Buybacks on the agenda for FBD as the company resumes dividend payments

FBD is targeting share buybacks as early as next year to return more capital to investors as the insurer continues to pay out business interruption claims from the pandemic.

The company announced on Friday that it is reinstating dividends suspended during the pandemic, with €35 million to be paid out to shareholders later this year.

FBD experienced an exceptional turnaround in 2021, posting a higher-than-expected pre-tax profit of €110 million, according to Davy, and ending the year with estimated excess capital of up to €100 million.

CEO Tómas Ó Midheach said that Irish Independent further disbursements were on the agenda for the future, but not this year.

“We are still operating in an environment of uncertainty due to Covid and the crisis in Ukraine,” he said.

“Our priority is to establish consistent dividends before we consider repaying excess capital, likely in the form of buybacks.”

FBD’s profits last year were more than 20 times the €4.8 million the company earned in 2020, due to lower claims incidence, lower claims payouts, favorable weather and the release of unused reserves is.

But Mr Ó Midheach said the exceptional performance of 2021 was not repeatable.

“In fact, we’ve had many years where normal claims haven’t materialized,” he said.

“We’ve also had very strong investment returns, but markets have tumbled in the months since Christmas.”

The company’s exposure to pandemic-related business interruption claims from its pub customers is much lower than originally expected at EUR 44 million due to reinsurance and a positive ruling by the High Court in January.

Evaluators are now negotiating payments for affected customers and have until March 15 to reach an agreement.

FBD has already made €30m in interim payments for business interruption claims after the High Court ruled it must cover losses to pub customers even where venues were allowed to remain partially open.

The company said it had paid an additional €11m to policyholders following a case the insurer had brought against the Financial Services and Pensions Ombudsman. Further payments are to follow, FBD said, after receiving further requested information.

Government subsidies paid to pub customers with business interruption insurance did not contribute to 2021 profit, FBD confirmed on Friday.