FBD Holdings plc
2007 Interim Results
August 2007
A.
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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.
2007 Interim Results
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2007 Interim Results
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Indigenous Irish company
Primary Business
Other Interests
Excellent growth record
Committed to
Key Business Driver
………. Founded in 1970………. Stock Exchange, 1989
………. Insurance Underwriting (Property/Casualty)
………. Leisure/Property Development………. Financial Services
……… “TSR” 46% p.a., last 5 years
………. Shareholders, customers, staff
………. Maximising shareholder value
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Mission Statement
“In our target markets, to be the leading customer focused
insurance group, delivering long term sustainable value.”
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Operational Highlights: H1 2007Underwriting Strong new business volumes offset reduced premium rates Premium income ahead of 2006
Policy count up 3% on December 2006
Business Support Centre (“BSC”) commenced operations in February 2007- 90 FTE staff
- 12,500 phone calls on average per week - Phone traffic to 12 offices migrated to BSC - Branch staff freed up to focus on sales
Progress in Dublin market maintained
Platform for business growth enhanced….. technology based efficiencies advanced
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Non-Underwriting – Leisure/Property Development
La Cala Property handovers ahead of comparable 2006 period Improved trading in hotel and golf activities
Sunset Excellent performance Record visitor numbers
Tower Visitor numbers up – improved trading
2007 Interim Results
Operational Highlights: H1 2007
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FBD Life Continued strong growth
FBD Brokers Maintained performance
Capital Fund Balance in fund reduced arising from
decision to return capital
………. Customer and product opportunities exploited
………. In highly competitive environment
……….Remaining fund impacted by weak equity markets
2007 Interim Results
Operational Highlights: H1 2007
Non Underwriting – Financial Services
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Corporate
Capital Management
- €176m of capital distributed to shareholders on 27th June 2007
- Flexible capital return mechanism devised to maximise returns for all shareholders
- Buy back of 957,000 shares in June 2007 for €31.1m
Organisation
- Management capacity enhanced by key appointments
- Formation of dedicated strategic developments unit
2007 Interim Results
Operational Highlights: H1 2007 (contd)
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H1 2007 H1 2006 %
€000s €000s
Gross written premiums 205,445 203,996 +0.7%
Net earned premiums 175,596 173,166 +1.4%
Underwriting result 26,158 41,649 -37.2%
Operating profit 65,118 75,721 -14.0%
Financial Highlights
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H1 2007 H1 2006
Cent Cent
Operating earnings per share 158.45 173.11 -8.5%
Dividend per share 27.50 24.00 +14.6%
Distribution of financial reserves per share 500.00 -
31/12/06
Net asset value per share 938.67 1,424.76
% %
Return on equity (6 months) 11% 26%
Financial Highlights (contd)2007 Interim Results
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Income StatementH1 2007 H1 2006
€000s €000s %
Gross written premiums 205,445 203,996 +0.7%
Net earned premiums 175,596 173,166 +1.4%
Net claims incurred (122,777) (108,558) +13.1%
Net operating expenses (26,661) (22,959) +16.1%
Underwriting Result 26,158 41,649 -37.2%
Loss Ratio 69.9% 62.7%
Net Expense Ratio 15.2% 13.2%
Combined Ratio 85.1% 75.9%
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Operating profit by activity:
Insurance underwriting 53,681 65,422
Non-underwriting
- Property/leisure 7,397 3,728
- Financial services/other 4,267 2,740
- Capital fund (227) 11,437 3,831 10,299
65,118 75,721
Income Statement (contd)
2007 Interim Results
H1 2007
€000s
H1 2006
€000s
%
Underwriting Result 26,158 41,649 -37.2%
Longer term investment return 27,523 23,773 +15.8%
Non underwriting operating income 11,437 10,299 +11.0%
Operating profit 65,118 75,721 -14.0%
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H1 2007 H1 2006
€000s €000s
Operating profit 65,118 75,721
Profit on sale of land at La Cala - 83,626
Short term fluctuation in investment return (12,458) 318
Finance costs (2,912) (2,220)
Profit before tax 49,748 157,445
Income tax expense (5,048) (34,845)
Profit for the year 44,700 122,600
Income Statement (contd)
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Balance Sheet - Assets30/06/07 31/12/06
Property & Equipment €000s €000s
Hotels/golf 181,661 180,369
Property – own use 32,735 33,195
Fixtures & Fittings 17,307 231,703 16,815 230,379
Investments
Property 81,291 81,181
Financial 939,867 1,099,309
Reinsurers’ share of technical provisions 81,144 72,553
Other receivables/DAC’s 93,025 99,319
Other Assets
Development land 31,549 32,608
Work-in-Progress 38,004 33,825
Cash 35,022 104,575 37,423 103,856
Total Assets 1,531,605 1,686,597
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Balance Sheet - Liabilities
Equity
30/06/07
€000s
31/12/06
€000s
Share Capital 21,277 21,277
Reserves 299,378 476,242
Shareholders’ funds – equity interests
320,655 497,519
Preference Shareholders 2,923 2,923
Minority Interests 6,636 6,476
Total equity 330,214 506,918
Liabilities
Technical provisions
- Unearned premiums 200,698
197,507
- Claims 751,500
952,198 734,439 931,946
Deferred tax 31,520 33,227
Creditors
- Loans 103,492
112,350
- Other 114,181
217,673 102,156 214,506
Total Liabilities 1,531,605 1,686,597
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Reconciliation of Movement in Shareholders’ Funds
30/06/07
€000s
30/06/06 €000s
Balance at 1st January 506,918 485,473
Profit for the period 44,700 122,600
Return of capital (175,645) -
Buyback of own shares (31,134) (129,212)
Dividends paid (15,798) (14,277)
Available-for-sale investments - (6,325)
Other 1,173 1,682
Balance at 30th June 330,214 459,941
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Cash Flow StatementH1 2007
€000sH1 2006
€000s
Net Cash from operating activities 101,271 129,963
From investing activities 125,664 10,438
Used in financing activities (229,215) (144,217)
Net decrease in cash and cash equivalents (2,280) (3,816)
Cash and cash equivalents at the beginning of the period 37,423 41,897
Effect of foreign exchange rate changes (121) (334)
Cash and cash equivalents at the end of the period 35,022 37,747
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Return on Equity
2003 2004 2005 2006 H1 2007 H1 2006
Underwriting 50.75% 43.78% 53.08% 58.44% 16.38% 23.36%
Non underwriting 13.68% 8.63% 11.63% 39.75% 3.42% 30.00%
Total 35.09% 31.61% 36.53% 50.61% 10.86% 26.46%
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Market Shares Gross Written Premium – 2006 (IIF)
5.0%
10.4%
5.0%
11.1%12.8%14.1%
13.3%14.9%
5.7%
12.4%
4.8%
7.8%
10.3%
10.7%
11.6%
12.0%
20.7%
9.7%
8.8%
12.3%
10.2%
13.2%
10.7%
21.1%
9.3%
8.7%
7.1%
9.0%
21.8%
8.7%
6.4%
11.7%
21.7%
8.7%9.4%
8.2%
Others(14)AIGEagle StarR.S.A.AXAFBDAllianzQuinnHibernian
20062005200420032002
Total Market 2006 - €3,822m: 2005 - €3,841m: 2004 - €3,933m : 2003 - €4,239m: 2002 - €3,955mFBD Premium 2006 - €407m: 2005 - €389m: 2004 - €351m: 2003 - €369m: 2002 - €326m
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OutlookGroup Expect to achieve analysts’ full year operating earnings forecast
Underwriting Insurers expect price competition to abate
Further reductions in premium only justifiable if progress on claims reform agenda sustained
Further improvement in claims environment possible
Confident that we will continue to grow our customer base
Ongoing investment in our operational platform will deliver growth - Business Support Centre - Technology enhancements programme
- New strategic developments unit
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Outlook
Non-Underwriting
Leisure/Leisure Property Development Businesses on course to deliver performances ahead of 2006
Anticipate regional planning approval necessary to trigger La Cala Tranche II €80m land sale payment in H1 2008
Financial Services
Businesses on course to deliver performances ahead of 2006
Continued growth in investment/life product sales
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Outlook
Capital
Efficient capital management will continue
Repatriations of €472m since March 2005 evidence of attention to capital management
Growth in dividend/earnings payout ratio to be maintained
2007 Interim Results