TIDMFBH
RNS Number : 0070J
FBD Holdings PLC
11 August 2023
FBD HOLDINGS PLC
Half yearly Report
For the Six Months ended 30 June 2023
KEY HIGHLIGHTS
-- Profit before tax of EUR39m under IFRS 17 compared to EUR3m in 2022.
-- Combined Operating Ratio (COR) of 81% reflecting continued
underwriting discipline and benefitting from positive prior year
reserve development including that related to Business
Interruption.
-- Special dividend approved of 100 cent per ordinary share.
-- Insurance revenue increased by 4.5% to EUR195m.
-- Written policy count increased by 2.6%.
-- The Covid-19 related Business Interruption best estimate
reduced by EUR15m to EUR27m net of reinsurance since year-end 2022
following conclusion of the test case.
-- Retention levels of existing business increased by 0.2% year on year.
-- Average premium increased by 4.6% across the portfolio.
Private Motor average premium increased by 1.7%.
-- Income statement investment return of 0.7%, reflecting
positive investment returns of EUR8m.
-- Our capital position remains strong with a Solvency capital
ratio (SCR) of 217% (unaudited) after allowing for the special
dividend, compared to 226% at 31 December 2022.
-- Return on equity of 15%.
-- IFRS 17 is effective for insurance contract reporting since 1
January 2023 and all comparatives are Half Year 2022 restated,
unless otherwise specified. IFRS 9 has also been adopted.
Half Year Half Year
FINANCIAL SUMMARY ended ended
30 Jun 30 Jun
2023 2022
(restated)
EUR000s EUR000s
Gross written premium 206,432 192,432
Insurance revenue 194,540 186,142
Insurance service result 65,403 44,052
Profit before taxation 39,477 2,509
Loss ratio 54.0% 60.9%
Expense ratio 27.1% 25.7%
Combined operating ratio 81.1% 86.6%
Cent Cent
Basic earnings per share 91 6
Net asset value per share 1,274 1,179
A reconciliation between IFRS and non-IFRS measures is given in
the Alternative Performance Measures (APMs) on page 62 and 63.
-- The largest element of Insurance revenue is Gross written
premium (GWP) which increased by 7.3% to EUR206m (2022: EUR193m).
Written policy count increased by 2.6% with over 70% of the
increase coming through our local offices.
-- The Insurance service result increased by EUR21m to EUR65m
(2022: EUR44m). This is made up of increased Insurance revenue of
EUR8m, a reduction in the Insurance service expense (ISE) of
EUR35m, largely due to a positive past service benefit including
that related to Business Interruption reserve releases, net of
additional reinsurance contract expenses of EUR22m as expected
reinsurance recoveries on Business Interruption reduced.
-- A positive start to the year for both equity and fixed income
investments has resulted in a profit through the Income Statement
of EUR8m (2022: -EUR15m) and a profit through Other Comprehensive
Income (OCI) of EUR9m (2022: -EUR64m).
-- The expense ratio increased to 27.1% (2022: 25.7%), with the
increase primarily reflecting inflationary increases on staff
costs, IT and utility costs. The expense ratio includes Insurance
acquisition expenses and Non-attributable expenses.
-- Net Asset Value per share of 1,274 cent has reduced from
1,276 cent (restated) at the end of 2022 as the dividend payments
in May were offset by Half Year profit.
Commenting on these results Tomás Ó Midheach, Group Chief
Executive, said:
"I am pleased to announce a strong profit for the first half of
2023 where the business continued to grow and deliver for all
stakeholders. Supported by a disciplined underwriting approach, our
financial and strategic foundations remain solid as we continue to
drive sustainable profitable growth.
Our ongoing focus and commitment to meeting the needs of our
customers and the provision of a personalised service continue to
play a significant role in the performance of the business. As a
consequence, it is most encouraging to see strong retention of
existing customers and continued growth in both customer and policy
count numbers.
Economic conditions remain challenging for businesses and
customers alike. Inflation continues to be experienced in Property
and Motor Damage claims. Injury claims experience has been benign
and there were no significant weather events.
We welcome the final Judgement on the Business Interruption test
case. This ruling allows us to finalise all valid Covid-19 related
claims and State subsidies.
We are supportive of the steps the Government has taken on
insurance reform to reduce claims costs and consequently insurance
premiums. The increased acceptance rates of awards from the
Personal Injuries Resolution Board could indicate the Personal
Injury Guidelines are being adopted, although their ultimate impact
will not be known until the challenges make their way through the
courts.
The business remains strongly capitalised with a capital ratio
above our stated risk appetite. As signalled earlier this year and
following engagement with our stakeholders, a special dividend of
100c per ordinary share was approved by the Board.
I am thankful for the support of the Board and the commitment
and hard work by all the team at FBD. We have demonstrated that our
relationship focus strategy is delivering and our evolving strategy
to firmly position FBD for the future to become a digitally
enabled, data enriched organisation delivering an excellent
customer and employee experience, is firmly on track."
A presentation will be available on our Group website
www.fbdgroup.com from 9.00 am today.
Enquiries Telephone
FBD
Michael Sharpe, Investor Relations +353 87 9152914
Drury Communications
Paddy Hughes +353 87 6167811
About FBD Holdings plc ("FBD")
FBD is one of Ireland's largest property and casualty insurers,
looking after the insurance needs of farmers, consumers and
business owners. Established in the 1960s by farmers for farmers,
FBD has built on those roots in agriculture to become a leading
general insurer serving the needs of its direct agricultural, small
business and consumer customers throughout Ireland. It has a
network of 34 branches nationwide.
Forward Looking Statements
Some statements in this announcement are forward-looking. They
represent expectations for the Group's business, and involve risks
and uncertainties. These forward-looking statements are based on
current expectations and projections about future events. The Group
believes that current expectations and assumptions with respect to
these forward-looking statements are reasonable. However, because
they involve known and unknown risks, uncertainties and other
factors, which are in some cases beyond the Group's control, actual
results or performance may differ materially from those expressed
or implied by such forward-looking statements.
The following details relate to FBD's ordinary shares of EUR0.60
each which are publicly traded:
Listing Euronext Dublin Financial Conduct Authority
Listing Category Premium Premium (Equity)
Trading Venue Euronext Dublin London Stock Exchange
Market Main Securities Market Main Market
ISIN IE0003290289 IE0003290289
Ticker FBD.I or EG7.IR FBH.L
OVERVIEW
The Group reported a profit before tax of EUR39.5m (2022:
EUR2.5m), supported by growth in Insurance revenue of EUR8.4m
primarily in local offices, a reduction in Insurance service
expenses of EUR35.3m mainly related to positive past service
movement including in respect of Covid-19 Business Interruption
(BI) claims, and positive investment returns of EUR8.4m (2022:
-EUR15.3m). This was offset by a EUR7.5m provision for our current
estimate of the cost of a constructive obligation arising from the
deduction of State subsidies under Business Interruption.
The net best estimate in respect of BI reduced by EUR14.9m to
EUR26.6m since December 2022. The reduction reflects the final
Judgement in respect of the BI test case.
INSURANCE SERVICE RESULT
Insurance Revenue
Insurance revenue is 4.5% higher at EUR194.5m (2022: 186.1m).
Gross written premium is the largest part of Insurance revenue and
is 7.3% higher than 2022 at EUR206.4m (2022: EUR192.4m) with strong
increases in Home, Agri and Commercial Business. Written policy
count increased by 2.6% with average premiums increasing by 4.6%
across the portfolio. The retention rate on the portfolio is higher
than the first half of 2022, continuing the trend of multi-year
highs.
Average premium increased by 4.6% across the portfolio
reflecting the inflationary impacts from the economic environment.
Private Motor average premium increased by 1.7% and Commercial
Motor increased by 0.7% reflecting the increasing cost of Motor
Damage claims, driven by increases in labour, parts and paint costs
with newer, more technologically advanced vehicles costing more to
repair. Home average premium increased by 9.5% reflecting increases
in property sums insured as inflation continues in construction
costs. Commercial Business average premium increased 5.9% driven by
a combination of sums insured increasing due to inflation in
construction costs and customers increasing liability cover,
increasing the exposure and as a result average premium. Farm
average premium increased by 5.0% as a result of increases in
property elements as sums insured increased due to inflation in
construction costs. Average Tractor premium increased by 8.8% due
to a higher proportion of newer tractors, increasing value of
existing tractors and inflation in the cost of Motor Damage
claims.
Insurance Service Expenses
Insurance service expenses (ISE) reduced by EUR35.3m to EUR92.0m
(2022: EUR127.3m). The table below splits the ISE into Gross
incurred claims, Changes that relate to past service and Insurance
acquisition expenses. The Gross incurred claims increase of EUR4.5m
reflects increasing costs due to inflation and increased frequency
in Property and Motor Damage. Changes that relate to past service
of EUR59.4m include prior year reserve movements, gross of
reinsurance, including that related to Business Interruption, as
well as other IFRS 17 specific movements in the Risk Adjustment and
Discounting. Insurance acquisition expenses of EUR36.6m form part
of the ISE and are referenced below under Expenses.
Insurance Service Expenses Half Year ended 30 June 2023 Half Year ended 30 June 2022
EUR000 EUR000
Gross incurred claims (114,744) (110,263)
Changes that relate to past service 59,375 17,005
Insurance acquisition expenses (36,588) (34,064)
Total Insurance service expenses (91,957) (127,322)
----------------------------- -----------------------------
Injury notifications increased 4% year on year largely
reflecting increased policy count with a slight increase in
frequency. The average cost of injury claims settlements are down
5% in the last 12 months and continue to be lower than that
experienced pre-Covid. C ourt backlogs are easing with trial dates
now secured within pre-Covid timeframes . FBD continue to stand
over the Personal Injuries Resolution Board (PIRB) awards made
under the Personal Injury Guidelines.
Claims being settled under the new guidelines continue to be
over 40% lower in value when compared to the previous Book of
Quantum. The level of acceptance of PIRB awards across the market
has improved to 48% which is closer to historic levels. This should
reduce the number of cases through the courts system attracting
higher legal costs. It could take a number of years for the full
impact to be known of the new guidelines on claims settled through
the litigation process.
Motor damage notifications increased by 17% as traffic volumes
have returned to pre-Covid levels and settlement costs also
increased over 11%. The mix is changing within the Motor book as
more policyholders have taken out comprehensive cover and inflation
on parts and labour is increasing the cost of repairs. The
increasing repair costs appear to be encouraging more people to
claim rather than pay outside of their insurance.
The average cost of property claims increased by 7% due to a
change in mix and inflation, with double digit increases in Escape
of Water and Fire costs.
Movement in other provisions increased by EUR7.2m to EUR12.4m
(2022: EUR5.2m), with the increase relating to the provision for
our current estimate of the cost of a constructive obligation
arising from the deduction of State subsidies paid to claimants
under Business Interruption of EUR7.5m. The other elements of the
Movement in other provisions are the Motor Insurers Bureau of
Ireland (MIBI) levy and the Motor Insurers Insolvency Compensation
Fund (MIICF) contribution.
Reinsurance
The reinsurance programme for 2023 was successfully renegotiated
with a similar structure to the expiring programme. The programme
saw an increase in reinsurance rates for property of 8% and
casualty of 2% which was a very positive result in the current
environment of hardening rates in the reinsurance market reflecting
geopolitical and macroeconomic shocks. The net expense from
reinsurance contracts held increased by EUR22.4m as recoverables
from reinsurers reduced by EUR20.1m, primarily due to expected
recoveries on Business Interruption claims reducing, as well as
reinsurance premium increases year on year of EUR2.3m.
Weather, Claims Frequency and Large Claims
No significant weather events of note occurred in the first six
months of 2023.
We observed an increase in the frequency of injury claims in the
first half of 2023 although the frequency of these claims continues
to remain significantly below pre-Covid levels.
Large injury claims, defined as a value greater than EUR250k,
notified to date in 2023 are lower than the average of previous
pre-Covid years.
Expenses
The Group's expense ratio is 27.1% (2022: 25.7%). Insurance
acquisition expenses and Non-attributable expenses are combined to
calculate the total expense cost of EUR52.8m (2022: EUR47.8m). The
increase is made up of inflationary impacts on salary costs, IT
spend and other utility costs with an increase in depreciation
costs as FBD increase capital investment in the business.
Commission also increased as our partnerships with intermediaries
continue to grow.
INDUSTRY ENVIRONMENT
An appeal to the Supreme Court in respect of the Personal Injury
Guidelines was heard at the end of February 2023. We are awaiting
the Judgement, but have no indication as to the timeline for
delivery. There are still a number of challenges over the
constitutionality of the laws underpinning the Guidelines. Court
backlogs have eased, with trial dates secured within pre-Covid
timelines, however, we note Claimants' Solicitors still have a
greater say around the timing of cases being called for trial.
We still await the outcome of the review to determine if the
Judiciary or the Minister of Justice and Equality should be allowed
to determine the discount rate and review it at intervals. The
delay in this decision may raise the potential of a challenge to
the discount rate. The Court & Civil Law (Miscellaneous
Provisions) Bill 2022 was signed into law in July 2023. Part 3 of
the Act sets out that the indexation of periodic payment orders
will no longer be fixed solely on the Consumer Price Index.
Instead, the indexation rate will be set by ministerial regulations
based on a broad range of more flexible factors. We note these
ministerial regulations are yet to be published with no timeline
for introduction indicated.
Amendments to Occupiers Liability Act 1995 were signed into law
in July as part of the Courts and Civil Law (Miscellaneous
Provisions) Bill 2022. An important part of the amendment is the
introduction of the concept of "Voluntary Assumption of Risk",
which seeks to broaden the circumstances in which an occupier may
be relieved of liability. For trespassers and recreational users
the amendment seeks to ensure that for an occupier to be held
liable the appropriate test is one of recklessness and not of
reasonable grounds. The amendment also provides that, apart from
exceptional circumstances, where a person enters onto a premises
for the purpose of committing an offence or while on the premises
commits an offence, the occupier will not be liable.
The following legislative changes impacting insurance have been
enacted in the year to date:
-- Irish Motor Insurance Database (IMID) - The next phase of the
previously named Motor Third Party Liability project (MTPL)
requires sharing of additional data on insured vehicles and drivers
with Regulatory Authorities. FBD is committed to adhering to
industry timelines.
-- The Road Traffic Act (RTA) legislation has been extended to
better regulate the use of scramblers/quads and
e-bike/e-scooters.
-- Assisted Decision Making Act - The Act came into effect on
the 26 April 2023. We are working on a number of changes including
updating our Vulnerable Customer Policy, scenario testing,
reviewing the customer journey and training.
-- Amendments to Occupiers Liability Act - Changes to amend the
"common duty of care" provisions in the Occupiers' Liability Act
1995.
A number of additional changes impacting insurance are
progressing through the legislative process:
-- The Motor Insurance Directive (MID) primarily deals with the
scope of compulsory insurance broadening the potential scenarios
where RTA cover will apply. European council have reached a
provisional agreement on the revision of the MID.
-- Flood Insurance Bill - This is a private member bill at early
stage of debate, the purpose of the bill is to provide for fairness
in the market for property insurance, which will force insurers to
offer flood cover to homes and businesses in flood affected
areas.
-- Protection of the Collective Interests of Consumers Bill 2023
- Proposed legislation transposes an EU directive and gives
designated "Qualified Entities" the power to take enforcement
action on behalf of a group of consumers whose rights have been
breached in Ireland or in another EU country. This Bill is
currently before the Seanad at the 3(rd) stage of debate.
-- Consumer Insurance Contracts (Amendment) Bill 2023 - This
Bill is currently at the second stage of debate in the Seanad and
proposes to ban the use of "clauses of average" in non-life
insurance contracts. FBD has provided its response to Insurance
Ireland on the proposed Bill, with the immediate concerns being
this legislation at present does not state the ban is only
applicable to new policies, and should not apply in entirety to
commercial policies. Introduction of a change in legislation in the
middle of a policy term as proposed would have an immediate impact
on Insurer reserving and pricing. A timed amendment has been passed
and the Bill will have to be reintroduced in June 2024 for
discussion.
We recently passed the anniversary of the Differential Pricing
regulations, meaning all policies have been through a cycle under
the new regulations. We continue to support the Central Bank of
Ireland with their data requests in this area, and we continue to
actively monitor the impact of the changes on our portfolio.
GENERAL
FBD's Combined Operating Ratio (COR) was 81.1% (2022: 86.6%).
The calculation of COR has changed under IFRS 17 (see APMs).
Investment Return
FBD's actual investment return for the first six months of 2023
was 1.5% (2022: -6.6%). 0.7% (2022: -1.3%) is recognised in the
Consolidated Income Statement and 0.8% (2022: -5.3%) in the
Consolidated Statement of Other Comprehensive Income (OCI).
Interest rates stabilised in the first half of 2023 after
extraordinary rate increases in 2022. Although the ECB continued to
raise its benchmark deposit rate during the first 6 months of 2023,
these rises were largely priced into FBD's 5 year benchmark
interest rate which remained largely unchanged over the half year.
The pull-to-par effect on the bond portfolios was the main
contributor to OCI returns, also aided with some spread narrowing
for corporate bonds. Bond maturities continue to be reinvested at
higher interest rates, which is gradually increasing the income
earned on these portfolios through the Income Statement.
Risk assets in general posted positive returns for the first six
months of the year. This was despite rising interest rates
threatening to cause a recession in many developed countries. The
bankruptcy of Silicon Valley Bank in the US and the forced takeover
of Credit Suisse in Europe threatened to cause a wider banking
crisis, however the situation was very much confined to US regional
banks. Rising interest rates did result in one of the Company's
corporate bonds being downgraded below investment grade. The
Company decided to sell the bond resulting in a realised loss of
EUR0.9m. The Company also wrote down the value of its investment
property by 5% (EUR0.75m), on advice from its valuation agent.
Financial Services and Other Group activities
The Group's financial services operations returned a loss before
tax of EUR0.1m for the period (2022 profit: EUR0.2m). Other Group
activities includes Holding Company costs which increased by
EUR0.3m to EUR1.8m due to inflation as well as additional costs
incurred for new reporting requirements.
Profit per share
The diluted profit per share is 89 cent per ordinary share,
compared to a profit of 6 cent per ordinary share in 2022.
Dividend
The Board has approved a special dividend of 100 cent per
ordinary share returning a portion of the excess capital to
shareholders. We will continue to monitor our capital position with
the intention of moving closer to our target capital based on risk
appetite.
The special dividend approved by the Board on 10 August 2023
will be paid on 20 October 2023 to the holders of shares on the
register on 15 September 2023. The dividend is subject to
withholding tax ("DWT") except for shareholders who are exempt from
DWT and who have furnished a properly completed declaration of
exemption to the Company's Registrar from whom further details may
be obtained.
STATEMENT OF FINANCIAL POSITION
Capital position
Ordinary shareholders' funds at 30 June 2023 amounted to
EUR456.9m (31 December 2022: EUR454.0m restated). The increase in
shareholders' funds is driven by the following:
-- Profit after tax for the half year of EUR33.3m;
-- An increase of EUR1.4m due to share based payments;
-- Mark to market gains on investments in debt securities
measured at FVOCI of EUR7.6m after tax;
-- Net of a decrease in the defined benefit pension scheme surplus of EUR0.9m after tax;
-- Insurance finance expense for insurance and reinsurance contracts of EUR2.3m after tax; and
-- Dividend payments of EUR36.2m in respect of 2022 financial year.
Net asset value per ordinary share is 1,274 cent, compared to
1,276 cent per share at 31 December 2022.
Investment Allocation
The Group has a conservative investment strategy that ensures
that its technical reserves are matched by cash and fixed interest
securities of similar nature and duration. The Company's deposits
and cash reduced as the 2022 dividend was paid and EUR10m was
invested in risk assets in the first six months of the year. The
average credit quality of the corporate bond portfolio has remained
at A- and has seen a reduction in allocation to BBB rated bonds
(40% vs 42% at 31 December 2022).
The allocation of the Group's investment assets is as
follows:
30 June 2023 31 December 2022
(restated)
EURm % EURm %
Corporate bonds 575 51% 563 49%
Government bonds 276 24% 271 24%
Deposits and cash 124 11% 175 15%
Other risk assets 92 8% 83 7%
Equities 56 5% 50 4%
Investment property 14 1% 15 1%
1,137 100% 1,157 100%
--------- ------ ----------- --------
Solvency
The Half Year Solvency Capital Ratio (SCR) is 217% (unaudited).
The audited SCR at 31 December 2022 was 226%. The Group is
committed to maintaining a strong solvency position.
RISKS AND UNCERTAINTIES
The principal risks and uncertainties faced by the Group are
outlined on pages 21 to 28 of the Group's Annual Report for the
year ended 31 December 2022 and continue to apply to the six month
period ended 30 June 2023. Inflation is expected to moderate due to
falling energy prices although price levels are still higher since
the Russian invasion of Ukraine, which is difficult for businesses
to afford and poses cost of living challenges for consumers.
The Personal Injury Guidelines are positively impacting the
claims environment although continuing challenges have resulted in
delayed settlements that may result in increased legal costs. A
higher degree of uncertainty still exists in the environment as the
claims payment patterns and average settlement costs of more recent
years are a less reliable future indicator and must be carefully
considered by the Actuarial function when arriving at claims
projections. The delays in claim settlements are likely to increase
legal costs further as well as additional inflation.
Substantial inflation in materials and labour continue to impact
the Motor and the Construction industries which has a knock on
effect on claims costs. There is a risk of continually increasing
settlement costs in future years and potentially higher injury
claims costs in the near future as pressure mounts on salary
inflation.
FBD model forward looking projections of key financial metrics
on a periodic basis based on an assessment of the likely operating
environment over the next number of years. The projections reflect
changes of which we are aware and other uncertainties that may
impact future business plans and includes assumptions on the
potential impact on revenue, expenses, claims frequency, claims
severity, investment market movements and in turn solvency. The
output of the modelling demonstrates that the Group is projected to
be profitable and remain in a strong capital position. However, the
situation can change and unforeseen challenges and events could
occur. The solvency of the Group remains solid and is currently at
217% (31 December 2022: 226%).
Central banks have continued to raise interest rates in an
effort to reduce stubbornly high inflation. Developed economies
have remained surprisingly resilient to higher interest rates,
however, there are real fears that continued higher rates will push
economies into recession and will increase default rates. Whether
monetary policy is sufficient to bring inflation under control
remains a risk. Also, whether the policy response will push
economies into a recession with consequent impact on asset
valuations continues to be a risk. Future financial market
movements and their impact on balance sheet valuations, pension
surplus and investment income are unknown and market risk is
expected to remain high for the foreseeable future.
The Group's Investment Policy, which defines investment limits
and rules and ensures there is an optimum allocation of
investments, is being continuously monitored. Regular review of the
Group's reinsurers' credit ratings, term deposits and outstanding
debtor balances is in place. All of the Group's reinsurers have a
credit rating of A- or better. All of the Group's fixed term
deposits are with financial institutions which have a minimum A-
rating. Customer defaults are at pre-pandemic levels and support is
provided to customers when required.
The Group continues to manage liquidity risk through ongoing
monitoring of forecast and actual cash flows. The Group's cash flow
projections from its financial assets are well matched to the cash
flow projections of its liabilities and it maintains a minimum
amount available on term deposit at all times. The Group's asset
allocation is outlined on page 8.
Businesses are refocusing on costs due to the ongoing energy and
cost of living crisis impacted by the war in Ukraine. There is a
risk that delaying the transition to a green economy due to
affordability may accelerate the already evident effects of climate
change, with more immediate impacts on insurers globally such as
reinsurance becoming increasingly more expensive and a reassessment
may be required of insurable risks.
The labour market is constantly evolving and changing with
certain skills in high demand making attracting and retaining
employees challenging. FBD continue to embed pandemic-based
learnings in the workplace culture including hybrid working,
flexibility, well-being initiatives and are committed to investing
in our employees' on-going skills development to meet future
needs.
OUTLOOK
The economic outlook for 2023 is projected to continue on a
solid growth path. Inflation is expected to reduce although high
prices and rising interest rates are still expected to impact
growth. Unemployment is expected to remain low while labour
shortages may hold back growth expectations.
The increased acceptance rates of awards from the PIRB could
indicate the Personal Injury Guidelines are gaining more
acceptance, although their ultimate impact will not be known until
the challenges make their way through the courts and experience
develops of how the guidelines are implemented.
The Differential Pricing requirements have been in place for
over a year and all policies have gone through a renewal cycle. It
will take time to see the full effects of the changes on pricing in
the market as the insurance industry adapts, creating potential
opportunities and challenges.
Income projections on our bond portfolios have increased in the
years ahead due to the impact of higher reinvestment rates as
existing bonds mature.
Our sustainability journey continues as we focus our ESG
approach on where we can have a meaningful impact as we embed and
engage the broader company through the integration of ESG across
the business. We are currently assessing the gaps to delivering the
multiple reporting and disclosure requirements and putting plans
and processes in place to address. We are investigating Science
Based Targets in order to provide a benchmark for future
decarbonisation improvements and we have submitted an application
to sign up to the UN Principles for Sustainable Insurance.
FBD offers a valuable proposition to all our customers and they
continue to stay with us in ever increasing numbers which is
testament to our committed employees keeping the customer at the
heart of what we do. We will continue to strengthen our
relationship focus and extend our digital enablement as our
strategy evolves. Despite the headwinds of inflation and increasing
interest rates affecting all businesses, customers and employees,
FBD is profitable and growing and continuing to deliver for all our
stakeholders.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the half year ended 30 June 2023
Half Half year Year
year
ended ended ended
30/06/23 30/06/22 31/12/22
Notes (restated)(1) (restated)(1)
EUR000s EUR000s EUR000s
Insurance revenue 6(a) 194,540 186,142 379,697
Insurance service expenses 6(c) (91,957) (127,322) (201,838)
Reinsurance expense (19,540) (17,232) (34,814)
Change in amounts recoverable from reinsurers
for incurred claims (17,640) 2,464 (11,941)
----------- --------------- ---------------
Net expense from reinsurance contracts
held 6(a) (37,180) (14,768) (46,755)
Insurance service result 6(a) 65,403 44,052 131,104
----------- --------------- ---------------
Total investment return 7 8,389 (15,281) (10,753)
----------- --------------- ---------------
Finance expense from insurance contracts
issued 5 (1,823) (6,213) (8,731)
Finance (expense)/income from reinsurance
contracts held 5 (281) 1,431 1,389
Net insurance finance expenses (2,104) (4,782) (7,342)
----------- --------------- ---------------
Net insurance and investment result 71,688 23,989 113,009
----------- --------------- ---------------
Other finance costs (1,272) (1,272) (2,559)
Non-attributable expenses 6(c) (16,165) (13,780) (33,048)
Movement in other provisions 16 (12,439) (5,241) (8,403)
Revenue from contracts with customers 6(a) 1,592 1,753 3,173
Financial services income and expenses (3,381) (2,940) (6,045)
Revaluation of property, plant and equipment 6(a) (546) - (287)
Profit before taxation 39,477 2,509 65,840
Income taxation charge 8 (6,170) (327) (8,284)
Profit for the period 33,307 2,182 57,556
----------- --------------- ---------------
Attributable to:
Equity holders of the parent 33,307 2,182 57,556
----------- --------------- ---------------
Half Half year Year
year
ended ended ended
30/06/23 30/06/22 31/12/22
Notes (restated) (restated)
Earnings per share Cent Cent Cent
Basic 9 91 6 161
----------- ------------ ------------
Diluted (2) 9 89 6 157
----------- ------------ ------------
(1) On 1 January 2023, IFRS 17 'Insurance Contracts' became
effective, replacing IFRS 4 'Insurance Contacts'. The Group
elected, as it met the criteria for a temporary exemption, to defer
the application of IFRS 9 'Financial Instruments' (replacing IAS
39) until 1 January 2023. See note 3 for updated accounting
policies and note 4 for transitional impact.
(2) Diluted earnings per share reflects the potential vesting of
share based payments.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Comprehensive Income
(UNAUDITED)
For the half year ended 30 June 2023
Half Half year Year
year
ended ended ended
30/06/23 30/06/22 31/12/22
Notes (restated)(1) (restated)(1)
EUR000s EUR000s EUR000s
Profit for the period 33,307 2,182 57,556
------------------ --------------- ---------------
Items that will or may be reclassified
to profit or loss in subsequent periods:
Movement on investments in debt securities
measured at FVOCI 7 7,720 (63,842) (89,761)
Movement transferred to the Consolidated
Income Statement on disposal during
the period 7 965 (11) (41)
Finance (expense)/income from insurance
contracts issued 5 (5,096) 35,670 42,388
Finance income/(expense) from reinsurance
contracts held 5 2,400 (7,832) (8,202)
Income tax relating to these items (749) 4,500 6,951
Items that will not be reclassified
to profit or loss:
Re-measurements of post-employment benefit
obligations, before tax (999) 3,899 (2,272)
Revaluation of owner occupied property - - 5
Income tax relating to these items 125 (485) 282
------------------ --------------- ---------------
Other comprehensive income/(expense)
after taxation 4,366 (28,101) (50,650)
------------------ --------------- ---------------
Total comprehensive income/(expense)
for the period 37,673 (25,919) 6,906
------------------ --------------- ---------------
Attributable to:
Equity holders of the parent 37,673 (25,919) 6,906
------------------ --------------- ---------------
(1) On 1 January 2023, IFRS 17 'Insurance Contracts' became
effective, replacing IFRS 4 'Insurance Contacts'. The Group
elected, as it met the criteria for a temporary exemption, to defer
the application of IFRS 9 'Financial Instruments' (replacing IAS
39) until 1 January 2023. See note 3 for updated accounting
policies and note 4 for transitional impact.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Financial Position
(UNAUDITED)
At 30 June 2023
Assets Half Half year Year
year
Notes ended ended ended
30/06/23 30/06/22 31/12/22
(restated)(1) (restated)(1)
EUR000s EUR000s EUR000s
Cash and cash equivalents 12 113,833 148,771 165,240
Equity and debt instruments at fair
value through profit or loss 10 149,147 131,583 134,094
Debt instruments at fair value through
other comprehensive income 10 851,124 851,805 833,865
Deposits 10 10,000 20,000 10,000
Investment assets 1,010,271 1,003,388 977,959
----------- --------------- ---------------
Other receivables 11 23,689 20,161 15,148
Loans 10 506 520 568
Reinsurance contract assets 15 120,234 158,069 136,657
Retirement benefit surplus 20 7,500 14,800 8,499
Intangible assets 19,083 10,074 14,082
Policy administration system 21,530 27,081 23,683
Investment property 14,304 16,053 15,052
Right of use assets 3,896 4,683 4,290
Property, plant and equipment 22,442 23,439 22,745
Deferred taxation asset 17 2,924 2,174 3,629
Total assets 1,360,212 1,429,213 1,387,552
----------- --------------- ---------------
(1) On 1 January 2023, IFRS 17 'Insurance Contracts' became
effective, replacing IFRS 4 'Insurance Contacts'. The Group
elected, as it met the criteria for a temporary exemption, to defer
the application of IFRS 9 'Financial Instruments' (replacing IAS
39) until 1 January 2023. See note 3 for updated accounting
policies and note 4 for transitional impact.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Financial Position
(UNAUDITED) ( continued)
At 30 June 2023
Liabilities and equity Half Half year Year
year
ended ended ended
30/06/23 30/06/22 31/12/22
(restated)(1) (restated)(1)
Notes EUR000s EUR000s EUR000s
Liabilities
Current taxation liabilities 1,650 13,520 2,399
Other payables 18 39,875 30,805 35,628
Other provisions 16 16,750 10,062 11,103
Reinsurance contract liabilities 15 656 458 610
Insurance contract liabilities 15 787,522 897,112 826,621
Lease liabilities 4,214 4,974 4,600
Subordinated debt 49,690 49,632 49,662
Total liabilities 900,357 1,006,563 930,623
----------- --------------- ---------------
Equity
Called up share capital presented
as equity 13 21,745 21,583 21,583
Capital reserves 33,257 28,738 30,192
Retained earnings 444,777 400,346 450,318
Other reserves 14 (42,847) (30,940) (48,087)
Shareholders' funds equity interests 456,932 419,727 454,006
----------- --------------- ---------------
Preference share capital 2,923 2,923 2,923
Total equity 459,855 422,650 456,929
----------- --------------- ---------------
Total liabilities and equity 1,360,212 1,429,213 1,387,552
----------- --------------- ---------------
(1) On 1 January 2023, IFRS 17 'Insurance Contracts' became
effective, replacing IFRS 4 'Insurance Contacts'. The Group
elected, as it met the criteria for a temporary exemption, to defer
the application of IFRS 9 'Financial Instruments' (replacing IAS
39) until 1 January 2023. See note 3 for updated accounting
policies and note 4 for transitional impact.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Cash Flows (UNAUDITED)
For the half year ended 30 June 2023
Half year Half year Year
ended 30/06/22
ended (restated)(1) ended
31/12/22
(restated)(1)
30/06/23
EUR000s EUR000s EUR000s
Cash flows from operating activities
Profit before taxation 39,477 2,509 65,840
Adjustments for:
Movement on investments classified as fair
value (3,096) 20,663 19,616
Interest and dividend income (8,809) (5,895) (11,510)
Depreciation/amortisation of property, plant
and equipment, intangible assets and policy
administration system 5,648 4,943 13,239
Depreciation on right of use assets 394 395 788
Share based payment expense 1,419 1,227 2,681
Fair value movement on investment property 748 1 1,003
Revaluation of property, plant and equipment 546 - 287
----------- ---------------- ----------------
Operating cash flows before movement in working
capital 36,327 23,843 91,944
----------- ---------------- ----------------
Movement on insurance and reinsurance contract
liabilities/assets (25,326) 45,459 2,879
Movement on other provisions 5,397 (2,209) (1,168)
Movement on other receivables (6,429) (4,266) 1,274
Movement on other payables 5,773 2,797 9,023
Interest on lease liabilities 92 106 216
Cash generated from operations 15,834 65,730 104,168
----------- ---------------- ----------------
Interest and dividend income received 6,694 5,909 10,998
Income taxes (paid)/refunded (6,836) 4,706 (12,603)
----------- ---------------- ----------------
Net cash generated from operating activities 15,692 76,345 102,563
----------- ---------------- ----------------
Cash flows from investing activities
Purchase of investments classified as fair
value through other comprehensive income (92,658) (166,911) (238,126)
Sale of investments classified as fair value
through other comprehensive income 82,127 142,007 203,750
Purchase of investments classified as fair
value through profit or loss (24,503) (16,154) (25,312)
Sale of investments classified as fair value
through profit or loss 14,503 4,415 13,573
Purchase of property, plant and equipment (1,383) (453) (1,288)
Additions to policy administration system (1,297) (2,021) (4,566)
Purchase of intangible assets (6,056) (1,873) (6,987)
Movement on loans 62 40 (8)
Additional deposits invested with banks - (20,000) (10,000)
----------- ---------------- ----------------
Net cash used in investing activities (29,205) (60,950) (68,964)
----------- ---------------- ----------------
Cash flows from financing activities
Ordinary and preference dividends paid (36,166) (35,870) (35,870)
Interest payment on subordinated debt (1,250) (1,250) (2,500)
Principal elements of lease payments (478) (480) (965)
----------- ---------------- ----------------
Net cash used in financing activities (37,894) (37,600) (39,335)
----------- ---------------- ----------------
Net decrease in cash and cash equivalents (51,407) (22,205) (5,736)
Cash and cash equivalents at the beginning
of the period 165,240 170,976 170,976
----------- ---------------- ----------------
Cash and cash equivalents at the end of the
period 113,833 148,771 165,240
----------- ---------------- ----------------
(1) On 1 January 2023, IFRS 17 'Insurance Contracts' became
effective, replacing IFRS 4 'Insurance Contacts'. The Group
elected, as it met the criteria for a temporary exemption, to defer
the application of IFRS 9 'Financial Instruments' (replacing IAS
39) until 1 January 2023. See note 3 for updated accounting
policies and note 4 for transitional impact.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Changes in Equity
(UNAUDITED)
For the half year ended 30 June 2023
Call up Capital Retained Other Attributable Preference Total
share capital reserve earnings reserves to ordinary share capital equity
presented shareholders
as equity
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
--------------- --------- ---------- ---------- -------------- --------------- ---------
As at 31 December
2022, as previously
reported 21,583 30,192 370,258 755 422,788 2,923 425,711
--------------- --------- ---------- ---------- -------------- --------------- ---------
Impact of application
of IFRS 17 (Note 4) - - 10,518 20,984 31,502 - 31,502
Impact of application
IFRS 9 (Note 4) - - 69,542 (69,826) (284) - (284)
--------------- --------- ---------- ---------- -------------- --------------- ---------
Restated balance at 1
January 2023 21,583 30,192 450,318 (48,087) 454,006 2,923 456,929
--------------- --------- ---------- ---------- -------------- --------------- ---------
Profit after taxation - - 33,307 - 33,307 - 33,307
Other comprehensive
(expense)/income for
the period - - (874) 5,240 4,366 - 4,366
--------------- --------- ---------- ---------- -------------- --------------- ---------
Total comprehensive
income for the
period - - 32,433 5,240 37,673 - 37,673
Dividends paid and
approved on ordinary
and
preference shares - - (36,166) - (36,166) - (36,166)
Issue of ordinary
shares* 162 1,646 (1,808) - - - -
Recognition of share
based payments - 1,419 - - 1,419 - 1,419
--------------- --------- ---------- ---------- -------------- --------------- ---------
Balance at 30 June
2023 21,745 33,257 444,777 (42,847) 456,932 2,923 459,855
--------------- --------- ---------- ---------- -------------- --------------- ---------
As at 31 December
2021, as previously
reported 21,409 27,406 422,815 752 472,382 2,923 475,305
--------------- --------- ---------- ---------- -------------- --------------- ---------
Impact of initial
application of IFRS
17
(Note 4) - - 17,190 (8,928) 8,262 - 8,262
Impact of initial
application IFRS 9
(Note
4) - - (9,106) 8,751 (355) - (355)
--------------- --------- ---------- ---------- -------------- --------------- ---------
Restated balance at 1
January 2022 21,409 27,406 430,899 575 480,289 2,923 483,212
--------------- --------- ---------- ---------- -------------- --------------- ---------
Profit after taxation - - 2,182 - 2,182 - 2,182
Other comprehensive
income/(expense) for
the period - - 3,414 (31,515) (28,101) - (28,101)
Total comprehensive
income/(expense) for
the period - - 5,596 (31,515) (25,919) - (25,919)
Dividends paid and
approved on ordinary
and
preference shares - - (35,870) - (35,870) - (35,870)
Issue of ordinary
shares* 174 105 (279) - - - -
Recognition of share
based payments - 1,227 - - 1,227 - 1,227
Balance at 30 June
2022 21,583 28,738 400,346 (30,940) 419,727 2,923 422,650
--------------- --------- ---------- ---------- -------------- --------------- ---------
* In 2022 and 2023 new ordinary shares were allotted to
employees of FBD Holdings plc as part of the performance share
awards scheme.
FBD HOLDINGS PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Changes in Equity
(UNAUDITED) ( continued)
For the half year ended 30 June 2023
Call up Capital Retained Other Attributable Preference Total
share capital reserve earnings reserves to ordinary share capital equity
presented shareholders
as equity
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
As at 31 December
2021, as previously
reported 21,409 27,406 422,815 752 472,382 2,923 475,305
--------------- --------- ---------- ---------- -------------- --------------- ---------
Impact of initial
application of IFRS
17
(Note 4) - - 17,190 (8,928) 8,262 - 8,262
Impact of initial
application IFRS 9
(Note
4) - - (9,106) 8,751 (355) - (355)
--------------- --------- ---------- ---------- -------------- --------------- ---------
Restated balance at 1
January 2022 21,409 27,406 430,899 575 480,289 2,923 483,212
Profit after taxation - - 57,556 - 57,556 - 57,556
Other comprehensive
expense for the year - - (1,988) (48,662) (50,650) - (50,650)
Total comprehensive
income/(expense) for
the year - - 55,568 (48,662) 6,906 - 6,906
Dividends paid and
approved on ordinary
and
preference shares - - (35,870) - (35,870) - (35,870)
Issue of ordinary
shares* 174 105 (279) - - - -
Recognition of share
based payments - 2,681 - - 2,681 - 2,681
Balance at 31
December 2022 21,583 30,192 450,318 (48,087) 454,006 2,923 456,929
--------------- --------- ---------- ---------- -------------- --------------- ---------
* In 2022 new ordinary shares were allotted to employees of FBD
Holdings plc as part of the performance share awards scheme.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 1 Statutory information
The half yearly financial information is considered
non-statutory financial statements for the purposes of the
Companies Act 2014 and in compliance with section 340(4) of that
Act we state that:
-- the financial information for the half year to 30 June 2023
does not constitute the statutory financial statements of the
Company;
-- the statutory financial statements for the financial year
ended 31 December 2022 have been annexed to the annual return and
delivered to the Registrar;
-- the statutory auditors of the Company have made a report
under section 391 Companies Act 2014 in respect of the statutory
financial statements for year ended 31 December 2022; and
-- the matters referred to in the statutory auditors' report
were unqualified, and did not include a reference to any matters to
which the statutory auditors drew attention by way of emphasis
without qualifying the report.
PricewaterhouseCoopers, Chartered Accountants and Statutory
Audit Firm, have performed an interim review in accordance with
International Standard on Review Engagements (Ireland) 2410,
'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' ("ISRE (Ireland) 2410") issued
for use in Ireland' on the interim financial information for the
period ended 30 June 2023. As part of this review they also
reviewed the IFRS 17 and IFRS 9 transition impacts on the
comparative information.
Note 2 Going concern
The Directors have, at the time of approving the interim
financial statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future being a period of not less
than 12 months from the date of this report.
In making this assessment the Directors considered up to date
solvency, liquidity and profitability projections for the Group.
The basis of this assessment was the latest quarterly forecast for
2023 and projections for 2024 which reflect the latest assumptions
used by the business. The economic environment may impact on
premiums including exposures, new business and retention levels.
Expense assumptions can change depending on the level of premiums
as discretionary spend and resources are adjusted and inflationary
pressures are taken into account.
A number of scenario projections were also run as part of the
Own Risk Solvency Assessment (ORSA) process, including a number of
more extreme stress events, and in all scenarios the Group's
capital ratio remained in excess of the Solvency Capital
Requirement and in compliance with liquidity policies.
The Directors considered the liquidity requirements of the
business to ensure it is projected to have cash resources available
to pay claims and other expenditures as they fall due. The business
is expected to have adequate cash resources available to support
business requirements. In addition the Group has a highly liquid
investment portfolio with over 50% of the portfolio invested in
corporate and sovereign bonds with a minimum A- rating. In the
worst case scenario run the Group's Capital Ratio remained in
excess of the Solvency Capital Requirement and in compliance with
liquidity policies.
Note 3 Summary of significant accounting policies
Basis of preparation
The annual financial statements of FBD Holdings plc are prepared
in accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with IAS 34 'Interim Financial
Reporting', as adopted by the European Union.
On the basis of the projections for the Group, the Directors are
satisfied that there are no material uncertainties which cast
significant doubt on the ability of the Group or Company to
continue as a going concern over the period of assessment being not
less than 12 months from the date of this report. Therefore the
Directors continue to adopt the going concern basis of accounting
in preparing the financial statements.
Consistency of accounting policies
The below accounting policies have been updated for the
application of IFRS 17 and IFRS 9 (see note 4). Apart from the
updated accounting policies included hereafter to address IFRS 17
and IFRS 9, the methods of computation used by the Group to prepare
the interim financial statements for the six month period ended 30
June 2023 are the same as those used to prepare the Group Annual
Report for the year ended 31 December 2022 (reference Note 3 of FBD
Holdings plc Annual Report 2022). Other than the adoption of IFRS
17 and IFRS 9 there are no other impacts from the adoption of other
standards and amendments.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
E) Insurance contracts
I. Definition and classification
The Group issues insurance contracts in the normal course of
business, under which it accepts significant insurance risk from
its policyholders. As a general guideline, the Group determines
whether it has significant insurance risk by comparing benefits
payable after an insured event with benefits payable if the insured
event did not occur. Insurance contracts can also transfer
financial risk. The Group issues non-life insurance to individuals
and businesses. Non-life insurance products offered include Motor,
Property, Liability and Personal Accident which are segmented into
Motor and Non-Motor for reporting. These products offer protection
of policyholder's assets and indemnification of other parties that
have suffered damage as a result of an insured event occurring.
In the normal course of business, the Group uses reinsurance to
mitigate its risk exposures. A reinsurance contract transfers
significant risk if it transfers substantially all the insurance
risk resulting from the insured portion of the underlying insurance
contracts, even if it does not expose the reinsurer to the
possibility of a significant loss.
II. Insurance and reinsurance contracts accounting treatment
Separating components from insurance and reinsurance
contract
Before the Group accounts for an insurance contract based on the
guidance of IFRS 17, it assesses whether the contract contains
distinct components which must be accounted for under another IFRS
instead of under IFRS 17. After separating any distinct components,
the Group applies IFRS 17 to all remaining components of the
insurance contract. Currently, engineering inspection risk, which
is not material, is the only non-insurance component which forms
part of any insurance contracts that requires unbundling.
Level of aggregation/Unit of account
The Group manages insurance contracts issued by product lines
within an operating segment, where each product line includes
contracts that are subject to similar risks. All insurance
contracts within a product line represent a portfolio of contracts.
Each portfolio is further disaggregated into groups of contracts
that are issued within a calendar year (annual cohorts) and are (i)
contracts that are onerous at initial recognition; (ii) contracts
that at initial recognition have no significant possibility of
becoming onerous subsequently; or (iii) a group of remaining
contracts. These groups represent the level of aggregation at which
insurance contracts are initially recognised and measured.
The profitability of groups of contracts is assessed by
actuarial valuation models that take into consideration existing
and new business. FBD assumes that no contracts in the portfolio
are onerous at initial recognition unless facts and circumstances
indicate otherwise. By the nature of the insurance risks covered by
the Group, all of the contracts issued have a maximum claim pay-out
potential that is greater than the premium received. On this basis
there are currently no contracts grouped into 'no significant
possibility of becoming onerous'.
Recognition, modification and de-recognition
The Group recognises groups of insurance contracts it issues
from the earliest of the following:
-- the beginning of the coverage period of the group of contracts;
-- the date when the first payment from a policyholder in the
group is due or when the first payment is received if there is no
due date; and
-- when the Group determines that a group of contracts becomes onerous.
Only contracts that meet the recognition criteria by the end of
the reporting period are included in the groups. When contracts
meet the recognition criteria in the groups after the reporting
date, they are added to the groups in the reporting period in which
they meet the recognition criteria, subject to the annual cohorts'
restriction. Composition of the groups is not reassessed in
subsequent periods.
The Group derecognises insurance contracts when:
-- the rights and obligations relating to the contract are
extinguished (i.e. discharged, cancelled or expired)
or
-- the contract is modified such that the modification results
in a change in the measurement model or the applicable standard for
measuring a component of the contract, substantially changes the
contract boundary, or requires the
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
E) Insurance contracts (continued)
II. Insurance and reinsurance contracts accounting treatment (continued)
Recognition, modification and de-recognition (continued)
modified contract to be included in a different group. In such
cases, the Group derecognises the initial contract and recognises
the modified contract as a new contract.
When a modification is not treated as a derecognition, the Group
recognises amounts paid or received for the modification with the
contract as an adjustment to the relevant liability for remaining
coverage (LRC).
Contract boundary
The Group includes in the measurement of a group of insurance
contracts all the future cash flows within the boundary of each
contract in the group. Cash flows are within the boundary of an
insurance contract if they arise from substantive rights and
obligations that exist during the reporting period in which the
Group can compel the policyholder to pay the premiums, or in which
the Group has a substantive obligation to provide the policyholder
with insurance contract services. A substantive obligation to
provide insurance contract services ends when the Group has the
practical ability to reassess the risks of the particular
policyholder and, as a result, can set a price or level of benefits
that fully reflects those risks.
Cash flows outside the insurance contracts boundary relate to
future insurance contracts and are recognised when those contracts
meet the recognition criteria.
Initial and subsequent measurement - groups of contracts
measured under the PAA
The Group applies the premium allocation approach (PAA) to all
the insurance contracts that it issues and reinsurance contracts
that it holds. The PAA is an optional simplified measurement model
in IFRS 17 that is available for insurance and reinsurance
contracts that meet the eligibility criteria.
The Group is eligible to apply the PAA because the following
criteria are met at initial recognition:
-- insurance contracts and losses-occurring reinsurance
contracts: The coverage period of each contract in the group is one
year or less.
-- risk-attaching reinsurance contracts: The Group reasonably
expects that the resulting measurement of the asset for remaining
coverage would not differ materially from the measurement that
would be produced applying the general measurement model (GMM).
The estimates of future cash flows:
-- are based on a probability weighted mean of the full range of possible outcomes;
-- are determined from the perspective of the Group, provided
the estimates are consistent with observable market prices for
market variables; and
-- reflect conditions existing at the measurement date.
The ultimate cost of outstanding claims is estimated by using a
range of standard actuarial claims projection techniques, such as,
but not limited to, Chain Ladder, Bornheutter-Ferguson, Initial
Expected Loss Ratio and frequency-severity methods.
The main assumption underlying these techniques is that a
group's past claims development experience can be used to project
future claims development and hence ultimate claims costs. These
methods extrapolate the development of paid and incurred losses,
average costs per claim (including claims handling costs), and
claim numbers based on the observed development of earlier years
and expected loss ratios. Historical claims development is mainly
analysed by accident years, but can also be further analysed by
significant business lines and claim types. Large claims are
separately addressed, separately projected in order to reflect
their future development. Explicit assumptions are made regarding
future rates of claims inflation or loss ratios. Additional
qualitative judgement is used to assess the extent to which past
trends may not apply in future, (e.g., to reflect one-off
occurrences, changes in external or market factors such as public
attitudes to claiming, economic conditions, levels of claims
inflation, judicial decisions and legislation, as well as internal
factors such as portfolio mix, policy features and claims handling
procedures) in order to arrive at the estimated ultimate cost of
claims that present the probability weighted expected value outcome
from the range of possible outcomes, taking account of all the
uncertainties involved.
In its claims incurred assessments, the Group uses internal and
market data. Internal data is derived mostly from the Group's
claims reports. This information is used to develop scenarios
related to the latency of claims that are used for the projections
of the ultimate number of claims.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
E) Insurance contracts (continued)
II. Insurance and reinsurance contracts accounting treatment (continued)
Initial and subsequent measurement - groups of contracts
measured under the PAA (continued)
Some of the insurance contracts that have been written in the
property line of business permit the Group to sell property
acquired in settling a claim. The Group also has the right to
pursue third parties for payment of some or all costs. Estimates of
salvage recoveries and subrogation reimbursements are considered as
an allowance in the measurement of ultimate claims costs.
Other key circumstances affecting the reliability of assumptions
include delays in settlement and inflation rates.
An explicit risk adjustment for non-financial risk is estimated
separately from the other estimates. For contracts measured under
the PAA, unless the contracts are onerous, the explicit risk
adjustment for non-financial risk is only estimated for the
measurement of the liability for incurred claims (LIC).
The risk adjustment for non-financial risk is applied to the
present value of the estimated future cash flows and reflects the
compensation the Group requires for bearing the uncertainty about
the amount and timing of the cash flows from non-financial risk as
the Group fulfils insurance contracts. The Group does not
disaggregate the change in risk adjustment for non-financial risk
between a financial and non-financial portion and includes the
entire change as part of the insurance service result. Methods and
assumptions used to determine the risk adjustment for non-financial
risk are discussed in accounting policy U.
The Group does not adjust the LRC for insurance contracts issued
and the remaining coverage for reinsurance contracts held for the
effect of the time value of money as insurance premiums are due
within the coverage period of contracts, which is one year or less.
The estimates of future cash flows related to incurred claims are
adjusted using the current discount rates to reflect the time value
of money and the financial risks related to those cash flows, to
the extent not included in the estimates of cash flows. The
discount rates reflect the characteristics of the cash flows
arising from the groups of insurance contracts, including timing,
currency and liquidity characteristics of the insurance contracts.
The determination of the discount rate that reflects the
characteristics of the cash flows and liquidity characteristics of
the insurance contracts requires significant judgement and
estimation.
The Group estimates certain fulfilment cash flows (FCF) at the
portfolio level or higher and then allocates such estimates to
groups of contracts.
Insurance acquisition cash flows
The Group includes the following acquisition cash flows within
the insurance contract boundary that arise from selling,
underwriting and starting a group of insurance contracts and that
are:
-- costs directly attributable to individual contracts and groups of contracts; and
-- costs directly attributable to the portfolio of insurance
contracts to which the group belongs, which are allocated on a
reasonable and consistent basis to measure the group of insurance
contracts.
For all groups, insurance acquisition cash flows will be
allocated to related groups of insurance contracts and amortised
over the coverage period of the related group.
Cash flows that are not directly attributable to a portfolio of
insurance contracts, such as some product development and training
costs, are recognised in non-attributable expenses as incurred.
Initial measurement
The carrying amount of a group of insurance contracts issued at
the end of each reporting period is the sum of:
-- the LRC; and
-- the LIC, comprising the FCF related to past service allocated
to the group at the reporting date.
For insurance contracts issued, on initial recognition, the
Group measures the LRC at the amount of premiums received, less any
acquisition cash flows paid and any amounts arising from the
derecognition of the prepaid acquisition cash flows asset.
The Group estimates the LIC as the FCF related to incurred
claims.
Where facts and circumstances indicate that contracts are
onerous at initial recognition, the Group performs additional
analysis to determine if a net outflow is expected from the
contract. Such onerous contracts are separately grouped from other
contracts
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
E) Insurance contracts (continued)
II. Insurance and reinsurance contracts accounting treatment (continued)
Initial and subsequent measurement - groups of contracts
measured under the PAA (continued)
and the Group recognises a loss in the income statement for the
net outflow, resulting in the carrying amount of the liability for
the group being equal to the FCF. A loss component is established
by the Group for the LRC for such onerous groups depicting the
losses recognised and included in the LRC.
Subsequent measurement
For insurance contracts issued, at each of the subsequent
reporting dates, the LRC is:
-- increased for premiums received in the period;
-- decreased for insurance acquisition cash flows paid in the period;
-- decreased for the amounts recognised as insurance revenue for
the services provided in the period; and
-- increased for the amortisation of insurance acquisition cash
flows in the period recognised as insurance service expenses.
The FCF relating to incurred claims, therefore the LIC, is
updated by the Group for current assumptions at the end of every
reporting period, using the current estimates of the amount, timing
and uncertainty of future cash flows and of discount rates.
If a group of contracts becomes onerous, the Group increases the
carrying amount of the LRC to the amounts of the FCF determined
under the GMM with the amount of such an increase recognised in
insurance service expenses. Subsequently, the Group amortises the
amount of the loss component within the LRC by decreasing insurance
service expenses. The loss component amortisation is based on the
passage of time over the remaining coverage period of contracts
within an onerous group. If facts and circumstances indicate that
the expected profitability of the onerous group during the
remaining coverage has changed, then the Group remeasures the FCF
by applying the GMM and reflects changes in the FCF by adjusting
the loss component as required until the loss component is reduced
to zero.
Reinsurance contracts held
Reinsurance contracts held are measured on the same basis as
insurance contracts, except:
-- They are adapted to reflect the features of reinsurance
contracts that differ from insurance contracts;
-- That references to onerous contracts refer to contracts on
which there is a net gain on initial recognition. For some groups
of reinsurance contracts held, a group can comprise a single
contract. By the nature of the Group's reinsurance treaties
currently in effect, there are no reinsurance contracts held that
are a net gain on initial recognition nor that are deemed as having
no significant risk of being a gain.
-- The Group recognises a group of reinsurance contracts held it
has entered into from the earlier of the following:
o the beginning of the coverage period of the group of
reinsurance contracts held. (However, the Group delays the
recognition of a group of reinsurance contracts held that provide
proportionate coverage until the date any underlying insurance
contract is initially recognised, if that date is later than the
beginning of the coverage period of the group of reinsurance
contracts held); and
o the date the Group recognises an onerous group of underlying
insurance contracts if the Group entered into the related
reinsurance contract held in the group of reinsurance contracts
held at or before that date.
-- The risk adjustment represents the amount of risk being
transferred by the Group to the reinsurer.
-- That cash flows are within the contract boundary if they
arise from substantive rights and obligations of the Group that
exist during the reporting period in which the Group is compelled
to pay amounts to the reinsurer or in which the Group has a
substantive right to receive services from the reinsurer.
-- The excess of loss reinsurance contracts held provides
coverage for claims incurred during an accident year.
-- All cash flows arising from claims incurred and expected to
be incurred in the accident year are included in the measurement of
the reinsurance contracts held. Some of these contracts may include
reinstatement reinsurance premiums, which are guaranteed per the
contractual arrangements and are thus within the respective
reinsurance contracts' boundaries.
-- In the measurement of reinsurance contracts held, the
probability weighted estimates of the present value of future cash
flows include the potential credit losses and other disputes of the
reinsurer to reflect the non-performance risk of the reinsurer.
-- On initial recognition, the Group measures the remaining
coverage at the amount of ceding premiums paid. The carrying amount
of a group of reinsurance contracts held at the end of each
reporting period is the sum of:
o the remaining coverage; and
o the incurred claims, comprising the FCF related to past
service allocated to the group at the reporting date.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
E) Insurance contracts (continued)
II. Insurance and reinsurance contracts accounting treatment (continued)
Reinsurance contracts held (continued)
-- Instead of at initial recognition, where the Group recognises
a loss on initial recognition of an onerous group of underlying
insurance contracts or when further onerous underlying insurance
contracts are added to a group, the Group establishes a
loss-recovery component of the asset for remaining coverage for a
group of reinsurance contracts held depicting the recovery of
losses. The loss-recovery component adjusts the carrying amount of
the asset for remaining coverage.
-- At each of the subsequent reporting dates, the remaining coverage is:
o increased for ceding premiums paid in the period; and
o decreased for the amounts of ceding premiums recognised as
reinsurance expenses for the services received in the period.
-- Instead of a loss component, the loss-recovery component
adjusts the carrying amount of the asset for remaining coverage.
Where a loss-recovery component has been established, the Group
subsequently reduces the loss recovery component to zero in line
with reductions in the onerous group of underlying insurance
contracts in order to reflect that the loss-recovery component
shall not exceed the portion of the carrying amount of the loss
component of the onerous group of underlying insurance contracts
that the entity expects to recover from the group of reinsurance
contracts held.
Methods used and judgements applied in determining the IFRS 17
transition amounts
The Group has been able to apply the fully retrospective
approach with the exception of using the modified retrospective
approach for the choice of initial recognition yield curves for
underwriting years 2015 and prior.
To the extent that the Group did not have reasonable and
supportable information to determine discount rates applicable on
the date of initial recognition of the group of contracts, the
Group estimated the discount rates using an observable yield
curve.
III. Amounts recognised in comprehensive income
Insurance revenue
The insurance revenue for the period is the amount of expected
premium receipts allocated to the period. The Group allocates the
expected premium receipts to each period of insurance contract
services on the basis of the passage of time. But if the expected
pattern of release of risk during the coverage period differs
significantly from the passage of time, then the allocation is made
on the basis of the expected timing of incurred insurance service
expenses.
The Group changes the basis of allocation between the two
methods above as necessary, if facts and circumstances change. The
change is accounted for prospectively as a change in accounting
estimate.
For the periods presented, all revenue has been recognised on
the basis of the passage of time.
Insurance service expenses
Insurance service expenses include the following:
-- incurred claims and benefits excluding investment components;
-- other incurred insurance acquisition expenses;
-- amortisation of insurance acquisition cash flows;
-- changes that relate to past service (i.e. changes in the FCF relating to the LIC); and
-- changes that relate to future service (i.e. losses/reversals
of onerous groups of contracts from changes in the loss
components).
For the contracts measured under the PAA, amortisation of
insurance acquisition cash flows is based on the passage of
time.
Net income /(expense) from reinsurance contracts held
The Group presents separately on the face of the income
statement, the amounts expected to be recovered from reinsurers and
the reinsurance expense. Re-instatement premiums contingent on
claims on the underlying contracts are treated as part of the
claims that are expected to be reimbursed under the reinsurance
contracts held. Ceding commissions that are not contingent on
claims of the underlying contracts issued reduce ceding premiums
and are accounted for as part of reinsurance expenses.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
E) Insurance contracts (continued)
II. Insurance and reinsurance contracts accounting treatment (continued)
Finance income/ (expense) from insurance contracts issued
Insurance finance income or expense comprise the change in the
carrying amount of the group of insurance contracts arising
from:
-- interest accreted on the LIC; and
-- the effect of changes in interest rates and other financial assumptions.
The Group disaggregates insurance finance income or expenses on
insurance contracts issued between the income statement and the
statement of comprehensive income. The impact of changes in market
interest rates on the value of the insurance contract liabilities
are reflected in the OCI in order to minimise accounting mismatches
between the accounting for financial assets and insurance assets
and liabilities. The Group's financial assets backing the insurance
portfolios are predominantly measured at fair value through other
comprehensive income (FVOCI).
K) Financial instruments
a) Recognition, classification and measurement
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when, and only when, the Group
becomes party to the contractual provisions of the instrument.
The Group classifies its financial assets, subsequent to initial
recognition, at either:
-- amortised cost;
-- fair value through other comprehensive income (FVOCI); or
-- fair value through profit and loss (FVTPL).
The Group determines the appropriate classification based
on:
(i) the business model for managing the financial assets: how
the Group manages its financial assets in order to generate cash
flows-either by collecting contractual cash flows, selling the
asset or both; and
(ii) the contractual cash flow characteristics of the financial
asset: the Solely Payments of Principal and Interest (SPPI) test -
whether the contractual terms of the financial asset give rise to,
on specified dates, cash flows that are solely payments of
principal and interest.
A financial asset is measured at amortised cost if both the
following conditions are met:
(i) the financial asset is held within a business model whose
objective is to hold the financial asset in order to collect
contractual cash flows; and
(ii) the contractual terms of the financial asset gives rise on
specific dates to cash flows that are SPPI on the principal amount
outstanding.
A financial asset is measured at FVOCI if both the following
conditions are met:
(i) the financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and
selling financial assets; and
(ii) the contractual terms of the financial asset gives rise on
specific dates to cash flows that are SPPI on the principal amount
outstanding.
A financial asset is measured at fair value though profit and
loss (FVTPL), unless it is measured using either of the above two
methods - amortised cost or FVOCI.
Investments at FVOCI
FVOCI investments relate to quoted debt securities. These
investments pass the SPPI test and are classified as FVOCI as they
are held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial
assets. They are recognised on a trade date basis at fair value,
and are subsequently revalued at each reporting date to fair value,
with gains and losses being included directly in the Statement of
Comprehensive Income until the investment is disposed of or
determined to be impaired, at which time the cumulative gain or
loss previously recognised in the Statement of Comprehensive
Income, is included in the Income Statement for the year.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
K) Financial instruments (continued)
a) Recognition, classification and measurement (continued)
Interest revenue using the effective interest method and foreign
exchange gains and losses on the financial asset are recognised in
the Income Statement.
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts through
the expected life of the debt instrument, or, where appropriate, a
shorter period, to the net carrying amount at initial
recognition.
The Expected Credit Loss (ECL) on debt instruments measured at
FVOCI does not reduce the carrying amount of the asset in the
statement of financial position, which remains at fair value.
Instead an amount equal to the allowance that would arise if the
assets were measured at amortised cost is recognised in OCI with a
corresponding charge to provision for credit losses in the income
statement.
Investments at FVTPL
Investments at FVTPL are stated at fair value and include quoted
shares, collective investment schemes and unquoted investments.
These investments are classified as FVTPL as they do not pass the
SPPI test. They are recognised on a trade date basis at fair value
and are revalued at subsequent reporting dates at fair value, with
gains and losses being included in the
Income Statement in the period in which they arise. Any dividend
or interest earned on FVTPL investments is also recognised in the
Income Statement.
Loans
Loans are recognised on a trade date basis at fair value plus
transaction costs and are subsequently measured at amortised cost
using the effective interest rate method. When it is not possible
to estimate reliably the cash flows or the expected life of a loan,
the projected cash flows over the full term of the loan are used to
determine fair value.
Other receivables
Amounts arising out of direct insurance operations and other
debtors are measured at initial recognition at fair value and are
subsequently measured at amortised cost, after recognising a loss
allowance for ECLs (note K (c)).
Deposits with banks
Term deposits with banks comprise cash held for the purpose of
investment. Demand deposits with banks are held for operating
purposes and included in cash and cash equivalents. Deposits with
banks and cash and cash equivalents are valued at amortised
cost.
Subordinated debt
Subordinated debt issued by the Group comprise callable dated
deferrable subordinated notes. The subordinated debt is measured at
amortised cost using the effective interest rate method. Interest
and amortisation relating to the financial liability is recognised
in the Income Statement.
b) Derecognition
The Group derecognises a financial asset only when the
contractual rights to the cash flows of the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of the ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risk and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability to the extent of its continuing involvement
in the financial asset. If the Group retains substantially all the
risks and rewards of ownership of a transferred financial asset,
the Group continues to recognise the financial asset.
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
K) Financial instruments (continued)
c) Impairment of financial instruments
The Group recognises loss allowances for ECLs at each balance
sheet date for the following financial instruments that are not
measured at FVTPL;
-- financial assets at FVOCI
-- financial assets at amortised cost
Financial assets at FVOCI
The Group categorises financial instruments classified as FVOCI
into the following categories at each reporting date.
Stage 1: 12-month expected credit losses (not
credit-impaired)
These are financial instruments where there has not been a
significant increase in credit risk since initial recognition. An
impairment loss allowance equal to the 12-month ECL is recognised,
which is the portion of the lifetime ECL resulting from default
events that are possible within the next 12 months.
Stage 2: Lifetime expected credit losses (not
credit-impaired)
These are financial instruments where there has been a
significant increase in credit risk since initial recognition but
which are not credit-impaired. The Group assesses whether the risk
of default over the remaining expected life of the financial
instrument is significantly higher than had been anticipated at
initial recognition, the credit risk is always considered as
significantly increased if any contractual payments are more than
30 days past due. An impairment loss allowance equal to the
lifetime ECL is recognised, being the ECL resulting from all
possible default events over the expected life of the financial
instrument.
Stage 3: Lifetime expected credit losses (credit-impaired)
These are financial instruments which are credit-impaired at the
reporting date but were not credit-impaired at initial recognition.
If the financial instrument is more than 90 days past due or if
there is other evidence of financial distress (for example, a legal
bankruptcy or default), the instrument is classified as
credit-impaired (stage 3) which means the impairment loss has to
reflect the lifetime ECL as in stage 2. The interest, for Stage 3
assets, is calculated by applying the effective interest rate (EIR)
to their carrying value, if the asset is no longer credit-impaired,
the calculation of interest income reverts to the gross basis.
Financial assets at amortised cost
The Group calculates a loss allowance for financial assets at
amortised cost. The Group considers the best reasonable and
supportable information when considering ECLs for 'Loans' and
'Other receivables'. The Group calculates ECL on loans at initial
recognition by considering the consequences and probabilities of
possible defaults only for the next 12 months (stage 1). It
continues to apply this method until a significant increase in
credit risk has occurred, at which point the loss allowance is
measured based on lifetime ECLs (stage 2) or where significant
increase in credit risk has occurred and the asset is
credit-impaired (stage 3). For 'Other receivables' the Group uses
the simplified approach, and therefore does not track the changes
in credit risk, but instead recognise a loss allowance based on
lifetime ECLs at each reporting date. Impairment loss allowances
for ECL on financial assets at amortised cost are presented as a
reduction in the gross carrying amount in the Statement of
Financial Position.
The measurement of impairment losses under IFRS 9 across
relevant financial assets requires judgement, in particular, for
the estimation of the amount and timing of future cash flows when
determining impairment losses and the assessment of a significant
increase in credit risk. These estimates are driven by the outcome
of modelled ECL scenarios and the relevant inputs used.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
N) Taxation
Income tax expense or credit represents the sum of income tax
currently payable and deferred income tax. Income tax currently
payable is based on taxable profit for the year. Taxable profit
differs from profit before tax as reported in the Consolidated
Income Statement because it excludes items of income or expense
that are taxable or deductible in other years and further excludes
items that are not taxable or deductible. The Group's liability for
income tax is calculated using rates that have been enacted or
substantively enacted at the reporting date. Income tax is
recognised in the Income Statement except to the extent that it
relates to items recognised directly in equity.
Deferred income tax is provided, using the liability method, on
all differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for taxation purposes. Deferred income tax assets and liabilities
are measured at the tax rates that are expected to apply in the
year when the asset is expected to be realised or the liability to
be settled.
Accounting adjustments to opening reserves as a result of the
adoption of IFRS 9 and IFRS 17 (i.e. the retrospective effect of
adopting the accounting standard recognised in opening reserves)
will be brought into account as a transitional adjustment and
spread over 5 years for tax purposes.
Deferred tax assets are recognised for all deductible
differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences and
the carry forward of unused tax credits and unused tax losses can
be utilised. The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit would be
available to allow all or part of the deferred income tax asset to
be utilised.
T) Other financial services income
Other financial services income previously comprised interest on
instalment premiums which is now included with Insurance revenue
and no longer presented separately on the face of the Consolidated
Income Statement.
U) Critical accounting estimates and judgements in applying accounting policies
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities
that are not readily apparent from other sources. The key
judgements and the key sources of estimation uncertainty that have
the most significant effect on the amounts recognised in the
interim financial statements are detailed below. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. The estimates and
underlying assumptions are reviewed on an ongoing basis and actual
results may differ from these estimates.
Estimates of future cash flows to fulfil insurance/reinsurance
contracts
The Group estimates insurance liabilities in relation to claims
incurred. In estimating future cash flows, the Group incorporate,
in an unbiased way, all reasonable and supporting information that
is available without undue cost or effort at the reporting date.
This information includes both internal information and external
historical data about claims and other experience, updated to
reflect current expectations of future events.
Uncertainty in the estimation of future claims and benefit
payments arises primarily from the severity and frequency of claims
and uncertainties regarding future inflation rates leading to
claims and claims-handling expenses growth. As a result of the
uncertainties noted, the Group sets provisions at a margin above
the best estimate known as the risk adjustment.
Assumptions used to develop estimates about future cash flows
are reassessed at each reporting date and adjusted where
required.
Methods used to measure the LIC
The Group estimates insurance liabilities and reinsurance assets
in relation to claims incurred on a risk basis. Estimates are
performed on an accident year basis with further allocation to
annual cohorts of portfolios based on available data. Judgement is
involved in assessing the most appropriate technique to estimate
insurance liabilities for the claims incurred. In certain
instances, different techniques or a combination of techniques have
been selected for individual accident years or groups of accident
years within the same type of contracts.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
U) Critical accounting estimates and judgements in applying accounting policies (continued)
Methods used to measure the LIC (continued)
The ultimate cost of outstanding claims is estimated by using a
range of standard actuarial claims projection techniques, such as,
but not limited to, Chain Ladder, Bornheutter-Ferguson, Initial
Expected Loss Ratio and frequency-severity methods.
The liabilities for incurred claims represent the cost of claims
outstanding. Actuarial techniques, based on statistical analysis of
past experience, are used to calculate the estimated cost of claims
outstanding at the period end.
The estimation of outstanding claim also includes factors such
as the potential for inflation and the potential impact of the
Personal Injuries Guidelines. Provisions for more recent claims
make use of techniques that incorporate expected loss ratios and
average claims costs (adjusted for inflation) and frequency
methods. The average claims cost and frequency methods are
particularly relevant when calculating the ultimate cost of the
current accident year.
FBD have now received the final judgement in relation to the
Covid-19 Business Interruption test case. This has provided more
certainty on the measurement of losses and FBD have issued
communications to all affected policyholders in order make the
final settlement of their claims.
FBD has received information from more than 700 policyholders in
order to assess the claims and has been making interim payments
based on these assessments. This data has provided reasonable
certainty in respect to a number of assumptions underlying the best
estimate of Covid-19 Business Interruption losses and will continue
to improve as FBD proceed to final settlements.
The calculations are particularly sensitive to the estimation of
the ultimate cost of claims for the particular classes of business
and the estimation of future claims handling costs. Actual claims
experience may differ from the assumptions on which the actuarial
best estimate is based and the cost of settling individual claims
may exceed that assumed.
The actual amount recovered from reinsurers is sensitive to the
same uncertainties as the underlying claims. To the extent that the
underlying claim settles at a lower or higher amount than that
assumed this will have a direct influence on the associated
reinsurance asset.
To minimise default exposure, the group's policy is that all
reinsurers should have a credit rating of A- or better or have
provided alternative satisfactory security.
Discount rates
The Group is required to discount future cash flows related to
incurred claims as the weighted time to settlement is greater than
one year from the date claim occurred.
The Group determines the risk-free discount rate using a
bottom-up approach. Under this approach, the discount rate is
determined as the risk-free yield curve adjusted for differences in
liquidity characteristics between the financial assets used to
derive the risk free yield and the relevant liability cash flows
(known as an illiquidity premium).
The Group uses the Euro denominated EIOPA prescribed rates under
Solvency II as the risk-free yield. The EIOPA EUR spot rates are
derived from market observable EUR swap rates for durations one to
twenty years.
The illiquidity premium is determined by reference to observable
market rates.
The yield curves used to discount the estimates of future cash
flows are as follows:
Currency 1 year 3 years 5 years 10 years 15 years 20 years
30 June
2022 EUR 1.5% 2.2% 2.4% 2.8% 3.0% 2.9%
---------- ------- -------- -------- --------- --------- ---------
31 Dec 2022 EUR 3.3% 3.3% 3.2% 3.2% 3.1% 2.9%
---------- ------- -------- -------- --------- --------- ---------
30 June
2023 EUR 4.1% 3.6% 3.3% 3.0% 2.9% 2.8%
---------- ------- -------- -------- --------- --------- ---------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 3 Summary of significant accounting policies (continued)
U) Critical accounting estimates and judgements in applying accounting policies (continued)
Methods used to measure the risk adjustment for non-financial
risk
The risk adjustment for non-financial risk is the compensation
that is required for bearing the uncertainty about the amount and
timing of cash flows that arises from non-financial risk as the
insurance contract is fulfilled. As the risk adjustment represents
compensation for uncertainty, estimates are made on the degree of
diversification benefits and expected favourable and unfavourable
outcomes in a way that reflects the Group's degree of risk
aversion. The Group estimates an adjustment for non-financial risk
separately from all other estimates.
The risk adjustment is calculated at the entity level and then
allocated down to each group of contracts in accordance with their
risk profiles. A confidence level approach is used to derive the
overall risk adjustment for non-financial risk. The Group aim to
target a risk adjustment within a range between the 75(th) and
80(th) percentiles. At year-end 2022, the risk adjustment was at
the 80(th) percentile, and remained at the 80(th) percentile to
date.
As the Group is using the PAA method, a risk adjustment is only
required for the LIC and not the LRC (unless there is an onerous
group).
To determine the risk adjustment for non-financial risk for
reinsurance contracts, the Group will apply these techniques both
gross and net of reinsurance and derive the amount of risk
transferred to the reinsurer as the difference between the two
results.
The methods and assumptions used to determine the risk
adjustment for non-financial risk were not changed in 2023.
Uncertainties in impairment testing
The Group has carried out impairment testing on tangible and
intangible assets. The recoverable amount of an asset is the higher
of its value in use or its fair value less costs to sell. In the
case of the Property, Plant and Equipment (excluding Owner Occupied
Property which is held at revalued amount), policy administration
system, Intangible Assets and Right of Use Assets there is no
reliable estimate of the price at which an orderly transaction to
sell the assets would take place and there are no direct cash-flows
expected from the individual assets. These assets are an integral
part of the FBD General Insurance business, therefore, the smallest
group of assets that can be classified as a cash generating unit is
the FBD General Insurance business.
The Value in Use cash flow projections are based on the
quarterly forecast for 2023 approved by the Board in May 2023 and
the five year strategic projections approved by the Board in
quarter four 2022. The 2028 and 2029 figures are extrapolated
assuming the performance in 2028 and 2029 are in line with 2027.
The time period of six years used in the cash flow projections is
less than the weighted average remaining useful life of the assets
in the FBD General Insurance business being assessed. This
projection and plan refresh represent management's best estimate of
future underwriting profits and fee income for FBD.
General Insurance business projections factors in both past
experience as well as expected future outcomes relative to market
data and the strategy adopted by the Board. The underlying
assumptions of these forecasts include average premium, number of
policies written, claims frequency, claims severity, weather
experience, commission rates, fee income charges and expenses. The
average growth rate used for 2023 is 6%, for 2024 is 7%, followed
by a 3% growth rate for 2025-2027. The growth rate is assumed to be
flat for later years. Future cash flows are discounted using an
estimated weighted average cost of capital (WACC) of 10.3% which is
considered a reasonable estimate following the recent increase in
risk free rates.
Sensitivity analysis was performed on the projections to allow
for possible variations in the amount of the future cash flows and
potential discount rate changes. The sensitivities include climate
change scenarios, delayed benefits from the Judicial Council
Guidelines, additional inflation in claims settlements, reduced
growth rates and positive impacts of new initiatives.
The level of headroom has remained in line with year-end 2022,
and in all scenarios run, the value in use of the cash generating
unit exceeded the carrying value of the assets, demonstrating that
no reasonably possible change in key assumptions would result in an
impairment of the assets. The largest reduction in the level of
headroom was from a climate change scenario.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards
The following new standards have been adopted by the Group
during the period ended 30 June 2023:
-- IFRS 9 'Financial Instruments'; and
-- IFRS 17 'Insurance Contracts'.
The Group's accounting policies have been updated for the
application of IFRS 9 and IFRS 17 from 1 January 2023 and are
detailed within note 3. The impact on transition can be summarised,
as follows:
IFRS 9 'Financial Instruments'
IFRS 9 'Financial Instruments' has been issued to replace IAS 39
'Financial Instruments: Recognition and Measurement'.
IFRS 9 replaced IAS 39 Financial Instruments: Recognition and
Measurement for annual periods beginning on or after 1 January
2018. However, the Group elected, under the amendments to IFRS 4,
to apply the temporary exemption from IFRS 9, thereby deferring the
initial application date of IFRS 9 to align with the initial
application of IFRS 17.
Financial assets within the scope of IFRS 9 are required to be
classified as being measured, subsequent to initial recognition, at
amortised cost (AC), fair value through other comprehensive income
(FVOCI) or fair value through profit or loss (FVTPL). The
assessment of how an asset should be classified is dependent on
both the overall objective of the business model within which the
asset is held and whether the contractual terms of the financial
asset give rise to, on specified dates, cash flows that are solely
payments of principal and interest (SPPI). IFRS 9 introduces a new
forward-looking impairment model based on expected credit losses
(ECL) rather than incurred losses. The accounting for financial
liabilities will remain largely consistent with that applied under
IAS 39, except for recognition of changes in own credit risk in
other comprehensive income for certain liabilities designated at
fair value through profit or loss.
The consolidated statements for the comparative periods
presented have been updated using the classification overlay
approach with the amendment to the transition requirements in IFRS
17 issued by the IASB at the end of 2021. Differences arising from
the adoption of IFRS 9 were recognised in retained earnings as of 1
January 2022.
To reflect the differences between IFRS 9 and IAS 39, IFRS 7
Financial Instruments: Disclosures was also amended. The Group has
applied the amended disclosure requirements of IFRS 7, together
with IFRS 9, for the year beginning 1 January 2023.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued)
The table below shows the impact of classification and
measurement in accordance with IFRS 9 as at the opening balance
sheet of the comparative period (i.e. 1 January 2022)
Financial Original Revised Carrying Reclassification Re-measurement Carrying
assets measurement measurement amount under amount under
(IAS 39) (IFRS 9) IAS 39 IFRS 9
EUR000s EUR000s EUR000s EUR000s
Quoted debt Available for
securities(1) sale (AFS) FVOCI 892,495 - - 892,495
Cash and cash Amortised cost
equivalents (AC) AC 164,479 6,497(2) - 170,976
Collective
investment Held for trade
schemes (HFT) FVTPL 137,547 - - 137,547
Receivables AC AC 58,047 (41,749)(2) (388)(3) 15,910
Unquoted
investments AFS FVTPL 1,220 - - 1,220
Loans AC AC 577 - (17)(3) 560
Deposits with AC AC - - - -
banks
Financial Original Revised Carrying Reclassification Re-measurement Carrying
liabilities measurement measurement amount under amount under
(IAS 39) (IFRS 9) IAS 39 IFRS 9
EUR000s EUR000s EUR000s EUR000s
Subordinated
debt AC AC 49,603 - - 49,603
Payables AC AC 41,657 - - 41,657
(1) In accordance with the requirements of IFRS 9 the
recognition and measurement of a loss allowance for financial
assets that are measured at FVOCI does not reduce the carrying
amount of the asset in the statement of financial position, which
remains at fair value. Instead an amount equal to the allowance
that would arise if the assets were measured at amortised cost is
recognised in OCI with a corresponding charge to provision for
credit losses in the income statement. As at the opening balance
sheet of the comparative period (i.e. 1 January 2022) an expected
credit loss of EUR754,000 was recognised and reflected directly in
the FVOCI reserve.
(2) Insurance and reinsurance contract receivables and payables
(outstanding cheques) are included within Insurance/Reinsurance
contract asset/liabilities under IFRS 17.
(3) Re-measurement relates to expected credit losses recognised
on 'Loans' and 'Other receivables' under IFRS 9.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued)
IFRS 17 'Insurance contracts'
IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts and
supersedes IFRS 4 Insurance Contracts.
The core of IFRS 17 is the general model, supplemented by a
specific adaption for contracts with direct participation features
(the variable fee approach) and a simplified approach (the premium
allocation approach) mainly for short-duration contracts. The Group
are eligible to apply the PAA to all insurance contracts issued and
reinsurance contracts held and have elected to apply the PAA in all
cases. The carrying amount of a group of insurance contracts at the
end of each reporting period shall be the sum of the LRC,
comprising the fulfilment cash flows related to future service
allocated to the group at that date, and the LIC, comprising the
FCF and risk adjustment related to past service allocated to the
group at that date.
IFRS 17 requires a company to determine the level of aggregation
for applying its requirements. Portfolios comprise groups of
contracts with similar risks which are managed together. Portfolios
are required to be further divided based on expected profitability
at inception into three categories: onerous contracts, contracts
with no significant risk of becoming onerous, and the remainder. A
group of contracts that is onerous on initial recognition results
in a loss being recognised immediately in the statement of
financial performance for the entire net cash outflow, therefore
the carrying amount of the insurance liability for the group is
equal to the fulfilment cash flows and the contractual service
margin is nil. Under the Premium Allocation Approach (PAA) it is
assumed no contracts in the portfolio are onerous at initial
recognition unless facts and circumstances indicate otherwise. IFRS
17 also requires that no group for level of aggregation purposes,
may contain contracts issued more than one year apart.
The impact to shareholder's equity on transition to IFRS 17 is
mainly driven by the below:
Discounting claims reserves
In accordance with the requirements of IFRS 17, the Group is
required to discount future cash flows related to incurred claims
as the weighted time to settlement is greater than one year from
the date the claim occurred. This requirement to allow for the time
value of money is a change from the previous practice under IFRS 4,
where no allowance for the time value of money was made in the
calculation of the claims liabilities. The impact of discounting in
a positive interest rate environment results in a reduction in the
liabilities previously recognised under IFRS 4, however, this will
unwind in future periods. Discounting cash flows when calculating
the LIC alters the timing of profit emergence but not the overall
level of profit.
The impact of discounting cash flows related to incurred claims
became significantly more prevalent throughout 2022 in line with
the rising interest rate environment.
Re-measurement of claims reserves under IFRS 17
Under IFRS 17 the measurement of the LIC, (previously claims
outstanding and incurred but not reported claims) is determined on
a discounted probability-weighted expected value basis and includes
an explicit risk adjustment for non-financial risk. The
introduction of the risk adjustment calculation as an allowance for
uncertainty about the amount and timing of cash flows that arises
from non-financial risk as the insurance contract is fulfilled
replaces the margin for uncertainty previously in existence under
IFRS 4 and resulted in a reduction of the liabilities on
transition.
Re-measurement of asset for insurance acquisition cashflows
In applying the Premium Allocation Approach, the Group continues
to defer acquisition costs which are directly attributable to a
portfolio and chose not to expense all acquisition costs as they
are incurred. However, IFRS 17 incorporates a more prescribed
approach in determining the asset for insurance acquisition
cashflows compared to IFRS 4, resulting in a reduction in total
equity on transition.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued )
The below table illustrates the impact on the relevant
components of equity on applying IFRS 9 and IFRS 17:
Year Year
ended ended
31/12/21 31/12/22
EUR000s EUR000s
Retained earnings
Closing balances as previously reported under
IAS 39 and IFRS 4 422,815 370,258
--------- ---------
Reclassification to FVOCI reserve (9,247) 80,804
IFRS 9 recognition of expected credit losses -
debt securities at FVOCI (754) (1,003)
IFRS 9 recognition of expected credit losses -
other receivables and loans (405) (324)
IFRS 17 re-measurement of claims reserves under
IFRS 17 12,300 2,531
IFRS 17 impact of discounting the liability for
incurred claims recognised through profit/loss 9,571 12,396
IFRS 17 re-measurement of asset for insurance
acquisition cashflows (2,225) (2,905)
--------- ---------
Tax on the above adjustments (1,156) (11,439)
--------- ---------
Total adjustment net of tax 8,084 80,060
Opening balance at 1 January under IFRS 9 and
IFRS 17 430,899 450,318
31/12/21 31/12/22
EUR000s EUR000s
FVOCI reserve
Closing balances as previously reported under - -
IAS 39 and IFRS 4
--------- ---------
Reclassification from retained earnings 9,247 (80,804)
IFRS 9 recognition of expected credit losses -
debt securities at FVOCI 754 1,003
Tax on the above adjustments (1,250) 9,975
--------- ---------
Total adjustment net of tax 8,751 (69,826)
--------- ---------
Opening balance at 1 January under IFRS 9 and
IFRS 17 8,751 (69,826)
31/12/21 31/12/22
EUR000s EUR000s
Insurance/RI finance reserve
Closing balance as previously reported under - -
IAS 39 and IFRS 4
--------- ---------
IFRS 17 impact of discounting liability for incurred
claims through OCI (10,204) 23,982
Tax on the above adjustment 1,276 (2,998)
--------- ---------
Total adjustment net of tax (8,928) 20,984
--------- ---------
Opening balance at 1 January under IFRS 9 and
IFRS 17 (8,928) 20,984
IFRS 9 and IFRS 17 transition adjustment to total
equity 7,907 31,218
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued)
The below tables detail the adjustments required to restate the
previously presented financial statements under IFRS 4 and IAS 39
to those reported under IFRS 17 and IFRS 9 as at 31 December
2022:
Statement of Financial Position
----------------------------------------------------------------------------------------------------------------
Financial statement Previously Classification Measurement Restated Financial statement
line item Reported adjustment adjustment line item
IFRS 4 & IAS 39 IFRS 17 & IFRS
9
---------------------------- ----------- --------------- ------------ ---------- --------------------------
EUR000s EUR000s EUR000s EUR000s
Loans 580 - (12) (1) 568 Loans
Available for sale (1,129) Debt instruments
investments 834,994 (2) - 833,865 at FVOCI
Investments held Equity and debt
for trading 132,965 1,129 (2) - 134,094 instruments at FVTPL
Deposits with banks 10,000 - - 10,000 Deposits
(4,830) Reinsurance contract
Reinsurance assets 138,785 (3) 2,702 (4) 136,657 assets
Deferred taxation (4,462) Deferred taxation
asset 8,091 - (5) 3,629 asset
Deferred acquisition (38,520)
costs 38,520 (6) - - -
(42,847)
Other receivables 58,307 (6) (312) (1) 15,148 Other receivables
Cash and cash equivalents 162,398 2,842 (7) - 165,240 Cash and cash equivalents
All other assets All other assets
(unaffected) 88,351 - - 88,351 (unaffected)
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Total assets 1,472,991 (83,355) (2,084) 1,387,552 Total assets
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Called up share Called up share
capital presented capital presented
as equity 21,583 - - 21,583 as equity
Capital reserves 30,192 - - 30,192 Capital reserves
(69,826) 20,984
Revaluation reserve 755 (8) (4,9,5) (48,087) Other reserves
69,826 10,234(1,)
Retained earnings 370,258 (8) (4,5,9) 450,318 Retained earnings
Preference share Preference share
capital 2,923 - - 2,923 capital
Total equity 425,711 - 31,218 456,929 Total equity
Insurance contract (72,754) (33,302) Insurance contract
liabilities 932,677 (6,7,10) (4,9) 826,621 liabilities
Reinsurance contract
- - 610 (6) - 610 liabilities
Other provisions 11,615 (512) (10) - 11,103 Other provisions
(10,699)
Payables 46,327 (3,6,7,10) - 35,628 Other payables
All other liabilities All other liabilities
(unaffected) 56,661 - - 56,661 (unaffected)
Total liabilities 1,047,280 (83,355) (33,302) 930,623 Total liabilities
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Total equity and Total equity and
liabilities 1,472,991 (83,355) (2,084) 1,387,552 liabilities
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Notes
1 Re-measurement relates to the recognition of ECL recognised on
'Loans' and 'Other receivables' under IFRS 9.
2 Unquoted investments previously classified as 'Available for sale'
under IAS 39 are classified as FVTPL under IFRS 9 as they do not
pass the SPPI test.
3 Reinsurance debtors and creditors are included within the fulfilment
cash flows under IFRS 17, previously included within 'Other receivables'
and 'Payables' under IFRS 4.
4 Impact of re-measurement of claims reserves under IFRS 17 including
the impact of discounting LIC and the application of a risk adjustment.
5 Tax on transitional adjustments.
6 No separate asset recognised for deferred acquisition costs or
premium receivables under IFRS 17. Instead, qualifying insurance
acquisition cash flows and premium receivables are subsumed into
the insurance liability for remaining coverage. Similarly transactional
tax levies on insurance premium written and liabilities owing
to reinsurers are subsumed into the fulfilment cash flows.
7 Outstanding premium and claims cheques are included within LRC
and LIC respectively previously included within 'Cash and cash
equivalents' or 'Payables'.
8 IFRS 9 mark to market gains/losses on FVOCI assets reclassified
from retained earnings net of ECL.
9 IFRS 17 re-measurement of asset for insurance acquisition cashflows.
10 Pre-recognised premium excluded from 'Insurance contract liabilities'
under IFRS 17 as this does not form part of the cash flows within
the contract boundaries, a deferred income liability set up for
same. Provisions for premium rebates are subsumed into the fulfilment
cash flows.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued)
Total Comprehensive Income
---------------------------------------------------------------------------------------------------------------------
Financial statement Previously Classification Measurement Restated Financial statement
line item Reported adjustment adjustment line item
IFRS 4 & IAS 39 IFRS 17 & IFRS
9
---------------------------- ------------ ---------------- ------------ ------------ ---------------------------
Year Year ended Year ended Year
ended 31/12/2022 31/12/2022 ended
31/12/2022 31/12/2022
---------------------------- ------------ ---------------- ------------ ------------ ---------------------------
EUR000s EUR000s EUR000s EUR000s
Income
(3,192)
Gross written premium 382,889 (1,5,6) - 379,697 Insurance revenue
Reinsurance premiums (40,016) 5,202 (1,2,6) - (34,814) Reinsurance expense
Change in net provision
for unearned premiums (7,019) 7,019 (6) - -
Total investment
Net investment return (10,413) (340) (3,4) - (10,753) return
Revenue from contracts Revenue from contracts
with customers 3,173 - - 3,173 with customers
Other financial services (4,812)
income 4,812 (1,5) - -
Expenses
11,441 Insurance service
Net claims and benefits (145,807) 3,125 (6) (7,8) (131,241) expenses
Change in amounts
recoverable from
(2,971) (8,970) reinsurers for
- - (2,6) (7) (11,941) incurred claims
Other underwriting 28,118 (2,753) Insurance service
expenses (95,962) (1,2,9) (8,10) (70,597) expenses
(33,048) Non-attributable
- - (9) - (33,048) expenses
Financial services Financial services
and other costs (6,685) 559 (1) 81 (11) (6,045) income and expenses
Finance income/(expense)
(8,731) from insurance
- - - (7) (8,731) contracts issued
Finance income/(expense)
from reinsurance
- - - 1,389 (7) 1,389 contracts held
All other expenses All other expenses
(unaffected) (11,249) - - (11,249) (unaffected)
Profit before
Profit before taxation 73,723 (340) (7,543) 65,840 taxation
Income taxation
Income taxation charge (9,269) 43 (13) 942 (13) (8,284) charge
Profit for the financial Profit for the
year 64,454 (297) (6,601) 57,556 financial year
Movement on available Net gains/(losses)
for sale financial on investments
assets during the in debt securities
year (90,271) 510 (3,4) - (89,761) measured at FVOCI
Net gains on investments
Movement transferred in debt securities
to the Consolidated measured at FVOCI
Income Statement reclassified to
on disposal during profit or loss
the year 129 (170) (3,4) - (41) on disposal
Finance income/(expense)
42,388 from insurance
- (12) 42,388 contracts issued
Finance income/(expense)
(8,202) from reinsurance
- (12) (8,202) contracts held
Income tax relating (4,274) Income tax relating
to these items 11,268 (43) (13) (13) 6,951 to these items
All other OCI (unaffected) (1,985) - - (1,985) All other OCI (unaffected)
Other comprehensive Other comprehensive
expense after taxation (80,859) 297 29,912 (50,650) expense after taxation
Total comprehensive Total comprehensive
(expense)/income (expense)/income
for the year (16,405) - 23,311 6,906 for the period
---------------------------- ------------ ---------------- ------------ ------------ ---------------------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued)
Notes
1 Unbundling of engineering inspection premium under IFRS 17 . Other
income re-classified to ' Financial services income and expenses'.
2 Reinstatement premiums contingent on claims on the underlying
contracts are treated as part of the claims that are expected
to be reimbursed under the reinsurance contracts held and were
previously included within 'Reinsurance premiums' under IFRS 4.
Reinsurance commission offset against reinsurance expense under
IFRS 17, included in 'Other underwriting expenses' under IFRS
4.
3 Movement on ECL on FVOCI assets under IFRS 9 recognised in profit
or loss.
4 Unquoted investments previously classified as 'Available for sale'
under IAS 39 are classified as FVTPL under IFRS 9 as they do not
pass the SPPI test. All income and other gains and/or losses on
FVTPL assets are recognised in profit or loss. Mark to market
gains and/or losses on 'Available for sale' assets under IAS 39
were recognised in Other Comprehensive Income.
5 Instalment premiums included within 'Insurance Revenue' under
IFRS 17, included within 'Other financial services income' under
IFRS 4.
6 Reinsurance result presented separately on face of profit or loss
under IFRS 17.
7 Impact of re-measurement of claims reserves under IFRS 17 including
the impact of discounting liability for incurred claims and the
application of a risk adjustment.
8 IFRS 17 re-measurement of claims handling expenses.
9 Non-attributable expenses presented separately under IFRS 17.
10 IFRS 17 re-measurement of asset for insurance acquisition cashflows
.
11 Movement in ECL on 'Other receivables' and 'Loans'.
12 IFRS 17 impact of discounting LIC recognised through OCI.
13 Tax on transitional adjustments.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 4 First time adoption of new accounting standards (continued)
The below tables detail the adjustments required to restate the
previously presented financial statements under IFRS 4 and IAS 39
to those reported under IFRS 17 and IFRS 9 as at 1 January
2022:
Statement of Financial Position
----------------------------------------------------------------------------------------------------------------
Financial statement Previously Classification Measurement Restated Financial statement
line item Reported adjustment adjustment line item
IFRS 4 & IAS 39 IFRS 17 & IFRS
9
---------------------------- ----------- --------------- ------------ ---------- --------------------------
EUR000s EUR000s EUR000s EUR000s
Loans 577 - (17) (1) 560 Loans
Available for sale (1,220) Debt instruments
investments 893,715 (2) - 892,495 at FVOCI
Investments held Equity and debt
for trading 137,547 1,220 (2) - 138,767 instruments at FVTPL
(6,557) 18,485 Reinsurance contract
Reinsurance assets 196,960 (3) (4) 208,888 assets
Deferred acquisition (35,458)
costs 35,458 (6) - - -
(41,749)
Other receivables 58,047 (6) (388) (1) 15,910 Other receivables
Cash and cash equivalents 164,479 6,497 (7) - 170,976 Cash and cash equivalents
All other assets All other assets
(unaffected) 93,225 - - 93,225 (unaffected)
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Total assets 1,580,008 (77,267) 18,080 1,520,821 Total assets
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Called up share Called up share
capital presented capital presented
as equity 21,409 - - 21,409 as equity
Capital reserves 27,406 - - 27,406 Capital reserves
(8,928)
Revaluation reserve 752 8,751 (8) (4,5,9) 575 Other reserves
(8,751) 16,835(1,)
Retained earnings 422,815 (8) (4,5,9) 430,899 Retained earnings
Preference share Preference share
capital 2,923 - - 2,923 capital
Total equity 475,305 - 7,907 483,212 Total equity
Insurance contract (64,466) Insurance contract
liabilities 985,404 (3,6,7,10) 9,043 (4,9) 929,981 liabilities
Reinsurance contract
- - 788 (6) - 788 liabilities
(1,221)
Other provisions 13,492 (10) - 12,271 Other provisions
Deferred taxation Deferred taxation
liability 2,761 - 1,130 (5) 3,891 liability
(12,368)
Payables 41,657 (3,6,7,10) - 29,289 Other payables
All other liabilities All other liabilities
(unaffected) 61,389 - - 61,389 (unaffected)
Total liabilities 1,104,703 (77,267) 10,173 1,037,609 Total liabilities
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Total equity and Total equity and
liabilities 1,580,008 (77,267) 18,080 1,520,821 liabilities
---------------------------- ----------- --------------- ------------ ---------- --------------------------
Notes
1 Re-measurement relates to the recognition of expected credit losses
recognised on 'Loans' and 'Other receivables' under IFRS 9.
2 Unquoted investments previously classified as 'Available for sale'
under IAS 39 are classified as FVTPL under IFRS 9 as they do not
pass the SPPI test.
3 Reinsurance debtors and creditors are included within the fulfilment
cash flows under IFRS 17, previously included within 'Other receivables'
and 'Payables' under IFRS 4.
4 Impact of re-measurement of claims reserves under IFRS 17 including
the impact of discounting the LIC and the application of a risk
adjustment.
5 Tax on transitional adjustments.
6 No separate asset recognised for deferred acquisition costs or
premium receivables under IFRS 17. Instead, qualifying insurance
acquisition cash flows and premium receivables are subsumed into
the LRC. Similarly transactional tax levies on insurance premium
written and liabilities owing to reinsurers are subsumed into
the fulfilment cash flows.
7 Outstanding premium and claims cheques are included within LRC
and LIC respectively previously included within 'Cash and cash
equivalents' or 'Payables'.
8 IFRS 9 mark to market gains/losses on FVOCI assets reclassified
from retained earnings net of expected credit losses.
9 IFRS 17 re-measurement of asset for insurance acquisition cashflows.
10 Pre-recognised premium excluded from 'Insurance contract liabilities'
under IFRS 17 as this does not form part of the cash flows within
the contract boundaries, a deferred income liability set up for
same. Provisions for premium rebates are subsumed into the fulfilment
cash flows.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 5 Finance income/ (expense) recognised in comprehensive income
The Group disaggregates finance income or expense on insurance
contracts issued and reinsurance contracts held between income
statement and OCI. The impact of changes in market interest rates
on the value of the insurance liabilities are reflected in OCI in
order to minimise accounting mismatches between the accounting for
financial assets and insurance assets and liabilities.
The Group adopts a conservative investment strategy to ensure
that its technical provisions are matched by cash and fixed
interest securities of low risk and similar duration. All of the
Group's fixed interest securities are classified as FVOCI whereby
accumulated mark to market gains or losses are reclassified to the
profit and loss account on liquidation.
The tables below detail:
-- the element of interest accretion on the LIC from the prior reporting period; and
-- the effect of changes in interest rates and other financial
assumptions during the period on the finance income/(expense)
recognised in comprehensive income.
Total investment return during the period is detailed in note 7
including the corresponding mark to market gains or losses on FVOCI
recognised.
Half year Half year Year ended
ended 30/06/23 ended 30/06/22 31/12/22
(restated) (restated)
EUR000s EUR000s EUR000s
Finance income /(expense) from insurance contracts issued
recognised in comprehensive income:
Interest accreted (4,965) 836 2,517
Effect of changes in interest rates
and other financial assumptions during
the period (1,954) 28,621 31,140
---------------- ---------------- ------------
Total (6,919) 29,457 33,657
---------------- ---------------- ------------
Represented by:
Amounts recognised in profit or loss (1,823) (6,213) (8,731)
Amounts recognised in OCI (5,096) 35,670 42,388
Half year Half year Year ended
ended 30/06/23 ended 30/06/22 31/12/22
(restated) (restated)
EUR000s EUR000s EUR000s
Finance income /(expense) from reinsurance contracts held
recognised in comprehensive income:
Interest accreted 1,168 (221) (595)
Effect of changes in interest rates
and other financial assumptions during
the period 951 (6,180) (6,218)
---------------- ---------------- ------------
Total 2,119 (6,401) (6,813)
---------------- ---------------- ------------
Represented by:
Amounts recognised in profit or loss (281) 1,431 1,389
Amounts recognised in OCI 2,400 (7,832) (8,202)
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 6 Segmental information
(a) Operating segments
The principal activities of the Group are underwriting of
general insurance business, financial services and other group
activities. For management purposes, the Group is organised in
three operating segments - general insurance, financial services
and other group activities. These three segments are the basis upon
which information is reported to the chief operating decision
makers, the Group Chief Executive/Executive Management Team, for
the purpose of resource allocation and assessment of segmental
performance. Discrete financial information is prepared and
reviewed on a regular basis for these three segments.
The following is an analysis of the Group's revenue and results
from continuing operations by reportable segments:
Half year ended 30/06/2023 General Financial Other
insurance services group activities Total
EUR000s EUR000s EUR000s EUR000s
Insurance revenue 194,540 - - 194,540
Insurance service expenses (91,957) - - (91,957)
Net expense from reinsurance
contracts held (37,180) - - (37,180)
Insurance service result 65,403 - - 65,403
----------- ---------- ------------------ ----------
Total investment return 8,307 - 82 8,389
Net insurance finance expenses (2,104) - - (2,104)
----------- ---------- ------------------ ----------
Net insurance and investment
result 71,606 - 82 71,688
----------- ---------- ------------------ ----------
Other finance costs (1,272) - - (1,272)
Non-attributable expenses (16,165) - - (16,165)
Movement in other provisions (12,439) - - (12,439)
Revenue from contracts
with customers - 1,592 - 1,592
Financial services income
and expenses 85 (1,655) (1,811) (3,381)
Revaluation of property,
plant and equipment (546) - - (546)
----------- ---------- ------------------ ----------
Profit/(loss) before taxation 41,269 (63) (1,729) 39,477
Income taxation (charge)/credit (6,409) 13 226 (6,170)
----------- ---------- ------------------ ----------
Profit/(loss) for the
period 34,860 (50) (1,503) 33,307
----------- ---------- ------------------ ----------
Other information
Insurance acquisition expenses (36,588) - - (36,588)
Depreciation/amortisation (5,648) - - (5,648)
Impairment of other assets (1,294) - - (1,294)
Capital additions 8,736 - - 8,736
Statement of financial
position
Segment assets 1,329,118 8,333 22,761 1,360,212
Segment liabilities (893,699) (872) (5,786) (900,357)
Included above in the current period is a net non-cash
impairment charge relating to property held for own use of
EUR546,000 and to investment property of EUR748,000 (31 December
2022: EUR287,000 and EUR1,003,000, 30 June 2022: Nil).
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 6 Segmental information (continued)
(a) Operating segments (continued)
Half year ended 30/06/2022 General Financial Other
(restated) insurance services group activities Total
EUR000s EUR000s EUR000s EUR000s
Insurance revenue 186,142 - - 186,142
Insurance service expenses (127,322) - - (127,322)
Net expense from reinsurance
contracts held (14,768) - - (14,768)
Insurance service result 44,052 - - 44,052
------------ ---------- ------------------ ------------
Total investment return (15,281) - - (15,281)
Net insurance finance
expenses (4,782) - - (4,782)
------------ ---------- ------------------ ------------
Net insurance and investment
result 23,989 - - 23,989
------------ ---------- ------------------ ------------
Other finance costs (1,272) - - (1,272)
Non-attributable expenses (13,780) - - (13,780)
Movement in other provisions (5,241) - - (5,241)
Revenue from contracts
with customers - 1,753 - 1,753
Financial services income
and expenses 163 (1,594) (1,509) (2,940)
Revaluation of property, - - - -
plant and equipment
------------ ---------- ------------------ ------------
Profit/(loss) before
taxation 3,859 159 (1,509) 2,509
Income taxation (charge)/credit (485) (19) 177 (327)
------------ ---------- ------------------ ------------
Profit/(loss) for the
period 3,374 140 (1,332) 2,182
------------ ---------- ------------------ ------------
Other information
Insurance acquisition
expenses (34,064) - - (34,064)
Depreciation/amortisation (4,943) - - (4,943)
Impairment of other assets - - - -
Capital additions 4,347 - - 4,347
Statement of financial
position
Segment assets 1,400,379 9,796 19,038 1,429,213
Segment liabilities (1,001,200) (919) (4,444) (1,006,563)
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 6 Segmental information (continued)
(a) Operating segments (continued)
Year ended 31/12/2022 General Financial Other
(restated) insurance services group activities Total
EUR000s EUR000s EUR000s EUR000s
Insurance revenue 379,697 - - 379,697
Insurance service expenses (201,838) - - (201,838)
Net expense from reinsurance
contracts held (46,755) - - (46,755)
Insurance service result 131,104 - - 131,104
----------- ---------- ------------------ ----------
Total investment return (10,753) - - (10,753)
Net insurance finance expenses (7,342) - - (7,342)
----------- ---------- ------------------ ----------
Net insurance and investment
result 113,009 - - 113,009
----------- ---------- ------------------ ----------
Other finance costs (2,559) - - (2,559)
Non-attributable expenses (33,048) - - (33,048)
Movement in other provisions (8,403) - - (8,403)
Revenue from contracts
with customers - 3,173 - 3,173
Financial services income
and expenses 560 (3,198) (3,407) (6,045)
Revaluation of property,
plant and equipment (287) - - (287)
----------- ---------- ------------------ ----------
Profit/(loss) before taxation 69,272 (25) (3,407) 65,840
Income taxation (charge)/credit (8,758) (7) 481 (8,284)
----------- ---------- ------------------ ----------
Profit/(loss) for the
period 60,514 (32) (2,926) 57,556
----------- ---------- ------------------ ----------
Other information
Insurance acquisition expenses (70,595) - - (70,595)
Depreciation/amortisation (13,239) - - (13,239)
Impairment of other assets (1,290) - - (1,290)
Capital additions 7,026 7,026
Statement of financial
position
Segment assets 1,361,232 8,988 17,332 1,387,552
Segment liabilities (924,367) (826) (5,430) (930,623)
The accounting policies of the reportable segments are the same
as the Group accounting policies. Segment profit represents the
profit earned by each segment. Central administration costs and
Directors' salaries are allocated based on actual activity.
Income taxation is a direct cost of each segment.
In monitoring segment performance and allocating resources
between segments:
-- All assets are allocated to reportable segments. Assets used
jointly by reportable segments are allocated on the basis of
activity by each reportable segment; and
-- All liabilities are allocated to reportable segments.
Liabilities for which reportable segments are jointly liable are
allocated in proportion to segment assets.
The Group's customer base is diverse and it has no reliance on
any major customer Insurance risk is not concentrated on any area
or on any one line of business.
The Group's half yearly results are not subject to any
significant impact arising from seasonality of operations.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 6 Segmental information (continued)
(a) Operating segments (continued)
See below Insurance revenue generated from major product lines
Motor and Non-motor:
Insurance revenue
Motor Non-motor Total
EUR000s EUR000s EUR000s
Half year ended 30/06/2023 92,116 102,424 194,540
Half year ended 30/06/2022 (restated) 90,722 95,420 186,142
Year ended 31/12/2022 (restated) 183,255 196,442 379,697
(b) Geographical segments
The Group's operations are located in Ireland.
(c) Insurance service expenses
Insurance service expenses, in the General Insurance segment,
comprise the following:
Half year Half year Year ended
ended 30/06/23 ended 30/06/22 31/12/22
(restated)
(restated)
EUR000s EUR000s EUR000s
Incurred claims and other expenses (114,744) (110,263) (223,807)
Changes that relate to past service
- changes in FCF relating to the
LIC 59,375 17,005 92,564
Amortisation of insurance acquisition
cash flows (36,588) (34,064) (70,595)
---------------- ---------------- ------------
Total (91,957) (127,322) (201,838)
---------------- ---------------- ------------
Total expenses, in the General Insurance segment, comprise the
following:
Half year Half year Year
ended 30/06/23
ended 30/06/22 ended 31/12/22
(restated) (restated)
EUR000s EUR000s EUR000s
Amortisation of insurance acquisition
cash flows (36,588) (34,064) (70,595)
Acquisition cash flows recognised - - -
when incurred
Non-attributable expenses (16,165) (13,780) (33,048)
----------------- ----------------- -----------------
Total expenses (52,753) (47,844) (103,643)
----------------- ----------------- -----------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 6 Segmental information (continued)
(c) Insurance service expenses (continued)
The below tables provide further details of the total expenses
of the Group by reportable segments.
Half year ended 30/06/2023 General Financial Other Total
insurance services group
activities
EUR000s EUR000s EUR000s EUR000s
Employee benefit expense (26,712) (1,041) (866) (28,619)
Depreciation (1,142) - - (1,142)
Amortisation (4,506) - - (4,506)
Other (20,393) (614) (945) (21,952)
----------- ---------- ------------ ---------
Total (52,753) (1,655) (1,811) (56,219)
----------- ---------- ------------ ---------
Half year ended 30/06/2022 General Financial Other Total
(restated) insurance services group
activities
EUR000s EUR000s EUR000s EUR000s
Employee benefit expense (24,715) (1,113) (899) (26,727)
Depreciation (1,193) - - (1,193)
Amortisation (3,751) - - (3,751)
Other (18,185) (481) (610) (19,276)
----------- ---------- ------------ ---------
Total (47,844) (1,594) (1,509) (50,947)
----------- ---------- ------------ ---------
Year ended 31/12/2022 (restated) General Financial Other Total
insurance services group
activities
EUR000s EUR000s EUR000s EUR000s
Employee benefit expense (53,392) (2,221) (1,595) (57,208)
Depreciation (2,348) - - (2,348)
Amortisation (10,891) - - (10,891)
Other (37,012) (977) (1,812) (39,801)
----------- ---------- ------------ ----------
Total (103,643) (3,198) (3,407) (110,248)
----------- ---------- ------------ ----------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 7 Total investment return
The net gain or loss for each class of financial instrument by
measurement category is as follows:
Amortised FVOCI FVTPL FVTPL Total
Cost
Half year ended 30/06/2023 Designated Designated Mandatory
EUR000s EUR000s EUR000s EUR000s EUR000s
Interest revenue from financial
assets not measured at FVTPL
Cash and cash equivalents 1,320 - - - 1,320
Government bonds - 896 - - 896
Other debt securities - 2,943 - - 2,943
---------- ----------- ----------- ---------- --------
1,320 3,839 - - 5,159
---------- ----------- ----------- ---------- --------
Net gain on FVTPL investments
Collective investment scheme - - - 5,085 5,085
Unquoted investments - - - - -
---------- ----------- ----------- ---------- --------
- - - 5,085 5,085
---------- ----------- ----------- ---------- --------
Other
Income, net of expenses, from
investment properties - - - (86) (86)
Unrealised loss on investment
properties - - - (748) (748)
Net credit impairment loss - (56) - - (56)
Net gain on FVOCI debt securities - 7,720 - - 7,720
---------- ----------- ----------- ---------- --------
- 7,664 - (834) 6,830
---------- ----------- ----------- ---------- --------
Recognised in income statement 1,320 2,818 - 4,251 8,389
Recognised in OCI - 8,685 - - 8,685
---------- ----------- ----------- ---------- --------
Recognised in total comprehensive
income 1,320 11,503 - 4,251 17,074
---------- ----------- ----------- ---------- --------
During the period to 30 June 2023 a loss of EUR965,000 on FVOCI
investments was reclassified from Other Comprehensive Income to the
Consolidated Income Statement.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 7 Total investment return (continued)
Amortised FVOCI FVTPL FVTPL Total
Cost
Half year ended 30/06/2022 Designated Designated Mandatory
(restated)
EUR000s EUR000s EUR000s EUR000s EUR000s
Interest revenue/ (expense)
from financial assets not
measured at FVTPL
Cash and cash equivalents (291) - - - (291)
Government bonds - 548 - - 548
Other debt securities 1,637 - - 1,637
---------- ----------- ----------- ---------- ---------
(291) 2,185 - - 1,894
---------- ----------- ----------- ---------- ---------
Net loss on FVTPL investments
Collective investment scheme - - - (17,272) (17,272)
Unquoted investments - - - - -
---------- ----------- ----------- ---------- ---------
- - - (17,272) (17,272)
---------- ----------- ----------- ---------- ---------
Other
Income, net of expenses,
from investment properties - - - 227 227
Unrealised gain/ (loss) on - - - - -
investment properties
Net credit impairment loss - (141) - - (141)
Net loss on FVOCI debt securities - (63,842) - - (63,842)
---------- ----------- ----------- ---------- ---------
- (63,983) - 227 (63,756)
---------- ----------- ----------- ---------- ---------
Recognised in income statement (291) 2,055 - (17,045) (15,281)
Recognised in OCI - (63,853) - - (63,853)
---------- ----------- ----------- ---------- ---------
Recognised in total comprehensive
income (291) (61,798) - (17,045) (79,134)
---------- ----------- ----------- ---------- ---------
During the period to 30 June 2022 a gain of EUR11,000 on FVOCI
investments was reclassified from Other Comprehensive Income to the
Consolidated Income Statement.
Amortised FVOCI FVTPL FVTPL Total
Cost
Year ended 31/12/2022 (restated) Designated Designated Mandatory
EUR000s EUR000s EUR000s EUR000s EUR000s
Interest revenue/ (expense)
from financial assets not
measured at FVTPL
Cash and cash equivalents (37) - - - (37)
Government bonds - 1,330 - - 1,330
Other debt securities 3,885 - - 3,885
---------- ----------- ----------- ---------- ----------
(37) 5,215 - - 5,178
---------- ----------- ----------- ---------- ----------
Net loss on FVTPL investments
Collective investment scheme - - - (14,655) (14,655)
Unquoted investments - - (92) - (92)
---------- ----------- ----------- ---------- ----------
- - (92) (14,655) (14,747)
---------- ----------- ----------- ---------- ----------
Other
Income, net of expenses,
from investment properties - - - 196 196
Unrealised loss on investment
properties - - - (1,003) (1,003)
Net credit impairment loss - (418) - - (418)
Net loss on FVOCI debt securities - (89,761) - - (89,761)
---------- ----------- ----------- ---------- ----------
- (90,179) - (807) (90,986)
---------- ----------- ----------- ---------- ----------
Recognised in income statement (37) 4,838 (92) (15,462) (10,753)
Recognised in OCI - (89,802) - - (89,802)
---------- ----------- ----------- ---------- ----------
Recognised in total comprehensive
income (37) (84,964) (92) (15,462) (100,555)
---------- ----------- ----------- ---------- ----------
During the year to 31 December 2022 a gain of EUR41,000 on FVOCI
investments was reclassified from Other Comprehensive Income to the
Consolidated Income Statement.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 8 Income taxation charge
The effective tax rate for the period was 15.6% (2022: 12.6%)
which is the best estimate of the weighted average annual income
tax rate expected for the full year. The effective tax rate for the
period was higher than the standard Irish corporation tax rate of
12.5% primarily due to assumed higher disallowable expenses in the
period.
Note 9 Earnings per EUR0.60 ordinary share
The calculation of the basic and diluted earnings per share
attributable to the ordinary shareholders is based on the following
data:
Half year Half year Year
ended ended 30/06/22 ended 31/12/22
30/06/23 (restated) (restated)
EUR000s EUR000s EUR000s
Earnings
Profit for the period for the purpose
of basic earnings per share 33,307 2,182 57,274
Profit for the period for the purpose
of diluted earnings per share 33,307 2,182 57,274
Number of shares No. No. No.
Weighted average number of ordinary
shares for the purpose of basic
earnings per share (excludes treasury
shares) 36,583,005 35,427,015 35,507,806
Weighted average number of ordinary
shares for the purpose of diluted
earnings per share (excludes treasury
shares) 37,458,042 36,346,524 36,424,983
Cent Cent Cent
Basic earnings per share 91 6 161
Diluted earnings per share (1) 89 6 157
(1) Diluted earnings per share reflects the potential vesting of
share based payments.
The 'A' ordinary shares of EUR0.01 each that are in issue have
no impact on the earnings per share calculation. The 'A' ordinary
shares of EUR0.01 each are non-voting. They are non-transferable
except only to the Company. Other than a right to a return of paid
up capital of EUR0.01 per 'A' ordinary share in the event of a
winding up, the 'A' ordinary shares have no right to participate in
the capital or the profits of the Company.
The below table reconciles the profit attributable to the parent
entity for the year to the amounts used as the numerators in
calculating basic and diluted earnings per share for the year and
the comparative year including the individual effect of each class
of instruments that affects earnings per share:
Half year Half year Year
ended 30/06/23
ended ended
31/12/22
(restated)
30/06/22
(restated)
EUR000s EUR000s EUR000s
Profit attributable to the parent
entity for the period 33,307 2,182 57,556
2023 dividend of 0.0 cent (2022:8.4
cent) per share on 14% non-cumulative
preference shares of EUR0.60 each - - (113)
2023 dividend of 0.0 cent (2022:8.4
cent) per share on 8% non-cumulative
preference shares of EUR0.60 each - - (169)
---------------- ------------ -------------
Profit for the period for the purpose
of calculating basic and diluted
earnings 33,307 2,182 57,274
---------------- ------------ -------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 9 Earnings per EUR0.60 ordinary share (continued)
The below table reconciles the weighted average number of
ordinary shares used as the denominator in calculating basic
earnings per share to the weighted average number of ordinary
shares used as the denominator in calculating diluted earnings per
share including the individual effect of each class of instruments
that affects earnings per share:
Half year Half year Year
ended 30/06/23 ended 30/06/22 ended 31/12/22
(unaudited) (restated) (restated)
EUR000s EUR000s EUR000s
Weighted average number of ordinary
shares for the purpose of calculating
basic earnings per share 36,583,005 35,427,015 35,507,806
Weighted average of potential
vesting of share based payments 875,037 919,509 917,177
---------------- ---------------- ----------------
Weighted average number of ordinary
shares for the purpose of calculating
diluted earnings per share 37,458,042 36,346,524 36,424,983
---------------- ---------------- ----------------
Note 10 Financial instrument and fair value measurement
(a) Financial Instruments
Half year Half year Year
ended 30/06/23 ended 30/06/22 ended 31/12/22
(unaudited) (restated) (restated)
EUR000s EUR000s EUR000s
Financial Assets
At amortised cost:
Cash and cash equivalents 89,685 148,771 108,635
Deposits 10,000 20,000 10,000
Other receivables 23,689 20,161 15,148
Loans 506 520 568
At fair value:
Cash and cash equivalents 24,148 - 56,605
Equity and debt instruments at
FVTPL -mandatory 148,018 130,454 132,965
Equity and debt instruments at
FVTPL -designated 1,129 1,129 1,129
Debt instruments at FVOCI - designated 851,124 851,805 833,865
Financial Liabilities
At amortised cost:
Other payables 39,875 30,805 35,628
Lease liabilities 4,214 4,974 4,600
Subordinated debt 49,690 49,632 49,662
An ECL for 'Debt instruments at FVOCI' of EUR928,000 (30 June
2022: EUR808,000, 31 December 2022: EUR1,003,000) does not reduce
the carrying amount of the asset in the statement of financial
position, which remains at fair value. Instead an amount equal to
the allowance that would arise if the assets were measured at
amortised cost is recognised in OCI with a corresponding charge to
provision for credit losses in the income statement.
An ECL of EUR312,000 (30 June 2022: EUR388,000, 31 December
2022: EUR312,000) has reduced the carrying value of 'Other
receivables' and an ECL of EUR12,000 (30 June 2022: EUR17,000, 31
December 2022: EUR12,000), has reduced the carrying value of
'Loans'.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 10 Financial instrument and fair value measurement (continued)
(b) Fair value measurement
The following table compares the fair value of financial
instruments not held at fair value with the fair value of those
assets and liabilities:
Half Half Half year Half year Year ended Year ended
year ended year ended ended ended 31/12/22 31/12/22
30/06/23 30/06/23 30/06/22 30/06/22
(restated) (restated) (restated) (restated)
Fair Carrying Fair Carrying Fair Carrying
value value value value value value
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Assets
Loans (restated) 607 506 624 520 682 568
Financial
liabilities
Subordinated
debt 45,484 49,690 49,119 49,632 46,129 49,662
The carrying amount of the following assets and liabilities is
considered a reasonable approximation of their fair value:
-- Cash and cash equivalents
-- Deposits
-- Other receivables
-- Other payables
-- Lease liabilities
Certain assets and liabilities are measured in the Consolidated
Statement of Financial Position at fair value using a fair value
hierarchy of valuation inputs. The following table provides an
analysis of assets and liabilities that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based
on the degree to which the fair value is observable.
Level Fair value measurements derived from quoted prices (unadjusted)
1 in active markets for
identical assets or liabilities.
* Debt instruments at fair value through other
comprehensive income - quoted debt securities are
fair valued using latest available closing bid price.
* Collective investment schemes, fair value through
profit or loss (Level 1) are valued using the latest
available closing NAV of the fund.
Level Fair value measurements derived from inputs other than
2 quoted prices included within
Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived
from prices). There are no assets/liabilities deemed to
be held at this level at end of the periods disclosed.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 10 Financial instrument and fair value measurement (continued)
(b) Fair value measurement (continued)
Level Fair value measurements derived from valuation techniques
3 that include inputs for the
asset or liability that are not based on observable market
data (unobservable inputs). Valuation techniques used
are outlined below;
* Collective investment schemes, fair value through
profit or loss (Infrastructure and Senior Private
Debt funds) are valued using the most up-to-date
valuations calculated by the fund administrator
allowing for any additional investments made up until
period end.
* Unquoted investments, fair value through profit or
loss, are classified as Level 3 as they are not
traded in an active market.
* Investment property and property held for own use
were fair valued by independent external professional
valuers at year end 2022. The properties were
revalued at 30 June 2023 . Group occupied properties
have been valued on a vacant possession basis
applying hypothetical 10-year leases and assumptions
of void and rent free periods, market rents, capital
yields and purchase costs which are derived from
comparable transactions and adjusted for property
specific factors as determined by the valuer. Group
investment properties have been valued using the
investment method based on the long leasehold
interest in the subject property, the contracted
values of existing tenancies, assumptions of void and
rent free periods and market rents for vacant lots,
and capital yields and purchase costs which are
derived from comparable transactions and adjusted for
property specific factors as determined by the
valuer.
Half year ended 30/06/23 Half year ended 30/06/22
(restated)
------------------------------------------- -------------------------------------------
Level Level Level Total Level Level Level Total
1 2 3 1 2 3
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Assets
Investment property - - 14,304 14,304 - - 16,053 16,053
Property held for
own use - - 15,377 15,377 - - 16,327 16,327
Financial assets
Cash and cash equivalents 24,148 - - 24,148 - - - -
Investments at
fair value through
profit or loss
- collective investment
schemes 107,008 - 41,010 148,018 112,720 - 17,643 130,363
Investments at
fair value through
profit or loss
-unquoted investments - - 1,129 1,129 - - 1,220 1,220
Investments at
fair value through
other comprehensive
income - quoted
debt securities 851,124 - - 851,124 851,805 - - 851,805
Total assets 982,280 - 71,820 1,054,100 964,525 - 51,243 1,015,768
Total liabilities - - - - - - - -
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 10 Financial instrument and fair value measurement (continued)
(b) Fair value measurement (continued)
Year ended 31/12/22 (restated)
-------------------------------------------
Level Level Level Total
1 2 3
EUR000s EUR000s EUR000s EUR000s
Assets
Investment property - - 15,052 15,052
Property held for own use - - 15,984 15,984
Financial assets
Cash and cash equivalents 56,605 - - 56,605
Investments at fair value
through profit or loss - collective
investment schemes 105,419 - 27,546 132,965
Investments at fair value
through profit or loss -unquoted
investments - - 1,129 1,129
Investments at fair value
through other comprehensive
income - quoted debt securities 833,865 - - 833,865
Total assets 995,889 - 59,711 1,055,600
Total liabilities - - - -
A reconciliation of Level 3 fair value measurement of financial
assets is shown in the table below.
Half year ended Half year ended 30/06/22 Year ended 31/12/22
30/06/23
(restated) (restated)
EUR000s EUR000s EUR000s
Opening balance Level 3 financial assets 59,711 47,551 47,551
Transfers-in - - -
Additions 14,503 4,415 12,349
Disposals - (1,739) -
Unrealised movements recognised in consolidated
income statement (2,394) 1,016 (189)
------------------------- --------------------
Closing balance Level 3 financial assets 71,820 51,243 59,711
---------------- ------------------------- --------------------
Investment property and property held for own use were fair
valued by independent external professional valuers at 31 December
2022 (refer to note 13 and note 16 in the Group Annual Report for
year ended 31 December 2022). At the period ending 30 June 2023 the
valuations for owner occupied property and investment property were
reduced by EUR546,000 and EUR748,000 respectively.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 11 Other receivables
Half year Half year Year
ended 30/06/23 ended 30/06/22 ended 31/12/22
(restated) (restated)
EUR000s EUR000s EUR000s
Prepayments and accrued income 10,881 7,810 6,084
Other debtors 12,127 12,351 8,882
Accrued interest and rent 681 - 182
---------------- ---------------- ----------------
Total other receivables 23,689 20,161 15,148
---------------- ---------------- ----------------
Note 12 Cash and cash equivalents
Half year Half year Year
ended 30/06/23 ended 30/06/22 ended 31/12/22
(restated) (restated)
EUR000s EUR000s EUR000s
Short term deposits 45,437 126,041 80,661
Money market fund 24,148 - 56,605
Cash in hand 44,248 22,730 27,974
---------------- ---------------- ----------------
Total cash and cash equivalents 113,833 148,771 165,240
---------------- ---------------- ----------------
Note 13 Called up share capital presented as equity
Half year Half year Year
ended ended 30/06/22 ended 31/12/22
30/06/23 (restated) (restated)
Number EUR000s EUR000s EUR000s
(i) Ordinary shares
of EUR0.60 each
Authorised:
At beginning and
end of period 51,326,000 30,796 30,796 30,796
------------ ---------- ---------------- ----------------
Issued and fully
paid:
At 1 January 2022 35,461,206 - 21,277 21,277
Issued during the
period 290,078 - 174 174
At the end of the
period 35,751,284 - 21,451 21,451
At 1 January 2023 35,751,284 21,451
Issued during the
period 269,688 162
------------ ---------- ---------------- ----------------
At the end of the
period 36,020,972 21,613
------------ ---------- ---------------- ----------------
(ii) 'A' Ordinary
shares of EUR0.01
each
Authorised:
At beginning and
end of period 120,000,000 1,200 1,200 1,200
------------ ---------- ---------------- ----------------
Issued and fully
paid:
At beginning and
end of period 13,169,428 132 132 132
------------ ---------- ---------------- ----------------
Total ordinary share
capital 21,745 21,583 21,583
---------- ---------------- ----------------
The number of ordinary shares of EUR0.60 each held as treasury
shares at 30 June 2023 was 164,005. At 31 December 2022 the number
held was 164,005.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 14 Other reserves
Revaluation FVOCI reserve Insurance/RI Total
reserve finance
reserve
EUR000s EUR000s EUR000s EUR000s
Balance at 1 January 2023 755 (69,826) 20,984 (48,087)
Other comprehensive income - 7,599 (2,359) 5,240
------------ -------------- ------------- ---------
Balance at 30 June 2023 755 (62,227) 18,625 (42,847)
------------ -------------- ------------- ---------
Balance at 1 January 2022 752 8,751 (8,928) 575
Other comprehensive income - (55,873) 24,358 (31,515)
------------ -------------- ------------- ---------
Balance at 30 June 2022 752 (47,122) 15,430 (30,940)
------------ -------------- ------------- ---------
Balance at 1 January 2022 752 8,751 (8,928) 575
Other comprehensive income 3 (78,577) 29,912 (48,662)
------------ -------------- ------------- ---------
Balance at 31 December
2022 755 (69,826) 20,984 (48,087)
------------ -------------- ------------- ---------
The reconciliation of cumulative amounts of the fair value
reserve within OCI, for investment assets measured at FVOCI
relating to the claims that the Group has applied the retrospective
approach at the IFRS 17 transition date, is provided in the tables
below.
30/06/2023 30/06/2022
At transition Post Total At transition Post Total
transition transition
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Opening FVOCI reserve (55,736) (14,090) (69,826) 8,751 - 8,751
Net movement during
period 7,037 684 7,721 (55,539) (8,303) (63,842)
Net movement reclassified
to profit or loss
on disposal 964 - 964 (11) - (11)
Income tax relating
to these items (1,000) (86) (1,086) 6,942 1,038 7,980
-------------- ------------ --------- -------------- ------------ ---------
Closing FVOCI reserve (48,735) (13,492) (62,227) (39,857) (7,265) (47,122)
-------------- ------------ --------- -------------- ------------ ---------
31/12/22
At transition Post transition Total
EUR000s EUR000s EUR000s
Opening FVOCI reserve 8,751 - 8,751
Net movement during period (73,659) (16,102) (89,761)
Net movement reclassified to profit
or loss on disposal (41) - (41)
Income tax relating to these items 9,213 2,012 11,225
-------------- ---------------- ---------
Closing FVOCI reserve (55,736) (14,090) (69,826)
-------------- ---------------- ---------
Note 15 Insurance and reinsurance contracts
The breakdown of groups of insurance contracts issued, and
reinsurance contracts held, that are in an asset position and those
in a liability position is set out in the table below:
Half year ended Half year ended
30/06/23 30/06/22 (restated)
---------------------------------- ----------------------------------
Assets Liabilities Net Assets Liabilities Net
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
-------- ------------ ---------- -------- ------------ ----------
Total insurance contracts
issued - (787,522) (787,522) - (897,112) (897,112)
-------- ------------ ---------- -------- ------------ ----------
Total reinsurance contracts
held 120,234 (656) 119,578 158,069 (458) 157,611
-------- ------------ ---------- -------- ------------ ----------
Year ended
31/12/22 (restated)
----------------------------------
Assets Liabilities Net
EUR000s EUR000s EUR000s
-------- ------------ ----------
Total insurance contracts
issued - (826,621) (826,621)
-------- ------------ ----------
Total reinsurance contracts
held 136,657 (610) 136,047
-------- ------------ ----------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 15 Insurance and reinsurance contracts (continued)
The roll-forward of the net asset or liability for insurance
contracts issued, showing the liability for remaining coverage and
the liability for incurred claims for major product lines are
disclosed in the tables below:
Half year ended 30/06/23
-----------------------------------------------------------------------------------------------------------------
Total insurance contracts issued
-----------------------------------------------------------------------------------------------------------------
Liability for Liability for Total
remaining coverage incurred claims
--------------------------------- ------------------------------ ------------
Excluding Loss component Estimates Risk Adjustment
loss component of the
present
value of
future
cash flows
EUR000s EUR000s EUR000s EUR000s EUR000s
Insurance contract liabilities
as at 01/01 117,798 - 641,074 67,749 826,621
Insurance contract assets - - - - -
as at 01/01
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Net insurance contract
(assets)/liabilities
as at 01/01 117,798 - 641,074 67,749 826,621
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Insurance revenue (194,540) - - - (194,540)
---------------- --------------- ------------ ---------------- ------------
Incurred claims and other
expenses - - 106,384 8,360 114,744
Amortisation of insurance
acquisition cash flows 36,588 - - - 36,588
Losses on onerous contracts
and reversals of those - - - - -
losses
Changes that relate to
past service-Changes
in FCF relating to the
LIC - - (50,774) (8,601) (59,375)
Impairment of assets
for insurance acquisition - - - - -
cash flow
Reversal of impairment
of assets for insurance - - - - -
acquisition cash flows
Investment components - - - - -
---------------- --------------- ------------ ---------------- ------------
Insurance service expenses 36,588 - 55,610 (241) 91,957
---------------- --------------- ------------ ---------------- ------------
Insurance service result (157,952) - 55,610 (241) (102,583)
---------------- --------------- ------------ ---------------- ------------
Insurance finance expenses - - 6,919 - 6,919
Total amounts recognised
in comprehensive income (157,952) - 62,529 (241) (95,664)
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Premium received 200,203 - - - 200,203
Claims and other directly
attributable expenses
paid - - (105,098) - (105,098)
Insurance acquisition
cash flows (38,540) - - - (38,540)
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Total cash flows 161,663 - (105,098) - 56,565
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Net insurance contract (assets)/liabilities
as at 30/06:
Insurance contract liabilities
as at 30/06 121,509 - 598,505 67,508 787,522
Insurance contract assets - - - - -
as at 30/06
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Net insurance contract
(assets)/liabilities
as at 30/06 121,509 - 598,505 67,508 787,522
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 15 Insurance and reinsurance contracts (continued)
Half year ended 30/06/22 (restated)
--------------------------------------------------------------------------------------------------------------------
Total insurance contracts issued
--------------------------------------------------------------------------------------------------------------------
Liability for Liability for incurred Total
remaining coverage claims
--------------------------------- ---------------------------------- -----------
Excluding Loss component Estimates Risk Adjustment
loss component of the present
value of
future cash
flows
EUR000s EUR000s EUR000s EUR000s EUR000s
Insurance contract liabilities
as at 01/01 114,940 - 750,038 65,003 929,981
Insurance contract assets - - - - -
as at 01/01
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
Net insurance contract
(assets)/liabilities
as at 01/01 114,940 - 750,038 65,003 929,981
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
Insurance revenue (186,142) - - - (186,142)
---------------- --------------- ---------------- ---------------- -----------
Incurred claims and other
expenses - - 102,883 7,380 110,263
Amortisation of insurance
acquisition cash flows 34,064 - - - 34,064
Losses on onerous contracts
and reversals of those - - - - -
losses
Changes that relate to
past service-Changes
in FCF relating to the
LIC - - (13,079) (3,926) (17,005)
Impairment of assets
for insurance acquisition - - - - -
cash flow
Reversal of impairment
of assets for insurance - - - - -
acquisition cash flows
Investment components - - - - -
---------------- --------------- ---------------- ---------------- -----------
Insurance service expenses 34,064 - 89,804 3,454 127,322
---------------- --------------- ---------------- ---------------- -----------
Insurance service result (152,078) - 89,804 3,454 (58,820)
---------------- --------------- ---------------- ---------------- -----------
Insurance finance expenses - - (29,457) - (29,457)
Total amounts recognised
in comprehensive income (152,078) - 60,347 3,454 (88,277)
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
Premium received 188,249 - - - 188,249
Claims and other directly
attributable expenses
paid - - (97,589) - (97,589)
Insurance acquisition
cash flows (35,252) - - - (35,252)
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
Total cash flows 152,997 - (97,589) - 55,408
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
Net insurance contract (assets)/liabilities
as at 30/06:
Insurance contract liabilities
as at 30/06 115,859 - 712,796 68,457 897,112
Insurance contract assets - - - - -
as at 30/06
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
Net insurance contract
(assets)/liabilities
as at 30/06 115,859 - 712,796 68,457 897,112
-------------------------------- ---------------- --------------- ---------------- ---------------- -----------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 15 Insurance and reinsurance contracts (continued)
Year ended 31/12/22 (restated)
-----------------------------------------------------------------------------------------------------------------
Total insurance contracts issued
-----------------------------------------------------------------------------------------------------------------
Liability for Liability for Total
remaining coverage incurred claims
--------------------------------- ------------------------------ ------------
Excluding Loss component Estimates Risk Adjustment
loss component of the
present
value of
future
cash flows
EUR000s EUR000s EUR000s EUR000s EUR000s
Insurance contract liabilities
as at 01/01 114,940 - 750,038 65,003 929,981
Insurance contract assets - - - - -
as at 01/01
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Net insurance contract
(assets)/liabilities
as at 01/01 114,940 - 750,038 65,003 929,981
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Insurance revenue (379,697) - - - (379,697)
---------------- --------------- ------------ ---------------- ------------
Incurred claims and other
expenses - - 209,625 14,182 223,807
Amortisation of insurance
acquisition cash flows 70,595 - - - 70,595
Losses on onerous contracts
and reversals of those - - - - -
losses
Changes that relate to
past service-Changes
in FCF relating to the
LIC - - (81,128) (11,436) (92,564)
Impairment of assets
for insurance acquisition - - - - -
cash flow
Reversal of impairment
of assets for insurance - - - - -
acquisition cash flows
Investment components - - - - -
---------------- --------------- ------------ ---------------- ------------
Insurance service expenses 70,595 - 128,497 2,746 201,838
---------------- --------------- ------------ ---------------- ------------
Insurance service result (309,102) - 128,497 2,746 (177,859)
---------------- --------------- ------------ ---------------- ------------
Insurance finance expenses - - (33,657) - (33,657)
Total amounts recognised
in comprehensive income (309,102) - 94,840 2,746 (211,516)
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Premium received 384,935 - - - 384,935
Claims and other directly
attributable expenses
paid - - (203,804) - (203,804)
Insurance acquisition
cash flows (72,975) - - - (72,975)
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Total cash flows 311,960 - (203,804) - 108,156
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Net insurance contract (assets)/liabilities
as at 31/12:
Insurance contract liabilities
as at 31/12 117,798 - 641,074 67,749 826,621
Insurance contract assets - - - - -
as at 31/12
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
Net insurance contract
(assets)/liabilities
as at 31/12 117,798 - 641,074 67,749 826,621
-------------------------------- ---------------- --------------- ------------ ---------------- ------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 15 Insurance and reinsurance contracts (continued)
The roll-forward of the net asset or liability for reinsurance
contracts held showing assets for remaining coverage and amounts
recoverable on incurred claims arising on property and liability
insurance ceded to reinsurers is disclosed in the tables below:
Half year ended 30/06/23
------------------------------------------------------------------------------------------------------------------
Assets for remaining Amounts recoverable Total
coverage on incurred claims
--------------------------------- ------------------------------ -----------
Excluding Loss component Estimates Risk Adjustment
loss component of the
present
value of
future
cash flows
EUR000s EUR000s EUR000s EUR000s EUR000s
Reinsurance contracts
held that are liabilities
as at 01/01 (631) - 20 1 (610)
Reinsurance contracts
held that are assets
as at 01/01 (2,530) - 131,797 7,390 136,657
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Net reinsurance contracts
held as at 01/01 (3,161) - 131,817 7,391 136,047
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Reinsurance expense (19,540) - - - (19,540)
Change in amounts recoverable
for incurred claims and
other expenses - - 5,060 355 5,415
Changes that relate to
past service-changes
in the FCF relating to
incurred claims recovery - - (22,954) (104) (23,058)
Loss-recovery on onerous
underlying contracts - - - - -
and adjustments
Effect of changes in
risk of reinsurers'
non-performance - - 3 - 3
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Net income/expense from
reinsurance contracts
held (19,540) - (17,891) 251 (37,180)
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Finance income / expense
from reinsurance contracts
held - - 2,119 - 2,119
Total amounts recognised
in comprehensive income (19,540) - (15,772) 251 (35,061)
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Premiums paid, net of
commission ceded 19,329 - - - 19,329
Recoveries from reinsurance - - (737) - (737)
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Total cash flows 19,329 - (737) - 18,592
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Net reinsurance contract assets/(liabilities)
held as at 30/06:
Reinsurance contracts
held that are liabilities
as at 30/06 (678) - 21 1 (656)
Reinsurance contracts
held that are assets
as at 30/06 (2,694) - 115,287 7,641 120,234
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
Net reinsurance contracts
held as at 30/06 (3,372) - 115,308 7,642 119,578
---------------------------------- ---------------- --------------- ------------ ---------------- -----------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 15 Insurance and reinsurance contracts (continued)
Half year ended 30/06/22 (restated)
------------------------------------------------------------------------------------------------------------------
Assets for remaining Amounts recoverable Total
coverage on incurred claims
--------------------------------- ------------------------------ --------------
Excluding Loss component Estimates Risk Adjustment
loss component of the
present
value of
future
cash flows
EUR000s EUR000s EUR000s EUR000s EUR000s
Reinsurance contracts
held that are liabilities
as at 01/01 (809) - 20 1 (788)
Reinsurance contracts
held that are assets
as at 01/01 (1,297) - 201,827 8,358 208,888
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net Reinsurance contracts
held as at 01/01 (2,106) - 201,847 8,359 208,100
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Reinsurance expense (17,232) - - - (17,232)
Change in amounts recoverable
for incurred claims and
other expenses - - 6,375 577 6,952
Changes that relate to
past service-changes
in the FCF relating to
incurred claims recovery - - (4,455) (33) (4,488)
Loss-recovery on onerous
underlying contracts - - - - -
and adjustments
Effect of changes in
risk of reinsurers' - - - - -
non-performance
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net income/(expense)
from reinsurance contracts
held (17,232) - 1,920 544 (14,768)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Finance income / (expense)
from reinsurance contracts
held - - (6,401) - (6,401)
Total amounts recognised
in comprehensive income (17,232) - (4,481) 544 (21,169)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Premiums paid, net of
commission ceded 17,619 - - - 17,619
Recoveries from reinsurance - - (46,939) - (46,939)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Total cash flows 17,619 - (46,939) - (29,320)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net reinsurance contract assets/(liabilities)
held as at 30/06:
Reinsurance contracts
held that are liabilities
as at 30/06 (479) - 20 1 (458)
Reinsurance contracts
held that are assets
as at 30/06 (1,240) - 150,407 8,902 158,069
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net reinsurance contracts
held as at 30/06 (1,719) - 150,427 8,903 157,611
------------------------------- ---------------- --------------- ------------ ---------------- --------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 15 Insurance and reinsurance contracts (continued)
Year ended 31/12/22 (restated)
------------------------------------------------------------------------------------------------------------------
Assets for remaining Amounts recoverable Total
coverage on incurred claims
--------------------------------- ------------------------------ --------------
Excluding Loss component Estimates Risk Adjustment
loss component of the
present
value of
future
cash flows
EUR000s EUR000s EUR000s EUR000s EUR000s
Reinsurance contracts
held that are liabilities
as at 01/01 (809) - 20 1 (788)
Reinsurance contracts
held that are assets
as at 01/01 (1,297) - 201,827 8,358 208,888
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net Reinsurance contracts
held as at 01/01 (2,106) - 201,847 8,359 208,100
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Reinsurance expense (34,814) - - - (34,814)
Change in amounts recoverable
for incurred claims and
other expenses - - 14,508 1,048 15,556
Changes that relate to
past service-changes
in the FCF relating to
incurred claims recovery - - (25,488) (2,016) (27,504)
Loss-recovery on onerous
underlying contracts - - - - -
and adjustments
Effect of changes in
risk of reinsurers'
non-performance - - 7 - 7
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net income/(expense)
from reinsurance contracts
held (34,814) - (10,973) (968) (46,755)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Finance income / (expense)
from reinsurance contracts
held - - (6,813) - (6,813)
Total amounts recognised
in comprehensive income (34,814) - (17,786) (968) (53,568)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Premiums paid, net of
commission ceded 33,759 - - - 33,759
Recoveries from reinsurance - - (52,244) - (52,244)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Total cash flows 33,759 - (52,244) - (18,485)
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net reinsurance contract assets/(liabilities)
held as at 31/12:
Reinsurance contracts
held that are liabilities
as at 31/12 (631) - 20 1 (610)
Reinsurance contracts
held that are assets
as at 31/12 (2,530) - 131,797 7,390 136,657
------------------------------- ---------------- --------------- ------------ ---------------- --------------
Net reinsurance contracts
held as at 31/12 (3,161) - 131,817 7,391 136,047
------------------------------- ---------------- --------------- ------------ ---------------- --------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
MIBI MIICF Consequential State Total
Levy contribution payments subsidies
EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1 January
2023 6,195 3,642 1,266 - 11,103
Provided in the
period 2,952 1,960 27 7,500 12,439
Net amounts paid (2,952) (3,642) (198) - (6,792)
-------- -------------- -------------- ----------- ---------
Balance at 30 June
2023 6,195 1,960 1,095 7,500 16,750
-------- -------------- -------------- ----------- ---------
Balance at 1 January
2022 6,681 3,645 1,945 - 12,271
Provided in the
period 3,347 1,894 - - 5,241
Net amounts paid (3,347) (3,649) (454) - (7,450)
-------- -------------- -------------- ----------- ---------
Balance at 30 June
2022 (restated) 6,681 1,890 1,491 - 10,062
-------- -------------- -------------- ----------- ---------
Balance at 1 January
2022 6,681 3,645 1,945 - 12,271
Provided in the
period 4,751 3,642 10 - 8,403
Net amounts paid (5,237) (3,645) (689) - (9,571)
Balance at 31 December
2022 (restated) 6,195 3,642 1,266 - 11,103
-------- -------------- -------------- ----------- ---------
Note 16 Other provisions
MIBI Levy
The Group's share of the Motor Insurers' Bureau of Ireland
'MIBI' levy for 2023 is based on its estimated market share in the
current year at the Statement of Financial Position date. Payments
of the total amount provided is made in equal instalments
throughout the year.
MIICF Contribution
The Group's contribution to the Motor Insurers' Insolvency
Compensation Fund 'MIICF' for 2023 is based on 2% of its Motor
Gross Written Premium. Payment is expected to be made in the first
half of 2024.
Consequential payments
The balance of the provision of EUR1,095,000 is based on the
best estimate of the Consequential Payments provision in respect of
the FSPO decisions and payments are expected to be made before the
end of the year.
State subsidies
The Group has included a provision of EUR7,500,000 in the
financial statements in respect of our current estimate of the cost
of a constructive obligation arising from the deduction of State
subsidies from Business Interruption claims payments following
Covid-19 closures. Payment to the State is expected to be made in
the coming year.
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 17 Deferred taxation asset/ (liability)
Retirement Unrealised Insurance/ Revaluation Losses Other Total
benefit gains on Reinsurance surplus carried timing
surplus investment finance on investment forward differences
& loans reserve properties
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1 January
2023 (1,061) 9,974 (2,998) (1,387) 329 (1,228) 3,629
Credited/ (debited) to
the Consolidated
Statement of
Comprehensive Income 125 (1,086) 337 - - - (624)
Debited to the
Consolidated Income
Statement - - - - (81) - (81)
----------- ------------ ------------- --------------- --------- ------------- --------
Balance at 30 June
2023 (936) 8,888 (2,661) (1,387) 248 (1,228) 2,924
----------- ------------ ------------- --------------- --------- ------------- --------
Balance at 1 January
2022 (1,363) (1,251) 1,276 (1,387) 410 (1,576) (3,891)
(Debited)/ credited to
the Consolidated
Statement of
Comprehensive Income (485) 7,981 (3,481) - - - 4,015
Credited to the
Consolidated
Income Statement - - - - - 2,050 2,050
----------- ------------ ------------- --------------- --------- ------------- --------
Balance at 30 June
2022 (restated) (1,848) 6,730 (2,205) (1,387) 410 474 2,174
----------- ------------ ------------- --------------- --------- ------------- --------
Balance at 1 January
2022 (1,363) (1,251) 1,276 (1,387) 410 (1,576) (3,891)
Credited/ (debited) to
the Consolidated
Statement of
Comprehensive Income 284 11,225 (4,274) - - (2) 7,233
Credited/ (debited) to
the Consolidated
Income Statement 18 - - - (81) 350 287
----------- ------------ ------------- --------------- --------- ------------- --------
Balance at 31 December
2022
(restated) (1,061) 9,974 (2,998) (1,387) 329 (1,228) 3,629
----------- ------------ ------------- --------------- --------- ------------- --------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 18 Other payables
Half year Half year Year
ended ended ended 31/12/22
30/06/23 30/06/22 (restated)
(restated)
EUR000s EUR000s EUR000s
Amounts falling due within one
year:
Payables and accruals 38,007 29,173 33,947
PAYE/PRSI 1,868 1,632 1,681
Total payables 39,875 30,805 35,628
---------- ------------ ----------------
Note 19 Dividends
Half year Half year Year
ended 30/06/23 ended 30/06/22
(restated) ended 31/12/22
(restated)
EUR000s EUR000s EUR000s
Paid in period:
2022 dividend of 8.4 cent (2021:
8.4 cent) per share on 14% non-cumulative
preference share of EUR0.60 each 113 113 113
2022 dividend of 4.8 cent (2021:
4.8 cent) per share on 8% non-cumulative
preference share of EUR0.60 each 169 169 169
2022 final dividend of 100.0 cent
(2021:100.0 cent) per share on ordinary
shares of EUR0.60 each 35,884 35,588 35,588
---------------- ---------------- ----------------
Total dividends paid 36,166 35,870 35,870
---------------- ---------------- ----------------
2022 dividend payments were approved by the shareholders at the
Annual General Meeting on 11 May 2023 and paid on 16 May 2023.
A special dividend of 100 cent per ordinary share
(EUR35,857,000) has been approved by the Board of FBD Holdings plc
on 10 August 2023. The approved dividend has not been included as a
liability in the Consolidated Statement of Financial Position at 30
June 2023.
Note 20 Retirement benefit surplus
The Group operates a funded defined benefit retirement scheme
for qualifying employees that is closed to future accrual and new
entrants. The Scheme liabilities increased slightly during the
period while the value of Scheme assets fell marginally, reducing
the Scheme surplus at 30 June 2023.
The amounts recognised in the Consolidated Statement of
Financial Position are as follows:
Half year Half year Year
ended ended ended
30/06/23 30/06/22 31/12/22
(restated) (restated)
EUR000s EUR000s EUR000s
Fair value of plan assets 70,400 79,600 71,170
Present value of defined benefit
obligation (62,900) (64,800) (62,671)
Net retirement benefit surplus 7,500 14,800 8,499
---------- --------------- --------------
FBD HOLDINGS PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
For the half year ended 30 June 2023
Note 21 Transactions with related parties
For the purposes of the disclosure requirements of IAS 24, the
term "key management personnel" (i.e. those persons having
authority and responsibility for planning, directing and
controlling the activities of the Group) comprises the Board of
Directors and Company Secretary of FBD Holdings plc and the members
of the Executive Management Team. Full disclosure in relation to
the compensation of the Board of Directors and details of
Directors' share options are provided in the Report on Directors'
Remuneration in the 2022 Annual Report. An analysis of share-based
payments to key management personnel is also included in Note 35 of
the 2022 Annual Report. The level and nature of related party
transactions in the first half of 2023 are consistent with the
transactions disclosed in the 2022 Annual Report.
Note 22 Contingent liabilities and contingent assets
There were no contingent liabilities or contingent assets at 30
June 2023, 30 June 2022 (restated) or 31 December 2022
(restated).
Note 23 Subsequent events
There have been no subsequent events that would have a material
impact on the interim financial statements.
Note 24 Information
This half yearly report and the Annual Report for the year ended
31 December 2022 are available on the Company's website at
www.fbdgroup.com.
Note 25 Approval of Half Yearly Report
The half yearly report was approved by the Board of Directors of
FBD Holdings plc on 10 August 2023.
RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Half Yearly
Financial Report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 and the Central Bank of Ireland
(Investment Market Conduct) Rules 2019 and with IAS 34, Interim
Financial Reporting as adopted by the European Union.
We confirm that to the best of our knowledge:
a) the Group condensed set of interim financial statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union;
b) the interim management report includes a fair review of the
important events that have occurred during the first six months of
the financial year, and their impact on the condensed set of
interim financial statements and the principal risks and
uncertainties for the remaining six months of the financial
year;
c) the interim management report includes a fair review of
related party transactions that have occurred during the first six
months of the current financial year and that have materially
affected the financial position or the performance of the Group
during that period, and any changes in the related parties'
transactions described in the last Annual Report that could have a
material effect on the financial position or performance of the
Group in the first six months of the current financial year.
On behalf of the Board
Liam Herlihy Tomás Ó Midheach
Chairman Group Chief Executive
10 August 2023
FBD HOLDINGS PLC
APPIX
ALTERNATIVE PERFORMANCE MEASURES (APMs) (UNAUDITED)
The Group uses the following alternative performance measures:
Loss ratio, expense ratio, combined operating ratio, annualised
investment return, net asset value per share, return on equity and
gross written premium.
Loss ratio (LR), expense ratio (ER) and combined operating ratio
(COR) are widely used as a performance measure by insurers, and
give users of the financial statements an understanding of the
underwriting performance of the entity. Investment return is used
widely as a performance measure to give users of financial
statements an understanding of the performance of an entities
investment portfolio. Net asset value per share (NAV) is a widely
used performance measure which provides the users of the financial
statements the book value per share. Return on equity (ROE) is also
a widely used profitability ratio that measures an entity's ability
to generate profits from its shareholder investments. Gross written
premium is a component of insurance revenue and is widely used
across the general insurance industry.
The calculation of the APMs is based on the following data:
Note Half year Half year Year ended
ended 30/06/23 ended 30/06/22 31/12/22
(restated)
(restated)
EUR000s EUR000s EUR000s
Loss ratio
Incurred claims and other expenses 6(c) 114,744 110,263 223,807
Changes that relate to past
service - changes in FCF relating
to the LIC 6(c) (59,375) (17,005) (92,564)
Net expense from reinsurance
contracts held 37,180 14,768 46,755
Movement in other provisions 12,439 5,241 8,403
Total claims incurred and movement
in other provisions 104,988 113,267 186,401
Insurance revenue 194,540 186,142 379,697
--------------- --------------- -----------
Loss ratio (Total claims incurred
and movement in other provisions/Insurance
revenue) 54.0% 60.9% 49.1%
Expense ratio
Amortisation of insurance acquisition
cash flow 6(c) 36,588 34,064 70,595
Acquisition cash flows recognised 6(c) - - -
when incurred
Non-attributable expenses 6(c) 16,165 13,780 33,048
Total insurance acquisition
and non-attributable expenses 6(c) 52,753 47,844 103,643
Insurance revenue 194,540 186,142 379,697
--------------- --------------- -----------
Expense ratio (Total insurance
acquisition and non-attributable
expenses /Insurance revenue) 27.1% 25.7% 27.3%
% % %
Combined operating ratio
Loss ratio 54.0 60.9 49.1
Expense ratio 27.1 25.7 27.3
--------------- --------------- -----------
Combined operating ratio (Loss
ratio + Expense ratio) 81.1 86.6 76.4
--------------- --------------- -----------
FBD HOLDINGS PLC
APPIX
ALTERNATIVE PERFORMANCE MEASURES (APMs) (UNAUDITED)
(continued)
Half Half year Year ended
year ended ended 31/12/22
30/06/23 30/06/22 (restated)
(restated)
EUR000s EUR000s EUR000s
Actual investment return
Investment return recognised in consolidated
income statement 8,389 (15,281) (10,753)
Investment return recognised in statement
of comprehensive income 8,685 (63,853) (89,802)
Actual investment return 17,074 (79,134) (100,555)
Average investment assets 1,143,242 1,194,183 1,169,411
Investment return (Actual investment
return/ Average investment assets) 1.5% (6.6%) (8.6%)
Net asset value per share (NAV per
share)
Shareholders' funds - equity interests 456,932 419,727 454,006
Number of shares No. No. No.
Closing number of ordinary shares
(excluding Treasury) 35,856,967 35,587,279 35,587,279
Cent Cent Cent
Net asset value per share (Shareholders'
funds/Closing number of ordinary shares) 1,274 1,179 1,276
Return on Equity EUR000s EUR000s EUR000s
Weighted Average (WA) equity attributable
to ordinary shareholders 455,469 450,008 467,148
Result for the period 33,307 2,182 57,556
ROE (Result for the period/WA equity
attributable to ordinary shareholders) %% %
15 (1) 1 (1) 12
Underwriting result EUR000s EUR000s EUR000s
Insurance service result 65,403 44,052 131,104
Non-attributable expenses (16,165) (13,780) (33,048)
Other provisions (12,439) (5,241) (8,403)
Underwriting result 36,799 25,031 89,653
Gross written premium EUR000s EUR000s EUR000s
Insurance revenue 194,540 186,142 379,697
Less: Instalment premium(2) (2,070) (2,088) (4,291)
Add: Movement in unearned premium(2) 13,962 8,378 7,245
Gross written premium 206,432 192,432 382,651
(1) Annualised
(2) These items cannot be reconciled to the Financial
Statements
Gross written premium: the total premium on insurance
underwritten by an insurer or reinsurer during a specific period,
before deduction of reinsurance premium.
Underwriting result: Insurance service result less
non-attributable expenses and movement in other provisions.
Expense ratio: Insurance acquisition expenses and
non-attributable expenses as a percentage of insurance revenue.
Loss ratio: Claims incurred net of reinsurance result as a
percentage of insurance revenue.
Combined operating ratio: the sum of the loss ratio and expense
ratio. A combined operating ratio below 100% indicates profitable
insurance results. A combined operating ratio over 100% indicates
unprofitable results.
Independent review report to FBD Holdings plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed FBD Holdings plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the half yearly report of FBD Holdings plc for the six month
period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Transparency
(Directive 2004/109/EC) Regulations 2007 and the Central Bank
(Investment Market Conduct) Rules 2019.
The interim financial statements, comprise:
-- the condensed consolidated statement of financial position as at 30 June 2023;
-- the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the condensed consolidated interim financial statements.
The interim financial statements included in the half yearly
report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Transparency (Directive 2004/109/EC)
Regulations 2007 and the Central Bank (Investment Market Conduct)
Rules 2019.
As disclosed in note 3 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' ("ISRE (Ireland) 2410") issued for use in Ireland. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (Ireland)
and, consequently, does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the half yearly
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (Ireland) 2410. However future events or
conditions may cause the group to cease to continue as a going
concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half yearly report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half
yearly report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 and the Central Bank (Investment
Market Conduct) Rules 2019. In preparing the half yearly report
including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the half yearly report based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Transparency (Directive 2004/109/EC) Regulations 2007 and
the Central Bank (Investment Market Conduct) Rules 2019 and for no
other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers
Chartered Accountants
10 August 2023
Dublin
Notes:
(a) The maintenance and integrity of the FBD Holdings plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
(b) Legislation in the Republic of Ireland governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
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IR NKKBDBBKBKFD
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