widely used performance measure which provides the users of the financial statements the book value per share. Return on equity (ROE) is also a widely used profitability ratio that measures an entity's ability to generate profits from its shareholder investments. Gross written premium refers to the revenue of an insurance company and is widely used across the general insurance industry.  

 

The calculation of the APM's is based on the following data:

                                                                                                                                                                                                                         

 

Half year

ended
30/06/19 (unaudited)

 

Half year

ended
30/06/18 (unaudited)

 

Year

ended 31/12/18 (audited)

 

€000s

 

€000s

 

€000s

Loss ratio

 

 

 

 

 

Net claims and benefits

88,139

 

102,596

 

183,367

Movement in other provisions

6,155

 

2,107

 

7,064

Total claims incurred

94,294

 

104,703

 

190,431

Net premium earned

167,207

 

165,510

 

337,903

Loss ratio (Total claims incurred/Net premium earned)

56.4%

 

63.3%

 

56.3%

 

 

 

 

 

 

Expense ratio

 

 

 

 

 

Other underwriting expenses

43,699

 

41,873

 

84,054

Net premium earned

167,207

 

165,510

 

337,903

Expense ratio (Underwriting expenses/Net premium earned)

26.1%

 

25.3%

 

24.9%

 

 

 

 

 

 

Combined operating ratio

%

 

%

 

%

Loss ratio

56.4%

 

63.3%

 

56.3%

Expense ratio

26.1%

 

25.3%

 

24.9%

Combined operating ratio (Loss ratio + Expense ratio)

82.5%

 

88.6%

 

81.2%

 

 

 

 

 

 

Annualised investment return

€000s

 

€000s

 

€000s

Investment return recognised in consolidated income statement

 

8,627

 

 

1,297

 

 

2,482

Investment return recognised in statement of comprehensive income

 

14,007

 

 

(3,474)

 

 

(7,845)

Total investment return

22,634

 

(2,177)

 

(5,363)

 

 

 

 

 

 

Average underwriting investment assets        

1,061,025

 

1,063,672

 

1,047,711

Investment return (Total investment return/Average underwriting investment assets)

 

4.3%1

 

 

(0.4%)1

 

 

(0.5%)

 

 

 

 

 

 

 

 

 

 

 

 

1Annualised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Half year

ended
30/06/19 (unaudited)

 

Half year

ended
30/06/18 (unaudited)

 

Year

ended 31/12/18 (audited)

Net asset value per share (NAV per share)

€000s

 

€000s

 

€000s

Shareholders' funds - equity interests

311,655

 

277,475

 

283,484

 

 

 

 

 

 

Number of shares

 

 

 

 

 

Weighted average number of ordinary shares

34,770,837

 

34,666,201

 

34,666,201

 

 

 

 

 

 

 

Cent

 

Cent

 

Cent

Net asset value per share (Shareholders funds /Weighted average number of ordinary shares)

 

896

 

 

800

 

 

818

 

 

 

 

 

 

Return on Equity

€000s

 

€000s

 

€000s

Weighted average equity attributable to ordinary equity holders of the parent

 

297,570

 

 

274,551

 

 

277,555

 

Result for the period

33,801

 

16,115

 

42,383

 

Return on equity (Result for the period/Weighted average equity attributable to ordinary equity holders of the parent)

 

 

23%1

 

 

 

12%1

 

 

 

15%

 

Gross premium written: The total premium on insurance underwritten by an insurer or reinsurer
during a specified period, before deduction of reinsurance premium.

 

1Annualised

 

 

 

 

 

 

 

 

 

 

 

 

Independent review report to FBD Holdings plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed FBD Holdings plc's condensed consolidated interim financial statement (the "interim financial statements") in half-yearly report of FBD Holdings plc for the six month period ended 30 June 2019.  Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

What we have reviewed

The interim financial statements, comprise:

·           the condensed consolidated statement of financial position as at 30 June 2019;

·           the condensed consolidated income statement for the period then ended;

·           the condensed consolidated statement of comprehensive income for the period then ended;

·           the condensed consolidated statement of cash flows for the period then ended;

·           the condensed consolidated statement of changes in equity for the period then ended; and

·           the explanatory notes to the interim financial statements.

The interim financial statements included in the half-yearly report have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union and the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The half-yearly report, including the interim financial statements, is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland.

Our responsibility is to express a conclusion on the interim financial statements in the half yearly report based on our review.  This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland and for no other purpose.  We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

 

 

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board for use in the United Kingdom and Ireland.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the half yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

 

PricewaterhouseCoopers

Chartered Accountants

Dublin

 

31 July 2019

 

 

 

(a)       The maintenance and integrity of the FBD Holdings plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b)       Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


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