Transcript FBD Holdings plc (LOGO)

FBD Holdings plc
2006 Preliminary Results
7th March 2007
A.
2006 Preliminary Results
Forward Looking Statements
This presentation contains certain forward-looking statements.
Actual results may differ materially from those projected or implied
in such forward-looking statements. Such forward-looking
information involves risks and uncertainties that could affect
expected results
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2006 Preliminary Results
FBD Holdings plc
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2006 Preliminary Results
FBD Holdings plc………

Indigenous Irish company
………. Founded in 1970
………. Stock Exchange, 1989

Primary Business
………. Insurance Underwriting (Property/Casualty)

Other Interests
………. Leisure/Property Development
………. Financial Services

Excellent growth record
……… “TSR” 55% p.a., last 5 years.

Committed to
………. Shareholders, customers, staff.

Key Business Driver
………. Maximising shareholder value.
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2006 Preliminary Results

Mission Statement
“In our target markets, to be the
leading customer focused
insurance group, delivering long
term sustainable value.”
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2006 Preliminary Results
Group

Operational Highlights
Net assets per share grew by 13.9% to 1,424.76c
Underwriting

Strong new business volumes more than offset reduced premium rates.

Policy count at year end up 11.8% on December 2005.

Branch network enhanced. Dublin personal lines unit grown.

Continued growth in Dublin market.

Increased investment in infrastructure and people
- VOIP/Business Support Centre – (Mullingar)
- Workflow systems enhancing efficiency
- New off-site IT availability for resilience/flexibility
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2006 Preliminary Results
Operational Highlights (contd)
Non-Underwriting – Leisure/Property Development
La Cala

€201m land sale agreed, February 2006.
-
€100m (Tranche 1) initial consideration, received, June 2006.
-
€21m (Tranche 1 balance) payable on 30th June 2007.
-
€80m (Tranche 2) payable when Regional planning approval received
……anticipated early 2008
-
€55m profit – after tax (Tranche 1) recognised in 2006.
Sunset

Visitor numbers up – improved trading.
Tower

Visitor numbers up – improved trading.
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2006 Preliminary Results
Operational Highlights (contd)
Non Underwriting:
Financial Services
FBD Life

Improved trading
………. Growth opportunities availed of
FBD Brokers

Maintained performance
………. Premium reductions.
Capital Fund

Excellent returns
……….Benefiting from strong equity
markets.
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2006 Preliminary Results
Operational Highlights (contd)
Corporate

Farmer Business Developments plc share placing.
-
4.5m shares (11.6% of issued capital).
Shareholding moves from 34% to 24.4%.
-
FBD buys 3.8m shares for €129m….. Shares cancelled.
-
Free float moves to 67%.
-

La Cala Dividend.
-
€1.60 Special Dividend in August in relation to Tranche 1 land
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2006 Preliminary Results
Operational Highlights (contd)
2006
2005
€000s
€000s
Gross written premiums
407,256
389,472
+4.6%
Net earned premiums
345,959
332,371
+4.1%
76,542
90,450
-15.4%
158,515
162,624
-2.5%
81,774
-
-
296,780
185,155
+60.3%
Underwriting result
Operating profit
Profit on sale of land at La Cala
Profit before taxation
%
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2006 Preliminary Results
Operational Highlights (contd)
Operating earnings per share
Dividend per share
Special dividend – La Cala land sale
Net asset value per share
Return on equity
2006
2005
Cent
Cent
376.60
363.54
+3.6%
69.00
57.50
+20.0%
160.00
-
-
1,424.76
1,250.62
+13.9%
%
%
50.61%
36.53%
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2006 Preliminary Results
Income Statement
2006
2005
€000s
€000s
Gross written premiums
407,256
389,472
+4.6%
Net earned premiums
345,959
332,371
+4.1%
(224,712)
(202,475)
+11.0%
(44,705)
(39,446)
+13.3%
Underwriting Result
76,542
90,450
-15.4%
Loss Ratio
65.0%
60.9%
Net Expense Ratio
12.9%
11.9%
Combined Ratio
77.9%
72.8%
Net claims incurred
Net operating expenses
%
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2006 Preliminary Results
Income Statement (contd)
2006
€000s
2005
€000s
%
Underwriting Result
76,542
90,450
-15.4%
Longer term investment return
48,054
44,435
+8.1%
Non underwriting operating
income
33,919
27,739 +22.3%
Operating profit
158,515
162,624
124,596
134,885
-2.5%
Operating profit by activity:
Insurance underwriting
Non-underwriting
- Property/leisure
- Financial services
- Capital fund
10,092
13,644
4,279
3,302
19,548
33,919
158,515
10,793
27,739
162,624
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2006 Preliminary Results
Income Statement (contd)
2006
2005
€000s
€000s
158,515
162,624
Profit on sale of land at La Cala
81,774
-
Short term fluctuation in investment return
61,350
25,956
Finance costs
(4,859)
(3,425)
Profit before tax
296,780
185,155
Income tax expense
(49,948)
(23,701)
Profit for the year
246,832
161,454
Operating profit
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2006 Preliminary Results
Balance Sheet - Assets
31/12/06
€000s
31/12/05
€000s
Property & Equipment
Hotels/golf
180,369
168,258
Property – own use
33,195
28,665
Fixtures & Fittings
16,815
230,379
13,302
210,225
Investments
Property
81,181
48,856
Financial
1,099,309
1,061,846
Reinsurers’ share of technical
provisions
72,553
66,034
Other receivables/DAC’s
99,319
73,058
Other Assets
Development land
32,608
36,163
Work-in-Progress
33,825
26,333
Cash
37,423
Total Assets
103,856
1,686,597
41,897
104,393
1,564,412
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2006 Preliminary Results
Balance Sheet - Liabilities
31/12/06
€000s
31/12/05
€000s
21,277
23,557
476,242
452,570
497,519
476,127
Preference Shareholders
2,923
2,923
Minority Interests
6,476
6,423
506,918
485,473
Equity
Share Capital
Reserves
Shareholders’ funds – equity interests
Total equity
Liabilities
Technical provisions
- Unearned premiums
197,507
- Claims
734,439
Deferred tax
188,953
931,946
699,397
33,227
888,350
33,873
Creditors
- Loans
112,350
- Other
102,156
Total Liabilities
99,831
214,506
1,686,597
56,885
156,716
1,564,412
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2006 Preliminary Results
Reconciliation of Movement in Shareholders’ Funds
31/12/06
€000s
30/6/05
€000s
Balance at 1st January
485,473
425,709
Profit for the period
246,832
93,920
(129,213)
(81,238)
Dividends paid
(77,672)
(10,298)
Available-for-sale investments
(26,342)
861
6,038
-
-
(9,956)
1,802
2,152
506,918
421,150
Buyback of own shares
Revaluation of owner occupied property
Purchase of minority interests
Other
Balance at 31st December
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2006 Preliminary Results
Cash Flow Statement
2006
€000s
2005
€000s
180,509
141,626
Used in investing activities
(3,136)
(54,411)
Used in financing activities
(181,574)
(96,744)
Net decrease in cash and cash equivalents
(4,201)
(9,529)
Cash and cash equivalents at the beginning of the period
41,897
51,362
(273)
64
37,423
41,897
Net Cash from operating activities
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the period
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2006 Preliminary Results
Return on Equity
2003
2004
2005
2006
Underwriting
50.75%
43.78%
53.08%
58.44%
Non underwriting
13.68%
8.63%
11.63%
39.75%
Total
35.09%
31.61%
36.53%
50.61%
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2006 Preliminary Results
Gross Claims Run-Off
Outstanding
Claims
2006
€m
Prior
Years
€m
2001
€m
2002
€m
2003
€m
2004
€m
2005
€m
2006
€m
At end of underwriting
year
-
205
270
262
329
329
394
One year later
-
201
222
225
278
278
-
Two years later
-
198
209
206
256
-
-
Three years later
-
182
198
185
-
-
-
Four years later
-
168
174
-
-
-
-
Five years later
-
163
-
-
-
-
-
1,147
163
174
185
256
278
394
2,597
(1,101)
(129)
(134)
(112)
(139)
(124)
(124)
(1,863)
46
34
40
73
117
154
270
734
Estimate of
cumulative claims:
Estimate of
cumulative claims
Cumulative payments
Claims outstanding
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2006 Preliminary Results
Hibernian
Allianz
Quinn
AXA
R.S.A.
8.7%
10.4%
10.2%
13.4%
FBD
6.4%
5.0%
5.0%
4.5%
9.4%
9.0%
8.7%
8.1%
8.2%
8.7%
8.8%
10.1%
10.6%
11.7%
11.1%
10.7%
10.2%
9.3%
11.0%
5.7%
7.1%
13.3%
12.8%
12.3%
10.6%
2006
2005
2004
2003
2002
14.9%
14.1%
13.2%
12.5%
21.7%
21.8%
21.1%
19.7%
Market Share
Gross Written Premium – (2006, provisional)
Eagle Star
AIG
Others(15)
Total Market
2006 - €3,840m: 2005 - €3,841m: 2004 - €3,957m : 2003 - €4,239m: 2002 - €3,955m
FBD Premium 2006 - €407m: 2005 - €389m:
2004 - €351m:
2003 - €369m: 2002 - €326m 21
2006 Preliminary Results
Outlook
Group

Confident that successful development will continue.
Underwriting

Intense price competition and discounting to continue…. eroding margins.

Further ongoing claims costs savings from existing and new “reform”
initiatives required to delay convergence of Irish & European Combined
Ratios.

FBD – targeting strong new business volumes.
– focusing on growing efficiently, sustainability and profitably.


– investing further in people and business infrastructure to achieve our
growth plans.
– Reserving policy………under ongoing review.
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2006 Preliminary Results
Outlook (contd)
Non-Underwriting

Leisure/Property Development
 Businesses on course to deliver satisfactory performances.
 Disposal of development land at La Cala confirms ongoing
commercial assessment of all businesses.

Financial Services
 Opportunities for further growth in Life/Investment product sales
to continue.


Falling premium levels will continue to impact insurance broking
revenue growth.
Capital Fund
 Positive outlook for Stock Markets.
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2006 Preliminary Results
OUTLOOK…Contd.
Capital

Capital efficiency is fundamental principle applied in all businesses.

Proactive approach to capital management confirmed; €265m repatriated
since March 2005.

Dividend payout to continue to increase.

Utilisation of capital to maximum benefit of shareholders determined in
context of development strategies which Group pursues.

Ongoing attention to use of capital.

……. Meanwhile, prudent investment.
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