FBD Holdings plc Interim Results. August Our Policy is You

Transcription

1 FBD Holdings plc 2013 Interim Results August Our Policy is You

2 2013 Interim 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. Where applicable and unless otherwise stated, all comparative figures have been restated to exclude operations that were sold during 2012 and to reflect changes to IAS 19 Employee Benefits. 2

3 2013 Interim Results - Highlights Performance Policy count up 1.7%, GWP up 0.7% Further growth in market share Industry leading COR of 94.7% PBT of 19m Change GWP 175.9m 174.7m 0.7% Operating profit 24.1m 28.1m -14.3% PBT 19.0m 21.8m -12.6% Operating EPS 63c 74c -14.9% Claims Further improvement in attritional loss ratio to 50.4% Severe personal injury claims* ahead of norm in early reversion towards norm has begun NAV 740c 666c 11.1% Strategic developments Financial strength NAV increased by 11% to 740c Solvency strengthened to 70% of NEP Key strategic initiatives deliver further growth Gaining traction from Broker relationships No Nonsense repositioned Increasing investment to maximise potential Dividend Interim dividend of 15.75c, up 29% - following through on earlier commitment to increase dividend *Personal injury claims with net cost greater than 1m 3 Very strong performance. Increased financial strength. Investing in future growth.

4 2013 Interim Results Performance in market context Economy Domestic demand continued to stabilise Unlikely to return to robust growth in short term Insurance industry Market continued to contract, but at a diminishing rate Insurable values stabilising Signs of hardening rates in car and business insurance Still a noisy advertising market Gender rating smooth implementation Claims environment GNP Domestic Demand % -9.7% % -5.0% % -3.0% % -1.1% 2013 (f) 0.3% -0.8% Benign weather in 2013 to date 6% increase in road deaths, from historic low Retail sales of automotive fuel Volume adjusted index (Base 2005=100) 6 per. Mov. Avg. (Retail sale of automotive fuel ) 4 Economic environment stabilising. Indications of a hardening market.

5 2013 Interim Results Customer segments Farm and business direct Increased products sold per customer Most farming customers ever Consumer Competitive market place, increased investment in marketing Premium and volume growth in car, No Nonsense premium income up 39%, through ready-made and telematics Maintaining underwriting discipline in home 100% 80% 60% 40% 20% 0% 88% % of Business Insurance NB Premium 12% 23% 25% 77% 75% 35% 65% 47% 53% 61% 39% Broker Direct Brokers Relationships with broker partners are developing well and business written is gaining momentum Brokers accounted for 61% of business insurance new business 5 Opportunities for continued outperformance

6 2013 Interim Results Premium trends GWP up 0.7%, volume up 1.7% Irish Insurance market down c3% Premium performance ahead of peers Increased market share in 2013, to highest ever share Market share growth in 11 of the last 12 years, continued into 2013 FBD reduced rates for some car insurance customers in 2012 where risk has reduced As economic activity increases, it is likely that market rates will harden to compensate for the associated increase in risk Premium and volume growth in all segments except home Cover and mix improving as economy stabilises 60% 50% 40% 30% 20% 10% 0% Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 CPI Cumulative % Change Jan 08 to June 13 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 6 FBD continues to outperform market HOME CAR

7 2013 Interim Results Market share 4.8% 6.2% 7.5% 7.6% 12.0% 9.7% 10.4% 10.4% 11.1% 12.3% 10.7% 11.3% 11.6% 11.5% 11.8% 12.2% 10.3% 10.0% 10.0% 10.7% 11.5% 11.6% 11.6% 11.2% 11.5% 11.2% 11.1% 11.8% 7.8% 8.0% 8.7% 10.7% 9.0% 9.4% 8.6% 6.4% 11.5% 12.8% 11.4% 9.8% 12.0% 12.2% 11.2% 10.4% 14.7% 15.6% 16.1% 16.0% 15.5% 15.1% 15.2% 20.7% 19.9% 19.2% 12.4% 24.9% 7 Latest available market data (Insurance Ireland) Market - m 4300 Premium Income -FBD and the Market Total Market FBD RSA Aviva FBD AXA Allianz Zurich Liberty/Quinn (e) Market share growth in 11 of the last 12 years. Continued growth in FBD - m

8 2013 Interim Results Claims Loss ratio of 68.8% Continued improvement in attritional claims - risk selection - claims management initiatives - rating - positive operating environment Severe personal injury claims*, which are volatile by nature were ahead of historic norms in early months of 2013 Likely to revert to norm over the course of the full year In contrast, severe weather experience was very benign in the period 21% 19% 17% 15% 13% 11% 9% 7% 5% Severe weather and large claims 63.3% Attritional Loss Ratio H1 64.4% 56.6% 52.4% 50.7% 50.4% 15.8% 19.4% 20.8% 14.2% 13.1% 18.4% H1 Impact of severe weather & large claims on LR Seven year average LR: Severe weather & large claims Loss Ratio Excluding severe weather & large claims (Right Hand Axis) Attritional loss ratio 65% 60% 55% 50% 45% 'm H1 08 Net cost of severe injury claims* H1 13 H2 09 H2 08 H1 12 H1 10 H2 12 H1 09 H2 10 H1 11 H % 85% 80% 75% 70% 65% 60% Loss Ratio H1 84.3% 83.2% 75.1% 68.9% 67.0% 68.8% Loss Ratio H1 8 *Personal injury claims with net cost greater than 1m Further improvement in attritional claims

9 2013 Interim Results Financial services & JV Financial services Includes: - premium instalment services - life, pension and investment broking (FBD Financial Solutions) - less head office cost Generated an operating profit of 2.2m (2012: 2.6m) An increasing proportion of insurance customers continue to avail of premium instalment services The market for life, pensions and investment broking business continued to be challenging Financial Solutions is the largest retail broker in Ireland Joint venture (JV) 50% share of property and leisure operations in Ireland and Spain Trading has continued to improve in 2013 Growth in occupancy, rate and revenue per room, particularly in the Irish market Sales of units in La Cala continue to be strong and the JV sold the last of the remaining units in July The Group s share of JV losses was 0.4m, an improvement on the 0.7m loss in Strong performance in a challenging market

10 2013 Interim Results Asset allocation Investment assets 30-Jun-13 m % m % Deposits and cash % % Corporate bonds % % Government bonds & approved securities 83 10% % Equities 62 7% 60 7% Unit trusts 23 3% - - Own land & buildings 16 2% 16 2% Investment property 11 1% 11 1% Investment assets % % Trade & other debtors and DAC Reinsurers share of technical provisions Investment in joint venture Plant and equipment Total assets 1,066 1, Dec-12 The movement towards our long-term asset allocation began in 2012 ~ We added short dated corporate bonds and equities ~ However we did not move to invest in longer-dated bonds Sell off in fixed income in June 2013 demonstrated the appropriateness of the current asset allocation Substantial cash allocation positions FBD to benefit from rising yields 10 Prudent management of investment assets - protecting customers and shareholders

11 2013 Interim Results Balance sheet NAV progression & solvency strength Strong capital base with solvency level of 70%, up from 63% Net asset value per share increased 11% to 740c Reserving maintained at same robust level as at the previous year end No release or build-up of reserves in period The Group has no debt Cent NAV progression June 12 to June % 70% 65% 60% 55% 50% 45% FBD Insurance Solvency Ratio 63% 60% 50% 55% 70% Cent Evolution of NAV Solvency Ratio Target 11 Position of strength

12 2013 Interim Results Dividend Policy 2013 Interim dividend It is in the long term interest of all stakeholders to maintain strong solvency and liquidity margins FBD is committed to a progressive dividend policy and efficient capital management Target is a 40% - 50% operating payout ratio Dividend pershare C 16 Interim DPS Interim dividend of 15.75c, an increase of 29% Further step towards 40% - 50% operating payout ratio Further significant increase rationale: Very strong profit performance Robust financial position Move towards target payout ratio Will move to target 40% - 50% ratio in sustainable and progressive steps Further significant increase with potential for sustainable progressive dividend in future years

13 2013 Interim Results Outlook Outlook Irish domestic demand will stabilise in the second half of 2013, but is unlikely to return to robust growth in short term FBD is committed to achieving profitable growth by evolving business to reflect the needs of customers. Growth will be achieved by: delivering products and services that matter to its farming and business customers increasing penetration of key urban markets, in particular Dublin increasing business insurance in partnerships with brokers selling personal lines in partnerships with brokers The Group will continue to deliver improvements in those aspects of claims costs that it can control, and expects to maintain the attritional loss ratio achieved in the first half of 2013 throughout the remainder of It is expected that the severe personal injury claims experience, which can be volatile in any short period, will revert to historic norms The Group re-affirms its previous guidance, subject to exceptional events arising, for the full year 2013 operating earnings per share of 145c to 155c 13 Full year 2013 operating EPS guidance 145c to 155c continued superior performance

14 2013 Interim Results Summary Has a track record of: Outperforming its peers and delivering superior returns to shareholders Delivering returns in difficult market conditions The insurance market is: Likely to stabilise in line with domestic demand Focussing on underwriting returns FBD will: Increase investment to maximise potential Seek opportunities for sustainable growth and profits Deliver superior returns to shareholders Move to target 40% - 50% operating payout ratio in sustainable and progressive steps FBD has: A robust underwriting business with a strong core franchise A strong capital base and balance sheet and a prudent reserving strategy A low-risk investment allocation 14 Well positioned to deliver long-term profitable growth

15 FBD Holdings plc 2013 Interim Results 15 Our Policy is You