General insurer FBD Holdings plc has reported a net profit of €96m for 2021 and declared a dividend of 100c per share.

With the share price trading today at the €10.50 level, that represents a dividend yield of 9.5%.

The FBD share was trading at the €7 level a year ago and got up to the €11 level in mid-February before drifting back.

Earnings per share for 2021 were 268c, giving FBD a trailing P/E ratio of x3.9 times.

The company says its underwriting profit last year was €95m compared with a loss of  €4m in 2020.

In Association with

Gross written premiums amounted to €366m, marginally ahead of the 2020 outcome. The company said that excluding Covid rebates, GWP in 2021 was in line with 2020, despite reducing average premium.

On insurance premiums charged to customers, FBD said average premium reduced by 1.3% across the book.

Average premium for Private Motor reduced by 13.9% as rates reduced to reflect the Personal Injury Guidelines and benign injury claims trends.

There was no reduction in premiums charged to farm customers while Home average premium increased by 1.2%. Average premium for Commercial increased 8.5%, which the company explained away as “almost entirely due to a change in mix”.

Customer policy count increased by 1.3%, with retention rates increasing 0.5% reaching the highest level in the last five years, the company disclosed.

In the annual results statement, FBD said the average cost of injury claims settlements is slightly lower than that experienced pre-Covid. The company said this is due to a change in the mix of settled cases affected by court closures and the inability to engage in pre-trial negotiation, with a backlog of cases building up in the courts system.

Large injury claims notified in 2021 were 31% lower than the average of previous pre-Covid years, defined as a value greater than €250,000, with Covid-19 affecting frequency and possibly impacting the normal flow of information, according to the company.

FBD credited the introduction of the Personal Injuries Guidelines with reducing the awards by c.40% for minor injuries.

However, the company cautioned: “As a result we have reflected the impact of this in premium reductions. It has yet to be seen what impact the new guidelines will have on claims settled after the PIAB process has been completed.

Guidelines uncertainties

“The introduction of the new Personal Injury Guidelines continues to bring caution to the approach of claimant solicitors, who are reluctant to engage in settlements for such cases and instead are anxious to determine the attitude of the courts to the adoption of the guidelines.

“We are experiencing a build-up of older, higher value injury claims as a result of slowdowns.

“Whilst the changes to Personal Injuries Guidelines introduced in April 2021 are a positive move for the customer and the insurance industry, there are a number of uncertainties, namely the extent of cost changes for future settlements and legal fees, the impact on the PIAB acceptance rate, and the potential for newly classified injuries to increase costs.

“We continue to track injury settlements and note there have been no court awards as yet. There are a number of challenges to the guidelines before the courts over the constitutionality of the laws underpinning the guidelines.

“The applicants' claims include that the application of the guidelines breaches the separation of powers between the legislature and the judiciary and their constitutional right to bodily integrity, property and equality.

“Whatever the outcome it is likely to be appealed to the Supreme Court due to the novelty of the constitutional issues involved.”

Group chief executive Tomás Ó Midheach commented: “As we move into the full re-opening of the economy and all restrictions are lifted and as we will see the withdrawal of government income supports, the real impact on the economy of the pandemic will become clearer, while new opportunities and challenges will arise.

“My first year has passed very quickly and I am delighted to say the underlying business is strong and in a very solid capital position as we leave the main impacts of the pandemic behind us.”