FBD sets aside €22m for Covid claims and parks plans to pay out dividend
FBD has formally shelved plans to pay shareholders a dividend, bowing to pressure from European regulators.
On February 27th FBD’s board proposed a final dividend of €35m for the 2019 financial year, subject to ratification at the insurer’s annual general meeting (AGM).
That meeting was originally scheduled for May 8th, but was delayed as a result of the Covid-19 restrictions. FBD said yesterday that the AGM will now go ahead on July 31st.
However, the proposed dividend has now been shelved until after the full impact of Covid-19 has worked through the system. For FBD that will include the cost of any payouts under business interruption policies over which the insurer is in legal disputes with hundreds of customers.
FBD said it has set aside what it called a “precautionary reserve of €22m” to cover costs that may be incurred in relation to the business interruption claims. The reserve will be included in claims costs in half-year results to the end of June.
FBD has faced a huge backlash from business customers – and hundreds of legal actions – over its refusal to pay out on business interruption claims to companies shut by the Covid-19 outbreak.
A handful of test cases are now before the courts, and the outcome of those cases will determine whether or not the insurer does eventually pay out.
Dublin pub Lemon & Duke is one of four test cases to be heard in October, with implications for hundreds of other businesses concerning insurance liability.
The company said it remains confident that the dividend will eventually by paid.
“Taking into account the statement issued in April by the European Insurance and Occupational Pensions Authority (EIOPA) urging the suspension of all discretionary dividend distributions, the heightened uncertainty resulting from Covid-19 and the importance of maintaining capital in the business, FBD has decided not to proceed at this time with the proposed dividend payment for the 2019 financial year,” it said.