Our Policy is You

FBD Holdings plc

2013 Results

March 2014

1

2013 Results

Forward Looking Statements

This presentation contains certain forward-looking statements. Actual results may differ materially

from those projected or implied in such forward-looking statements. Such forward-looking

information involves risks and uncertainties that could affect expected results.

Where applicable and unless otherwise stated, all comparative figures have been restated to reflect

changes to IAS19, “Employee Benefits” and are for continuing operations only.

2

2013 Results - Highlights

Strategic developments� More farms insured, more policies per farm

� Increased penetration of business insurance market

� Further penetration of consumer insurance market

� Launched Clan Insurance to access car insurance

customers who choose to buy through brokers

Performance � GWP up 2%, new market initiatives deliver first full

year increase in premium since 2010

� Highest ever share of market at 13.4%

� COR of 94.1%, despite large claims experience

� Strong investment return of 3.6%, with low risk

allocation

� Operating EPS of 136c, fully diluted EPS of 131c

� Excellent ROE of 17.3%

Financial strength� NAV of 823c

� Second successive year of 14% NAV growth

� Solvency strengthened to 78.1% of NEP

Dividend� Full year dividend of 49c, delivering dividend growth

of 16%

Excellent performance. Dividend growth. Increased financial strength 3

2013 2012

GWP €351.2m €344.3m

Operating profit €52.7m €65.4m

PBT €51.5m €52.2m

Operating EPS 136c 170c

Fully Diluted EPS 131c 131c

NAV 823c 721c

FY DPS 49c 42c

2013 Results – Performance in market context

Evidence of economic recovery. Market rates should rise

Economy� Economic activity turned around faster than

anticipated, welcome development post the peak to

trough decline in domestic demand of 22.5%

Insurance industry� Market COR of 109% in 2012, likely further

deterioration in 2013

� Market remains competitive, particularly in home

insurance and for higher value business risks

� Early signs of rate hardening before year end

4

Claims environment� Road deaths rose by 17% to 190 in 2013, the first

increase since 2005

� Increase in economic activity is likely to result in

increased claims frequency

70

75

80

85

90

95

100

105

110

115

Retail sales of automotive fuel

Volume adjusted index (Base 2005=100)

6 per. Mov. Avg. (Retail sale of automotive fuel)

GNP Domestic demand

2010 0.5% -5.0%

2011 -1.6% -3.0%

2012 1.8% -1.1%

2013 (e) 3.0% -0.7%

2014 (f) 2.6% 1.5%

Peak to trough decline -13.9% -22.5%

2013 Results – Customer segments

Opportunities for continued outperformance by meeting needs of existing and new customers

Farm and business direct � Strong performance, more customers, more policies

per customer

� More farming customers than anytime in history

� Business insurance written directly continued to

reduce

5

� Online offerings (FBD.ie and No Nonsense.ie) made

significant progress with premium income up 36.6% on

2012 levels

� Repositioning of No Nonsense via ‘readymade’ and

telematics product ‘SmartDriver’, aimed at drivers under

the age of 30, also helped deliver growth

Consumer

Brokers � Relationships with broker partners are developing well

and business written up 30%

� Brokers accounted for 14% of new business

� Growth closely controlled

� In Q4 launched Clan Insurance to access car

insurance customers who choose to buy through

brokers

At the Irish Brokers Association’s Annual Insurance Service Awards, FBD

was awarded

• The Most Improved Award

• Top Supporting Management Team

4%

9% 9%

11%11%

14%

12%23% 25%

35%

46%

62%

10%

30%

50%

70%

3%

7%

11%

15%

% of all new business via brokers LHS% of business insurance new business via brokers RHS

Broker as % of new business premium:

Overall and business insurance

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

H1

20

09

H2

09

H1

10

H2

10

H1

11

H2

11

H1

12

H2

12

H1

13

H2

13

Average rate change YoY

Average rate Change YoY

2013 Results – Premium trends

6FBD continues to outperform market

Analysis of change in GWP (YoY)

0%

10%

20%

30%

40%

50%

60%

Jan

-08

Jun

-08

No

v-0

8

Ap

r-0

9

Se

p-0

9

Fe

b-1

0

Jul-

10

De

c-1

0

May

-11

Oct

-11

Mar-

12

Au

g-1

2

Jan

-13

Jun

-13

No

v-1

3

CPI Cumulative % Change

Jan 08 to Jan 13

HOME CAR

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Policy volume Average rate Cover and mix Total GWP

2009 2010 2011 2012 2013

� FBD GWP up 2%

� Irish Insurance market down 4 - 5%

� Increased market share to c. 13.4%,

highest ever share

� Market share growth in 12 of the last 13

years

� Policy volume up 2.6%

� Average rate marginally

lower, improvement in

second half

� Stability in economy

contributed to first

improvement in cover

and mix since 2008,

cumulative reduction since 2008 of 15%

� Premium and volume growth stronger in

the second half of the year

� Market pricing for home insurance was

uneconomic, FBD maintained underwriting

discipline to generate an acceptable return

12.0%

24.9%

7.5%

15.2%

12.8%

7.6%

4.8%

9.7%

20.7%

10.7%

10.3% 11.6%

7.8%

12.0%

10.4%

19.9%

11.3%

10.0%

11.2%

8.0%

12.2%

10.4%

19.2%

11.6%

10.0% 11.5%

8.7%

11.2%

11.1%

16.1%

11.5%

10.7%

11.2%

10.7%

10.4%12.3%

16.0%

11.8%

11.5%

11.1%

9.0%

8.6%

14.7%

15.5%

12.2%

11.6%

11.8%

9.4%

6.2%

15.9%

15.4%

12.6%

11.6%

11.1%

10.0%

6.5%

13.4%

RSA Aviva FBD AXA Allianz Zurich Liberty/Quinn

2000 2006 2007 2008 2009 2010 2011 2012 2013 (e)

2013 Results – Market share (GWP)

Market share growth in 12 of the last 13 years7

Latest available

market data (II)

200

250

300

350

400

2300

2500

2700

2900

3100

3300

3500

3700

3900

4100

4300

FBD - €m Market - €m Premium Income - FBD and the Market

Total Market FBD

102

169

60

80

100

120

140

160

180

200

220

Premium Income - FBD and the Market

(Base 2000 = 100)

Total Market FBD

2013 Results – Claims

Loss ratio of 67.9%� Continued improvement in attritional claims

- risk selection

- claims management initiatives

- rating

- underwriting improvements

� Combined cost of severe weather and large claims ahead of norm, driven by volatile very large accident and liability claims

� Likely to revert to norm over time

� Variability mitigated by reinsurance

� Risk tools curtailed impact of flood damage

Combined cost of severe weather and large claims will revert to norm8

Analysis of Loss Ratio 2008 – 2013

Loss Ratio 2008 - 2013

79.1%

83.8%

77.4%

66.6%63.8%

67.9%

60%

65%

70%

75%

80%

85%

Loss Ratio

15.8% 19.4% 20.8% 14.2% 13.1% 18.7%

63.3%64.4%

56.6%

52.4%50.7% 49.2%

45%

50%

55%

60%

65%

70%

5%

7%

9%

11%

13%

15%

17%

19%

21%

2008 2009 2010 2011 2012 2013

Combined cost of severe weather and large claims (LHS)

Seven year average LR: Combined cost of severe weather and large claims

Loss Ratio excluding combined cost of severe weather and large claims (RHS)

Combined cost of severe

weather and large claims

Attritional Loss Ratio

-

5

10

15

20

25

Nine year average of €9m

€'m

Net cost of accident and liability claims (> €1m)

2005 - 2013

2013 Results – Financial services and JV

Financial services

9

� Includes:

- premium instalment services

- life, pension and investment broking (FBD Financial Solutions)

- less cost of Holding Company

� Generated an operating profit of €6.4m (2012: €5.6m)

� An increasing proportion of insurance customers continue to avail of premium instalment services

� The market for life, pension and investment broking business continued to be challenging

� FBD Financial Solutions is the largest retail broker in Ireland

Joint venture (JV)

� 50% share of property and leisure operations in Ireland and Spain

� Trading performance improved compared to 2012

� Growth in occupancy and rates, particularly in the Irish market

� Market for Irish hotel assets has improved significantly during 2013, with improving operational performance and higher multiples increasing property valuations

� JV sold remaining units in La Cala

� The Group’s share of JV profits was €1.3m, a significant improvement on the €1.7m loss in 2012

Strong performance in a challenging market

Prudent management of investment assets - protecting customers and shareholders

2013 Results – Asset allocation

• FBD maintained low allocation of long-dated bonds to

protect shareholders and customers from risk of rising

bond yields.

• Return on underwriting investments was €29.4m, up 18%

• Strong return of 3.6%, despite low interest rate

environment

• Return delivered with a low risk allocation aided by the

decision not to invest in long dated bonds and a strong

performance on 8.5% (2012: 7.0%) of assets invested in

equities

• FBD positioned to benefit from rising yields

10

31-Dec-13 31-Dec-12

Underwriting investment assets €m % €m %

Deposits and cash 454 53% 499 59%

Corporate bonds 144 17% 152 18%

Government bonds 134 16% 110 13%

Equities 73 9% 60 7%

Unit trusts 24 3% 0 0%

Own land & buildings 15 2% 16 2%

Investment property 12 1% 11 1%

Underwriting investment assets 856 100% 848 100%

Working capital & other assets 116 100

Investment in joint venture 45 44

Reinsurance assets 44 55

Plant and equipment 31 20

Total assets 1,092 1,067

2013 Results – Balance sheet

Position of strength 11

� Strong capital base with solvency level of 78.1% of NEP up from 73.8% (per Solvency I)

� Net asset value per share increased 14% (second year in a row) to 823c

� IAS 19 retirement benefit obligation reduced by €3m

� Excess capital over Solvency II requirement

NAV progression & solvency strength

FBD Insurance Solvency Ratio

NAV progression – Dec ‘12 to Dec ‘13

721

823

131

1646

700

800

900Cent

708

640

576

536 547

582

630

666721

740

823

500

550

600

650

700

750

800

850

Cent

49.8% 52.4%

61.3%

66.0%

73.8% 78.1%

45%

50%

55%

60%

65%

70%

75%

80%

Solvency RatioTarget

Evolution of NAV 2008 - 2013

2013 Results – Reserving strength

Robust reserves12

Net reserving and run off

20 30 40 50

Savings

Positive Run-off€m

Prior years 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

€m €m €m €m €m €m €m €m €m €m €m €m

Estimate of cumulative claims:

At end of underwriting year 265 290 298 307 338 308 283 233 235 248

One year later 228 287 257 281 319 286 265 208 219

Two years later 214 221 254 277 318 286 266 216

Three years later 184 210 251 273 317 284 260

Four years later 176 205 247 269 313 274

Five years later 171 201 243 263 306

Six years later 168 199 239 259

Seven years later 167 198 236

Eight years later 168 196

Nine years later 166

Estimate of cumulative claims 166 196 236 259 306 274 260 216 219 248

Cumulative payments (163) (189) (227) (243) (279) (236) (190) (131) (112) (73)

Claims outstanding at 12/13 6 3 7 9 16 27 38 70 85 107 175 541

Saving in 2013 1 2 1 4 5 8 11 6 (7) 16 - 47

15%17%

17% 19%

26%25%

46%

30%

21%25%

36%

0%

10%

20%

30%

40%

50%

60%

Dividend payout ratio (Operating EPS)

2013 Results – Dividend

Further significant increase with potential for progressive dividend in future years

Policy

� It is in the long term interest of all stakeholders

to maintain strong solvency and liquidity

margins

� FBD is committed to a progressive dividend

policy and efficient capital management

� Target is a 40% - 50% operating payout ratio

2013 Dividend

� Full year dividend of 49c, an increase of 16%

� Further step towards 40% - 50% operating

payout ratio

� Further increase - rationale:

� Strong profit performance

� Robust financial position

� Move towards target payout ratio

13

30

32

35

42

49

25

30

35

40

45

50Dividend per share

Dividend Per Share (c)

Cent

2013 Results - Investing in the future

14 Investing through the downturn - pace of change increasing

Meeting customers needs Pre 2010 2010 2011 2012 2013Realignment organisation around customer

Farm & Business Direct

Restructure sales office network and establish support centre

Increase policies holdings per customer

Optimise resources to match customer needs

Consumer

Launch No Nonsense and FBD.ie

NN Home, Readymade, Telematics, Top Driver

Brokers

Initiate pilot

Full launch, expand broker panel

Add car insurance via Clan

PeopleEnhanced managerial expertise

Management development

Enhanced product function

Redefine work practices

Technology and processImplementation of new back office system

New claims system

Cost management initiatives

Claims management initiatives

Focus on underwritingProperty and leisure JV

FBD Brokers sold

Abbey Re sold

2013 Results – Outlook

� Initial signs of a recovery in Irish economy. Resulting

growth will be very positive in terms of premium

income. Turnaround faster than the market anticipated

� Increased economic activity will lead to higher claims

frequency. There is invariably a time lag before this is

reflected in market premiums. This will have a short

term impact on profitability in 2014 and early 2015

� Market rates should rise given the profitability

challenges facing the industry, the extent of recent

weather losses and any impact of increased frequency

arising from economic activity

� The February windstorm will cost the industry up to

€130m. FBD cost within annual budget. FBD’s cost of

severe weather and large claims will revert to norm

� Persistent bad weather in January/February will lead to

an increase in industry and FBD claims

FBD aims to deliver superior returns to shareholders15

� The initiatives on those aspects of claims costs that are

within the Group’s control, will continue to have a positive

impact on the loss ratio

� FBD is committed to achieving profitable growth by focusing

on needs of customers by:

� delivering products and services that matter to its

farming and business direct customers

� increasing penetration of key urban markets, in

particular Dublin

� increasing business and car insurance in partnerships

with brokers

� These initiatives will enable the Group to outperform the

market in 2014 and deliver superior return to shareholders

� Subject to no exceptional events arising, the Group is

guiding full-year 2014 operating EPS of 120c to 130c

1

17

50

52

51

-5

5

15

25

35

45

55

PBT

PBT

€m

2013 Results – Track record

16 Track record of superior returns

30

32

35

42

49

25

30

35

40

45

50 Dividend per share

Dividend Per Share (c)

Cent

11.5%11.8%

12.2%

12.6%13.4%

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

Market Share

Market Share

%

73.0% 78.0% 83.0% 88.0% 93.0% 98.0%

FBD

Allianz

Zurich

Axa

Top 7 Ave

RSA

Aviva

Liberty/Quinn

10 Year COR % 2003-2012

FBD has a track

record of:

� Outperforming

its peers

� Delivering returns

in difficult market

conditions

2013 Results – Summary

Well positioned to deliver long-term profitable growth

FBD has:� A strong track record

� A robust underwriting business with a strong

core franchise

� A strong capital base and balance sheet and

a prudent reserving strategy

� A low-risk investment allocation and is

positioned to benefit from rising yields

FBD will:� Increase investment to maximise potential

� Seek opportunities for sustainable growth and

profits

� Deliver superior returns to shareholders

� Continue to move to target 40% - 50%

dividend payout ratio

17

The insurance market:� Is facing a profitability challenge

� Has incurred weather losses

� Will see an increase in claims frequency due to the

economic recovery

� Should see rate adjustments, the speed and extent of

which, depend on competitive dynamics and priorities of

competitors

Our Policy is You

FBD Holdings plc

2013 Results

18