Our Policy is You

FBD Holdings plc2014 Interim Results

August 2014

1

Forward Looking Statement

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.

2014 Interim Results – Highlights

Strategic developments Further progress in delivering on strategic priorities

and aligning business model to continue to meet the needs of customers

Relationships with broker partners are developing well and business written is gaining momentum

Continued investment in platform for growth

Performance GWP up 5.1% Further increase in market share COR of 107%:

• Severe and persistent weather claims of €44.3m, gross of reinsurance, €15.3m net

• Sharp increase in car insurance claims frequency

Annualised investment return of 3.0%, excellent result in a low return environment

Operating EPS of 14c, fully diluted EPS of 8c

Financial strength NAV of 776c Reserving ratio 241% (2013: 235%) Solvency strengthened to 73.4% of NEP

Dividend Interim dividend of 17.0c. Committed to progressive dividend policy

Robust results in difficult six month period, strengthened platform for profitable growth2

2014 2013GWP €184.9m €175.9mOperating profit  €5.3m €24.1mPBT  €3.2m €19.0m

Operating EPS  14c 63cFully Diluted EPS  8c 49cNAV  776c 740cInterim DPS 17.0c 15.75c

2014 Interim Results – Irish economy

Economic recovery stronger than anticipated

Economy Economic growth has accelerated faster

than anticipated Welcome development post peak to trough

decline in domestic demand of 20.4% Domestic demand forecast to grow 2.9% in

2014 Unemployment rate 11.4% in 2014, down

from 13% in 2013 Consumer sentiment hits a five year high Retail sales of auto fuels, the best gauge of

insurable auto risk, is up 8.8% yoy, far exceeding expectations

Increase in new vehicle registrations:• Cars up 30% • HGVs up 44% • LCVs up 46%

3

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

Domestic Demand (yoy change) * 

Source: CSO/Goodbody       * excludes aircraft and R&D

70

75

80

85

90

95

100

105

110

115

Retail sales of automotive fuel  Volume adjusted index (Base 2005=100)

71

73

75

77

79

81

2300

2500

2700

2900

3100

3300

3500

3700

3900

4100

4300

Market ‐ €m 

2014 Interim Results – Insurance industry

Insurance industry Irish insurance market premium income

stabilises after 11 years of decline Industry COR for 2011-2013 of 102% (Car

112%) Substantial rate increases in car insurance in

recent months Market remains competitive, particularly in

home insurance and for higher value business risks

4

‐8%

‐3%

2%

7%

12%

17%

22%

July 2013 October 2013 January 2014 April 2014 July 2014

1

2

3

4

FBD

5

No Nonsense

6

Source : Consumer  Intelligence 

‐300‐200‐100

0100200300400500600700800

€m

Source: Insurance Ireland

Rate hardening to overcome profitability challenge

Market in car insurance rates July2013 – July 2014Premium Income – Market

Insurance Industry – Underwriting Profit History

2014 Interim Results – Claims

Claims environment Severe and persistent weather experience Improvement in economy led to higher

claims frequency

5

Weather and large claims H1 2014 weather cost is the highest in

Group’s history Severe and persistent weather and large

claims accounted for 26% of NEP compared to an average of 16.5% for the previous seven years

Over 9,000 customers impacted by weather

FBD claims cost Net claims incurred increased 17.2% Loss ratio of 79.5% Severe and persistent weather of €44.3m

gross or €15.3m net Sharp increase in frequency of car injury

claims Large claims over €1m revert to norm

Analysis of Loss Ratio  2008 – 2014  Severe and persistent weather and large claims 

Impact of storm Darwin  ‐ FBD risk exposure per county

15.8% 19.6% 21.5% 14.2% 13.1% 18.7% 25.6%

5%7%9%11%13%15%17%19%21%23%25%27%

2008 2009 2010 2011 2012 2013 2014 H1

Severe and persistent weather & large claims LR Seven year average LR: Severe and persistent weather & large claims

Abnormally high weather cost will revert to norm

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

2008 ‐ 2014

 ‐

 2

 4

 6

 8

 10

 12

‐8%

‐3%

2%

7%

12%

17%

22%

July 2013 October 2013 January 2014 April 2014 July 2014

1

2

3

4

FBD

5

No Nonsense

6

Source : Consumer  Intelligence 

Third Party Injury  Frequency FBD Car   2012‐14

2014 Interim Results – Claims (cont)

Economic recovery leads to higher claims frequency and higher market rates 6

Attritional loss ratio First increase since 2009 Up from 49.2% to 53.9% Car insurance claims frequency increased

due to stronger than expected economic recovery

First increase in frequency in H2 2013, further sharp increases in H1 2014

Increase evident across all customer profiles

Rating action Rating action started in July 2013 Further action in Oct 13 and Feb, Apr, May,

Jul and Aug 14, with more to follow Sales volume continued to rise in H1 2014 and

inbound call activity surged 40% in Q2. This suggests that a market wide adjustment is underway

There is an inevitable lag before the benefit of rate increases reaches NEP

Analysis of Loss Ratio  2008 ‐ 2014

71

73

75

77

79

81

15.8%19.6% 21.5%

14.2%13.1%

18.7% 25.6%

63.3% 64.1%

55.9%

52.4%50.7% 49.2%

53.9%

45%

50%

55%

60%

65%

70%

5%7%9%11%13%15%17%19%21%23%25%27%

2008 2009 2010 2011 2012 2013 2014 H1

Attrition

al Loss R

atio

Severe persistent w

eather & large claims

Impact of severe and persistent weather & large claims on LR

Seven year average LR: Severe and persistent weather & large claims

Attritional Loss Ratio Excluding severe persistent weather & large claims (Right Hand Axis)

2014 Interim Results – Premium

7 FBD continues to outperform market

Analysis of change  in GWP (YoY) GWP up 5.1% Growth achieved across all

customer segments Average premium up 3.1%, policy

volume up 2.0% Further increase in market share Stabilisation in cover and mix

continues

‐10.0%

‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

6.0%

8.0%Policy volume Average rate Cover and mix Total GWP

 H1 08  H2 08  H1 09  H2 09 H1 10 H2 10 H1 11  H2 11  H1 12 H2 13 H1 14

Average premium

2014 Interim Results – Customer segments

Continuing to broaden and deepen customer reach

Farm and business direct Strong performance, growth in premium, more policies

per customer Business insurance written directly stabilising Continued investment to improve customer

experience, increase focus and provide capacity for growth

8

Growth in car insurance despite higher rates Decline in home insurance where FBD has continued to

maintain its underwriting discipline rather than compete with uneconomic rates

Launched new home insurance product in July

Consumer

Brokers Relationships with broker partners are developing well

and premium gaining momentum Brokers accounted for 20% of all new business Rates hardening for commercial insurance Clan Insurance delivering as expected

4%

7%11% 10% 11%

15% 20%

11%20% 30% 29%

47%

61%59%

10%

30%

50%

3%

7%

11%

15%

19%

23%

% of all new business via brokers LHS

% of business insurance new business via brokers RHS

Broker as % of new business premium

Premium by customer segment H1 2014

2014 Interim Results – Market share (GWP)

9

Latest availablemarket data (II)

102

169

6080100120140160180200220

Premium Income ‐ FBD and the Market  (Base 2000 = 100) 

Total Market FBD

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

Market share growth in 12 of the last 13 years

12.0

%

7.6%

24.9

%

12.8

%

15.2

%

7.6%

4.8%

9.7%

10.7

%

20.7

%

11.6

%

10.3

%

7.8%

12.0

%

10.4

% 11.3

%

19.9

%

11.2

%

10.0

%

8.0%

12.2

%

10.4

% 11.6

%

19.2

%

11.5

%

10.0

%

8.7%

11.2

%

11.1

%

11.5

%

16.1

%

11.2

%

10.7

%

10.7

%

10.4

%

12.3

%

11.8

%

16.0

%

11.1

%

11.5

%

9.0%

8.6%

14.7

%

12.2

%

15.5

%

11.8

%

11.6

%

9.4%

6.2%

15.9

%

12.6

%

15.4

%

11.1

%

11.6

%

10.0

%

6.5%

14.2

%

13.6

%

13.3

%

12.3

%

12.0

%

10.4

%

6.8%

RSA FBD Aviva Allianz AXA Zurich Liberty/Quinn

2000 2006 2007 2008 2009 2010 2011 2012 2013

2014 Interim Results – Non-underwriting

Financial services

10

Includes: • premium instalment services• life, pension and investment broking (FBD Financial Solutions, largest retail broker in Ireland) • less cost of Holding Company

Operating profit of €1.7m (2013: €2.2m)

Joint venture (JV) 50% share of property and leisure operations in Ireland and Spain Trading performance improved compared to 2013 The Group’s share of JV profits (in the seasonally quiet first half) was €0.1m, a significant improvement

on the €0.4m loss in 2013 Growth in occupancy, rates and revpar, particularly in the Irish market Market for Irish hotel assets has improved significantly, particularly in Dublin city centre The JV agreement with Taylor Wimpey plc to sell a parcel of development land at La Cala Resort Spain

is progressing according to plan This transaction is indicative of JV’s strategy to realise value as market conditions improve The JV is considering the disposal of Temple Bar Hotel if an attractive offer can be obtained

Opportunities to realise value

Prudent management of investment assets - protecting customers and shareholders

2014 Interim Results – Asset allocation

• Annualised return of 3.0%, an excellentperformance in a low yield environment

• Return delivered with a low risk allocation

• All asset classes contributed to performance

• Tactical allocation guards against volatility

• Deposits & fixed income investments rated A-or better

• Equity holdings reduced by 20% as gains were realised

11

30-Jun-14 31-Dec-13Underwriting investment assets €m % €m %

Deposits and cash 490 57% 454 53%Corporate bonds 172 20% 144 17%Government bonds 81 10% 134 16%Equities 58 7% 73 9%Unit trusts 24 3% 24 3%Own land & buildings 15 2% 15 2%Investment property 13 1% 12 1%

Underwriting investment assets 853 100% 856 100%

Working capital & other assets 128 116Reinsurers’ share of provisions 62 44Investment in joint venture 45 45Plant and equipment 35 31

Total assets 1,123 1,092

2014 Interim Results – Balance sheet

12

Strong capital base with solvency level of 73.4% of NEP up from 69.7% at June 2013

Excess capital over Solvency II requirement Reserving ratio 241% (2013: 235% ) Net asset value per share 776c IAS 19 retirement benefit obligation increased by

€7m, discount rate reached an all time low

NAV progression & solvency strength

823

776

8

21

34

750

850

640

536

582

666

740

776

500

550

600

650

700

750

800

Cent

NAV progression – Dec 2013 to Jun 2014

Evolution of NAV

Strong solvency, robust reserves

224%226%228%230%232%234%236%238%240%242%244%

45%

50%

55%

60%

65%

70%

75%

80%

Solvency Ratio Reserving Ratio

Solvency & Reserving Ratios

15%

17%17%

19%

26%25%

46%

30%

21%

25%

36%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Historic dividend payout ratio (Operating EPS)

2014 Interim Results – Dividend

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 across insurance cycle

2014 Interim dividend Interim dividend of 17c, an increase of 8% Rationale for increase in dividend:

• Committed to progressive dividend policy• Robust financial position• Confidence in capacity of business model

to deliver returns through the insurance cycle

13

9

10

11

12

13

14

15

16

17

18

Interim Dividend Per Share

Further increase in dividend. Commitment to progressive dividend

2014 Interim Results - Investing in the future

14 Continued investment to provide infrastructure for profitable growth

Technology and processInvestment in new technology will enable:

Enhanced customer experience Agile pricing Product innovation Business intelligence Operational excellence Generating capacity

Realignment around customer Enhanced customer experience Removed voice recognition for farming Generating capacity Optimum aligning of resources for

customers

2014 Interim Results – Outlook

15

FBD• Growth in the second half more likely to come from rate than volume as

Group ensures that car premiums reflect increasing frequency

• Rate increases implemented by FBD since the beginning of 2014 will

improve loss ratio over time

• The inevitable lag before rate actions are effective will have a short term

impact on profitability in 2014 and the early part of 2015

• Growth in economic activity will have a positive effect on FBD in the medium

term, particularly given the Group’s track record of outperforming the market

• The Group has developed the ability to broaden its customer reach and will

continue to focus on farming and direct business customers. Together

these provide a solid platform for profitable growth

• As a result it will continue to outperform the market and deliver superior

returns to shareholders

• The Group re-affirms its previous guidance, subject to no further

exceptional weather events arising, of full year 2014 operating EPS of

between 70 and 80 cent

FBD aims to deliver superior returns to shareholders

Operating environment • Economic indicators point to an improved outlook

• Irish insurance market is likely to grow in H2 2014

• Rate of growth will depend on speed and extent with

which the market chooses to adjust rates to deliver an

acceptable return

• Increasing economic activity will lead to higher claims

frequency

• Market profitability will continue to be challenging for

the remainder of 2014 as the effect of rate increases

are likely to have been more than offset by the upturn

in frequency

• The precise timing and quantum of the improvement in

market profitability will depend on the evolution of

frequency arising from economic growth and any

further rating action

15

2014 Interim Results – Summary

FBD remains well positioned to deliver 18% ROE target through insurance cycle

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 positioned to

benefit from rising yields

FBD will Seek opportunities for sustainable growth and

profits Continue to invest to maximise potential Deliver superior returns to shareholders Continue to move towards target 40% - 50%

dividend payout ratio across the cycle

16

The insurance market Continues to face profitability challenges Is experiencing increases in car insurance claims

frequency due to the economic recovery Has applied rate increases but more are required Competitive dynamics will decide the speed and extent

of the industry recovery

Our Policy is You

FBD Holdings plc

2014 Interim Results

17