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FBD HOLDINGS PLC 2 0 1 7 F U L L Y E A R R E S U L T S F E B R U A R Y 2 7 t h 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. 2
OVERVIEW Fiona Muldoon, CEO 3
K E Y HIGHLIGHTS GWP of € 372m ( 2016: € 362m) • New Business volumes up 12% on 2016 Full year profit of € 50m before tax • Strong retention of existing customers • Increase in new farm and business customers 86% Combined Operating Ratio • Current Year COR of 93% ahead of expectations and includes Storm Ophelia Key strategic targets met • Positive prior year and MIBI reserve releases of € 21m • Travel insurance, professional indemnity contributing 7% and new car products launched • Strong new business growth in SMEs Capital • Dublin branch opened, second • Return on Equity of 17% branch on the way • Solvency Capital Ratio 164% (unaudited) • Partnership with Post Insurance to offer car insurance Dividend • Proposed dividend 24c per share: 20% payout ratio 4 4
DELIVERY AHEAD O F E X P E C T A T I O N S Stabilise volumes New Brand Claims Capital & begin careful campaign & Cost & Profit growth launched Control accretion 2017 RETURN ON EQUITY DIVIDEND 24 cent 17% PER SHARE 5
PROGRESS I N D E V E L O P I N G O U R B U S I N E S S NEW SALES BRAND & PRICING PRODUCTS & DISTRIBUTION MARKETING & UNDERWRITING • • • • New CarProtect product New Dublin branch opened Advertising campaign More granular rating facilitated in Drumcondra – Branch introduced in Consumer building on brand re-launch by new CarProtect product channel providing greater on Southside planned • Sponsorship of “Bloom” • Changes to underwriting choice for customer • Enhancements to website festival, Marian Finucane Show approach to support urban • Travel and Car Hire including allowing on line Storm and partnership growth plans with Toyota “Face It Down” (externally underwritten) Ophelia claims notifications • All channels and products Campaign • • Professional Indemnity Changes to Consumer contributing to underwriting profit • and Directors & Officers call centre to align to customer Continuing support for (externally underwritten) buying patterns agricultural associations and events including the National Ploughing Championships RESULTING IN: STRONG RETENTION OF EXISTING CUSTOMERS AND NEW BUSINESS UP 12% 6
FINANCIAL PERFORMANCE John O’Grady, CFO 7
2 0 1 7 FINAL RESULTS Very strong 2017 results include Storm Ophelia costs of € 5m, € 15m positive prior year reserve release and € 6m from MIBI release 2017 2016 € 372m € 362m GWP € 50m € 11m Profit before tax 93% EPS 123c 26c Current NAV 784c 651c Year COR ROE 17% 5% 2017 2016* Loss ratio 63% 76% Expense ratio 23% 23% Combined Operating Ratio 86% 99% 784c 1.2% 1.9% Total investment return-annualised • Income statement 0.9% 0.8% NAV • OCI 0.3% 1.1% * 2016 figures adjusted to reflect claims handling expenses now presented within “ Net Claims Incurred ” as opposed to “Other Underwriting Expenses ” 8
2 0 1 7 FINAL RESULTS 2017 2016* €’000s €’000s Gross written premium 372,459 361,799 Net earned premium 325,932 308,226 € 372m Net claims incurred (incl. MIBI) (205,089) (235,600) Gross Written Other underwriting expenses (75,908) (69,406) Premium Underwriting Result 44,935 3,220 Investment income 9,361 8,338 Finance costs (6,289) (6,156) Other 3,444 3,273 Sub total 51,451 8,675 Exceptional items Restructuring costs (1,715) (2,795) € 50m Pension Curtailment Gain - 7,214 Profit Profit before tax from continuing operations 49,736 13,095 Before Tax Profit before tax from discontinued operations - 1,653 Profit before tax 49,736 11,442 * 2016 figures adjusted to reflect claims handling expenses now presented within “Net Claims Incurred (incl. MIBI)” rather than “Other Underwriting Expenses ” 9
ANALYSIS O F C O M B I N E D O P E R A T I N G R A T I O 2017 2016 € m € m % % 5% Current Year Combined Operating Ratio 29.3 91.0% 7.5 97.6% Current excluding Cat weather Year COR Improvement Nat Cat weather - Storm Ophelia (5.4) 1.6% - - Current Year Combined Operating Ratio 23.9 92.6% 7.5 97.6% including Cat weather Prior year reserve release/strengthening 15.4 (4.7%) (4.3) 1.4% € 5.4m MIBI provision release 5.6 (1.7%) - Costs of Ophelia Reported Combined Operating Ratio included 44.9 86.2% 3.2 99.0% Including Storm Ophelia 10
INVESTMENT P E R F O R M A N C E 1.2% Return reflecting low risk allocation and low rate environment 1.2% 31-Dec-17 31-Dec-16 Investment Return Annualised € m € m Underwriting investment assets % % Deposits and cash 230 22% 270 27% Corporate bonds 499 47% 493 49% 0.9% Government bonds 259 25% 177 18% Income Statement Return Equities 22 2% 24 2% Unit trusts 24 2% 24 2% Investment property 18 2% 16 2% € 82m Total 1,052 100% 1,004 100% Increase in Government Bond allocation 11
ENVIRONMENT, OUTLOOK & SUMMARY Fiona Muldoon, CEO 12
IRISH E N V I R O N M E N T 2018 DOMESTIC DEMAND GROWTH FORECASTS BY COUNTRY 97% of Irish SMEs are planning to invest in their businesses in the next 12 months 5% (Global Business Monitor – Bibby Financial Services Ltd – Sept 2017) 4% 3% YoY Irish Gross Domestic Product forecast to grow by 4.2% in 2018 2% 1% (ESRI – Dec 2017) 0% “The impact of Brexit on the Irish economy both in the short and long term is likely to be negative and material” (CBI Macro Financial Review – Source: AMECO, Goodbody *Core Domestic Demand June 2017) 13
AVERAGE COST OF INJURY SETTLEMENT A L L R I S K S & A L L P E R S O N A L I N J U R I E S Claims inflation has moderated but costs are still increasing Mid sized injury claims have higher inflation Updated Book of Quantum increasing damages Property claims inflation increasing with 2014 2015 2016 2017 strengthening Irish economy Average Cost 12 months to December 14
ONE YEAR ON FROM THE COST OF INSURANCE WORKING GROUP F B D C O N T I N U E S T O S E E K D E L I V E R Y O N • Enactment of PIAB (Amendment) Bill STRENGTHENING strengthening power to tackle non co-operation 01 • THE INJURIES Implementation of pre-action protocols • Appeals powers for rejected cases BOARD • More efficient process to litigation • Implementation of standardised approach to assessing “whiplash” claims PERSONAL • 02 Implement internationally benchmarked awards INJURIES • Assess other systems internationally for delivering COMMISSION compensation including “care not cash” • Accredited medical advisors • Full implementation of Automatic Number Plate Recognition (ANPR) • Establishment of integrated insurance fraud IMPROVED 03 database DATA • Set up a dedicated insurance fraud investigation SHARING unit within the Garda Delivery is required to • Regular reports on key aggregated metrics on reduce costs for customers claims costs and trends in the Insurance market 15
STORM OPHELIA - C O S T C O N T A I N E D B Y R E I N S U R A N C E P R O G R A M M E Net cost € 5.4m Almost 2,200 claims Southern counties Gross claims € 10-11m received of Ireland most including impacted - Cork and reinstatement Tipperary account for premium 45% of claims 16
DIVIDEND P O L I C Y Capital strength Payout ratio Annual single Proposing 20% Targeting a range declaration of payout for 2017: and usage a key based policy of 20% to 50% consideration dividend after full-year 24 cent per share when appropriate profits are known 17
SUMMARY ROE of 17% and Dividend of 24c per share Our 86% Combined Operating Ratio is an excellent result Key strategic targets met Our focus is on modest growth & sustainable profitable underwriting Our goal is to deliver growth in book value through strong underwriting and customer focus . 18
SUSTAINABLE G R O W T H I N B O O K V A L U E OPERATIONAL QUALITY EFFICIENCY PRODUCT AND SERVICE AND EXPENSE CONTROL LONG-TERM SHAREHOLDER VALUE EXCELLENT SOPHISTICATED CLAIMS RISK SELECTION MANAGEMENT AND PRICING In 2018 we continue to target careful growth and a COR in the low 90s (absent exceptional weather) 19
APPENDIX 20
PREMIUM BY PRODUCT 10% 11% 11% 12% 100% 14% 16% 24% 22% 25% 24% 22% 23% 80% 7% 9% 7% 8% 8% 7% 60% 19% 17% 19% 17% 19% 18% 40% 25% 24% 27% 24% 26% 24% 20% 15% 16% 13% 14% 12% 12% 0% 2012 2013 2014 2015 2016 2017 Commercial Motor Consumer Motor Small Business Motor - Agri Farm Home Farm includes property, public liability, employer liability and motor risks Small Business includes property, public liability and employer liability risks in shops, pubs, guesthouses, retail outlets and other small/medium enterprises 21
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