Annual Report 2017

FBD Holdings plc Annual Report 2017 Protection. It’s in our nature. FBD Holdings plc Contents Financial Highlights 2 Chairman's Statement 4 Review of Operations 8 Corporate Information 14 Annual Report 2017 Report of the Directors 15 Corporate Governance 24 Report on Directors’ Remuneration 38 Directors’ Responsibilities Statement 47 Independent Auditors’ Report 48 Financial Statements Consolidated Income Statement 60 Consolidated Statement of Comprehensive Income 61 Consolidated Statement of Financial Position 62 Consolidated Statement of Cash Flows 64 Consolidated Statement of Changes in Equity 65 Company Statement of Financial Position 66 Company Statement of Cash Flows 67 Company Statement of Changes in Equity 68 Notes to the Financial Statements 69 Other Items (Not Forming Part of the Financial Statements) Alternative Performance Measures 130 Letter from Chairman in relation to Annual General Meeting 131 Notice of Annual General Meeting 135 1 Financial Highlights 2017 2016 €000s €000s Gross premium written 372,459 361,799 Net premium earned 325,932 308,226 Profit for the financial year 42,696 10,680 2017 2016 Cent Cent Basic earnings per share 123 31 Diluted earnings per share 991 31 Net asset value per share 784 651 Ordinary dividend per share - - 1Diluted earnings per share reflects the potential conversion of the convertible debt and share based payments Calendar Preliminary announcement 27 February 2018 Dividend record date 6 April 2018 Annual General Meeting 4 May 2018 Dividend payment date 11 May 2018 2 FBD Holdings plc FBD Holdings at a glance Annual Report 2017 €372m 86.2% €50m GWP is up 3% Combined Operating Ratio Profit before Tax 2017: Progress in Developing our Business NEW SALES & BRAND & PRICING & PRODUCTS DISTRIBUTION MARKETING UNDERWRITING n New CarProtect n New Dublin branch n Advertising campaign n More granular rating product introduced in opened in Drumcondra – building on brand re-launch facilitated by new Consumer channel Branch on Southside CarProtect product n Sponsorship of “Bloom” providing greater choice planned festival, Marian Finucane n Changes to for customer n Enhancements to Show and partnership with underwriting approach n Travel and Car Hire website including Toyota “Face It Down” to support urban growth (externally underwritten) allowing on line claims Campaign plans notifications n Professional Indemnity n Continuing support for n All channels and and Directors & Officers n Changes to Consumer agricultural associations products contributing to (externally underwritten) call centre to align to and events including the underwriting profit customer buying patterns National Ploughing Championships 3 Chairman’s Statement Performance I am pleased to present to you our excellent financial results for 2017 and in particular I am very pleased to announce a proposed dividend payment to our shareholders. We achieved a Group Profit before Tax of €50m and our Net Asset Value (Book value) per share grew to 784 cents. Our Solvency Capital Ratio has improved from 126% in 2016 to 164% at the end of 2017. Over the past three years we have successfully executed Board Changes a significant turnaround in our business and we can now The new Board and streamlined governance structure clearly see the results of the many strong and sometimes was steadily effective during the year. The group is difficult actions taken in that time. We look forward with focussed on its general insurance business, FBD confidence to future profitability and growth. We intend Insurance plc, and our life, pensions and investment to carefully grow our business while maintaining our intermediary, FBD Financial Solutions. underwriting discipline. It is in this way that FBD intends to generate sustainable growth in book value for our During the year there were some Board changes that shareholders. warrant noting and I would like to record my own and the Board’s deep appreciation of Mr. Michael Berkery, From the outset, I would like to acknowledge and thank our former Chairman, and Mr. Sean Dorgan, our former our loyal FBD staff for their immense contribution to Senior Independent Director, who both stepped down at these strong financial results. Their dedication to our our AGM last May. The Board and I thank them for their customers and to great customer service continues to valued contributions to the Group over many years and be a key differentiator and competitive advantage for we wish them continued success in the future. We were FBD and that dedication is a source of pride and also delighted to welcome Joe Healy, President of the confidence for the Board. Irish Farmers’ Association as a new non-executive Board member. Joe brings valuable insight and excellent Management Changes relationships with our core customer base. He has a deep With the help of the Board, Ms. Fiona Muldoon our knowledge of Irish farming and the Agri-sector and we Group Chief Executive added further executive talent look forward to working with him over the coming years. to the FBD senior management team during 2017. We welcomed a new Chief Commercial Officer, Chief Human Resources Officer and Chief Underwriting Officer. The depth and strength of our senior management team position the Group well for the execution of our strategy and any future challenges ahead. The Board looks forward with confidence to the continued successful implementation of this strategy. 4 Liam Herlihy CHAIRMAN Chairman’s Statement 5 Chairman’s Statement (continued) Our Heritage More recently, during 2017 we also extended our branch network in Dublin with the opening of our new office in This year, FBD celebrates its 50th year in business. Drumcondra on Dublin’s north side. This represented the We have a rich heritage and we are uniquely an Irish first branch office opened in many years and was a cause indigenous insurer, supporting and protecting our farm, of some celebration for staff and customers. We hope to business and consumer customers. With our nationwide soon follow with a further office in South Dublin. This branch network, we are based in and active participants further extends our presence into the important Dublin in the communities we serve. We continue to be strong commercial business market and extends our brand supporters of Irish farmers and Irish businesses down reach and recognition into the most important consumer through the years. Our sponsorship of key events such urban centre in the country; our capital city. as our on-going flagship sponsorship of The Ploughing Championship and many other associations and events across the length and breadth of the country continues Claims Environment to ensure our commitment to rural Ireland’s success and The claims environment continues to be uncertain and, prosperity is well known and understood. in the absence of reform, our customers will continue to pay higher insurance premiums than those seen in We re-launched our brand in 2017 with the FBD Tree and other EU countries. The progress made on the actions our ‘Protection. It’s in our Nature.’ strap line. We believe recommended by the Government Cost of Insurance this speaks to our heritage and our roots while also being Working Group is welcome. It is important that these relevant and modern to today’s customers. It has helped proposals are followed through with legislation so that us retain our existing customers, broaden the appeal of we see a reduction in the cost of claims. In October, FBD and foster relationships with new customers. Storm Ophelia hit the country and caused widespread damage to property. Our claims staff responded superbly During 2017 we formed new partnerships with Toyota to help our impacted customers. Insurance is for events (‘Face It Down’ Driving Safety Campaign), Chubb (Travel such as these and as always, we can be proud of our Insurance) and XL Catlin (Professional Indemnity and claims paying record. Unfortunately, in addition, 2017 Directors & Officers Insurance). In addition, we were was a very poor year for Farm safety and indeed there proud to become the first commercial sponsor of the were a record number of deaths on Irish farms during the Bord Bia-led Bloom Festival in the Phoenix Park and we year. FBD will continue to work hard with its customers became the sponsors of Ireland’s most listened to radio to change farm workplace practices. FBD supports many show: RTÉ’s Marian Finucane Show. sponsorships and initiatives in this area and will continue to help educate and support a safety culture that would begin to change the very high level of death and injury in the farm workplace. 6 FBD Holdings plc Dividend Conclusion The Board believes that it is in the long-term interest of I want to extend my sincere thanks to the Board for its all stakeholders to maintain strong solvency and liquidity active leadership and support during 2017. I also want to Annual Report 2017 margins and it is focussed on ensuring that the Group’s thank Fiona, the management team and our FBD staff for capital position continues to be robust and its financial their commitment in delivering this very strong result. position well managed. Finally we thank our customers for their business. Their Following the improvement in the financial performance loyalty, trust and confidence in FBD has enabled this of the business the Board proposes to pay a dividend success. As we enter our 50th year of trading, FBD is of 24c per share for the 2017 financial year. This is strongly positioned for the future and I am confident equivalent to a pay-out ratio of approximately 20% in that FBD will continue to grow and prosper over its respect of 2017 profits. The Group will target a 20% next fifty years. to 50% annual pay-out range of full year profits when appropriate, recognising extreme weather events and Thank you. inherent cyclicality are a feature of all insurance businesses.

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