Transcript FBD HOLDINGS PLC

FBD HOLDINGS PLC
2005 PRELIMINARY RESULTS
1
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
Introduction to FBD Holdings plc
• Core business …insurance underwriting.
– leading position in target markets
– strong brand identity
• Non – Core
– property/leisure
– financial services
• Excellent growth record.
3
Operational Highlights of 2005
Underwriting
• Strong new business volumes more than offset reducing
premium rates.
• Policy count at 31st December 2005 up 12.5% on 2004 figure.
• Branch network enhanced.
• Dublin Market targeted
• New products introduced (Shops, Trades, Breakdown / Claims
Assist 24 Hour service)
• Increased investment in infrastructure and human resources
4
Operational Highlights of 2005
Non-Underwriting
• 40 Residential units sold at La Cala Resort
• Third championship golf course (“The Europa”) opened for play
at La Cala.
• Castlerosse Hotel, Killarney sold.
• Castleknock Hotel & Country Club opened.
5
Operational Highlights of 2005
Corporate
• KBC disposed of its 22% shareholding.
– FBD partakes in KBC sale…(€81m buyback)
– Free float increased to 58%
6
Financial Highlights
2005
2004
€000s
€000s
Gross written premiums
389,472
351,487
+10.8%
Net earned premiums
332,371
296,237
+12.2%
90,450
65,939
+37.2%
162,624
124,724
+30.4%
Cent
Cent
363.54
256.18
+41.9%
57.50
40.00
+43.75%
1,250.62
969.64
+29.0%
%
%
36.53
31.61
Underwriting result
Operating profit
Operating earnings per share
Dividend per share
Net asset value per share
Return on equity
%
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Preliminary Results: Year to 31st December 2005
Income Statement
2005
2004
€000s
€000s
Gross written premiums
389,472
351,487
+10.8%
Net earned premiums
332,371
296,237
+12.2%
(202,475)
(197,784)
+2.4%
(39,446)
(32,514)
+21.3%
Underwriting Result
90,450
65,939
+37.2%
Loss Ratio
60.9%
66.7%
Net Expense Ratio
11.9%
11.0%
Combined Ratio
72.8%
77.7%
Net claims incurred
Net operating expenses
%
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Preliminary Results: Year to 31st December 2005
Income Statement…. Contd.
2005
2004
€000s
€000s
Underwriting Result
90,450
65,939
+37.2%
Longer term investment return
44,435
40,713
+9.1%
Non underwriting operating income
27,739
18,142
+52.9%
162,624
124,794
+30.3%
134,885
106,652
Operating profit
%
Operating profit by activity
Insurance Underwriting
Non-Underwriting
- Property/Leisure
- Financial Services
- Capital Fund
13,644
10,586
3,302
3,905
10,793
27,739
162,624
3,651
18,142
124,794
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Preliminary Results: Year to 31st December 2005
Income Statement….. Contd.
2005
2004
€000s
€000s
162,624
124,794
Short term fluctuation in investment return
25,956
10,298
Finance costs
(3,425)
(3,116)
Profit before tax
185,155
131,976
Income tax expense
(23,701)
(16,968)
Profit for the year
161,454
115,008
Operating profit
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Preliminary Results: As at 31st December 2005
Balance Sheet - Assets
Property & Equipment
Hotels/golf
31/12/05
31/12/04
€000s
€000s
168,258
148,582
Property – own use
28,665
27,935
Fixtures & Fittings
13,302
210,225
10,547
187,064
Investments
Property
48,856
24,200
Financial
1,061,846
999,080
Reinsurers’ share of technical provisions
66,034
65,765
Other receivables/DAC’s
73,058
68,825
Other Assets
Development land
36,163
34,105
Work-in-Progress
26,333
36,438
Cash
41,897
Total Assets
104,393
1,564,412
51,362
121,905
1,466,839
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Preliminary Results: As at 31st December 2005
Balance Sheet - Liabilities
31/12/05
31/12/04
€000s
€000s
23,557
25,151
452,570
381,302
476,127
406,453
Preference Shareholders
2,923
2,923
Minority Interests
6,423
16,333
485,473
425,709
Equity
Share Capital
Reserves
Shareholders’ funds – equity interests
Total equity
Liabilities
Technical provisions
- Unearned premiums
188,953
-
699,397
Claims
Deferred tax
184,954
888,350
658,431
33,873
843,385
25,787
Creditors
- Loans
99,831
- Other
56,885
Total Liabilities
80,476
156,716
1,564,412
91,482
171,958
1,466,839
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Preliminary Results: Year to 31st December 2005
Statement of Changes in Equity
31/12/05
31/12/04
€000s
€000s
Balance at 1st January
425,709
326,696
Profit for the year
161,454
115,008
10,196
4,681
1,409
2,716
Buyback of own shares
(81,238)
-
Dividends paid
(18,158)
(12,614)
Purchase of minority interests
(9,864)
(495)
Actuarial loss on pension fund revaluation
(3,802)
(9,031)
(233)
(1,252)
485,473
425,709
Gain on available-for-sale investments
Re-issue of ordinary shares
Other
Balance at 31st December
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Preliminary Results: Year to 31st December 2005
Cash Flow Statement
31/12/05
31/12/04
€000s
€000s
Net Cash from operating activities
141,626
157,394
Used in investing activities
(54,411)
(156,735)
Used in financing activities
(96,744)
25,057
Net (decrease) increase in cash and cash equivalents
(9,529)
25,716
Cash and cash equivalents at the beginning of the year
51,362
25,275
64
371
Effect of foreign exchange rate of changes
Cash and cash equivalents at the end of the year
41,897
51,362
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5 Year Financial Performance
2001
2002
2003
2004
2005
01/05
€000s
€000s
€000s
€000s
€000s
% Inc
Gross written premiums
247,959
325,809
368,619
351,448
389,472
57%
Net earned premiums
192,864
240,325
290,320
296,237
332,371
72%
Underwriting result
(15,088)
(5,266)
60,967
65,939
90,450
30,184
37,531
110,456
124,724
162,624
Operating profit
439%
15
5 Year Financial Performance
2001
2002
2003
2004
2005
%
%
%
%
%
Loss ratio
94.9
91.8
66.5
66.7
60.9
Net expense ratio
12.9
10.4
12.5
11.0
11.9
107.8
102.2
79.0
77.7
72.8
Combined ratio
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5 Year Financial Performance
2001
2002
2003
2004
2005
01/05
Cent
Cent
Cent
Cent
Cent
% Inc
Operating earnings per share
59.59
75.34
227.38
256.18
363.54
510%
Dividend per share
19.50
22.00
27.50
40.00
57.50
195%
483.11
510.13
701.94
969.64
1,250.62
159%
Net asset value per share
17
Return on equity
2003
2004
2005
Underwriting
50.75%
43.78%
53.08%
Non underwriting
13.68%
8.63%
11.63%
Total
35.09%
31.61%
36.53%
18
Gross Claims Run-off
Prior
Years
€m
2001
€m
2002
€m
2003
€m
2004
€m
2005
€m
At end of underwriting
year
-
205
270
262
329
329
One year later
-
201
222
225
278
-
Two years later
-
198
209
206
-
-
Three years later
-
182
198
-
-
-
Four years later
-
168
-
-
-
-
Estimate of cumulative
claims
1,148
168
198
206
278
329
Cumulative payments
(1,083)
(118)
(118)
(101)
(126)
(84)
65
50
80
105
152
245
Outstanding
Claims
31/12/05
€m
Estimate of cumulative
claims:
Claims outstanding
699
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Market share (IIF) Gross written Premium
€m
10%
2005
3900
390
8.8%
2004
4000
352
8.8%
2003
4176
369
8.2%
2002
3954
326
7.7%
3229
2001 248
FBD
Rest of Market
20
Post Balance Sheet Events
• 23rd February 2006,
– Conditional agreement to sell 96 hectares of development land at
La Cala
– Total consideration €201m. in cash, in phased payments.
– Estimated profit after tax… €90 m.
– Intention to distribute the net cash proceeds, estimated at €120m. in two
special dividends.
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OUTLOOK
Underwriting
• Year to date trading on target
• Price competition continues
• Ambitious new-business volumes targeted
• Further investment in people and infrastructure planned
• Road accident trends negative, pending Government action
• Increased claims incurred charge….higher exposures
• No significant changes in claims reserving approach envisaged, in
the short term
• Combined ratio to move towards European norms
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OUTLOOK…Contd.
Non -Underwriting
• Property / Leisure
– Operating environment to remain challenging
– New marketing strategies being implemented
• Financial Services
– Falling premiums pressurising income
– Increased sales activity planned
23
OUTLOOK…Contd.
Capital Retained
• Increasing dividend payout
• Opportunities to invest capital in core / related financial service
businesses to be investigated
• All options to maximise returns to shareholders under ongoing
review…….
• ………meanwhile , prudent investment.
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