FBD Holding Plc - Audit Report / Information 2021

FBD Holdings plc

FBD HOLDINGS PLC ANNUAL REPORT 2021

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In this Report

Strategic Report

Financial Highlights 2

Our Purpose 3

Chairman’s Statement 4

Review of Operations 7

FBD’s Business Model 14

Our Strategy 16

Risk & Uncertainties Report 18

Environmental, Social & Governance

Environmental 27

Social 36

Governance

Board of Directors 46

Corporate Information 49

Report of the Directors 50

Corporate Governance 54

Nomination & Governance Report 66

Report on Directors’ Remuneration 69

Directors’ Responsibilities Statement 85

Financial Statements

Independent Auditors’ Report 87

Consolidated Income Statement 98

Consolidated Statement of Comprehensive Income 99

Consolidated Statement of Financial Position 100

Consolidated Statement of Cash Flows 102

Consolidated Statement of Changes in Equity 103

Company Statement of Financial Position 104

Company Statement of Cash Flows 105

Company Statement of Changes in Equity 106

Notes to the Financial Statements 107

Other Information

Alternative Performance Measures 165

Strategic Report Environmental, Social & Governance Financial Statements Other Information

2021 Performance Highlights

Proﬁ t before tax

€110.4m

(2020: €4.8m)

Return on Equity

23%

(2020: 1%)

Combined operating ratio

71.5%

(2020: 101.4%)

Net Asset Value

1,338c

(2020: 1,095c)

Gross premium written

€366m

(2020: €358m)

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Established in the 1960s by farmers for

farmers, FBD has built on our roots in

agriculture to become a leading general

insurer directly serving the needs of

Farmer, Business and Retail customers

throughout Ireland.

FBD at a Glance

Further information on the above measures is found in Alternative Performance Measures on 165 and 166.

Strategic Report

2 FBD Holdings PLC Annual Report 2021

Financial Highlights

2021

€000s

2020

€000s

Gross premium written 366,328 358,230

Underwriting profit/(loss) 95,197 (4,379)

Profit before tax 110,435 4,802

2021

Cent

2020

Cent

Basic earnings per share 274 13

Diluted earnings per share 268

Net asset value per share 1,338 1,095

Ordinary dividend per share proposed 100 –

Ordinary dividend per share paid – –

2021

2020

Combined operating ratio 71.5% 101.4%

Return on equity 23% 1%

Diluted earnings per share reflects the potential vesting of share based payments

Further information on measures referred to in our Financial Highlights is found in Alternative Performance Measures on pages 165 and 166.

Financial Calendar

Preliminary announcement 4 March 2022

Annual General Meeting 12 May 2022

Strategic Report Environmental, Social & Governance Financial Statements Other Information

At FBD Insurance we aim to serve the needs of

agriculture, businesses and retail customers across

Ireland by supporting, protecting and standing with

them to enable them to grow and thrive.

Our customers and

our community are at

the heart of who we

are and what we do

We are proud of our roots in farming and of our Irish

heritage. We are proud of our expertise and appreciate

the trust of our customers. We take pride in being part

of the communities we serve. We evolve to meet the

changing needs of our customers and the next

generation of customers.

We continue to support families and family businesses in

the same way we have supported Ireland’s farmers for

generations.

We continue to carefully grow our business, building the

FBD brand and securing FBD’s future.

Our Purpose

4 FBD Holdings PLC Annual Report 2021

Strategic Report

Chairman’s Statement

Performance

I am very pleased to announce an

excellent set of financial results for 2021,

including a proposed dividend payment to

our shareholders of 100 cent per share.

Clarity on the quantum of Business

Interruption claims following the recent

High Court judgement and positive

developments surrounding reinsurance

recoveries, strong investment returns and

lower claims costs, has culminated in a

Group Profit before Tax of €110m for

2021. Our Net Asset Value (book value)

per share grew to 1,338 cents. Our

Solvency Capital Ratio continues to be

very strong at 214% (unaudited). These

results are a demonstration of the strong

underlying profitability in our business.

We appreciate that our customers as well

as our employees have been through a

very difficult time over the past two years

but, we are hopeful that the worst of the

pandemic is behind us and we can look

forward to brighter days ahead, for all.

As always our loyal and steadfast

employees continue to show great

commitment. Our operational resilience

has been tested on numerous occasions

over the past two years with the majority

of employees working from home, while

still maintaining an excellent level of

customer service. This customer service

and loyalty is borne out in our retention

rates which are at their highest level in five

years. I am happy to say that a phased

return to the office has commenced, in

line with public health guidelines, and on

behalf of the Board I would like to thank

you all.

Board of Directors

Our Chief Executive Officer (CEO) Tomás

Ó Midheach joined the Board on 4 January

2021. Tomás has brought his considerable

knowledge of the Irish and international

financial services landscape to FBD and

has been instrumental in reviewing and

setting FBD’s strategic direction.

Following a review of Board skills by our

Nomination and Governance Committee

a thorough search was conducted against

specific and defined criteria. I am delighted

that Ms Jean Sharp and Mr John O’Dwyer

joined our Board in August 2021, following

this process. Ms Sharp and Mr O’ Dwyer

both have extensive experience in the life

and general insurance industries. Their

knowledge and skills will be of great

benefit to our Board and we look forward

to working with them into the future.

The Board and I are also pleased to

announce the appointment of Ms Nadine

Conlon to the role of Company Secretary,

with Derek Hall remaining as Chief Risk

Officer. I would like to acknowledge the

contribution of Derek in the dual role of

Company Secretary and Chief Risk Officer

over the past 5 years.

I am very pleased to announce

an excellent set of financial

results for 2021, including a

proposed dividend payment to

our shareholders of 100 cent

per share”.

Liam Herilhy

Chairman

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Mr Walter Bogaerts has indicated his

intention not to go forward for re-election

at the 2022 AGM. Mr Bogaerts has been a

member of the Board since 2016 and has

served a full nine years on the Board of

FBD Insurance plc since 2013. We

acknowledge the strong contribution

Mr Bogaerts has made to the Board and

planning for his succession will be carried

out in line with the Board Succession Plan.

Covid-19

The recent High Court quantum hearing

judgement has provided much needed

clarity on many elements of the handling

of business interruption claims and we will

advance the settlement of claims in due

course. I also note the application of

reinsurance cover has been agreed with

our panel of reinsurers on expected

impacted layers of our programme. The

removal of this uncertainty is positive for

FBD and our customers.

While awaiting clarity on quantum we

made interim payments to customers over

the course of 2021 and we have also paid

additional amounts to all impacted

customers following the FSPO decisions

earlier in the year.

We introduced a number of measures to

assist our customers throughout the

Covid-19 pandemic including premium

rebates, suspension of cover reductions

and payment flexibility, where required.

We have also assisted customers with a

wide range of supports reflecting the

changed environment for individuals and

businesses. We are grateful to our loyal

customers for their continued support.

ESG

As an organisation we are committed

to implementing sustainability into

everything we do. We have aligned our

existing activities under each of the ESG

categories (Environmental, Social and

Governance). A Sustainability Committee

and Working Groups have been

established, charged with driving ESG

and sustainability within FBD. We are

integrating ESG considerations into our

Investment portfolios and we are

supporting customers to make the

transition to low carbon alternatives,

where possible.

We are proud to support the next

generation of farm leaders and innovators

through our partnerships with Teagasc

and the ASA, while FBD Trust continues

to support research and educational

scholarships for training and

development.

As we know, farming can be one of the

more dangerous occupations in Ireland

and the persistently high number of farm

fatalities and serious accidents is cause for

significant concern to us. The Farm

Protect Campaign promotes behavioural

changes by working directly with farms

and businesses to help improve safety

standards and awareness. Our Champions

for Safety and Agri Aware Safe Schools

Programme continue to educate our

future farmers on how they can make

the farm a safer place for all.

I am delighted to announce that we have

maintained our position as the leading

general insurer, as defined by customer

experience, following the latest CXi report

carried out by Amárach Research. This

external validation of the exceptional

customer service we provide is a credit

to our staff.

We recently secured the naming rights to

Semple Stadium in a deal that will see the

stadium renamed ‘FBD Semple Stadium’.

FBD have been backing the Tipperary

men’s football and hurling championships

since 2019 and camogie from last year.

We also offer ongoing support to local GAA

clubs throughout the country through our

Local Office Sponsorship Funds. We are

very proud of our sporting heritage and I

would like to acknowledge the Team

Ireland success at the Tokyo Olympics and

especially our former brand ambassadors

Kellie Harrington and Paul O’Donovan

who brought home gold medals.

Claims Environment

Covid-19 continued to affect the claims

environment throughout 2021 with

lengthy court delays experienced as well

as an impact to settlement talks. As a

result, settlement rates are showing a

marked decline on last year.

We welcome the introduction of the new

Personal Injury Guidelines however, we

note the cautious approach of claimant

solicitors, who are anxious to determine

the attitude of the Courts to the adoption

of the guidelines. Whilst the changes to

Personal Injuries Guidelines are a positive

move for the customer and the insurance

industry, we continue to track injury

settlements and note there have been

no court awards as yet.

Submissions regarding the reform of

PIAB were invited by the Department of

Enterprise, Trade and Employment in

April, and we supported Insurance Ireland

in their engagement with this process.

We await the outcome of the review and

we also await the outcome of the 2020

Discount Rate consultation.

Brexit and Covid-19 are continuing to

impact supply chains, with resultant

increases in motor and property damage

repair costs.

6 FBD Holdings PLC Annual Report 2021

Strategic Report

Chairman’s Statement (continued)

We fully support the work of the

Government on the insurance reform

agenda. We welcome the progress made

to date towards the objective of reducing

insurance premiums for Irish farmers,

businesses and retail customers.

Capital/Dividend

The Board believes that it is in the

long-term interest of all stakeholders to

maintain a strong solvency margin and it is

focused on ensuring that the Group’s

capital position is robust and its financial

position well managed. This has been

particularly important over the past two

years during the Covid-19 pandemic and

its effect on investment markets and

economic activity generally.

Following the excellent financial

performance for 2021 the Board are

happy to propose a dividend of 100 cent

per share. This is a reflection of our

continuing confidence in the underlying

profitability and future prospects of our

Group. Our Dividend Policy is designed to

ensure we maintain sufficient capital at all

times.

Our capital position remains strong with a

Solvency Capital Ratio of 214%

(unaudited) at 31 December 2021.

Conclusion

I am hopeful that much of the uncertainty

we have faced over the past two years is

now behind us and that we can look

forward, continue to grow, serve our

customers and meet the expectations of

all our stakeholders, well into the future.

During 2021 we established our strategic

intent to be a digitally enabled, data

enriched organisation which delivers

an excellent customer and employee

experience. As always, we will keep our

customers and communities at the heart

of who we are and what we do. At the core

of our strategy are our three customer

segments, farmers, businesses and retail

customers, and the use of our people and

technology to deliver profitable growth.

I would like to thank the Board for their

continued guidance and support over the

past year and of course, to our loyal

customers, who have remained with FBD.

We will endeavour to repay your trust and

confidence in us, well into the future.

With Best Regards.

Liam Herlihy

Chairman

3 March 2022

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Review of Operations

Overview

The Group reported a profit before tax of

€110.4m (2020 profit: €4.8m), supported

by a strong underwriting performance

including claims frequency

improvements, lower severity of injury

claims, benign weather, strong

investment returns of €15.7m and

positive prior year reserve development

of €63.6m.

The Group reported an underwriting profit

of €95.2m (2020 loss: €4.4m) and GWP of

€366.3m (2020: €358.2m) which is in line

with 2020 when the pandemic related

premium rebates are excluded.

The quantum hearing judgement

delivered on January 28th 2022 clarified

the position for Business Interruption

claims in respect of the definition of

business closure and on other matters

such as allowable wages. We agreed the

reinsurance recovery levels with our

reinsurers for the expected impacted

layers of the catastrophe programme,

clarifying the application of our

reinsurance contract cover.

FBD is now ready to move to the next

phase of the process and arrange final

claims settlements with our public house

customers.

Underwriting

Premium income

Gross written premium increased to

€366.3m in 2021 (2020: €358.2m) and

includes €3.3m of Covid-19 Commercial

rebates (2020: €6.0m Motor and €5.8m

Commercial rebates). Excluding rebates

gross written premium is in line with last

year, despite reducing average premium.

Customer policy count increased by 1.3%,

with retention rates increasing 0.5%

reaching the highest level in the last

five years.

Average premium reduced by 1.3% across

the book. Average premium for Private

Motor reduced by 13.9% as rates reduced

to reflect the Personal Injury Guidelines

and benign injury claims trends.

Average premium on Farm was flat with

strong retention levels. Home average

premium increased by 1.2% reflecting a

change in cover and mix. Average

premium for Commercial increased 8.5%

almost entirely due to a change in mix.

Reinsurance

The reinsurance programme for 2022 was

successfully renegotiated with a similar

structure to the expiring programme. The

negotiation of the 2022 renewal reflects

market rate increases that incorporate

recent global events and overall we saw

an increase in reinsurance rates of 7%.

Claims

Net claims incurred (Net claims and

benefits plus movements in Other

provisions) reduced by €85.4m to

€145.7m (2020: €231.1m). The main

change relates to an increase in positive

prior year reserve development from

€23.3m in 2020 to €63.6m in 2021. In

addition the Business Interruption claims

costs of €54.0m in 2020 did not recur in

2021. This has been offset by €13.2m

costs for consequential payments

following the application of the Central

Bank Business Interruption Supervisory

Framework to FSPO decisions on Business

Interruption complaints.

Strategic Report

Environmental, Social & Governance

The underlying insurance business is solid

and has a strong foundation on which to

grow while maintaining the customer’s

needs at the heart of the business. We will

need to continue to adapt in an ever

evolving world to build future success.”

Tomás Ó Midheach

Group Chief Executive

The underlying insurance business is solid

and has a strong foundation on which to

needs at the heart of the business. We will

evolving world to build future success.”

Further information on measures referred to in our Review of Operations is found in Alternative Performance Measures on pages 165 and 166.

8 FBD Holdings PLC Annual Report 2021

Strategic Report

Review of Operations (continued)

The positive prior year reserve

development of €63.6m is coming from

the reduction in the Business Interruption

best estimate, reduced number of large

claims and lower attritional claims

frequency and severity in recent

accident years.

Motor damage and injury claims

frequency, while similar to 2020, has been

lower than pre-Covid levels primarily due

to the Government restrictions on

movement. Excluding Business

Interruption claims, Property claims

frequency remained relatively consistent

with the 2020 experience. There were no

significant weather events in 2021; Storm

Barra in December was a minor event

incurring claims costs of approximately

€4m.

The average cost of injury claims

settlements continues to be slightly lower

than that experienced pre-Covid. This is

due to a change in the mix of settled cases

affected by court closures and the inability

to engage in pre-trial negotiation, with a

backlog of cases building up in the courts

system. In addition the introduction of the

Personal Injuries Guidelines have had the

desired impact of reducing the awards by

approximately 40% for more minor

injuries. As a result we have reflected the

impact of this in premium reductions. It

has yet to be seen what impact the new

guidelines will have on claims settled after

the PIAB process has been completed.

The average cost of property claims

increased 27% due to a change in mix and

inflation, with further inflation expected

on domestic building costs. Motor damage

claims continue to experience high

inflation of 8% in the year as costs of

parts, paint and average labour hours per

repair increase.

The increase in the movement in other

provisions of €12.5m primarily relates to

the FSPO consequential payments. The

Motor Insurers Bureau of Ireland (MIBI)

levy and Motor Insurers Insolvency

Compensation Fund (MIICF) contribution

combined totalled €9.0m (2020: €9.7m).

Claims Environment

Covid-19 continued to affect the claims

environment throughout 2021. Social

distancing restrictions have had a material

impact on the courts, with lengthy delays

experienced. While there were six new

judicial appointments recently, we note

there remains a backlog in the court

system. Restrictions on our ability to

arrange settlement talks have also

impacted on settlement rates which are

showing a marked decline on pre-Covid

rates.

The introduction of the new Personal

Injury Guidelines continues to bring

caution to the approach of claimant

solicitors, who are reluctant to engage in

settlements for such cases and instead are

anxious to determine the attitude of the

courts to the adoption of the guidelines.

We are experiencing a build-up of older,

higher value injury claims as a result of

slowdowns.

Whilst the changes to Personal Injuries

Guidelines introduced in April are a

positive move for the customer and the

insurance industry, there are a number of

uncertainties, namely, the extent of cost

changes for future settlements and legal

fees, the impact on the PIAB acceptance

rate, and the potential for newly classified

injuries to increase costs. We continue to

track injury settlements and note there

have been no court awards as yet.

There are a number of challenges to the

Personal Injury Guidelines before the

courts, over the constitutionality of the

laws underpinning the guidelines. The

applicants’ claims include that the

application of the guidelines breaches

the separation of powers between the

legislature and the judiciary and their

constitutional right to bodily integrity,

property and equality. Whatever the

outcome it is likely to be appealed to the

Supreme Court due to the novelty of the

constitutional issues involved.

We welcome all initiatives in place to

reduce the cost of claims including

capping of general damages introduced in

April and the passing of legislation dealing

with perjury in injury claims. Submissions

were invited regarding the reform of PIAB

in which Insurance Ireland engaged and

we await the outcome from the

consultation on the determination of

who should decide on the appropriate

discount rate.

Weather, Claims Frequency and

Large Claims

No significant weather events of note

occurred during 2021 which is consistent

with the experience of the previous two

years. December’s Storm Barra brought

with it the highest number of property

claims in any month of 2021 with a claims

cost of €4m. Overall weather claims costs

of approximately €9.0m were very similar

to the weather costs experienced in 2020.

As a result of the Covid-19 pandemic

and the restrictions put in place by the

Government there continued to be a

significant reduction in Motor and Liability

claims during the year when compared to

pre-Covid norms. This was particularly

evident in the first two months of the year

when the country was at Level 5

lockdown. Frequency of Motor claims

remained below normal levels in the

second half of the year, albeit at much

higher levels than those observed at the

beginning of the year. Frequency for

liability claims has reverted back close to

pre-Covid norms over the last few months

of the year. The frequency of claims

relating to Farm activities remained

relatively stable throughout the year.

Large injury claims notified in 2021 are

31% lower than the average of previous

pre-Covid years, defined as a value greater

than €250k, with Covid-19 affecting

frequency and possibly impacting the

normal flow of information.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Expenses

The Group’s expense ratio was 27.9%

(2020: 28.1%). Other underwriting

expenses were €93.4m, an increase of

€4.8m on 2020. The increase in expenses

is primarily made up of accelerated

amortisation in respect of the policy

administration system offset by a higher

allocation to claims handling expenses

following an updated cost allocation

review.

The expense ratio reduced by 0.2% as a

result of higher earned premium and

additional costs allocated to claims

handling expenses offset by accelerated

amortisation on the policy administration

system. Excluding the accelerated

amortisation the expense ratio would

be 26.1%.

General

FBD generated an underwriting profit of

€95.2m (2020 loss: €4.4m) which

translates to a COR of 71.5% (2020:

101.4%).

Investment Return

FBD’s total investment return for 2021

was 0.3% (2020: 1.3%). 1.3% (2020:

0.9%) is recognised in the Consolidated

Income Statement and -1.0% (2020:

0.4%) in the Consolidated Statement of

Other Comprehensive Income (OCI). The

positive investment return through the

Income Statement is largely due to the

strong performance of risk assets over the

year.

Despite new Covid-19 variants and

ensuing lockdowns, economic growth has

been strong as economies re-opened and

central banks remained accommodative.

The Global Equity Fund was up 20.3%

over the year and the Emerging Market

Equity Fund was up 3.9%. Interest rates

increased on fears of higher inflation

which reduced the valuation of the

Group’s bond portfolios leading to

negative mark-to-market returns through

OCI. Credit spreads have remained tight

reflecting the positive outlook for

corporates.

Financial Services Income and

Other Costs

The Group’s financial services operations

returned a profit before tax of €1.2m for

the period (2020: profit €2.1m). Revenue

reduced by €2.1m reflecting the impact of

customer forbearance measures and

lower commission in the Life & Pension

business. Costs reduced by €1.1m to

€6.1m primarily due to reduced legal and

other expenses in the Holding company.

Profit Per Share

The diluted profit per share was 268 cent

per ordinary share, compared to 12 cent

per ordinary share in 2020.

Statement of Financial

Position

Capital Position

Ordinary shareholders’ funds at 31

December 2021 amounted to €472.4m

(2020: €384.0m). The increase in

shareholders’ funds is mainly attributable

to the following:

l Profit after tax for the year of €96.4m;

l An increase of €2.7m due to share

based payments; and

l Offset by mark to market losses on our

bond portfolio of €10.7m after tax;

Net assets per ordinary share are 1,338

cent, compared to 1,095 cent per share at

31 December 2020.

Investment Allocation

The Group adopts a conservative

investment strategy to ensure that its

technical reserves are matched by cash

and fixed interest securities of low risk and

similar duration. FBD invested an

additional €40m into its corporate bond

portfolio during the year to earn higher

The allocation of the Group’s investment assets is as follows:

31 December 2021 31 December 2020

€m % €m

Corporate bonds 589 48 % 552 47 %

Government bonds 303 25 % 311 26 %

Deposits and cash 175 14 % 180 15 %

Other risk assets 88 7 % 68 6 %

Equities 50 4 % 49 4 %

Investment property 16 2 % 17 2 %

1,221 100 % 1,177 100 %

10 FBD Holdings PLC Annual Report 2021

Strategic Report

Review of Operations (continued)

yield while allowing it to maintain

sufficient liquidity. An additional €10m

was invested in risk assets, predominantly

emerging market debt. The Group

continues to maintain a higher cash

allocation to provide sufficient liquidity for

payment of Business Interruption claims.

Solvency

The latest (unaudited) Solvency Capital

Ratio (SCR) is 214% compared to the 2020

SCR of 197%.

Risks and Uncertainties

The principal risks and uncertainties faced

by the Group are outlined on pages 18 to

25. Covid-19 was again a dominant

influence during 2021 with a continuing

impact on economic activity and wider

society impacting a number of risks and

uncertainties faced by the Group.

The claims environment continues to be

impacted by the Covid-19 pandemic and

lockdowns experienced during 2020 and

2021. Reduced frequency continues

despite increased commercial activity to

more normalised levels. In addition we

are observing delays in the settlement of

claims due to court backlogs and

restrictions in place leading to difficulties

entering into settlement discussions with

solicitors. As a result a higher degree of

uncertainty exists in the environment as

the claims payment patterns and average

settlement costs of the more recent

Covid-19 years are a less reliable future

indicator and must be carefully considered

by the Actuarial function when arriving at

claims projections. Supply chain issues in

respect of materials and labour shortages

particularly in respect of Construction and

the Motor industry may impact claims

costs in future years. Increased energy

costs are also a risk that may drive

increased general inflation.

With on-going Government supports

ensuring businesses continue in operation

the risk increases when supports are

removed that businesses may close or

contract, reducing exposures and

premium on the Commercial account.

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 likely 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 214% (31 December 2020:

197%).

The quantum hearing judgement on

Business Interruption claims was received

on 28th January 2022 and clarified the

definition of business closures and on

other matters such as allowable wages

reducing the uncertainty in respect of the

gross claims cost.

The application of reinsurance contract

cover to Business Interruption claims

has been agreed with reinsurers for the

expected impacted layers of the

catastrophe programme. This reduces

the uncertainty surrounding reinsurance

recoveries and is the main reason for the

favourable reduction in the Business

Interruption booked reserves net of

reinsurance. Potential future adverse

events are assessed when the Group is

considering the margin for uncertainty

which is a provision held as an amount

over the best estimate of claims liabilities

net of expected reinsurance recoveries.

Rising inflation in developed markets has

led to increasing risk free interest rates. A

risk remains as to how high inflation will

go and to the policy response in order to

control it. Equity valuations are at near

all-time highs and are therefore

susceptible to large drawdowns. Future

financial market movements and their

impact on balance sheet valuations,

pension surplus and investment income

are unknown and market risk remains

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 as

we monitor the situation closely.

The Group continues to manage liquidity

risk through ongoing monitoring of

forecast and actual cash flows and

currently holds a higher allocation to

short-term cash and corporate bonds in

order to meet Business Interruption

claims. 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 9.

The recruitment, motivation and

retention of employees is key for the

business as the world of work has evolved

and flexible working, wellbeing and

continuous development opportunities

are differentiators. We continue to adjust

to these changes to attract and retain a

talented workforce.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Outlook

In terms of economic outlook for 2022,

almost all pandemic restrictions were

lifted on the 22 January across the

economy and despite continuing high

infection rates the severity of the virus and

the impact on the health service is at a

manageable level. Vaccination levels are

very high which are supporting the

reopening of the economy and many

people are returning to places of work,

and setting the economy on the path to

post pandemic recovery.

We await the recommendations from the

public consultation on the personal injury

discount rate in the Republic of Ireland

which started in June 2020 and will

increase the cost of awards if the discount

rate is decreased.

Differential pricing requirements when

published may result in significant pricing

changes in the market in the second half

of 2022, as the insurance industry adapts

creating potential opportunities and

challenges.

It is early days for the Personal Injury

Guidelines as claims settlements are at

such low levels with Covid-19 impacting

the claims settlement process and the

courts. FBD are seeing reduced awards

and are hopeful that consistency in awards

and a real reduction in claims settlements

in personal injury cases should come

through, justifying the lower premiums

charged to customers.

We are continuing our sustainability

journey as we embed Environmental,

Social and Governance (ESG) factors into

the business and align our existing

activities, some of which are mature and

others which are under development. We

have disclosed the Company’s climate risk

and strategy under the recommendations

of the Task Force on Climate-related

Financial Disclosures (TCFD) for the first

time. In future we will further integrate

ESG into our business model and decision

making and provide additional metrics and

disclosures to meet increasing investor

and stakeholder expectations.

FBD, our customers and staff have come

through a challenging time with Covid-19

and have demonstrated resilience in the

face of challenging circumstances.

Excellent service has been maintained

across the business. The underlying

insurance business is solid and has a

strong foundation on which to grow while

keeping our customer’s needs at the heart

of what we do. We are aware of the need

to continually adapt in an ever evolving

world to build future success.

Tomás Ó Midheach

Group Chief Executive

3 March 2022

12 FBD Holdings PLC Annual Report 2021

At FBD Insurance we have over 50 years

of experience dealing with your insurance

needs, so you have one less thing to worry

about. Support extends to all aspects of

our business from community programs

to sponsorships and from helpful claims

advice to safety initiatives.

SUPPORT.

IT’S WHAT WE DO.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

52%

Our Farm customers

represent 52% of our

premium

29%

Our Business customers

represent 29% of our

premium

19%

Our Retail customers

represent 19% of our

premium

FARM

BUSINESS

RETAIL

FBD Holdings PLC Annual Report 202114

Strategic Report

FBD’S Business Model

We oﬀ er clear solutions to

customer's insurance needs

through our 34 branches

nationwide, on the phone,

online or through our partner

and broker networks.

Keeping our

customers and

communities

at the heart of

who we are and

what we do.

Inputs

FBD empowers our people to deliver for customers

and shareholders alike.

Our Employees

The expertise, experience and

local knowledge of our 900

employees provides our customers

with tailored service based on

in-depth understanding of their

requirements.

Social

FBD is a responsible member of

local communities throughout

Ireland and works hard to provide

significant support to farm,

business and community groups.

Financial

FBD seeks to maintain a resilient

and stable balance sheet that is

well reserved with a low risk

investment portfolio.

Environment

FBD seeks to do business in a

sustainable way evidenced through

investment choices and operational

activities. FBD's reinsurance

program reduces our exposure to

adverse weather and climate change

while maximising the protection

thatweoﬀerourcommunities.

Relationships

Founded by farmers for farmers,

FBD has an unrivalled knowledge

of farm enterprises through over

50 years of protection and close

relationships with farming

organisations. Today FBD has

expertise in Farmer, Business and

Retail segments.

Technology

FBD has evolved with changing

customer needs for over 50 years.

FBD will continue to change and

adapt our customer proposition to

oﬀerunrivalledserviceand

protection in the digital era.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Business Activities/

Create Value

FBD creates value through

our customer centric focus,

our broad distribution

network and our expertise

in three main customer

segments; Farmer,

Business and Retail.

Outputs

FBD oﬀ ers products that

meet our customers

needs,no matter which

channel we deliver a strong

service proposition.

Stakeholder Outcomes

Position FBD for the future,

deliver for our customers and

all other stakeholders.

Customer Centric Focus

Through our 34 offices located across

the country and a multi-channel

distribution strategy, we are never

too far away and always ready to

support our customers.

Our Products

FBD protects our customers

through our range of farm business

and retail products.

Underwriting Risk Selection

At FBD we understand the Irish farm,

business and retail customer. We

measure and model risk effectively

which enables us to price accurately,

competitively and fairly.

Distribution Network

We meet the customer where they

choose to shop. FBD offers great

service through our 34 branches, on

the phone, online and through our

broker and our partner network.

Manage Claims

FBD maintains its customer centric

focus throughout the customer

journey. We are focused on paying

honest claims quickly and efficiently.

Financial Advisory Services

FBD Life & Pensions provides advice

to personal and corporate customers,

through our team of financial

planning advisors.

Reserve Appropriately

FBD has a prudent approach to

reserving, supported by strong

governance including extensive peer

reviews and regular external reviews.

Capital Management

FBD follows a conservative

investment policy. We manage our

assets and claims liabilities to ensure

we meet our obligations to our

customers.

Our People

We promote diversity and inclusion in our

workforce. We invest in our people,

helping them to grow. We provide market

competitive rewards and benefits linked

to individual and Group performance.

Our Customers

We protect our customers by delivering

products that meet their needs. We

invest in broadening our distribution

network and leveraging our technology

to deliver for our customers.

Our Investors

By delivering for our customers we in turn

deliver profitable growth which increases

the value of the business and delivers

sustainable returns for our shareholders.

Wider Society

We invest in the communities in which

we operate through corporate

sponsorship (reference Social section)

and by partnering with charities, trusts

and local events.

Our Regulator

We deliver on our commitments to the

regulator and endeavour to meet their

evolving expectations to the highest

standards.

16 FBD Holdings PLC Annual Report 2021

Strategic Report

Our Strategy

FBD of 2026

A digitally enabled, data enriched organisation which delivers

an excellent customer and employee experience

STAKEHOLDER 1

Our Customer

STAKEHOLDER 3

Our Investors

STAKEHOLDER 4

Wider Society

STAKEHOLDER 5

Our Regulator

STAKEHOLDER 2

Our People

Teams/

Collaboration

Data Usage/

Technology

Our Customers

are at the heart of

what we do

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Strategic

Objectives

Customer

Proposition

Data

Underwriting

& Pricing

Technology

Process End

to End

People

Focus on our strengths to

deliver profitable growth

For farmers we focus on

relationship strengthening

Key to success is understanding

our customers and execution

In retail, execute our intermediary

promise and build our oﬀ ering for

mass market

For business we build on

momentum and relationships

Strategic

Pillars

18 FBD Holdings PLC Annual Report 2021

Strategic Report

Risk & Uncertainties Report

A. Overview

Risk taking is inherent in the provision of financial services and

FBD assumes a variety of risks in undertaking its business

activities. FBD defines risk as any event that could impact the

core earnings capacity of the Group; increase earnings or

cash-flow volatility; reduce capital; threaten business reputation

or viability; and/or breach regulatory or legal obligations.

The Group has adopted an Enterprise Risk Management

approach to identifying, assessing and managing risks. This

approach is incorporated in the Risk Management Framework

which is approved by the Board and subject to annual update

and review. The key components of the Risk Management

Framework include Risk Appetite; Risk Governance; Risk

Process and People.

B. Risk Management Framework

Risk Appetite

Risk appetite is a measure of the amount and type of risks the

Group is willing to accept or not accept over a defined period of

time in pursuit of its objectives. The Group’s risk appetite seeks

to encourage measured and appropriate risk-taking to ensure

that risks are aligned to business strategy and objectives.

The risk appetite in the Group’s underwriting subsidiary is driven

by an over-arching desire to protect its solvency at all times.

Through the proactive management of risk, it ensures that it

does not take on an individual risk or combination of risks that

could threaten its solvency. This ensures that it has and will have

in the future sufficient capital to pay its policyholders and all

other creditors in full as liabilities fall due.

Role of the

Board/BRC

& Snr. Mgt.

Risk Appetite,

Tolerance and

Limits

Risk

Reporting

Embedding

Risk

Management

Risk

Identiﬁ cation

and

Measurement

Risk

Framework

and Policy

Risk

Monitoring

Risk

Resource

Mandate

of the Risk

Function

Governance

Process

People

Risk Management

Framework

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Risk Governance

The Board set the business strategy and have ultimate

responsibility for the governance of all risk taking activity in FBD.

Risk is governed through business standards, risk policies and

Oversight Committees with clear roles, responsibilities and

delegated authorities.

FBD uses a ‘three lines of defence’ framework in the delineation

of accountabilities for risk governance:

l Primary responsibility for risk management lies with line

management.

l Line management is supported by the second line Risk,

Actuarial and Compliance Functions who provide objective

challenge and oversight of first line management of risks.

l The third and final line of defence is the Internal Audit

function, which provides independent assurance to the

Audit Committee of the Board on risk-taking activities.

Risk Process

Identify and Measure

Risk, including emerging risk, is identified and assessed through

a combination of top-down and bottom-up risk assessment

processes. Top-down processes focus on broad risk types and

common risk drivers rather than specific individual risk events,

and adopt a forward-looking view of perceived threats over the

planning horizon. Bottom-up risk assessment processes are

more granular, focusing on risk events that have been identified

through specific qualitative or quantitative measurement tools.

Top-down and bottom-up views of risk come together through a

process of upward reporting of, and management response to,

identified and emerging risks. This ensures that the view of risk

remains sensitive to emerging trends and common themes. FBD

measures risk on the basis of economic capital and other bases

(where appropriate) to determine materiality, potential impact

and appropriate management. Risks are recorded on the Group

Risk Register.

Monitor and Report

We regularly monitor our risk exposures against risk appetite,

risk tolerances and limits and monitor the effectiveness of

controls in place to manage risk. Reporting to the Risk

Committees is dynamic and includes material risks, emerging

risks, risk appetite monitoring, changes in risk profile, risk

mitigation programmes, reportable errors, breaches of risk

policies (if any) and results of independent assessments

performed by the Risk function.

People

Risk Management is embedded in the Group through leadership,

governance, decision making and competency. The Risk

Management Framework establishes the roles and

responsibilities of risk resources. A risk training programme

is in place to ensure all risk resources have the knowledge and

competency to perform their roles effectively.

In accordance with Group policy, business unit management

has primary responsibility for the effective identification,

management, monitoring and reporting of risks. There is an

annual review by the Risk Committee of all major risks and

emerging risks, to ensure all risks are identified and evaluated.

Each risk is assessed by considering the potential impact and the

probability of the event occurring. Impact assessments are made

against financial, operational, regulatory, reputational and

customer impact criteria.

Key Risks and Mitigants

All individual risks recorded on the Group Risk Register are

assigned to key risk categories which are reviewed regularly by

the Risk Committees. FBD’s key risk categories and mitigants are

provided in the table below. Escalation parameters for key risks

that are outside of tolerance/appetite and a ‘three lines of

defence’ system, complemented with external reviews are in

place. The Board is satisfied that FBD maintains a robust and

effective risk management framework.

The Covid-19 outbreak and its associated risk impact continued

to be monitored by the Board and Risk Committee throughout

2021. The impact of Covid-19 on FBD’s key risk categories is

detailed in Section C.

The management of risks associated with climate change were

also considered on a forward looking basis in 2021, further detail

is provided in Section D.

20 FBD Holdings PLC Annual Report 2021

Strategic Report

Risk & Uncertainties Report (continued)

Capital Management Risk

The risk that the Group fails to maintain an adequate regulatory solvency position.

Key Mitigants

l The Group has an Investment Committee, a Pricing & Underwriting Committee, a Capital

Management Forum, an Audit Committee, a Reserving Committee and Board and Executive

Risk Committees, all of which assist the Board in the identification and management of

exposures and capital.

l The annual Own Risk and Solvency Assessment ‘ORSA’ provides a comprehensive view and

understanding of the risks to which the Group is exposed or could face in the future and how

they translate into capital needs or alternatively require mitigation actions.

l An experienced Actuarial team is in place with policies and procedures to ensure that

Technical Provisions are calculated in an appropriate manner and represent a best estimate.

l Technical Provisions are internally peer reviewed every quarter, audited once a year and

subject to external peer review every two years.

l An approved Reinsurance Programme is in place to minimise the solvency impact of

Catastrophe events to the Group.

l The Chief Financial Officer is responsible for consideration of the implications for the capital

position as part of the strategic planning process and key strategic decision-making and for

ensuring appropriate action is taken as approved by the Board/Chief Executive Officer/

relevant committee.

l On at least an annual basis, thresholds for Solvency Capital Requirements (SCR) Ratio,

developed as part of the annual planning/budgeting process, are approved by the Board as

part of the Risk Appetite Statements in the Risk Appetite Framework.

l The Group also devotes considerable resources to managing its relationships with the

providers of capital within the capital markets, for example, existing and potential

shareholders, financial institutions, stockbrokers and corporate finance houses.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Underwriting Risk

This is the risk that underwritten business is less profitable than planned due to insufficient pricing

and setting of claims case reserves as a result of higher than expected claims frequency, higher

average cost per claim and catastrophic claims.

Key Mitigants

The Group manages this risk through its underwriting strategy, proactive claims handling and

its reinsurance arrangements.

Underwriting Strategy:

l The Group’s underwriting strategy is incorporated in the overall corporate strategy which is

approved by the Board of Directors and includes the employment of appropriately qualified

underwriting personnel; the targeting of certain types of business that conform with the

Group’s risk appetite and reinsurance treaties; ongoing review of the Group’s Pricing Policy

using up-to-date statistical analysis and claims experience; and the surveying of risks carried

out by experienced personnel. All risks underwritten are within the Group’s underwriting

policies.

l The Group has developed its insurance underwriting strategy to diversify the type of

insurance risks written and, within each of the types of cover, to achieve a sufficiently large

population of risks to reduce the variability of the expected outcome. The principal

insurance cover provided by the Group include, Motor, Employers’ and Public Liability and

Property.

l The only significant concentration of insurance risk is that all of the Group’s underwriting

business is conducted in Ireland. Within Ireland there is no significant concentration risk in

any one area.

Reserving:

l The Group uses statistical and actuarial methods to calculate the quantum of claims

provisions and uses independent actuaries to review its liabilities to ensure that the carrying

amount of the liabilities is adequate. The provision includes a margin for uncertainty to

minimise the risk that actual claims exceed the amount provided. The Reserving Committee

assists the Board in its review of the adequacy of the Group’s claims provisions.

l Case reserve estimates are subject to robust controls including system controls preventing

claim handlers from increasing reserves above their reserve limits without supervisor

approval and secondary review and challenge of case reserve estimates.

Reinsurance Arrangements:

l The Group purchases reinsurance protection to limit its exposure to single claims and the

aggregation of claims from catastrophic events. The Group’s reinsurance programme is

approved by the Board on an annual basis. FBD has purchased a reinsurance programme

which has been developed to meet the local domestic risk profile and tailored to FBD’s risk

appetite. The programme protects Motor, Liability, Property and other classes against both

individual large losses and events.

22 FBD Holdings PLC Annual Report 2021

Strategic Report

Risk & Uncertainties Report (continued)

Market Risk

The risk that the value of the Group’s investments may fluctuate as a result of changes in market

prices, changes in market interest rates or changes in the foreign exchange rates of the currency in

which the investments are denominated.

Key Mitigants

l The extent of the exposure to market risk is managed by the formulation of, and adherence

to, an Investment Policy incorporating clearly defined investment limits and rules, as

approved annually by the Board of Directors and employment of appropriately qualified and

experienced personnel and external investment management specialists to manage the

Group’s investment portfolio. The overriding philosophy of the Investment Policy is to

protect and safeguard the Group’s assets and to ensure its capacity to underwrite is not put

at risk.

l The Group will only invest in assets the risks of which can be properly identified, measured,

monitored, managed and controlled in line with the Prudent Person Principle under

Solvency II.

l The Group has an Asset Liability Matching policy whereby its liabilities are backed by fixed

interest assets of similar currency and duration.

l The Group monitors its allocation to the various asset classes and has a long term Strategic

Asset Allocation target.

Credit & Concentration Risk

This is the risk of loss in the value of financial assets due to counterparties failing to meet all or part

of their obligations and/or over allocation to a single entity that may default or fall in value resulting

in adverse financial impact.

Key Mitigants

l Credit and concentration risk is managed by the formulation of, and adherence to, an

Investment Policy that is approved annually by the Board of Directors. The Investment

Policy incorporates clearly defined investment limits and rules and ensures that there is an

optimum spread and duration of investments.

l The Group only places reinsurance with companies that it believes are strong financially and

operationally. Credit exposures to these companies are closely monitored by Senior

Management. All of the Group’s current reinsurers have either a credit rating of A- or better.

The reinsurance programme structure ensures that there is no significant concentration of

risk. All of the Group’s fixed term deposits are with financial institutions which have a

minimum A- rating.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Liquidity Risk

This is the risk of insufficient liquidity to pay claims and other liabilities due to inappropriate

monitoring and management of liquidity levels or inadequate Asset Liability Management.

Key Mitigants

l The Group manages liquidity risk by continuously monitoring forecast and actual cash flows

and ensuring that the maturity profile of its financial assets is well matched to the maturity

profile of its liabilities and maintaining a minimum amount available on term deposit at all

times.

Strategy Risk

The risk that the strategy adopted by the Board is incorrect or not implemented appropriately

resulting in sub-optimal performance and impact on profitability.

Key Mitigants

l The Group has a strategic planning cycle which commences with a fundamental review of

strategy at least every 5 years (normally every 3 years). Further supporting this is an annual

review of the strategy by the Board to determine the continuing relevance. To ensure the

strategy is implemented effectively, the Group engages in a robust business planning and

review process that results in an annual plan including key initiatives and budget.

Reputational Risk

The risk of reputational or brand damage arising from inadequate or failed processes and systems or

badly executed strategy/poorly executed communication.

Key Mitigants

l The Group’s Board and Senior Management set the ethical and behavioural tone for the

Group. In support of this a number of Group policies are utilised which influence employee

behaviour, including a Reputational Risk Policy, Fitness & Probity Policy, an Anti-Fraud

Policy, Code of Conduct Policy, Conflicts of Interest Policy and a Speak Up Policy.

l The Group has established a Corporate Governance Framework which is in full compliance

with the requirements of the Central Bank of Ireland’s Corporate Governance Requirements

for Insurance Undertakings and the UK Corporate Governance Code.

l Reputation, integrity and character of persons are key considerations in establishing

business arrangements and throughout the life of the relationship.

l Independent customer satisfaction research is undertaken and customer complaints are

dealt with efficiently to ensure the quality of products and services offered to customers.

l The Group’s claims philosophy is to be “Fair to the customer and fair to FBD”. This

philosophy guides the Claims function in its handling of all customer claims.

24 FBD Holdings PLC Annual Report 2021

Strategic Report

Risk & Uncertainties Report (continued)

Operational Risk

Adverse operational impacts could arise as a result of inadequately controlled internal processes or

systems, human error or from external events.

This definition is intended to include all risks to which the Group is exposed and that are not

considered elsewhere. Hence, operational risks include for example, information technology,

information security, human resources, project management, outsourcing, taxation, legal, fraud

and regulatory risks.

Key Mitigants Risk Management Framework

l Operational risk is governed through business standards covering key processes. This is

complemented by our Risk Management Framework that defines the structure in place to

identify, measure, manage, monitor and report on operational risks and mitigating controls

with defined risk tolerances and Key Risk Indicators (KRIs).

l There is a ‘three lines of defence’ system in place, with line management being primarily

responsible for risk management, with extensive second and third line challenge over the

operational control environment.

l The Own Risk Solvency Assessment (ORSA) provides for a scenario based approach to

determine the appropriate level of capital to be held in respect of operational risks.

Information Technology Controls

l Sound information technology controls are in place across the Group, including a dedicated

IT security team with overall responsibility for managing information technology security

standards, which together with on-going employee training and regular cyber-risk reviews

are used to mitigate such information technology risks.

Business Continuity Plans

l The Group has taken significant steps to minimise the impact of Business Interruption that

could result from a major external event. Formal Business Continuity and Disaster Recovery

plans are in place for both workspace recovery and retrieval of communications, IT systems

and data. If a major event occurs, these plans will enable the Group to either move the

affected operations amongst its various sites or invoke remote working from home. The

Business Continuity and Disaster Recovery plans are tested regularly.

Personnel

l The success of the Group depends upon its ability to retain, attract, motivate and develop

talent. FBD are committed to providing employees at all levels with appropriate training,

development and education relevant to their role. Training needs are identified through

performance management and operational planning. A Talent Management and Succession

Plan is in place and reviewed regularly. This ensures that FBD develops and retains key

talent and is best placed to replace key roles in a seamless manner should the need arise.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

C. Covid-19

Following a High Court decision in February 2021, FBD

commenced interim claim payments to relevant customers

related to Covid-19 pandemic Business Interruption claims. Final

claims costs can now be estimated with greater confidence

following the outcome of a ‘Quantum module’ of the test case

in January 2022. In arriving at the Business Interruption best

estimate of €44m, FBD has assessed all available and up to

date information which may impact on ultimate costs. It is

acknowledged that there remains some degree of uncertainty in

arriving at the best estimate of likely costs as the outcome of a

follow up hearing to clarify some remaining matters is still to

conclude. The remaining uncertainties have been considered in

the margin for uncertainty.

Markets continued to rebound strongly throughout 2021

despite the ongoing Covid-19 pandemic due to the continued

unprecedented stimulus provided by Central Banks and

Governments of developed countries, the intermittent reopening

of society as well as economies adapting to the new environment.

Asset valuations remain high and the trajectory and impact of

monetary policy is uncertain and may diverge across regions

meaning market risk will also remain high for the foreseeable

future. Future financial market movements and their impact on

balance sheet valuations, pension surplus and investment income

are unknown and are being closely monitored.

The restrictions put in place to fight the Covid-19 pandemic

continued to result in the need for current business processes and

distribution models to be re-imagined by all. FBD itself has been

able to continue to adapt to the changing environment with

substantially all employees working from home throughout 2021.

The majority of functions have again largely been able to maintain

business as usual. From a third party risk management

perspective, alternative processes put in place with many

providers to ensure continuity of service while under restricted

movement continued to operate. As the country re-opens, FBD

has developed its own transition plan. Pre-planned actions aim to

ensure operational resilience and the safety of staff and customers

through extra health and security measures.

D. Climate Change

The management of climate risk is strategically important to FBD,

from both a commercial and Stakeholder perspective. It is an area

of focus for the Group and under active consideration, particularly;

l Physical risks to property and person from variable weather

patterns and long term climate change.

l Transition risks from the process of adjustment to a low carbon

economy.

FBD is managing climate risk operationally through a dedicated

Emerging Risk process which integrates risks as they mature and

are understood into the wider Risk Management system for

ongoing mitigation and reporting including TCFD disclosures and

the EU Taxonomy.

This approach ensures that climate risk is evaluated and managed

within a defined Framework subject to ongoing independent

challenge and validation, meaning ongoing analysis, monitoring

and reporting of it are in place and embedded within governance

structures as it evolves.

Climate risk has also already been integrated into capital planning

as part of the Own Risk and Solvency Assessment (ORSA) process.

Risks associated with actions aimed at limiting temperature

increases and risks associated with temperatures increasing have

been modelled (See TFCD disclosures for further detail).

In terms of transition risk, FBD has worked with Investment

Managers to establish exposures to assets with high or excessive

transition risk ratings. Stress tests have also been calibrated and

performed on asset values to help determine the financial risk

associated with these exposures.

Notwithstanding the ongoing work and analysis in this area, going

forward FBD will continue to develop and enhance its approach.

The Group will continue to develop the skills of its people through

regular training, updates and role specific initiatives to ensure

appropriate management of this risk going forward.

E. Emerging Risks

An Emerging Risk is a risk which may or may not develop, is

difficult to quantify, may have a high loss potential and is marked

by a high degree of uncertainty. We have a defined process in place

for the identification of and response to emerging risks, which is

informed through the use of subject matter experts, workshops,

Risk and Control Self Assessments and consulting a range of

external documentation. Key emerging risks are monitored

regularly by the Board and Risk Committees to assess whether

they might become significant for the business and require

specified action to be taken.

Key Emerging Risks include:

l Covid-19 and other macroeconomic developments including,

for example, an increased frequency of cyber attacks, and the

impact that these factors may have on society’s future

insurance needs and claims types and frequencies.

l The impact of climate change may result in increasingly

volatile weather patterns and more frequent severe weather

events.

l Technological advances changing the shape of the insurance

industry and competitive environment.

l Changes in customer behaviour including the potential

expectation to communicate largely through mobile channels

or the expectation of self-service and self-solve.

l Global deterioration in economic conditions and particularly in

Ireland may lead to a reduction in revenue and profits.

l Global socio-political uncertainty that may cause an adverse

impact on profitability.

l Evolving regulatory and legislative landscape. We continuously

monitor developments at both a local and EU level to ensure

continued compliance with legislative and regulatory

requirements.

26 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

FBD Holdings PLC Annual Report 202126

Environmental, Social and Governance (ESG)

FBD have incorporated their non-financial and climate related

disclosures into this Environmental, Social and Governance

section of the Annual Report. We have categorised the work that

we do and the initiatives we have taken under the 3 headings as

follows:

Environmental: We actively manage the challenge of

climate change in FBD and we have recently adopted the

recommendations of the Task Force on Climate-related Financial

Disclosures (TCFD) as the means by which we will disclose our

climate ambitions. This section entitled ‘FBD supporting the

Environment’ describes what TCFD is and goes onto describe the

actions FBD have taken under its 11 detailed recommendations.

Social: Equally as important to FBD is the social aspect and

responsibility that we bear as Ireland’s only remaining listed

insurance plc. FBD is committed to supporting our people, the

agricultural and broader community.

Governance: In FBD we take corporate governance very seriously

and have implemented the most effective governance structures

and processes. In this section we describe the role and

performance of the Board and its Committees. We also provide

detailed information in relation to the Remuneration Policy and

structures in place within the Group.

As per previous reports we have aligned our ESG initiatives to the

UN 17 point Sustainable Development Goals (SDG’s) charter to

highlight the sustainability objective and assist the reader identify

how they assist in improving the lives of our customers and wider

society.

NO POVERTY

ZERO HUNGER

CLEAN WATER

AND SANITATION

AFFORDABLE AND

CLEAN ENERGY

REDUCED

INEQUALITIES

SUSTAINABLE

CITIES AND

COMMUNITIES

LIFE BELOW

WATER

PEACE, JUSTICE

AND STRONG

INSTITUTIONS

LIFE

ON LAND

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Environmental, Social & Governance

Environmental

CLIMATE

ACTION

FBD Supporting the Environment

Climate Related Disclosures for FBD

Climate change and its consequences will be a material

challenge for society into the future. A key element in

responding to this challenge is the availability of transparent

and consistent data on how firms are engaging with this

challenge. The information contained in this section of the

report is produced following the recommendations of the Task

Force on Climate-related Financial Disclosures (TCFD). FBD

falls within the scope of the TCFD recommendations as a

result of the Financial Conduct Authority (FCA) mandatory

ruling and its premium listing on the London Stock Exchange.

The recommendations of TCFD are becoming more standard

in the marketplace and FBD believe that they are a good

framework through which to disclose the Group’s climate

related risks and mitigation. This is the first year that FBD will

be disclosing climate related information aligned to the TCFD

recommendations and it will take some time to fully meet the

recommendations.

FBD has described the activities that they currently undertake

under the relevant TCFD recommendations. There is a lot of

work ahead as the sustainability agenda and governance

becomes embedded in the organisation and its risk

management and we move toward full compliance with the

TCFD guidelines – see section ‘Future Developments’ below

for further detail. Nevertheless, good initial progress has been

made and the Group will continue over the year ahead to

further integrate the recommendations throughout the

business.

About TCFD

The Task Force on Climate-related Financial Disclosures

(TCFD) is a group of experts appointed by the Financial

Stability Board to develop voluntary, consistent climate

related financial disclosures that would be useful to investors,

lenders and insurance underwriters in understanding material

risks. The Task Force developed four core elements on

climate related financial disclosures that are applicable to

organisations across sectors and jurisdictions.

Under these 4 headings are a further eleven supporting

recommended disclosures. FBD has summarised its climate

related disclosures under these eleven supporting disclosures

in the paragraphs below. The UK has made the disclosures

mandatory for certain companies for accounting periods

ended on or after 1 January 2021. For further detail on TCFD

including the final recommendations, see the following link:

https://www.fsb-tcfd.org/.

Core Elements of Recommended Climate-Related Financial Disclosures

Metrics

and

Targets

Governance

The organisations’ governance around climate-related

risks and opportunities.

Strategy

The actual and potential impacts of climate-related risks

and opportunities on the organisation’s businesses,

strategy and financial planning.

Risk Management

The processes used by the organisation to identify, assess

and manage climate-related risks.

Metrics and Targets

The metrics and targets used to assess and manage

relevant climate-related risks and opportunities.

https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf

28 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Environmental (continued)

Governance

TCFD Recommendation:

“Describe the board’s oversight of climate-related risks

and opportunities.”

The Board of FBD is ultimately responsible for decision

making within the Group including the oversight of climate

related risks. The Board has responsibility for oversight of

climate related risk and for monitoring and mitigating this

risk. It is responsible for the Group’s climate strategy. The

newly established FBD Sustainability Committee (see

below) reports to the Board through the Chief Executive

Officer. There will be a climate risk agenda item on all

regular Board meetings, starting in 2022

, where Directors

will be kept informed of all developments in this area.

TCFD Recommendation:

“Describe management’s role in assessing and

managing climate-related risks and opportunities.”

FBD has recently established a Sustainability Committee

comprised of its Executive Management Team (EMT) and

chaired by the Chief Executive Officer. The Committee is

scheduled to meet at least quarterly

. The Committee is

tasked with coordinating the Group’s strategy for climate

related risk mitigation and for driving the climate agenda

across the Group. Supporting the Sustainability Committee

will be the Sustainability Working Group. This is comprised

of key personnel from across the business including

representatives from Investments, Underwriting, Facilities,

Claims, HR and Risk. Relevant departments will be

required to implement FBD’s strategy for climate risk

management supported by reliable metrics.

The Risk function will be represented on the FBD

Sustainability Committee and will be the second line

function which monitors and oversees the implementation

and integration of sustainability initiatives throughout the

Group.

1 It is proposed that the first Board meeting of 2022 at which

climate risk will be discussed is 3rd March 2022.

2 The first meeting of the Sustainability Committee occurred on

13th December 2021.

Strategy

TCFD Recommendation:

“Describe the climate-related risks and opportunities

the organisation has identified over the short, medium,

and long term.”

FBD has split climate risk into two sub-categories of risk:

l Transition risk - risks that arise from the transition to a

low-carbon and climate resilient economy;

l Physical risk - risks that arise from the physical effects

of climate change.

These risks are projected to impact on FBD in the medium

to long term (3 years +). The evolution of the sustainability

agenda is moving with such pace that the Group could be

faced with some of the risks below in the short term.

Transition Risk – Market Risk

This is the risk of a reduction in the value of the Group’s

assets where the companies we have invested in lose value

due to one or more of the following:

l Increased cost of raw materials;

l Reduced demand for existing assets (stranded assets),

goods and services due to a shift in consumer

preferences;

l Increased production costs due to changing input prices

(e.g., energy, water) and output requirements (e.g.,

waste treatment);

l Abrupt and unexpected shifts in energy costs.

Transition Risk – Premium Risk

This is the risk to the Group of a fall in premium income due

to the impact of climate change as the Group’s customers

transition to a low carbon economy.

l Climate change is challenging for Irish agriculture both

in the context of greenhouse gas (GHG) emissions and

the need for adaptation of farming practices to be more

resilient to the impacts of climate change. In Ireland the

Agriculture sector is a significant contributor to GHG

emissions, mainly methane from livestock, and nitrous

oxide due to the use of nitrogen fertiliser and manure

management.

l Ireland is signed up to ambitious EU targets for

emissions reduction over the coming years. In order to

meet these targets new legislation may be needed that

will cap the amount of agricultural activity. “Green”

Strategic Report Environmental, Social & Governance Financial Statements Other Information

legislation could reduce farm activity and in turn FBD’s

GWP growth into the future. However, we believe it will

take some time to fully understand the consequences of

these changes on farming practices. There are also

opportunities for FBD in this transition.

Selecting the assets that will benefit from this transition will

be important and avoiding the ESG laggards. When it comes

to agriculture there will be opportunities for FBD to increase

its GWP among farmers by understanding their needs and

aiding them in any transition.

Physical Risk

The physical effects of climate change can affect FBD in a

number of ways:

l Increased severity of extreme weather events

e.g. storms, flooding, wildfires, etc;

l Changes in rainfall patterns, average temperature rises

and increasing sea levels leading to changing claim

patterns and exposure to risk;

l Cost of reinsurance for catastrophe events becoming too

high or becoming unavailable.

The opportunity here will be to design insurance products

that continue to meet the needs of an ever changing world

and provide value for money to our customers.

TCFD Recommendation:

“Describe the impact of climate-related risks and

opportunities on the organisation’s businesses, strategy,

and financial planning.”

Investments

FBD recognises that as an asset owner it has an important

role to play in the journey to a low carbon economy and the

goal of limiting future global temperature increases

enshrined in the Paris Agreement. Over the last number of

years, we have approached our climate related objectives

through the prism of the ESG (Environmental Social

Governance) framework. As better data analytics have

become available we have also begun the process of analysing

the carbon intensity of the investment portfolio with a view to

implementing reduction strategies and ultimately

transitioning towards a net-zero portfolio.

FBD actively integrates ESG considerations into its

investment processes across its book of more than €1bn

in assets. We are continually seeking to enhance our

understanding of the ESG investment landscape, the ESG

characteristics, risks and opportunities of our portfolio and

the actions we can take to invest in a more sustainable future.

There is broad acknowledgement across the investment

industry that including sustainability as part of the

investment process provides a wider perspective on risk,

potentially reducing volatility and enhancing risk-adjusted

returns. The FBD ESG framework incorporates the following

measures:

Asset Manager Selection including Stewardship

FBD’s external asset manager due diligence review,selection

and retention processes place a strong emphasis on the

manager’s ESG capabilities and credentials. All our external

managers are signatories of the UN’s Principles for

Responsible Investment (PRI) and are required to provide

Sustainability Policies/Reports detailing how they promote

ESG both within their own corporate structures and through

engagement with underlying companies and fund managers

in relation to ESG transparency and proxy voting on company

resolutions. Stewardship is the process by which asset

owners can use their voting rights to influence the

management of a company to act in a more sustainable

manner – FBD’s main asset managers are signatories to the

UK’s Stewardship Code, the global gold standard.

Integration of ESG Factors into Investment Portfolio

FBD’s corporate bond manager has developed their own

proprietary ESG scoring system, on a scale of A-F (A being the

best in class from an ESG perspective and F being the ESG

laggards) which takes into account the current ESG profile

and the steps the companies are taking to improve their

ratings. FBD has built quantitative limits based on this

scoring system into the Investment Policy, committing to

excluding F rated securities and holding a maximum of 5% in

E rated securities and 20% in D rated securities. Excluding or

limiting investment in these lower rated companies

decreases demand for their bonds and increases the cost of

funding which in turn incentivises companies to adopt more

sustainable practices.

The Risk Asset Fund is invested through collective investment

schemes and the external manager undertakes due diligence

and selection placing an emphasis on how ESG is built into

the underlying manager’s investment strategy and processes.

They rate the managers on these criteria as well as on the

traditional investment metrics. In 2021, FBD switched 50%

of our developed market equity exposure into a Sustainable

Global Equity Fund which seeks to promote environmental

and social characteristics in line with Article 8 of the

Sustainable Finance Disclosure Regulations (SFDR). While we

are restricted by the availability of sustainable investment

products in some of the asset classes within the risk asset

portfolio, we continue to monitor developments and expect

to make more active investment decisions in the future.

30 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Environmental (continued)

Insurance

In FBD we seek to identify opportunities to promote a

transition to a low carbon environment. We take into

consideration climate change and ESG considerations in

our product development process. We aim to incentivise

customers to make the transition to low carbon alternatives

where possible. One example of this is via a premium

discount for new home insurance customers whose BER

rating is a minimum of B3. This feature is available to all of

our home insurance product offerings. On our website we

also offer suggestions on how to make a person’s home more

energy efficient: https://www.fbd.ie/protection-stories/

home/how-to-improve-your-homes-ber-rating/.

On FBD’s Farm Multiperil product we have included

environmental liability cover for farmers as a standard

feature. This will respond to the clean-up and remediation

costs associated with an insured environmental incident

including first party clean up (the farmers own property), for

example leaking of silage effluent, slurry or oil resulting in

contamination of lands or watercourse.

FBD also provide insurance cover for farmers investing in

forestry. This is a key mitigant against climate change giving

forestry farmers the peace of mind that their investment will

not be lost due to fire or storm. FBD is constantly seeking to

innovate in its product features. We are continually reviewing

changes in the Agricultural sector to ascertain if we can

support policy aligned to improving our climate footprint.

Currently, policy makers are finalising new criteria for the

Common Agricultural Policy (CAP) which we are actively

monitoring.

Facilities

The Facilities department in FBD manage all of the Group’s

buildings and infrastructure. A key objective of the

department includes energy usage reduction and consequent

emissions reduction. A 5% energy reduction target is now a

mandatory objective within the scope of all mechanical and

electrical infrastructure projects. The Facilities Manager’s

business objectives, which feed into their remuneration

outcome, include energy usage reduction targets with

consequent emissions reduction.

The Facilities team coordinate a number of initiatives aimed

at reducing the Group’s carbon footprint:

l In 2020, FBD moved all its electrical energy consumption

to renewable sources.

l In 2020, FBD began to transition customers from paper

based printing to digital document management. This

continued into 2021.

l In 2021, at our head office we continued the rollout of

LED lighting to open plan office areas. LED is a more

energy efficient and environmentally friendly light

source.

Procurement

FBD expects our suppliers to measure, manage and reduce

their carbon footprint, to prevent environmental damage

and at all times comply with legislative and regulatory

requirements. The Head of Procurement in FBD has

introduced an ESG assessment tool on all large and strategic

tenders as part of its selection criteria for providers.

TCFD Recommendation:

“Describe the resilience of the organisation’s strategy,

taking into consideration different climate-related

scenarios, including a 2°C or lower scenario.”

FBD has undertaken stress testing in relation to its

investment portfolio for transition risk (a scenario where the

increase in average global temperatures is limited to 2°C or

lower). The stress testing involved FBD obtaining stresses for

its corporate bonds based on the ‘transition risk rating’ of the

underlying securities. These stresses were obtained from the

Group’s corporate bond portfolio manager and derived by

expert judgement. FBD’s Investment department

extrapolated the stresses to the rest of the Group’s

investment portfolio adopting a prudent approach and

calculated an overall stress of €12m on the Group’s €1.2bn

investment portfolio (or 1% of the overall portfolio).

The transition risk stress for the Group is relatively low

demonstrating that the Group is resilient in respect of its

investment portfolio. This risk is further mitigated by:

l The average duration of the corporate bond portfolio is

less than three years and FBD will have time to reinvest

maturities into companies with less transition risk.

l Transition risk is more applicable to equities and is less

likely to result in the inability of companies to repay their

corporate debt over such a short timeframe to maturity.

l Equity allocation is achieved through highly diversified

global equity funds (including an actively managed

sustainable equity fund) and the assumptions used in this

stress test are likely to be prudent.

l Politically and economically it may take years to

implement legislation that would significantly increase

costs for companies.

l Many of the companies that currently rate poorly are also

investing in “Green” solutions so their ratings are likely to

improve.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

l FBD actively integrates ESG (Environmental Social

Governance) considerations into its investment

processes across its book of €1.2bn in assets and is

continually seeking to enhance both its understanding

of the ESG investment landscape and the actions it can

take to invest in a more sustainable future.

Concurrently, Stress and Scenario Tests have been carried

out on the Company’s underwriting portfolio to understand

the potential impact of physical risks including;

l The impact of an increase in the frequency and severity

of catastrophe (CAT) weather events on reinsurance

costs over a period of years;

l The impact of a severe windstorm event (modelled on

2014 and adjusted for inflation and climate change

effects) on the current capital position;

l The impact of a severe flood event (modelled on 2014

and adjusted for inflation and climate change effects)

on the current capital position;

l The impact of a 1 in 100 year weather event on the

current capital position, and;

l The impact of a 1 in 200 year weather event on the

current capital position.

The scenario analysis highlights that Climate change could

make Reinsurance a lot more expensive and this could

lower profits if these costs are not passed on to customers.

Also if the current level of cover became unaffordable or

unavailable FBD would be more exposed to these CAT

events.

Risk Management

TCFD Recommendation:

“Describe the organisation’s processes for identifying

and assessing climate-related risks.”

FBD has adopted an enterprise risk management approach

to identify, measure, monitor, manage and report on risk.

Risks are identified through a combination of top-down and

bottom-up forward looking risk assessment processes,

outlined in a documented risk management framework,

which is approved by the Board and subject to annual

update and review.

Operationally a ‘three lines of defence’ framework is

deployed to support the mitigation of each risk identified.

This framework ensures appropriate oversight of identified

risks through ongoing review and challenge from

independent Risk Management, Compliance and Internal

Audit functions. This enables FBD to understand and assess

risk effectively and integrate risk based decision making into

strategic planning and reporting.

Notwithstanding the ongoing work and analysis in this area,

FBD will continue to develop and enhance its approach to

climate risk. The Group will continue to develop the skills of

its people through regular training, updates and role

specific initiatives to ensure appropriate management of

climate risk going forward.

Climate risk will be subject to a dedicated program of

activity in the 2022 FBD Risk function plan with the

integration of Risk and ESG reporting over the course of the

year.

At an overall level, FBD will ensure that guidance and

support is in place to provide for appropriate action to

identify, measure, monitor, manage and report on the risks

and opportunities presented by climate change and the

refinement of current techniques as it evolves for all of its

people. See sections above in relation to governance for

details on these structures.

FBD will continue to work with its stakeholders and

partners to build solutions and products which reflect the

changing environment and the needs of its communities to

ensure effective support for future initiatives and the

changing environmental landscape.

32 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Environmental (continued)

TCFD Recommendation:

“Describe the organisation’s processes for managing

climate-related risks.”

The management of climate risk is strategically important

to FBD, from both a commercial and stakeholder

perspective. It is an area of focus for the Group and

already under active consideration, particularly;

l Physical risks to property and people from variable

weather patterns and long term climate change;

l Transition risks from the process of adjustment to a

low carbon economy.

FBD is managing climate risk operationally through a

dedicated Emerging Risk process which integrates risks

as they mature and are understood into the wider Risk

Management system for ongoing mitigation and

reporting.

This approach ensures that climate risk is evaluated and

managed within a defined Framework subject to ongoing

independent challenge and validation, meaning ongoing

analysis, monitoring and reporting of it are in place and

embedded within local governance structures as it

evolves.

TCFD Recommendation:

“Describe how processes for identifying, assessing,

and managing climate-related risks are integrated into

the organisation’s overall risk management.”

Climate risk has been integrated into capital planning as

part of the Own Risk and Solvency Assessment (ORSA)

process. Risks associated with actions aimed at limiting

temperature increases to 1.5°C (transition risks) and risks

associated with temperatures increasing beyond 1.5°C

(physical risks) have been modelled.

In terms of transition risk, FBD has worked with

Investment Managers to establish exposures to assets

with high or excessive transition risk ratings. Stress tests

have been calibrated and performed on asset values to

help determine the financial risk associated with these

exposures. A qualitative assessment has also been carried

out to understand how the Group’s customers may be

impacted by transition risks as the world tries to limit

temperature increases to 1.5°C.

RESPONSIBLE CONSUMPTION

AND PRODUCTION

Metrics

TCFD Recommendation:

“Disclose the metrics used by the organisation to assess

climate-related risks and opportunities in line with its

strategy and risk management process.”

GHG Emissions

Since 2017 FBD has been obtaining independent third party

validation of its energy consumption i.e. its green house gas

(GHG) emissions. It has enlisted the services of Clearstream

Solutions for this measurement. They have calculated

Scope 1 and Scope 2 emissions for FBD. The GHG

verification methodology employed entailed:

l Interviews with key personnel;

l Review of methodology for data collection, aggregation

and appropriate classification of emission sources;

l Review of data and information systems and controls.

Description of

Scope 1 Scope 2 –

Location Based

Scope 2 –

Market Based

Includes CO

emissions

generated

from gas and

heating oil.

Includes emissions

from the purchase

of electricity by

location.

Individual FBD

property

consumption

approach.

Includes emissions

based on FBD’s

purchasing decisions.

From July 2020, FBD

are purchasing 100%

renewable electricity

(Green contracts)

for all our sites.

Carbon Neutrality

FBD has purchased carbon offsets from an Irish overseas

development agency called Vita to offset the total amount

of carbon emissions generated by FBD in 2020. This

includes the total of Scope 1 and Scope 2 emissions above

as well as those emissions generated by business mileage

done by its employees. FBD has therefore become carbon

neutral in respect of these GHG emissions for 2020.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

500

1,000

1,500

2,000

2,500

20212020201920182017

GHG Emissions by year (tCO

Scope 2: Market based

Scope 2: Location based

Scope 1

Progress Made on Emissions in 2021:

Scope 1 +4%



Scope 1 emissions were up by 5

tCO

e. The increase of 4% on the

previous year arises from Covid-19

ventilation and heating

requirements. Note, however, that

heating control changes at FBD

House were completed late in 2021

and this change will reduce Scope 1

emissions in 2022.

Scope 2 –

Location

Based

-20%



Scope 2 location based emissions

were down 20% on the previous

year. Lower workplace attendance

persisted in 2021. The lower

attendance combined with

continuing investment in LED

lighting and a focus on reducing

waste contributed to the downward

trend in 2021.

Scope 2 –

Market

Based

-100%



Scope 2 market based emissions are

down 100% on the previous year,

due to a change in electrical energy

procurement policy. FBD are now

purchasing energy from renewable

sources only.

Vita is a smart, dynamic, Irish overseas development agency

working in Africa for nearly thirty years, fighting hunger and

latterly, the impacts of climate change. Vita sells voluntary

carbon offsets on the wholesale and retail voluntary market

using the Gold Standard, an independent and highly

respected accreditation agency that operates to UN rules

which determines the emission savings from projects.

Carbon Disclosure Project

On an annual basis FBD completes voluntary disclosure to

the Carbon Disclosure Project (CDP). CDP is a non-profit

charity which supports the global disclosure system for

investors, companies, cities, states and regions to manage

their environmental impacts. CDP takes independently

verified information supplied by FBD, and scores our progress

on climate action on a scale from A to F.

FBD’s 2021 rating is C which is in the Awareness category and

defined by CDP as ‘Knowledge of impacts on, and of, climate

issues’. The European Regional and the Financial Services

sector averages are B.

TCFD Recommendation:

“Disclose Scope 1, Scope 2, and, if appropriate, Scope 3

greenhouse gas (GHG) emissions, and the related risks.”

The following graph illustrates the GHG emissions by year

from 2017-2021. While the impact of Covid-19 on workplace

occupancy had a big impact on the GHG emissions reduction

in 2020, we can see from the following graph that they have

been on a downward trajectory since 2017.

34 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Environmental (continued)

FBD do not currently disclose metrics in relation to its Scope

3 emissions – these are indirect emissions from its upstream

and downstream activities. Whilst it has started to calculate

Scope 3 emissions in respect of its employee business travel

and waste further work is required to properly identify and

measure other Scope 3 emissions.

TCFD Recommendation:

“Describe the targets used by the organisation to manage

climate-related risks and opportunities and performance

against targets.”

Carbon Intensity of Corporate Bond Portfolio

The carbon intensity of a bond portfolio expresses the

carbon emissions of the companies in relation to their

revenue, weighted according to the respective share of a

security in the overall portfolio. In the case of FBD’s

corporate bond portfolio, which accounts for almost 50% of

its overall assets, FBD has set a target to reduce the carbon

intensity

of the portfolio by a factor of 50% over 9 years

starting on 1st Jan 2021, with a 25% reduction by 1st

January 2025. FBD has written this target into the portfolio

guidelines with its investment manager and will monitor the

planned reduction on a regular basis to ensure that it is being

achieved.

Future Developments

FBD will seek to further develop its management of climate

risks/opportunities and enhance disclosures, in the future,

in the following areas:

Governance

l Enhancing the knowledge and expertise of Board

members and wider management on climate related

issues.

l Providing additional detail with regard to the processes

and frequency by which the Board and wider

management are informed about climate related issues

and how they are considered when reviewing and guiding

strategy.

Strategy

l Providing further information on the risks and

opportunities for FBD and whether they are aligned

with the short, medium or long term.

3 Similar to the GHG emissions monitored by FBD, the carbon

intensity measures Scope 1 and Scope 2 emissions only. As data

improves in respect of Scope 3 emissions, FBD may transition to

including these within the calculation.

l Increasing the level of detail disclosed regarding impacts

and providing more quantitative analysis.

l Providing additional scenario analysis in respect of the

resilience of the underwriting portfolio and increasing

the number of scenarios modelled including those

specified in the TCFD guidelines.

Risk Management

l Providing more information around the process for

identifying and assessing climate related risks.

l Providing more information around the process for

managing climate related risks and the specific

mitigating actions undertaken.

Metrics and Targets

l Increasing the metrics that FBD uses to monitor climate

related risks and providing these for the Company’s

investment and underwriting portfolios as well as FBD’s

own facilities.

l Increasing the measurement and understanding of

Scope 3 emissions and how these will be mitigated.

Taxonomy Regulation

The EU Taxonomy is a tool to help investors, companies,

issuers and project promoters navigate the transition to a

low-carbon, resilient and resource-efficient economy. The

Taxonomy Regulation is a key component of the European

Commission’s action plan to redirect capital flows towards a

more sustainable economy. It represents an important step

towards achieving carbon neutrality by 2050 in line with EU

goals as the taxonomy is a classification system for

environmentally sustainable economic activities.

In the following sections, FBD describe the share of our

non-life premium income and total assets, which are

associated with taxonomy-eligible economic activities

related to the first two environmental objectives

l climate change mitigation and

l climate change adaptation,

in accordance with Article 8 Taxonomy Regulation.

Non-life premium income

FBD has considered all premiums from each line of business

described in the delegated regulations ((EU) 2021/2139)

for eligibility for the taxonomy. The premium must

demonstrate direct coverage of climate-related natural

hazards or the specific activity being insured must meet the

Strategic Report Environmental, Social & Governance Financial Statements Other Information

screening criteria outlined in the taxonomy. As our systems

do not categorise data in a manner consistent with the

taxonomy, we have assumed premium that has property

cover, which includes catastrophe cover, and premium that

includes environmental (pollution) cover as eligible. We

classify all other lines of business that do not contain any

direct climate relevant coverage or are not described in the

delegated regulations as not eligible for taxonomy, subject to

the development of further guidance.

Taxonomy eligible premiums contributing to

enabling climate change adaptation

30%

Taxonomy non-eligible premiums 70%

The taxonomy eligible premium is calculated as the amount

of premium of the eligible lines of business (numerator)

divided by total premium for all lines of business

(denominator). The total of premium is consistent with the

amount disclosed in the Consolidated Income Statement.

As the number and range of sub-sectors eligible for the

taxonomy evolves with the development of the remaining

four environmental objectives, additional activities will

become eligible for the taxonomy which are aligned with

non-life insurance products. We will look to refine this

disclosure as the guidance emerges in this area.

Assets

The EU Commission has clarified that specific information

published by companies and investment funds may only be

used to assess taxonomy capability within the framework of

non-financial reporting. The availability of this data is limited

as this is the first time it is required for disclosure. FBD

engaged with its investment managers and they do not have

data that aligns with the taxonomy for the Group’s

investment assets. Availability of data from companies and

investment funds is expected to improve which will enable us

to provide better information for the next reporting period.

We expect that our Key Performance Indicators (KPI’s) will

change with increasing data availability in the coming

reporting periods.

As at 31st December 2021

Exposure to sovereign bonds as a proportion of

Total Assets

The share of sovereign bonds as a percentage of

Total Assets

25%

Exposure to derivatives as a proportion of

Covered Assets

The proportion of derivatives is calculated

according to the following formula: (Total

derivatives/(Total Assets – Sovereign Bonds))

* 100

Exposure to corporate bonds not subject to

NFRD as a proportion of Covered Assets

The proportion of non-reporting entities

according to NFRD is calculated using the

following formula: (Investments in Companies

that do not report under the NFRD/(Total Assets

– Sovereign Bonds)) * 100

42%

Taxonomy non-eligible activities – as a

proportion of Covered Assets

The non-taxonomy-eligible investments are

calculated using the following formula: (non-

taxonomy- eligible investments/(Total Assets –

Sovereign bonds)) * 100

58%

Taxonomy eligible activities – as a proportion

of Covered Assets

The taxonomy-eligible investments are

calculated using the following formula:

(taxonomy- eligible investments/(Total Assets –

Sovereign bonds)) * 100

Notes:

Total Assets is not clearly defined in the Regulations and is

consequently open to interpretation. Taking into account the

FAQ published by the EU on December 20, 2021 and with a

view to consistent and comparable reporting, we have

assumed Total Assets includes total financial assets per

the Consolidated Statement of Financial Position.

Covered Assets equal Total Assets less Sovereign Bonds.

All investments whose issuer country is outside the EU and

for which we have reliable information from our data provider

that they do not fall under the reporting obligation according

to NFRD (Out of Scope) are outside the scope of the KPIs for

taxonomy eligibility reporting. In the absence of specific data

on economic activities carried out and of the reporting

according to NFRD, we report all other investments as

non-taxonomy-eligible in the first reporting year if they are

located within the EU.

36 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Social

DECENT WORK AND

ECONOMIC GROWTH

FBD Supporting our People

FBD realises that our people are the most important asset

that we have. To support our people we need to have the

appropriate culture and values embedded in our

organisation.

Our Culture and Our Values

Our culture defines the values and behaviours that we will

champion and promote as a Group. Values in action is based

on the belief that real sustainable culture change is shaped

by the behaviour of individuals at all levels across the

organisation. These values define our culture and the

character of the Group, guiding how we behave and make

decisions.

Our

Values

Respect

Community

Innovation

Ownership

Belief

Communication

FBD has a very clearly defined Strategy that is aligned to

our culture and is actively considered and set by the Board

and EMT. The Board and EMT take a leading role in

communicating the desired culture to the organisation.

This is achieved through a number of ways including;

l The FBD values that were set in 2019 were reviewed and

reconfirmed by the Chief Executive Officer and Board in

early 2021 as part of the initial strategic planning

process.

l Culture remained an area of dedicated focus of the Board

throughout 2021. A review was completed by the Board

in respect of our Culture programme to date as well as

outlining the desired future culture for the organisation

and agreeing communication plans and strategy in

respect of how our “Culture Strategy” should be

embedded into the overall organisation aligned to our

business strategy.

l New forums have been put in place for all people

managers to enhance lines of communication and

consistency of message as well as building engagement

with line managers. Town halls are held on a regular basis

for all employees to enhance engagement and update

them on our Culture and business strategy. Two way

communication is a key part of these forums with Q&A at

the end of each session to enable EMT gather feedback

and answer any questions employees or people managers

might have.

l Engagement workshops for employees were facilitated in

2021 to ensure we had the right values and behaviours

aligned to our desired culture and also to prioritise key

values to focus on in 2021. In May 2021 we launched our

Behavioural Competency Framework with clearly defined

behaviours aligned to our values to support delivery of

excellent customer service and continue to enhance

employee experience. There was significant training

throughout 2021 for all people managers and employees

to support embedding of the competency framework.

Behaviours Aligned to Our Values

Putting the

Customer First

Customer Focus

Problem Solving



Cultivating Relationships

Communicating Effectively

Supporting and

Collaborating with

Colleagues



Building Integrity & TrustDoing the Right Thing



Continuously Seeking

to Improve

Driving for Results



Leading Self

Leading Others

Leading Self

and Others



Strategic Report Environmental, Social & Governance Financial Statements Other Information

l The tone from the top i.e. from the Chief

Executive Officer, Executive Management Team

and Board is critical to the success of our Culture

Strategy and all communications that are

determined by the Board and EMT are aligned

with our values and behaviours with a strong

focus on Ownership and Communication.

l FBD has invested significantly in training for all

employees aligned to our culture and strategy in

2021 and our plans for 2022. We also developed

and implemented a Mindful Leadership

Programme facilitated by the Mindful Leader

Academy for people managers in 2021 to support

the desired culture and build coaching skills and

management effectiveness in embedding desired

culture in teams throughout the organisation.

The Group’s short and long-term remuneration

philosophy is to ensure that remuneration is aligned

to FBD’s purpose and values, supports strategy and

promotes long-term success of the Group.

Remuneration includes performance related

elements designed to align Directors’ interests with

those of shareholders and to promote long-term

sustainable growth and performance in line with our

strategy. Market-competitive total remuneration is

structured to attract, motivate and retain individuals

of the highest quality.

A new Diversity and Inclusion Strategy and policy was

launched in 2021 for all employees reaffirming our

commitment to ensure FBD is a place where our

people can bring their true self to work and feel their

voice will be heard and respected (see next section for

more).

GENDER

EQUALITY

Diversity and Inclusion in FBD

At FBD our diversity and inclusion objective is to foster and

promote an inclusive and equal employment work environment

for our employees and the customers we serve, promote a

harassment and discrimination free workplace, investigate

equal employment opportunity complaints and provide

guidance, training and resources.

Our shared commitment to working towards a consciously

inclusive workplace is key to creating an environment that

fosters innovation, employee engagement, creativity and the

collaboration required to be the insurance employer of choice.

Diversity and Inclusion (D&I) continues to be an area of focus for

FBD and we have worked hard in 2021 to roll out phase one of

our three year strategy. Phase one of the strategy involved

assessing our current environment through the D&I lens and

introducing an awareness of the pillars of D&I.

In 2021, the D&I Committee led the role out of ‘Inclusio’ to all

FBD employees, including Executive Management as part of our

Inclusive Culture programme. Inclusio is an independent

software tool, developed by DCU. Using Inclusio, employees

had the opportunity to anonymously contribute and provide

feedback on FBD’s culture and team inclusion. Employees could

partake in learning, development and discussion forums about

different pillars of D&I and also the working culture at FBD.

We launched Inclusio at two different stages throughout the

year and we have a third stage planned for 2022. We achieved

an overall engagement rate from employees of 75%. Our goal is

to increase this to 80% for the third stage in 2022. In total,

employees undertook 350 hours of shared learning, including

reading 3,609 articles and watching 3,925 videos. To further

drive engagement, we invited the creators of Inclusio in to FBD

to present the findings and analyse the insights with the Senior

Management Team. We also communicated the findings to all

employees.

It is important that we hold ourselves accountable to achieving

the ambition that is set out in the D&I strategy therefore we

have included metrics and targets to ensure we are on track.

We consolidate current information, regulatory updates, events

and our vision in our bi-annual D&I newsletter.

As part of FBD’s D&I Strategy, Board members participated in

Inclusive Leadership and Unconscious Bias Training. In Q1

2022, the Executive Management Team and HR team will

participate in the same training programme, delivered by DCU’s

Centre of Diversity.

38 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Social (continued)

FBD partnered with the Irish Centre for Diversity and

underwent a review of a number of our policies to ensure

they were inclusive of all people regardless of any of the

nine grounds for discrimination. We were awarded a

Bronze rating under the Irish Centre for Diversity

‘Investors in Diversity’ Framework. We are in the process

of gaining the silver accreditation for being Investors in

Diversity for 2022.

FBD also continues to partner with the Trinity Centre for

People with Intellectual Disabilities. In 2021, we

completed the successful placement of one of their

students and we are preparing to begin our second

placement with them in 2022.

GOOD HEALTH

AND WELL-BEING

Supporting Our People in Remote Working

FBD has provided employees with different support

options throughout Covid-19 to ensure that they have a

comfortable workspace in the home. It is a priority that

our employees have the necessary means to ensure they

can continue to work with as little interference as

possible. As we continue to navigate remote working,

we have placed a great deal of focus on enhancing

communication across the organisation. Departmental

newsletters are published each month. These contain

business updates, upcoming changes and insights but

they are also a great tool to introduce new members to

the Group and share good news stories as we work from

home. Regular town halls are hosted online by the

Executive Management Team for all employees.

QUALITY

EDUCATION

Investing in Training and Development for

Our People

We believe that the development and growth of our people is

fundamental to the achievement of our business results and

every person in FBD participated in some form of learning and

development during the year.

In 2021 we continued to deliver much of our learning and

development activity remotely and pivoted to a blended learning

approach where possible. We enhanced our on boarding for all

new employees to improve their experience as they begin their

career in FBD by redesigning our induction course to take

advantage of virtual training.

This year we embarked on a Mindful Leadership Programme to

bring consistency to how we support and develop our people

leaders across all parts of the business based on our shared

leadership principles and values. The programme focuses on

delivering sustainable results to support our leaders to build an

empowered organisation. Over 80% of our people leaders have

participated to date in this intense modular programme delivered

over a 12 week period. Our schedule of programmes for 2022 is

underway.

Staff Policies and Onboarding

FBD has a range of people policies in place to ensure full

compliance with legislation and with our commitment to

providing a safe and supportive working environment for our

employees. Fundamental to these policies and the embedded

culture, is a regard for the individual, their rights and the mutual

advantage of fostering our employees’ potential and supporting

their career development.

These policies are communicated to all employees joining FBD

as part of the onboarding process. They provide information,

guidelines and rules where appropriate in relation to every stage

of employment including recruitment and selection; equality and

diversity; probation; learning and development; all types of leave;

benefits; remuneration; disciplinary and grievance. Refresher

modules are provided via e-learning for certain policies to refresh

the knowledge of employees on an ongoing basis. In addition,

policies and procedures are reviewed on an annual basis to ensure

they accurately reflect employee entitlements and continue to

support FBD’s business objectives while remaining fit for purpose

and compliant and these updates are notified to employees.

We also run campaigns to promote certain policies. In 2021, we

ran a Speak Up campaign for all employees. It is our mission to

nurture the psychological safety among employees so that

everyone has a voice and understands their rights.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

GOOD HEALTH

AND WELL-BEING

Our People Giving Back

FBD employees are active in supporting a wide range of

local and national charity based organisations. At a Group

level the chosen charities for 2021 were DePaul, who

provide assistance to the homeless and C.A.S.A. a support

service for people with disability. Due to Covid-19

restrictions a limited number of fund raising activities

took place in 2021.

Throughout the year employees based in FBD House,

Bluebell made donations in excess of €40,000 to a number

of charities which included Our Lady’s Children’s Hospital,

Temple Street Children’s Hospital, the Capuchin Day

Centre for the Homeless, the Peoples Foodbank in

Bluebell and Jigsaw (a youth mental health advice charity).

Health & Safety

FBD is committed to providing a safe place of work and

conducting all aspects of its business activities in such a

way as to achieve the best possible standards of health and

safety and welfare for its employees. The FBD Safety

Statement is the cornerstone of our safety management

system. The Safety Statement clearly outlines FBD’s

commitment to health and safety, identifies persons with

safety responsibilities, outlines the Group safety policies

and includes site risk assessments.

DECENT WORK AND

ECONOMIC GROWTH

Anti-Bribery and Anti-Corruption

FBD requires all employees at all times to act honestly and

with integrity and to safeguard the resources for which they

are responsible. Our Code of Conduct Policy sets out the

professional standards and responsible behaviours expected

to ensure that we are appropriately focused on delivering

the right outcomes for shareholders and customers,

meeting our legal and regulatory requirements and

appropriately managing and mitigating risks.

This is further underpinned by our:

l Delivery of mandatory ethics training to all employees

annually;

l The Anti-Fraud Policy which outlines the role and

responsibilities for the reporting and investigation of

fraud;

l The Speak Up Policy which provides a framework

for employees to raise concerns about unlawful or

inappropriate conduct, financial malpractice, danger to

the public or the environment, possible fraud or risks to

the Group.

Respect for Human Rights

Under FBD’s Equal Opportunities, Diversity and Inclusion

Policy, all employees who work in FBD, and those who use

services provided by FBD, are treated with dignity and

respect, receive equality of opportunity and are not subject

to discrimination. FBD seeks to ensure that respect for

diversity, equality and inclusion are embedded in all the

services we provide and the work we do. To this end, FBD’s

Supplier Charter details how FBD supports the Universal

Declaration of Human Rights and will work to enforce these

rights within our supply chain.

40 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Social (continued)

QUALITY

EDUCATION

The FBD Trust

FBD Trust is the philanthropic arm of FBD Group. The

Trust was established as a means to give back to our loyal

customers by providing support to advance the interests of

Irish farm families and the communities where they live

and work. The FBD Trust supports research and

educational scholarships for training and development,

while also supporting groups and organisations that

advocate for Irish farmers and their communities.

Teagasc/FBD Student of the Year Award

The annual Teagasc/FBD Student of the Year awards are

presented to the highest achieving graduates from the

previous year, from Teagasc agricultural colleges across the

country. Nominees for these awards are the next

generation of farm leaders and innovators. FBD has

supported the Student of the Year Awards since their

inception by providing a bursary to the winner, category

winners and finalists.

Deirdre McMahon was named Teagasc/FBD Student of the

Year in a virtual ceremony.

CONGRATULATIONS TO THE FINALISTS

AND WINNERS IN THE TEAGASC / FBD

STUDENT OF THE YEAR 2020 AWARDS

OVERALL

WINNER:

Deirdre

McMahon

FBD is proud to be supporting agricultural

education for the next generation of farmers for

over 30 years. Congratulations to each of the 19

nalists from the team at FBD Insurance.

CATEGORY WINNERS:

Drystock: Shane O’Brien, Co Cork

Dairy: Deirdre McMahon, Co Galway

Other Land Based Enterprises:

Marian Dempsey, Co Cavan

Nuffield Scholarships

FBD sponsors the Nuffield Farming Scholarship

Programme. This programme provides agri-scholars the

opportunity to achieve a global perspective and exposure

to new methods and ideas. Scholars regularly go on to

become influencers of sustainable change and

improvement within their sector. FBD supports Nuffield

scholarships to promote excellence by developing and

supporting these individuals.

ASA Conference Partner & ASA Fellowship

The Agricultural Science Association (ASA) is the professional

body for graduates in agricultural, horticultural, forestry,

environmental and food science. It is the voice of the

Agricultural profession in Ireland. FBD has been the ASA

conference partner for many years. Due to Covid-19

restrictions the 2021 conference was held virtually.

In 2021 the ASA launched an annual Fellowship Programme,

sponsored by FBD, which aims to contribute positively to

scientific innovation within the Irish agri-food industry. The

€10,000 ASA Fellowship will assist the successful candidate

in further developing their scientific knowledge and

experience while

enhancing their

communications skills in

the sharing of scientific

information in an engaging

and accessible manner to

the public. The inaugural

recipient of the fellowship,

Dr. Laurence Shalloo, was

announced at the ASA

Conference.

The FBD Young Farmer of the Year Awards

The FBD ‘Young Farmer of the Year’ is a national competition

held in conjunction with Macra na Feirme. The purpose of

these awards is to identify and recognise young farmer

excellence to inspire and empower the next generation of

young farmers in Ireland. The award recognises and rewards

top-performing young farmers. It promotes knowledge-

sharing, networking opportunities, a platform to showcase

and highlight Irish agriculture and the fantastic work being

done by young farmers. Adjudication is based on a number of

criteria including business initiative and innovation on the

farm. The judges also consider farm efficiency levels,

enterprise quality, farm

safety, environmental

protection awareness,

agricultural knowledge and

community involvement.

The 2021 FBD Young

Farmer of the Year is

Owen Ashton.

FBD Supporting the Agricultural Community

For over 50 years FBD has been invested in agriculture, farming and rural life in Ireland. We believe farmers, businesses, retail

customers and wider society feel real economic and social benefits as a result of our business activities. As a Group that has

been providing insurance for Irish farmers for more than 50 years we are uniquely placed to support Irish farmers and the

agricultural industry in Ireland. Here is a flavour of some of the ways we provide that support:

Strategic Report Environmental, Social & Governance Financial Statements Other Information

INDUSTRY, INNOVATION

AND INFRASTRUCTURE

The Burren Winterage Weekend

At the end of summer, Burren farmers follow the ancient

tradition of herding their cattle onto ‘winterage’ pastures.

These cattle spend the winter grazing in the Burren’s

limestone uplands and this practise is key to the survival of

the region’s famous flora and fauna. The Burren Winterage

Weekend is a celebration of this tradition of Winterage and

includes a wide range of farming, heritage, cultural and

family events around the October Bank Holiday weekend

each year. The Burren Winterage School is held as part of

the Winterage weekend and it aims to unite farmers,

researchers, advisors and government representatives to

allow them to share ideas on sustainable pastoral land

management.

The annual Burrenbeo Winterage Weekend, supported by

FBD, celebrates not only the unique farming traditions of

the Burren, but also highlights, celebrates and supports the

broader significance of pastoral farming in shaping much of

the Irish landscape.

Patron Member of Agri Aware

A founding member of Agri Aware, FBD was one of a

number of agri-businesses that recognised the need for

an independent body to provide the general public with

information and education on the importance of agriculture

and the food industry to the Irish economy. FBD’s annual

support assists Agri Aware in continuing its programme of

educational and public awareness initiatives among the

non-farming community. Topics include modern

agriculture, the rural environment, animal welfare,

food quality and safety.

Grass10 – Grassland Excellence for Irish

Livestock

FBD has sponsored the ‘Grass10’ programme, a multi-year

campaign launched by Teagasc, since 2017. This

programme entered its second phase in 2021 and FBD

remains committed to supporting the programme in this

next phase. The programme aims to increase grass

utilisation on Irish livestock farms. Achieving ‘Grass10’

targets will require changes in farm practices associated

with both grass production and utilisation, delivering best

practice, and promoting sustainable agricultural methods.

Young Stockperson Competition

In 2021 The Irish Shows Association and the Irish Farmers

Journal organised the inaugural Young Stockperson

Competition sponsored by FBD Insurance. This competition

gave young people aged 8-25 the opportunity to practice their

showing skills. In addition to training and educating the next

generation about showing and stockmanship, the competition

also provided an opportunity to bring together likeminded

young people in a safe and socially distant manner.

GOOD HEALTH

AND WELL-BEING

Farm Protect

Farming can be very rewarding and provide a great way of

life, but it is also a high-risk industry, which presents many

challenges due to its unique workplace setting, the aging

profile of farmers and the fact farmers are potentially

exposed to more dangers compared to other sectors, such

as large animals, heavy machinery, slurry gases and

construction work. The persistently high number of farm

fatal and serious accidents is cause for significant concern to

us. FBD’s mission is to support initiatives which will make the

farm a safer place for all. In addition we have a dedicated risk

management team who work directly with farms and

businesses to help improve safety standards and awareness

in the workplace. Stewart Gavin, FBD Agri Underwriting

Product Manager represents FBD on the National Farm

Safety Partnership Advisory Committee (FSPAC) to the

Health and Safety Authority. In 2021 the FSPAC developed

and launched a New Farm Safety Action Plan 2021-2024

which aims to reduce the level of fatalities, serious injuries

and ill health in the agriculture sector.

FBD’s Farm Protect campaign aims to encourage farmers

to make small but meaningful changes to their working

behaviour. While farmers’ attitudes to health and safety are

generally positive, simple changes can make a big difference.

We focus on promoting awareness of the critical behavioural

changes required through press and online adverts, social

media and through distributing safety materials and farm

safety signs at events and through our network of branches.

Adrian Dockery, winner of the intermediate category at the

Young Stockperson of the Year Awards with Kathleen Leonard

(FBD Insurance), Shane Murphy (Irish Farmers Journal) and

Catherine Gallagher (Irish Shows Association).

42 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

FBD Holdings PLC Annual Report 202142

Social (continued)

Champions for Safety

Over the last nine years, FBD has led “Champions for Safety”

seminars and events across all agricultural colleges around the

country. The aim of the initiative is to encourage young farmers

to become champions for safety and to encourage them to stop

taking risks. Speakers include staff from FBD, Teagasc, the

Health and Safety Authority, ESB Networks and farm accident

survivors who share the details of their accidents and the life

changing affects it has had on their lives.

UCD School of Agriculture and Food Science Health

and Safety Award Sponsorship

FBD renewed its commitment to sponsor the FBD Health and

Safety Awards at the UCD annual School of Agriculture and Food

Science Awards Ceremony. This awards ceremony is one of the

highlights of the UCD academic year and it celebrates and

acknowledges the excellent achievements of students during

the academic session 2020/2021. Noel Banville, one of three

students recognised for their achievements in the Health

Welfare and Safety module, was presented with the FBD Trust

Health and Safety Award 2021 at a virtual ceremony.

Farm Safe School Initiative – with Agri Aware &

Agri Kids

In 2021, FBD supported the Agri Aware Safe Farm Schools

Programme which had over 450 schools register to take part in

farm safety lessons and projects. The mission of this programme

is to engage, educate and empower children to be farm safety

ambassadors, raising their awareness of farm safety in order to

ensure that the importance of safety on the farm is understood

and acknowledged from a young age.

Moorepark Open Day 2021 Sponsorship and

Farm Safety Exhibits

FBD worked with Teagasc in developing and delivering farm

safety exhibits at the Moorepark open day 2021 to promote

farm safety. The topics covered by the exhibits included

tractors, machinery, livestock, work at height and farm

buildings.

Tractor Training Skills

FBD continues to support the Farm Relief Services (FRS)

tractor training skills course for young people over the age

of 14, to ensure that safe driving practices are adopted

early.

Farm Safety Videos

FBD are currently working with Teagasc to produce an

updated suite of high quality farm safety videos. The videos

will cover all key farm safety hazards including; tractors,

ATVs, machinery, livestock, slurry, work at height,

chemicals, etc.

Farm Safety Communication

FBD run regular farm safety communications in the media.

During 2021, FBD ran monthly farm safety adverts and

advertorials in the Irish Farmers Journal and in the Irish

Farmers Monthly. These focused on timely, seasonal

hazards, their associated risks and appropriate safety

controls and messages.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

GOOD HEALTH

AND WELL-BEING

Age Friendly Ireland

FBD is a member of Age Friendly Ireland. This programme is

a Government initiative to prepare for the rapid ageing of

our population. It aims to create an inclusive, equitable

society in which older people can live full, active, valued

and healthy lives. Age Friendly Ireland supports businesses

to implement low cost changes which signal a strong

welcome for older people. Extensive staff training has

taken place to support FBD staff in contributing to this

programme.

DECENT WORK AND

ECONOMIC GROWTH

FBD’s Supplier Charter

FBD’s ‘Supplier Charter’ outlines the standards that we

expect to see throughout our supply chain. We set high

standards for ourselves and our suppliers. We insist that

all of our business activities are conducted lawfully,

sustainably and above all ethically. Our charter sets out

FBD’s zero tolerance approach to modern slavery in all its

forms in our own business and in our supply chain. This

means not using forced or compulsory labour, and/or

labour held under slavery or servitude. We also understand

how important prompt payment is to our suppliers. Our

standard payment terms are net 30 days and we work hard

to make sure we meet this. FBD expects that all of our

suppliers pay employees at least the minimum wage, and

provides each employee with all legally mandated benefits.

PARTNERSHIPS

FOR THE GOALS

Guaranteed Irish

FBD is a proud member of the Guaranteed Irish

programme. As Ireland’s only indigenous insurance

company, FBD has a proud heritage of supporting local

communities. The Guaranteed Irish symbol is awarded to

companies that create quality jobs, contribute to local

communities and are committed to Irish provenance.

Chambers of Commerce

With 34 branches located around Ireland, FBD is a

committed member of many local Chambers of Commerce.

Working collaboratively with local businesses, Chambers

of Commerce provide a forum to promote initiatives,

knowledge sharing and to assist local business in

communities across Ireland.

Using Language that Everyone Understands

We understand that some insurance terminology can be

complex and difficult to understand. We aim to write all our

customer documents in plain language to ensure that we

are more readily understood. We have engaged with a third

party provider to complete a thorough review of our main

products policy wording with this objective in mind.

Protecting Information

FBD collects and retains information from and about our

customers and third parties. This is a vital and necessary

part of providing insurance products. Keeping information

secure is a top priority for us. We continue to implement

appropriate technical and organisational measures to

protect data from unlawful or unauthorised processing and

against accidental loss, destruction, damage, alteration or

disclosure.

FBD Supporting the Wider Community

In addition to the farming community FBD is also active in the wider community. Some of the initiatives we have supported

are as follows:

44 FBD Holdings PLC Annual Report 2021

SUPPORTING

LOCAL

COMMUNITIES

Strategic Report Environmental, Social & Governance Financial Statements Other Information

I think the new partnership between

FBD and Semple Stadium is hugely

exciting. FBD has strong links in the

community and that fits very well

with such an iconic GAA stadium. I

am looking forward to seeing many

memorable occasions in FBD Semple

Stadium in the coming years.”

NIAMH MARTIN

46 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Board of Directors

Liam Herlihy

Chairman

Liam Herlihy (appointed on

01/09/2015) is a farmer and

was appointed Chairman in

May 2017. He was appointed

Chairman of the Teagasc

Authority in September 2018

and was, until May of 2015,

Group Chairman of Glanbia

plc, a leading Irish based

performance nutrition and

ingredients group, having served

in that role for 7 years during

which he presided over a period

of significant structural change

and unprecedented growth for

Glanbia plc.

Mr. Herlihy completed

the Institute of Directors

Development Programme and

holds a certificate of merit in

Corporate Governance from

University College Dublin. He

brings to the Board a wealth

of commercial experience and

some deep insights into the

farming and general agricultural

industries in Ireland which,

together, comprise the Group’s

core customer base. (Aged 70)

Tomás Ó Midheach

Group Chief Executive

Tomás Ó Midheach (appointed

on 04/01/2021) has 25 years’

experience in the financial

services industry spanning many

diverse areas including finance,

data, customer analytics,

direct channels and digital. He

spent 11 years with Citibank

in the UK, Spain and Dublin

where he held several senior

positions in Finance ultimately

assuming the position of CFO

at Citibank Ireland. He joined

AIB in June 2006 and held a

number of senior executive

positions including Head of

Direct Channels & Analytics,

Chief Digital Officer and Chief

Operating Officer. Prior to

joining FBD, Mr. Ó Midheach

held the position Deputy CEO

and was an Executive Board

Member of AIB. (Aged 52)

Walter Bogaerts

Independent

Non-Executive Director

Walter Bogaerts (appointed

on 26/02/2016) was General

Manager of the Corporate

Insurances Division of KBC

Insurance based in Belgium

prior to his retirement in 2013.

He joined KBC Group (previously

ABB Insurances) in 1979 and

has gained extensive experience

throughout his career with KBC

in underwriting, reinsurance,

audit, risk management and

sales. He was general manager

in charge of KBC Group’s

Central-European insurance

businesses until appointed to

his most recent role in 2012. In

that role he was a member of

the Supervisory Boards, Audit

and Risk Committees of KBC’s

insurance subsidiaries in Czech

Republic, Slovakia, Hungary,

Poland and Bulgaria. He holds a

Commercial Engineering degree

from the Economic University of

Brussels. (Aged 64)

Mary Brennan

Independent

Non-Executive Director

Ms. Mary Brennan (appointed

on 31/08/2016) is a Chartered

Director, Certified Investment

Fund Director and a Fellow of

Chartered Accountants Ireland.

In a career spanning over 30

years, Ms. Brennan has worked

internationally in audit in KPMG

and in a number of publicly

listed companies, including Elan

plc and Occidental Petroleum

Corp. She is a highly experienced

Non-Executive Director and

currently holds the position

of Chair of the Board, Chair

of the Audit Committee and

Chair of the Risk Committee

in her portfolio of financially

regulated directorships.

Ms Brennan previously served

on the Boards of BNP Paribas

Ireland, Atradius Reinsurance

Dac, Macquarie Capital Ireland,

the Social Finance Foundation

and Microfinance Ireland. (Aged

56)

Biographical details of the Directors in office on the date of this Report are as follows:

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Tim Cullinan

Independent

Non-Executive Director

Tim Cullinan (appointed on

31/12/2020) is from Toomevara,

Co. Tipperary where he runs a

pig enterprise alongside a feed

mill operation. Mr. Cullinan was

elected the 16th President of

the Irish Farmers’ Association in

December 2019. He has been

heavily involved in the Irish

Farmers’ Association over the

past 15 years holding various

positions including National

Pigs Committee Chairman

and County Chairman and

most recently the position of

National Treasurer. He is a

Board Member of Bord Bia – the

Irish Food Board which is an

Irish semi state Agency whose

remit is to market and promote

Ireland’s food, drink and

horticulture industry in Ireland

and abroad. Mr. Cullinan is Vice

President of COPA (Committee

of Professional Agricultural

Organisations) and represents

Irish farmers at EU level on

COPA, which is the official

umbrella representative

body for European farmers.

Mr. Cullinan established world

first DNA traceability for Irish

pig meat and previously held the

position Pig Expert to the Copa

Cogeca. (Aged 61)

Sylvia Cronin

Independent

Non-Executive Director

Sylvia Cronin (appointed on

28/11/2019) was Director

of Insurance Supervision in

the Central Bank of Ireland

until October 2019 and was

a Member of the European

Insurance and Occupational

Pensions Authority (“EIOPA”)

Board of Supervisors. Before

joining the Central Bank,

Ms. Cronin spent the majority

of her career working in the

insurance industry, most

recently as Chief Executive

of Augura Life Ireland Ltd.

Previously, Ms. Cronin was

the Chief Executive of MGM

International Assurance Ltd.

and spent several years with

the AXA Group where she was

head of Business Development,

Services and Marketing in

Ireland. Ms. Cronin started her

insurance career with the Fortis

Group where her focus was on

IT Management. Ms. Cronin

holds a Masters in Business

Administration, was admitted

as a Chartered Director to

the Institute of Directors in

London and is a CEDR Certified

Mediator. (Aged 59)

David O’Connor

Independent

Non-Executive Director

David O’Connor, Chair of FBD

Insurance, (appointed on

05/07/2016) is a Fellow of the

Society of Actuaries in Ireland.

He commenced his career in

New Ireland Assurance before

joining Allianz Ireland in 1988

to set up its non-life actuarial

function. He was a member of

Allianz Executive Management

Board and held a number of

senior management positions

there prior to joining Willis

Towers Watson in 2003 to set

up its Property and Casualty

consultancy unit in Dublin,

where he worked until June

2016. Since 2016 he has acted

principally as an Independent

Director with a number of active

and run-off insurers in Irish, UK

and overseas markets. (Aged 64)

John O’Dwyer

Independent

Non-Executive Director

John O’Dwyer (appointed on

31/08/2021) was CEO of VHI for

nine years prior to joining the

Board of FBD. He has spent all of

his career in insurance including

the international Dutch

insurance group Achmea where

he was the Chief Operating

Officer and Executive Director

with responsibility for the life,

general and health businesses

in Interamerican, the second

biggest insurer in Greece. John

has an extensive track record

in financial services and in

particular, the health insurance

sector which included roles such

as Managing Director of Friends

First Life Assurance, Director of

Operations at Bupa Ireland and

Assistant Chief Executive with

responsibility for Claims in VHI.

John is an independent Non-

Executive Director in Google

Payments Ireland Ltd. John

holds a B.A in Management and

is a Chartered Director with the

Institute of Chartered Directors.

(Aged 64)

48 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Board of Directors (continued)

John O’Grady

Group Finance Director

John O’Grady (appointed on

01/07/2016) is a Chartered

Accountant and an experienced

insurance executive. He joined

FBD from Liberty Insurance

Limited where he held the

role of Finance Director.

Prior to his role in Liberty,

Mr. O’Grady worked for Aviva

and its predecessor companies

in Ireland in various roles

between 1989 and 2012,

including Finance Director,

Claims Director and Operations

Director. (Aged 60)

Richard Pike

Senior Independent Non-

Executive Director

Mr Richard Pike (appointed

18/09/2019) has extensive

experience of working with

financial institutions throughout

the world, assisting companies

in managing strategic and

enterprise risk more efficiently

while addressing local

regulatory guidelines and

standards. Richard is currently

Chairman of Citadel Securities

(Ireland) Ltd and Citadel

Securities (Europe) Ltd, an

Independent Non-Executive

Director of National Cyber

Security Society and Starling

International. Prior to this,

Richard has worked in various

senior banking, insurance,

credit and market risk roles

at Wolters Kluwer Financial

Services, ABN AMRO, Bain,

JP Morgan and Permanent TSB

Bank. Richard lectures on risk

management and governance

at the Institute of Banking and

the Smurfit Business School and

was a contributing author to

two books on risk management.

Richard has also received the

designation of ‘Certified Bank

Director’ by the Institute of

Banking. (Aged 54)

Jean Sharp

Independent Non-

Executive Director

Jean Sharp (appointed on

16/08/2021) is a fellow of

Chartered Accountants Ireland,

and an experienced Financial

Services executive. Until 2019

she was Chief Taxation Officer

of Aviva and its predecessor

companies, a role she had held

since 1998. She is a former

partner in EY, the Big Four

accounting firm. Jean is an

Independent Non-Executive

Director of Personal Assets

Plc, which is listed on the

London Stock Exchange and

is a constituent of the FTSE

250 index. She also chairs its

Audit Committee. Jean is also

an Independent Non-Executive

Director and Audit Committee

Chair at Flood Re Limited.

(Aged 62)

Padraig Walshe

Non-Executive Director

Padraig Walshe (appointed on

23/12/2011) is Chairman of

Farmer Business Developments

plc, the Group’s largest

shareholder, and a dairy

farmer. He is a past President

of COPA, the European Farmers’

Organisation and of the

Irish Farmers’ Association.

Mr. Walshe previously served

on the Board of FBD between

2006 and 2010, and rejoined the

Board in December 2011.

Mr. Walshe’s extensive

leadership experience at

national and international level

and his deep understanding of

Ireland’s farming community

and the Irish food sector are of

immense benefit to the Board.

(Aged 64)

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Registered Office and Head Office

FBD House

Bluebell

Dublin 12

D12 Y0HE

Ireland

Stockbrokers

Goodbody Stockbrokers

Ballsbridge Park

Ballsbridge

Dublin 4

D04 YW83

Ireland

Shore Capital

The Corn Exchange

Fenwick Street

Liverpool L2 7RB

United Kingdom

Independent Auditors

PricewaterhouseCoopers

Chartered Accountants and Statutory Audit Firm

One Spencer Dock

North Wall Quay

Dublin 1

D01 X9R7

Ireland

Bankers

Allied Irish Banks plc

Bank of Ireland

Ulster Bank

Barclays Bank plc

BNP Paribas

Close Brothers International

Credit Suisse (Luxembourg) S.A.

Deutsche Bank AG

The Goldman Group, Inc.

KBC Bank NV

Solicitors

Dillon Eustace

33 Sir John Rogerson’s Quay

Dublin 2

D02 XK09

Ireland

Registrar

Computershare Investor Services (Ireland) Limited

3100 Lake Drive

Citywest Business Campus

Dublin 24

D24 AK82

Ireland

Corporate Information

50 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report of the Directors

The Directors present their report and the audited financial

statements for the financial year 2021.

Principal Activities

FBD is one of Ireland’s largest property and casualty insurers

looking after the insurance needs of farmers, private individuals

and business owners through its principal subsidiary, FBD

Insurance plc. The Group also has financial services operations

including a successful life and pensions intermediary. The

Company is a holding company incorporated in Ireland.

FBD is subject to the UK Corporate Governance Code 2018 and

the Irish Annex. FBD is subject to the Central Bank of Ireland’s

Corporate Governance Requirements for Insurance

Undertakings 2015 and are required to comply with the

additional requirements for High Impact designated insurance

undertakings.

Business Review

The review of the performance of the Group, including an

analysis of financial information and the outlook for its future

development, is contained in the Chairman’s Statement on

pages 4 to 6 and in the Group Chief Executive’s Review of

Operations on pages 7 to 11. Information in respect of events

since the financial year end and a review of the key performance

indicators are also included in these sections. The key

performance indicators include gross premium written, earnings

per share, loss ratio, expense ratio, combined operating ratio,

profit for the year, net asset value per share and return on

equity.

Results

The results for the year are shown in the Consolidated Income

Statement on page 98.

Financial Instruments

The Group makes routine use of financial instruments in its

activities. The use of financial instruments is material to an

assessment of the financial statements. Detail on the Group’s

financial risk management objectives and policies are included

in the Risks and Uncertainties Report on pages 18 to 25. The

Group’s exposure to liquidity, market, foreign currency, credit

and concentration risk are included in note 36 of the financial

statements.

Dividends

Please refer to note 30 for further details.

Subsequent Events

The judgement in respect of Business Interruption claims for

public houses issued on 28th January 2022 has provided

considerable clarity on the definition of business closure and

on other matters such as allowable wages. FBD will continue to

progress with the settlement of valid claims for customers.

The discussions with reinsurers on the application of reinsurance

cover to these Business Interruption claims has reached

agreement for the expected impacted layers of the catastrophe

programme. This reduces uncertainty surrounding recoveries

from reinsurers and has a favourable impact on previously

booked reserves net of reinsurance.

The judgement and the reinsurance agreement are adjusting

events for the purposes of the 2021 financial statements on the

basis that they relate to 2021.

Risk and Uncertainties

A description of the risks and uncertainties facing the Group are

set out in the Risks and Uncertainties Report on pages 18 to 25.

Subsidiaries

The Company’s principal subsidiaries, as at 31 December 2021,

are listed in note 31.

Directors

The present Directors of the Company, together with a

biography on each, are set out on pages 46 to 48. The Board has

decided that all Directors continuing in office will submit

themselves for re-election at each Annual General Meeting

(AGM). Mr Bogaerts has indicated his intention not to go forward

for re-election at the 2022 AGM.

The Directors who served at any time during 2021 were as

follows:

Liam Herlihy Chairman

Walter Bogaerts Independent Non-Executive Director

Mary Brennan Independent Non-Executive Director

Sylvia Cronin Independent Non-Executive Director

Tim Cullinan Independent Non-Executive Director

Paul D’Alton Interim Chief Executive Officer and Executive

Director (Resigned 4 January 2021)

David O’Connor Independent Non-Executive Director

John O’Dwyer Independent Non-Executive Director

(Appointed 31 August 2021)

John O’Grady Group Chief Financial Officer

Tomás Ó Midheach Group Chief Executive Officer

(Appointed 4 January 2021)

Richard Pike Senior Independent Non-Executive Director

Jean Sharp Independent Non-Executive Director

(Appointed 16 August 2021)

Padraig Walshe Non-Executive Director

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Annual General Meeting

The AGM is scheduled to be held on Thursday, 12 May 2022. The

notice of the AGM of the Company will be sent to shareholders

giving 21 clear days’ notice.

Directors’ and Company Secretary’s Interests

The interests of the Directors and Company Secretary (together

with their respective family interests) in the share capital of the

Company, at 31 December 2021 and 1 January 2021 were as

follows:

Number of ordinary shares of

€0.60 each

Beneficial

31 December

2021

1/1/2021

(or at date of

appointment)

Liam Herlihy 8,000 8,000

Walter Bogaerts 0 0

Mary Brennan 0 0

Sylvia Cronin 0 0

Tim Cullinan 0 0

Paul D’Alton 0 0

David O’Connor 1,500 1,500

John O’Dwyer 0 0

John O’Grady 22,095 10,743

Tomás Ó Midheach 0 0

Richard Pike 2,500 2,500

Jean Sharp 0 0

Padraig Walshe 1,100 1,100

Company Secretary

Nadine Conlon (appointed

28 October 2021) 0 0

Derek Hall (resigned

28 October 2021) 19,966 12,724

There has been no change in the interests of the Directors and

Company Secretary (together with their respective family

interests) in the share capital of the Company up to the date

of this report.

The interests of the Directors and the Company Secretary in

conditional awards over the share capital of the Company under

the shareholder approved Performance Share Plans are detailed

in the Report on Directors’ Remuneration on pages 69 to 84.

European Communities (Takeover Bids

(Directive 2004/25/EC)) Regulations 2006

For the purposes of Regulation 21 of the European Communities

(Takeover Bids (Directive 2004/25/EC)) Regulations 2006, the

information on the Board of Directors on pages 46 to 48, the

Performance Share Plans in note 34 and the Report on Directors’

Remuneration on pages 69 to 84 are deemed to be incorporated

in this part of the Report of the Directors.

On an annual basis the Directors seek shareholder approval for

certain powers relating to the Company’s shares. Pursuant to

shareholder resolutions passed at the Annual General Meeting

held on 12 May 2021 the Directors have the authority to allot

shares up to an aggregate nominal value of €6,940,388

representing approximately 33% of the issued ordinary share as

at 14 April 2021.

The Directors have authority to issue shares for cash other than

strictly pro-rata to existing shareholdings in certain

circumstances as approved at the AGM held on 12 May 2021.

The Directors also have authority to make market purchases of

the Company’s ordinary shares up to 10% of the aggregate

nominal value of the Company’s total issued share capital.

These authorities are due to expire on the date of the next

Annual General Meeting being 12 May 2022. These authorities

are sought annually at the AGM.

Substantial Shareholdings

As at 31 December 2021 the Company has been notified of the

following interests of 3% or more in its share capital:

Ordinary shares of €0.60 each No.

% of

Class

Farmer Business Development Plc 8,531,948 24.2%

FBD Trust Company Limited 2,984,737 8.5%

Protector Forsikring ASA 2,976,210 8.4%

M & G Investment Management Ltd. 2,247,533 6.4%

Highclere International Investors LLP 1,903,864 5.4%

Black Creek Investment Management Inc.

1,538,926 4.4%

As at 28 February, FBD has been notified of the following

changes in substantial shareholdings; Protector Forsikring

ASA increased its holding to 3,500,210 (9.9%); Highclere

International Investors LLP reduced its holding to 1,344,796

(3.8%).

Preference Share Capital

14% Non-cumulative preference

shares of €0.60 each No.

% of

Class

Farmer Business Developments plc 1,340,000 100%

8% Non-cumulative preference shares

of €0.60 each No.

% of

Class

FBD Trust Company Limited 2,062,000 58.38%

Farmer Business Developments plc 1,470,292 41.62%

52 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report of the Directors (continued)

Share Capital

The Group had four classes of shares in issue at the end of the

year. These classes and the percentage of the total issued share

capital represented by each are as follows:

Voting shares

Number

in issue

% of

Total

Ordinary shares of €0.60 each 35,297,201* 87.8%

14% Non-cumulative preference shares

of €0.60 each 1,340,000 3.4%

8% Non-cumulative preference shares

of €0.60 each 3,532,292 8.8%

40,169,493 100.0%

* excluding 164,005 shares held in treasury

The Company’s ordinary shares of €0.60 each are listed on the

Main Securities Market of Euronext Dublin and have a premium

listing on the London Stock Exchange. They are traded on both

Euronext Dublin and the London Stock Exchange. Neither class

of preference share is traded on a regulated market.

Each of the above classes of share enjoys the same rights to

receive notice of, attend and vote at meetings of the Company.

Non-voting shares Number in issue

‘A’ ordinary shares of €0.01 each 13,169,428

The rights attaching to the ‘A’ ordinary shares are clearly set out

in the Articles of Association of the Company. They are not

transferable except only to the Company. Other than a right to a

return of paid up capital of €0.01 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.

Non-Financial Statement

Under the EU Non-Financial Disclosure Regulations (Directive

2014/95/EU) FBD Holdings plc must provide a brief description

of the Group’s business model and disclose information in

relation to:

l Environmental matters;

l Social and employee matters;

l Respect for human rights;and

l Anti-corruption and anti-bribery matters.

Any risk relating to the above matters are identified, assessed,

managed and reported in line with the Risk Management

Framework. Environmental and Social sections on pages 27 to

43 have further details on Policies and activities in each of these

areas.

FBD’s Business Model

FBD’s business model is outlined on page 14. Customers and our

communities are at the heart of our business model. We offer

our customers clear solutions to their insurance needs using

extensive distribution networks which deliver the best customer

experience. FBD invests in its people, empowering them to

deliver for customers and shareholders alike.

Independent Auditors

PricewaterhouseCoopers, Chartered Accountants and Statutory

Audit Firm, were appointed by the Directors in 2016 to audit the

financial statements for the financial year ended 31 December

2016 and subsequent financial periods. The period of total

uninterrupted engagement is six years, covering the financial

years ended 31 December 2016 to 31 December 2021.

PricewaterhouseCoopers have signified their willingness to

continue in office in accordance with the provisions of Section

383(2) of the Companies Act 2014.

Regarding disclosure of information to the Auditors, the

Directors confirm that:

As far as they are aware, there is no relevant audit information of

which the Group’s statutory auditors are unaware; and they have

taken all the steps that they ought to have taken as a Director in

order to make themselves aware of any relevant audit

information and to establish that the Group’s statutory auditors

are aware of that information.

Accounting Records

The Directors have taken appropriate measures to ensure

compliance with Sections 281 to 285 of the Companies Act,

2014 – the requirement to keep proper accounting records –

through the employment of suitably qualified accounting

personnel and the maintenance of appropriate accounting

systems. The accounting records are located at FBD House,

Bluebell, Dublin 12, Ireland.

Directors’ Compliance Statement

The Directors of the Company acknowledge that they are

responsible for securing the Company’s compliance with its

relevant obligations (as defined in the Companies Act 2014 (the

“2014 Act”)) and, as required by section 225 of the 2014 Act, the

Directors confirm that:

(i) a compliance policy statement setting out the Company’s

policies with regard to complying with the relevant

obligations under the 2014 Act has been prepared;

(ii) arrangements and structures have been put in place that

they consider sufficient to secure material compliance with

the Company’s relevant obligations; and

(iii) a review of arrangements and structures has been conducted

during the financial year to which the Directors’ report

relates.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Corporate Governance

The Corporate Governance Report on pages 54 to 65 forms part

of this report and in this the Board has set out how it has applied

the principles set out in the UK Corporate Governance Code

2018, which was adopted by both Euronext Dublin and the UK

Listing Authority, the Irish Corporate Governance Annex, and

the Central Bank of Ireland Corporate Governance Code

requirements for Insurance Undertakings 2015.

Board Committees

The Board has established four Committees to assist it in the

execution of its responsibilities. These are:

l the Audit Committee;

l the Risk Committee;

l the Nomination and Governance Committee; and

l the Remuneration Committee.

Political Donations

The Group did not make any political donations during 2021.

Viability Statement

The Directors have assessed the prospects of the Group and its

ability to meet its liabilities as they fall due in the medium term.

The Directors selected a five year timeframe which they consider

appropriate as this corresponds with the Board’s strategic

planning process. The objectives of the strategic planning

process are to consider the key strategic choices facing the Group

and to incorporate these into a financial model with various

scenarios. This assessment has been made with reference to the

Group’s current position and prospects, the Group’s strategy, the

Board’s risk appetite and the principal risks and uncertainties

facing the Group including Covid-19, as outlined in the Risks and

Uncertainties Report on pages 18 to 25.

The Directors reviewed and approved the Group’s five year

strategic plan in October 2021 and this will be reviewed on an

annual basis. Progress against the strategic plan is reviewed

regularly by the Board and Senior Management. Associated risks

are considered within the Board’s Risk Management Framework.

The strategic plan has been tested for a number of scenarios

which assess the potential impact of some of the strategic and

commercial risks facing the Group. The Group performs an

ORSA at least annually which subjects FBD’s solvency capital

levels to a number of extreme stress scenarios and Covid-19 had

been considered as part of this. This was last performed in

December 2021. Based on the results of these tests the

Directors confirm that they have performed a robust assessment

of the principal risks facing the Group, including those that

would threaten its business model, its future performance and

solvency and that they can have a reasonable expectation that

the Group will be able to continue in operation and meet its

liabilities as they fall due over the period of the assessment.

Going Concern

The Group’s business activities, together with the factors likely

to affect its future development, performance and financial

position are set out in the Chairman’s Statement and the Review

of Operations, as is the financial position of the Group. In

addition, the Risks and Uncertainties Report on pages 18 to 25

and note 36 of the financial statements include the Group’s

policies and processes for financial risk management.

The Directors have 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 at least twelve months from the date of the approval of the

financial statements.

In making this assessment the Directors considered the Group’s

budget for 2022 and forecast for 2023, which take into account

foreseeable changes in the trading performance of the business,

key risks facing the business and the medium term plans

approved by the Board. In addition the ORSA process monitors

current and future solvency needs. The scenarios were projected

as part of the ORSA process as well as a number of more

extreme stress events. In all scenarios the Group’s capital ratio

remained in excess of the Solvency Capital Requirement.

On the basis of the performance projected by the Group and the

additional ORSA scenarios carried out, 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 the approval of the financial

statements. Therefore the Directors continue to adopt the

going concern basis of accounting in preparing the financial

statements.

Approval of Financial Statements

The financial statements were approved by the Board on 3

March 2022.

Signed on behalf of the Board

Liam Herlihy

Chairman

Tomás Ó Midheach

Group Chief Executive

3 March 2022

54 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Corporate Governance

Your Board of Directors is committed to the highest standards of

corporate governance. Good governance stems from a positive

culture and well embedded values. FBD’s core values of respect,

belief, innovation, community, ownership and communication

are central to how the Board conducts its business and

discharges its responsibilities. Equally, however, these values

are as relevant to every employee working throughout the Group

in their interactions with each other, and with our customers,

shareholders and other stakeholders.

UK Corporate Governance Code and the Irish

Corporate Governance Annex

The UK Corporate Governance Code 2018 (“the Code”) and the

Irish Corporate Governance Annex (“the Annex”) codify the

governance arrangements which apply to listed companies such

as FBD. Combined, these represent corporate governance

standards of the highest international level.

Throughout 2021 and to the date of this report, we applied the

principles of the Code and, save as set out on page 72 and page

74, complied with the provisions of both the Code and the

Annex.

This section of the Annual Report sets out the governance

arrangements in place in FBD Holdings plc.

Location of information required pursuant to Euronext

Dublin Listing Rule 6.1.80

Listing Rule Information to be included:

6.1.77 (4) Refer to Report on Director’s Remuneration

on pages 69 to 84.

No information is required to be disclosed in respect of Listing

Rules 6.1.77 (1), (2), (3), (5), (6), (7), (8), (9), (10), (11), (12),

(13), (14).

The Board of Directors and its Role

The Group is managed by the Board of Directors.

The primary role of the Board is to provide leadership and

strategic direction while maintaining effective control over the

activities of the Group.

The Board has approved a Corporate Governance Framework

setting out its role and responsibilities. This is reviewed annually

as part of the Board’s evaluation of its performance and

governance arrangements. The Framework includes a formal

schedule of matters reserved to the Board for its consideration

and decision, which includes:

l the approval of the Group’s objectives and strategy;

l approval of the annual budget including capital expenditure

and the review of the Group’s systems of internal control;

l maintenance of the appropriate level of capital, the

allocation thereof and decisions as to the recommendation

or payment of dividends;

l approval of Financial Statements; and

l the appointment of Directors and the Company Secretary.

This schedule ensures that the skills, expertise and experience

of the Directors are harnessed to best effect and ensures that

any major opportunities or challenges for the Group come

before the Board for consideration and decision. The schedule

was last reviewed in October 2021.

Other specific responsibilities of the Board are delegated to

Board appointed Committees, details of which are given later

in this report.

Board Composition and Independence

At 31 December 2021 the Board comprised two Executive

Directors and ten Non-Executive Directors, including the

Chairman. This structure was deemed appropriate by the Board.

The Board deemed it appropriate that it should have between

8 and 12 members and that this size is appropriate, being of

sufficient breadth and diversity to ensure that there is healthy

debate and input.

Eight of the Non-Executive Directors in office at the end of 2021

were considered to meet all of the criteria indicating

independence set out in the Code.

Date first

elected by

shareholders

Years from

first election

to 2022 AGM

Considered

to be

independent

Mary Brennan 31 Aug 2016 5 years

9 months

Yes

Walter Bogaerts 29 Apr 2016 6 years Yes

Sylvia Cronin 31 July 2020 1 year

10 months

Yes

Tim Cullinan 12 May 2021 1 year Yes

David O’Connor 31 Aug 2016 5 years

9 months

Yes

John O’Dwyer Awaiting

Election

Awaiting

Election

Yes

Richard Pike 31 July 2020 1 year

10 months

Yes

Jean Sharp Awaiting

Election

Awaiting

Election

Yes

Liam Herlihy was independent on appointment as Chair of FBD

Holdings plc in accordance with Provision of the UK Corporate

Governance Code 2018. Padraig Walshe, who is chairman of the

Group’s largest shareholder, Farmer Business Developments

plc, is not considered to be independent.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Key Roles and Responsibilities

Chairman

The role of the Chairman is set out in writing in the Corporate

Governance Framework. He is responsible, inter alia, for:

l setting the Board’s agendas and ensuring that they cover the

key strategic issues confronting the business;

l promoting a culture of openness and debate at Board

meetings and will make sure that the Directors apply

sufficient challenge to management proposals;

l facilitate the effective contribution of Non-Executive

Directors in particular and ensure constructive relations

between Executive and Non-Executive Directors are

maintained;

l ensuring that the Directors receive accurate, timely and

clear information;

l leading the Board appointment process in line with the

Board Recruitment & Diversity Policy; and

l ensure that there is effective communication with

shareholders.

Group Chief Executive

The role of the Group Chief Executive is set out in writing in the

Corporate Governance Framework. He is responsible, inter alia,

for:

l running the Group’s business and reporting regularly on the

progress and performance of the Group;

l proposing, developing and executing the Group’s strategy

and overall objectives in close consultation with the

Chairman and the Board; and

l implementing the decisions of the Board and its

Committees.

Senior Independent Director

The Senior Independent Director is responsible for:

l being available to shareholders if they have concerns which

they have not been able to resolve through the normal

channels of the Chairman, the Group Chief Executive or the

Group Chief Financial Officer, or for which such contact is

inappropriate;

l leading the annual appraisal of the performance of the Chair;

l acting as a sounding board for the Chairman; and

l serving as an intermediary for the other Non-Executive

Directors as required.

Company Secretary

The Company Secretary acts as Secretary to the Board and to its

Committees. In so doing, she:

l assists the Chairman in ensuring that the Directors have

access, in a timely fashion, to the papers and information

necessary to enable them to discharge their duties;

l ensuring good information flows within the Board and its

Committees and between Senior Management and non-

executive Directors;

l assists the Chairman by organising and delivering induction

and training programmes as required; and

l is responsible for ensuring that Board procedures are

followed and that the Board and Directors are fully briefed

on corporate governance matters.

Board Effectiveness and Performance

Evaluation

Board effectiveness is reviewed annually as part of the Board’s

performance evaluation process. The Chairman is responsible

for ensuring that each Director receives an induction on joining

the Board and that he or she receives any additional training he

or she requires. The induction itself is organised and delivered by

the Company Secretary and other Members of the Management

Team.

Board Evaluation

Every year the Board evaluates its performance and that of its

Committees. Directors are expected to take responsibility for

identifying their own training needs and to take steps to ensure

that they are adequately informed about the Group and about

their responsibilities as a Director. The Board is confident that

all of its members have the requisite knowledge and experience

and support from within the Group to perform their role as a

Director of the Group.

Towards the end of 2019, the Board had its evaluation process

externally facilitated by Independent Audit, an independent

consultancy which has no other connections with the Group.

FBD is committed to ensuring that it has a high-performing

Board, which is equipped to anticipate, meet and overcome

future challenges and to ensure alignment with the Group’s

long-term strategy. The Board welcomed the constructive and

enhancing recommendations from this external evaluation and

implemented the suggested actions throughout 2020 and into

2021.

Further details of the 2021 Board Effectiveness and

Performance Evaluation are set out in the Report of the

Nomination and Governance Committee on pages 66 to 68.

56 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Corporate Governance (continued)

Re-election of Directors

The Board has, since 2011, adopted the practice that all

Directors will submit themselves for re-election at each AGM

regardless of length of service or the provisions of the Company’s

Articles of Association.

Access to Advice

All members of the Board have access to the advice and the

services of the Company Secretary who is responsible for

ensuring that Board procedures are followed and that applicable

rules, regulations and other obligations are complied with.

In addition members of the Board may take independent

professional advice at the Company’s expense if deemed

necessary in the furtherance of their duties.

If a Director is unable for any reason to attend a Board or

Committee meeting, he or she will receive Board/Committee

papers in advance of the meeting and is given an opportunity to

communicate any views on or input into the business to come

before the Board/Committee to the Board/Committee

Chairman.

Each of the Committees has written terms of reference which

were approved by the Board and set out the Committees’

powers, responsibilities and obligations. The terms of reference

are reviewed at least annually by the Board. These are available

on the Group’s website www.fbdgroup.com.

The Company Secretary acts as secretary to the Committees.

Minutes of all of the Committees’ meetings are available to the

Board.

Each of these Committees has provided a report in the sections

following.

Attendance at Board and Board Committee Meetings during 2021

Board Audit

Nomination and

Governance Remuneration Risk

W Bogaerts 16/16 9/9 7/7 2/2 5/5

M Brennan 16/16 9/9 1/1

T Cullinan 15/16

S Cronin 15/16 7/7 2/2 5/5

L Herlihy 16/16 7/7 1/1 5/5

D O’Connor 16/16 5/8 1/1 2/2

J O’Dwyer 4/4

J O’Grady 16/16

T Ó Midheach 16/16

R Pike 16/16 5/5

J Sharp 4/4 1/1

P Walshe 14/16

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Report of the Audit Committee

Jean Sharp

Committee Chairperson

Membership during the year

Length of time

served on

committee

J Sharp

(Appointed 28

October 2021)

Committee Chairperson,

Independent Non-Executive

Director

0 years

4 months

M Brennan Independent Non-Executive

Director

5 years

4 months

W Bogaerts Independent Non-Executive

Director

5 years

10 months

D O’Connor

(retired on 28

October 2021)

Independent Non-Executive

Director

2 years

5 months

The Committee members have been selected to ensure that the

Committee has available to it the range of skills and experience

necessary to discharge its responsibilities.

Following new Board appointments during 2021, the

composition of the Committee was reviewed in October 2021.

Ms Jean Sharp was appointed as Member and Chairperson of the

Committee. Ms Sharp is a Fellow of Chartered Accountants

Ireland. Mr O’Connor retired as member of the Committee.

Mr Bogaerts has indicated his intention not to put himself

forward for re-election at the 2022 Annual General Meeting.

The Board is satisfied that all Members are considered to have

recent and relevant financial experience and qualifications. The

Committee as a whole has the competence relevant to the

General Insurance sector.

Objective of Committee

To assist the Board of the Group in fulfilling its oversight

responsibilities for such matters as financial reporting, the

system of internal control and management of financial risks,

the audit process and the Group’s process for monitoring

compliance with laws and regulations.

Key Responsibilities Delegated to the Committee

l reviewing the Group’s financial results announcements and

financial statements;

l overseeing the relationship with the external auditors

including reviewing and approving their terms of

engagement and fees;

l review and monitor the independence and objectivity of the

Statutory Auditor and the effectiveness of the audit process;

l reviewing the scope, resources, results and effectiveness of

the Group’s internal audit function; and

l performing detailed reviews of specific areas of financial

reporting as required by the Board or the Committee.

Meetings

The Committee met on nine occasions during 2021. Attendance

at the scheduled meetings held during 2021 is outlined on page

56. Meetings are attended by Committee members. The Chief

Financial Officer and the Head of Group Internal Audit are

regular attendees at meetings. The Statutory Auditor is also

invited to attend meetings on a regular basis. Additionally the

Head of Actuarial Function and the Chief Risk Officer are

invited to attend all scheduled meetings at the request of the

Committee. The Committee regularly meets separately with the

Statutory Auditor and with the Head of Group Internal Audit,

without members of management present.

The minutes of Committee meetings are circulated routinely to

the Board. The Committee chairperson also provides a verbal

report to the Board after each Committee meeting. The

Committee reports formally to the Board annually on the overall

work undertaken and the degree to which it discharged the

responsibilities delegated to it.

Activities of the Committee During 2021

The principal activities undertaken by the Committee during

2021 include:

l review of all aspects of the relationship with the external

auditors, including the statutory audit plan, audit findings

and recommendations and consideration of the

independence of the external auditors and the arrangement

in place to safeguard this, including partner rotation,

prohibition on share ownership and levels of fees payable to

the statutory auditor for non-audit assignments;

consideration of issues of financial reporting, particularly

those involving substantial judgement and the risk of

material misstatement including claims estimates and

provisions;

l annual performance review of the External Auditor;

l review drafts of the Annual Report and the Half Yearly Report

prior to their consideration by the Board;

l consideration and review of the Key Judgements and

Uncertainties and Going Concern Assessment;

l review of reserving adequacy including the financial impact

of Business Interruption claims;

l review of the recognition of the Reinsurance Asset with the

Best Estimate of Business Interruption Claims;

58 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Corporate Governance (continued)

Report of the Audit Committee (continued)

l review of IAASA Financial Reporting Decisions;

l appraisal of the Internal Audit function, plan, work, reports

and issues arising and monitoring the scope and

effectiveness of the function;

l assessment of financial and other risks facing the Group and

of the operation of internal controls;

l review of certain policies including the Internal Control

Policy, Anti-Fraud Policy and Speak Up Policy;

l assessment of compliance with laws, regulations, codes and

financial reporting requirements; and

l reporting to the Board on its activities and confirming the

degree to which the Committee’s delegated responsibilities

had been discharged through verbal reports to the Board

after each meeting and a formal written report presented

annually.

In 2021 the Committee considered the independence of the

Auditors and acknowledged the independence and quality

control safeguards operated within PricewaterhouseCoopers. In

2021 the Committee oversaw the onboarding of a new Audit

Partner as the previous Audit Partner rotated off having served

for a five year period. This process has been seamless with no

interruption in audit services.

Additionally, in 2021 the Committee reviewed and approved a

Non-Audit Services Policy which is in place to mitigate any risks

threatening, or appearing to threaten, the external audit firm’s

independence and objectivity arising through the provision of

non-audit services. No non-audit services were provided by

PricewaterhouseCoopers other than the audit of those elements

of the Solvency and Financial Condition Report that

PricewaterhouseCoopers are required to audit and the provision

of certificates of premium amounts to the Motor Insurers

Bureau of Ireland.

As part of its responsibilities the Committee reviews the External

Audit Plan, the audit approach and objectives and Audit Findings

and has concluded that the external audit process has remained

effective.

PricewaterhouseCoopers were reappointed as Auditors of the

Group in respect of the financial year ended 31 December 2021.

The audit was last put out to tender in 2015 and

PricewaterhouseCoopers was appointed as Auditors from 2016.

PricewaterhouseCoopers have been auditors to the Group for six

years.

The significant issues, critical judgements and estimates used in

the formulation of the financial statements are set out in note 3.

All are considered by the Committee, with particular focus on

the following:

Key Issue Committee conclusion

Valuation of

claims

provisions

The Committee reviewed the best estimate,

claims handling provision and margin for

uncertainty, as well as the actuarial

methodologies and key assumptions. The

Committee separately reviewed the Business

Interruption claims provisions given the

complexity and judgements involved in the

calculations. The Committee was satisfied with

the measurement and valuation of all claims

provisions.

Valuation of

reinsurance

asset

The Committee reviewed the assumptions in

respect of the estimated recoveries under the

Group reinsurance programme for the Covid-19

Business Interruption claims. Agreement was

reached with reinsurers on the application of

contract cover for Business Interruption claims

for the expected impacted layers of the

catastrophe programme, which reduces

uncertainty around reinsurance recoveries.

Impairment

testing

The Committee reviewed management’s

documentation of the impairment assessment of

the Group. The Committee was satisfied that no

impairment of the assets was required.

Going concern The Committee reviewed management’s

documentation of the going concern assessment.

The Committee was satisfied that there were 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.

Fair, Balanced and Understandable

The Committee formally advises the Board on whether the

Annual Report and financial statements, taken as a whole, are

fair, balanced and understandable, in accordance with Provision

27 of the UK Corporate Governance Code 2018. The Committee

must ensure that the Annual Report and financial statements

also provide the information necessary for Shareholders to

assess the performance of the Group, along with its business

model and strategy and the Committee is satisfied that the

above requirements have been met.

Evaluation

The Committee has reviewed the activities which it performed

and its overall effectiveness and has concluded that it has

operated effectively in providing the Board with the assurances

needed to discharge its responsibilities.

Jean Sharp

On behalf of the Audit Committee

3 March 2022

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Report of the Risk Committee

Mary Brennan

Committee Chairperson

Membership during the year

Length of time

served on

committee

M Brennan

(Appointed 28

October 2021)

Committee Chairperson,

Independent Non-Executive

Director

0 years

4 months

W Bogaerts Independent Non-Executive

Director

5 years

S Cronin Independent Non-Executive

Director

2 years

L Herlihy Independent Non-Executive

Director and Board Chairman

5 years

R Pike Senior Independent Non-

Executive Director

2 years

Following new Board appointments during 2021, the

composition of the Committee was reviewed in October 2021.

Ms Brennan was appointed as Member and Chairperson of the

Committee. Mr Bogaerts remains a member of the Committee

and has indicated his intention not to put himself forward for

re-election at the 2022 Annual General Meeting.

The Committee members have been selected to ensure that the

Committee has available to it the range of skills and experience

necessary to discharge its responsibilities.

Objective of Committee

The Board Risk Committee is the forum for risk governance

within FBD. It is responsible for providing oversight and advice to

the Board in relation to current and potential future risk

exposures of the Group and future risk strategy. This advice

includes recommending a risk management framework

incorporating strategies, policies, risk appetites and risk

indicators to the Board for approval. The Risk Committee

oversees the Risk function, which is managed on a daily basis

by the Chief Risk Officer.

Key Responsibilities Delegated to the Committee

l promote a risk awareness culture within the Group;

l ensure that the material risks and emerging risks facing

the Group have been identified and that appropriate

arrangements are in place to manage and mitigate those

risks effectively;

l advise the Board on the effectiveness of strategies and

policies with respect to maintaining, on an ongoing basis,

the amounts, types and distribution of capital adequate to

cover the risks of the Group;

l review and challenge risk information received by the Chief

Risk Officer from the business departments to ensure that

the Group is not exceeding the risk limits set by the Board;

l present a profile of the Group’s key risks, risk management

framework, risk appetite and tolerance and risk policies at

least annually together with a summary of the Committee’s

business to the Board.

Meetings

The Committee met on five occasions during 2021. Meetings are

attended by Committee members. The Chief Risk Officer is an

attendee at all Committee meetings. The Chief Executive

Officer, the Chief Financial Officer, the Chief Underwriting

Officer, the Head of Compliance, the Risk Actuary and the Head

of Internal Audit are invited to attend all scheduled meetings of

the Committee.

The minutes of Committee meetings are circulated routinely to

the Board. The Committee chairman also provides a verbal

report to the Board after each Committee meeting. The

Committee reports formally to the Board annually on the overall

work undertaken and the degree to which it discharged the

responsibilities delegated to it.

Activities of the Committee During 2021

The principal activities undertaken by the Committee during

2021 include:

l assisted the Board in the review and update of its risk

policies, including frameworks, risk appetite, risk indicators

and risk tolerance;

l appraised the Risk function plan, to ensure that the plan is

sufficient and appropriate to effectively identify, monitor,

manage and report, on a continuous basis, the risks to which

the Group could be exposed; ensured that the material risks

facing the Group have been identified and appropriately

managed and mitigated;

l reviewed the emerging risks facing the Group;

l reviewed the embeddedness of Risk Culture in the Group;

l reviewed the risks and uncertainties arising from Covid-19

and Business Interruption related issues;

l reviewed and challenged risk information reported to the

Committee to ensure that the Group is operating within the

risk limits set by the Board;

l reviewed the quarterly Solvency Capital Ratio;

60 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Corporate Governance (continued)

Report of the Risk Committee (continued)

l considered the results of risk policy stress tests and peer

reviews of the Actuarial Best Estimate that were performed

by the Risk function;

l assessed the results of Control Design Reviews, Blank Page

Risk Reviews and Emerging Risks Reviews undertaken by the

Risk function; and

l reviewed the 2021 ORSA report prior to its consideration by

the Board.

Evaluation

The Committee has reviewed the activities which it performed

and its overall effectiveness and has concluded that it has

operated effectively in providing the Board with the assurances

needed to discharge its responsibilities.

Mary Brennan

On behalf of the Risk Committee

3 March 2022

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Report of the Nomination and

Governance Committee

Liam Herlihy

Committee Chairman

Membership during the year

Length of time

served on

committee

L Herlihy Committee Chairman,

Non-Executive Director, Board

Chairman

5 years

7 months

W Bogaerts Independent Non-Executive

Director

2 years

9 months

S Cronin Independent Non-Executive

Director

2 years

D O’Connor

(Appointed as

Member on 28

October 2021)

Independent Non-Executive

Director

0 years

4 months

Following new Board appointments during 2021, the

composition of the Committee was reviewed in October 2021.

Mr. O’Connor was appointed as a Member of the Committee.

Mr Bogaerts has indicated his intention not to put himself

forward for re-election at the 2022 Annual General Meeting.

Objective of Committee

To ensure that the Board and its Committees are made up of

individuals with the necessary skills, knowledge and experience

to ensure that the Board is effective in discharging its

responsibilities.

Key Responsibilities Delegated to the Committee

l reviewing the structure, size and composition of the Board

and making recommendations to the Board for any

appointments or other changes;

l recommending changes to the Board’s Committees;

l advising the Board in relation to succession planning both for

the Board and the senior executives in the Group;

l monitor the Group’s compliance with corporate governance

best practice with applicable legal, regulatory and listing

requirements and to recommend to the Board such changes

as deemed appropriate; and

l overseeing, in conjunction with the Board Chairman, the

conduct of the annual evaluation of the Board, Board

Committees, Chairman and individual Director

Performance.

Meetings

The Committee met seven times during 2021. The Group Chief

Executive may attend meetings of the Committee but only by

invitation and not at a time when their succession arrangements

are discussed.

The minutes of Committee meetings are circulated routinely to

the Board. The Committee chairman also provides a verbal

report to the Board after each Committee meeting. The

Committee reports formally to the Board annually on the overall

work undertaken and the degree to which it discharged the

responsibilities delegated to it.

Activities of the Committee During 2021

l led the search for two new Independent Non-Executive

Directors;

l led the search for a new Group Company Secretary;

l reviewed the Board Skills matrix and the independence of

the Non-Executive Directors;

l reviewed engagement with employees;

l reviewed the Board evaluation process;

l reviewed the Corporate Governance report;

l reviewed the talent management and succession plan for the

Group and its principal subsidiary, FBD Insurance plc.

l reviewed the Diversity and Inclusion Policy;

l reviewed compliance with governance best practice; and

l reviewed the Fitness and Probity Policy including a number

of related policies.

Further details of their activities are laid out in the Nomination

and Governance report on pages 66 to 68.

Evaluation

The Committee has reviewed the activities which it performed

and its overall effectiveness and has concluded that it has

operated effectively in providing the Board with the assurances

needed to discharge its responsibilities.

Liam Herlihy

On behalf of the Nomination and Governance Committee

3 March 2022

62 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report of the Remuneration

Committee

David O’Connor

Committee Chairman

Membership during year

Length of time

served on

committee

D O’Connor Committee Chairman,

Independent Non-Executive

Director

4 years and

9 months

W Bogaerts Independent Non-Executive

Director

5 years and

9 months

S Cronin Independent Non-Executive

Director

2 years

L Herlihy

(appointed 28

October 2021)

Non-Executive Director,

Board Chairman

0 years

4 months

Following new Board appointments during 2021, the

composition of the Committee was reviewed in October 2021.

Mr Liam Herlihy was appointed as a Member of the Committee

and in accordance with Provision of the UK Corporate

Governance Code 2018 he was independent on appointment

as Chair of FBD Holdings plc. Mr Bogaerts has indicated his

intention not to put himself forward for re-election at the 2022

Annual General Meeting.

Objective of Committee

To assist the Board of the Group in ensuring that the level of

remuneration in the Group and the split between fixed and

variable remuneration are sufficient to attract, retain and

motivate Executive Directors and Senior Management of the

quality required to run the Group in a manner which is fair and

in line with market norms, while not exposing the Group to

unnecessary levels of risk.

Key Responsibilities Delegated to the Committee

l ensuring that the Group’s overall reward strategy is

consistent with achievement of the Group’s strategic

objectives;

l determining the broad policy for the remuneration of the

Group’s Executive Directors, Company Secretary and

Executive Management;

l determining the total remuneration packages for the

foregoing individuals, including salaries, variable

remuneration, pension and other benefit provision and any

compensation on termination of office;

l ensure that remuneration schemes promote long-term

shareholdings by Executive Directors that support alignment

with long-term shareholder interests;

l review the on-going appropriateness and relevance of the

Remuneration Policy;

l ensuring that the Group operates to recognised good

governance standards in relation to remuneration;

l making awards of shares under the Group’s approved share

scheme; and

l preparation of the detailed Report on Directors’

Remuneration.

Meetings

The Committee met two times during 2021. The Group Chief

Executive may attend meetings of the Committee but only by

invitation and not at a time when individual remuneration

arrangements are discussed.

The minutes of Committee meetings are circulated routinely to

the Board. The Committee chairman also provides a verbal

report to the Board after each Committee meeting. The

Committee reports formally to the Board annually on the overall

work undertaken and the degree to which it discharged the

responsibilities delegated to it.

Activities of the Committee During 2021

The principal activities undertaken by the Committee during

2021 include:

l annual review of remuneration arrangements for Executive

Directors and other senior executives;

l review and approval of the Report on Directors’

Remuneration for 2021;

l review culture and how it relates to remuneration;

l making of a conditional award of shares under the FBD

Performance Share Plan and setting the conditions

attached;

l review of Non-Executive Director fees in line with the

approved Remuneration Policy;

l review of Gender Pay Gap Analysis; and

l keeping under review upcoming legislation impacting the

Group.

Full details of Directors’ Remuneration are set in the Report on

Directors Remuneration on pages 69 to 84.

Evaluation

The Committee has reviewed the activities which it performed

and its overall effectiveness and has concluded that it has

operated effectively in providing the Board with the assurances

needed to discharge its responsibilities.

David O’Connor

On behalf of the Remuneration Committee

3 March 2022

Corporate Governance (continued)

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Engagement

FBD has identified the following as its key stakeholders;

l Shareholders

l Employees

l Policyholders/Customers

l Regulators

l Wider Society

The Board is committed to ensuring that excellent lines of

communication exist and are fostered between the Group and

its stakeholders. Initiatives undertaken are outlined in the Social

section of this Annual Report on pages 36 to 43.

A planned programme of investor relations activities is

undertaken throughout the year which includes:

l briefing meetings with all major shareholders after the full

year and half yearly results announcements;

l regular meetings between institutional investors and

analysts with the Group Chief Executive, Chief Financial

Officer and/or Head of Investor Relations to discuss business

performance and strategy and to address any issues of

concern; and

l responding to letters and queries received directly from

shareholders and from proxy adviser firms.

Should a significant proportion of votes be cast against a

resolution at any general meeting, the Board will endeavour to

identify the shareholders concerned and will initiate contact

with them with the view to understanding the reasons for the

adverse vote. In 2021 no resolution had 20% or more votes cast

against it.

The Board receives reporting on shareholder engagement which

includes details of meetings held, feedback received and issues

either of interest or of concern raised. Any issues arising are

addressed at Board meetings.

FBD has numerous channels through which it can engage with

customers. FBD has 34 branches in its network making face to

face contact easily accessible for customers. Our branch

network was closed at the beginning of 2021 in line with

Government guidelines. FBD maintained service to our

customers during the closure of our branches and staff

continued to be available while working remotely to discuss

customer requirements.

Through regular meetings with Board members and Senior

Management, the Group has an engaging relationship with the

Central Bank of Ireland, its regulator. Through attendance at

Oireachtas meetings on insurance related matters the Group

engages with Government bodies.

Director Appointed for Engagement with the

Workforce

Sylvia Cronin is the appointed Director for Workforce

Engagement for FBD. Her key role ensures the views and

concerns of the workforce are heard and understood, shared

with the Board and taken into account in the decision making of

the Board.

Throughout 2021 Ms Cronin met with numerous employees

across a number of business areas including Branch

Management and Staff in our Call Centre. ESG emerged

as an area staff were keen to promote. The importance of

sustainability is recognised by the Board and is an area of focus

by the business. The impact of Covid-19 and particularly the well

being of employees remained an area of focus for Sylvia.

Additionally Working from Home and the longer term impacts of

Covid-19 were an area of interest to staff. Concerns were relayed

to the Board who supported a number of initiatives to enhance

and improve the home working environment of employees. The

Board further supported a return to the office for those

employees who wished to do so in line with Government

requirements and restrictions.

Throughout 2021 Sylvia provided regular updates to the Board in

her role as Director Appointed for Engagement with the

Workforce.

To celebrate International Women’s Day in March 2021, Sylvia

took part in an interview outlining her background and career to

date. This was broadcast to all staff and gave an opportunity for

staff to ask questions and get to know Sylvia better. This helped

in Sylvia’s visibility to staff in her role particularly considering the

constraints imposed by Covid-19 over the previous two years.

FBD and Wider Environment

In addition, FBD spokespeople on Insurance, Farm Safety and

the Claims Environment participate in and contribute to societal

debate on topical issues.

Annual General Meeting

The Company’s AGM is held each year in Dublin. The 2022

meeting will be held on 12 May 2022.

Who attends?

l Directors;

l Senior Group executives;

l Shareholders;

l Company Advisers; and

l Members of the media are also invited and permitted to

attend.

64 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Corporate Governance (continued)

What business takes place at the meeting?

l the Group Chief Executive makes a presentation on the

results and performance to the meeting prior to the

Chairman dealing with the formal business of the meeting

itself; and

l all shareholders present, either in person or by proxy can

question the Chairman, the Committee Chairpersons and

the rest of the Board during the meeting and afterwards.

All formal resolutions are dealt with on a show of hands. Once

the vote is declared by the Chairman, the votes lodged with the

Company in advance of the meeting are displayed prominently

in the venue for those present to see. Immediately after the

meeting is concluded the results are published on the Group’s

website www.fbdgroup.com and also via the Euronext Dublin

and London Stock Exchange.

The notice of the AGM is issued to shareholders at least 20

working days in advance of the meeting. Details will be available

in due course in respect to the holding of the AGM. The 2021

AGM was held under restricted circumstances considering

Government guidelines at the time.

Internal Control

The Board has overall responsibility for the Group’s system of

internal control and for reviewing its effectiveness. The system

which operates in FBD is designed to manage rather than

eliminate the risk of failure to achieve business objectives and

can provide only reasonable and not absolute assurance against

material misstatement or loss.

In accordance with the revised Financial Reporting Council

(FRC) guidance for directors on internal control published in

September 2014, “Guidance on Risk Management, Internal

Control and Related Financial and Business Reporting”, the

Board confirms that there is an ongoing process for identifying,

evaluating and managing any significant risks faced by the

Group, that it has been in place for the year under review and up

to the date of approval of the financial statements and that this

process is regularly reviewed by the Board.

The key risk management and internal control procedures which

cover all material controls include:

l skilled and experienced management and staff in line with fit

and proper requirements;

l roles and responsibilities including reporting lines clearly

defined with performance linked to Group objectives;

l an organisation structure with clearly defined lines of

responsibility and authority;

l the maintenance of proper accounting records;

l a comprehensive system of financial control incorporating

budgeting, periodic financial reporting and variance analysis;

l a Risk Committee of the Board and a risk management

framework comprising a risk function headed by a Chief Risk

Officer, a clearly stated risk appetite and risk strategy

supported by approved risk management policies and

processes;

l an Executive Risk Committee comprising Senior

Management whose main role includes reviewing and

challenging key risk information and to assist the Board Risk

Committee, described earlier, in the discharge of its duties

between meetings;

l the risk strategy, framework and appetite are articulated in

a suite of policies covering all risk types and supported by

detailed procedural documents. Each of these documents is

subject to annual review and approval by the Board;

l performance of an ORSA linking to risk management,

strategy and capital management;

l a Group Internal Audit function;

l a Group Compliance function;

l a Data Protection Officer;

l an Audit Committee whose formal terms of reference

include responsibility for assessing the significant risks facing

the Group in the achievement of its objectives and the

controls in place to mitigate those risks;

l a disaster recovery framework is in place and is regularly

tested;

l a business continuity framework is in place and is regularly

tested;

l a number of key Group policies in place include a Corporate

Governance Framework, Fitness and Probity Policy,

Financial Reporting Policy, Speak Up Policy and Code of

Conduct.

The Annual Budget, Half-Yearly Report and Annual Report are

reviewed and approved by the Board. Financial results with

comparisons against budget are reported to Executive Directors

on a monthly basis and are reported to the Board quarterly.

The risk management, internal control, reporting and

forecasting processes are important to the Board in the exercise

of its Governance and Oversight role. The Board constantly

strives to further improve their quality.

The Group has established a Speak Up Policy for employees, the

purpose of which is to reassure employees that it is safe and

appropriate to raise any concern that they may have about

malpractice and to enable them to raise such concerns safely

and properly. This policy is reviewed annually and circulated

thereafter to all Group employees.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Internal Controls over Financial Reporting

The main features of the internal control framework which

supports the preparation of the consolidated financial

statements are as follows:

l A comprehensive set of accounting policies are in place

relating to the preparation of the interim and annual

financial statements in line with IFRS;

l A number of policies and controls are in place to support the

delivery of the annual report and half yearly report including

a Financial Reporting Policy, Data Management Framework

and Internal Control Policy;

l An appropriately qualified and skilled Finance team is in

place operating under the supervision of experienced

management who are compliant with fit and proper

requirements;

l Appropriate financial and accounting software is in place;

l A control process is followed as part of the interim and

annual financial statements preparation, involving the

appropriate level of management review of the significant

account line items, and where judgments and estimates are

made, they are independently reviewed to ensure that they

are reasonable and appropriate. This ensures that the

consolidated financial information required for the interim

and annual financial statements is presented fairly and

disclosed appropriately;

l Preparation and review of key account reconciliations;

l The Audit Committee attend an annual workshop with

Finance personnel to consider and review the financial

statements in detail;

l The Audit Committee hold a number of meetings in the lead

up to the annual financial statements and the half year

financial statements to have early sight of key judgements

and uncertainties;

l Summary and detailed papers are prepared for review and

approval by the Audit Committee covering all significant

judgemental and technical accounting issues together with

any significant presentation and disclosure matters;

l The Audit Committee has a number of responsibilities

delegated to it under its Terms of Reference. On an annual

basis an assessment is carried out of the Committee’s

compliance with its Terms of Reference.

The Board confirms that it has reviewed the effectiveness of the

Group’s Systems of Internal Control for the year ended 31

December 2021. The 2021 internal control assessment provides

reasonable assurance that the Group’s controls are effective,

and that where control weaknesses are identified, they are

subject to management oversight and action plans.

66 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Nomination and Governance Report

Dear Shareholder,

On behalf of the Nomination and Governance Committee, I am

pleased to set out a summary of activities during 2021.

Board Changes During 2021

Our Chief Executive Officer (CEO) Tomás Ó Midheach joined the

Board on 4 January 2021. Tomás has brought his considerable

knowledge of the Irish financial services landscape to FBD and

has been instrumental in reviewing and setting FBD’s strategic

direction.

During 2021 the Committee reviewed the Board skills and

identified further skill sets that would benefit the existing

knowledge and experience of the Board. An independent

external executive search specialist firm, Odgers Berndtson,

was engaged to assist it in the search for new independent

non-executive directors in line with the Board requirements.

Following a thorough search process against specific and defined

criteria, Ms Jean Sharp and Mr John O’Dwyer joined our Board in

August 2021. The Board was delighted to welcome both

Ms Sharp and Mr O’ Dwyer who have extensive experience in the

life and general insurance industries. Their knowledge and skills

will be of great benefit to our Board skill set and we look forward

to working with them into the future. The biography of Ms Sharp

and Mr Dwyer can be found on pages 46 to 48.

Mr Bogaerts has indicated his intention not to go forward for

re-election at the 2022 AGM. Mr Bogaerts has been a member

of the Board since 2016 and has served on the Board of FBD

Insurance plc since 2013. We acknowledge the strong

contribution Mr Bogaerts has made to the Board and planning

for his succession will be carried out in line with the Board

Succession Plan.

The Committee led the search for a new Group Company

Secretary. Odgers Berndtson had assisted in the recruitment

process against defined criteria. The Board was pleased to

welcome Ms Nadine Conlon to FBD. The Board would like to

thank Mr Derek Hall for his valued contribution in his role as

Company Secretary. Derek is leaving this position to focus on his

role as Chief Risk Officer.

Board Induction, Training and Development

FBD recognises the importance and benefit of supporting the

continued development of its employees. The Board is highly

supportive of this and is committed to its own ongoing

professional development. A detailed and comprehensive

induction training programme is in place for newly appointed

directors and this training was provided to Ms Sharp and

Mr O’Dwyer on their appointment to the Board.

During 2021 the Board reviewed its programme of training

which has been developed having given consideration to the

business needs and requirements, current and emerging risks

and forthcoming changes in law and regulation. Areas of training

include Market Abuse Regulation, Changes in Accounting

Standards, Risk including Cyber Risk and director fiduciary

duties. Additionally Directors may request training as they may

deem appropriate.

Board Succession

In 2021 the Committee and the Board reviewed the Board

Succession Plan. The Committee, on behalf of the Board,

regularly consider the Board composition and tenure, its

diversity and that of its Committees along with the Board skill

set. This assists the Committee in reviewing succession from a

short, medium and long term perspective and in identifying any

skills and diversity requirements that would be of benefit to the

Board. Board succession is supported by the Board Recruitment

and Diversity Policy.

Diversity and Inclusion at FBD

The Board believe that diversity and inclusion are key to creating

an environment that fosters innovation, employee engagement,

creativity and the collaboration required to support and drive the

Board agreed strategy 2022 to 2026.

On behalf of the Board, the Committee regularly receive updates

on diversity and inclusion including the work of our Diversity and

Inclusion Committee and Phase one of our three year Diversity

and Inclusion Strategy. Board members have participated in

Inclusive Leadership and Unconscious Bias Training. Executive

Management have also undertaken this training.

Board Diversity is supported by the Board Recruitment and

Diversity Policy and reflects our continued commitment to

promote a diverse and inclusive culture, valuing diversity of

thought, skills, experience, knowledge and expertise including

of educational and professional backgrounds, alongside diversity

criteria such as gender, ethnicity and age. As set out in the Policy

all executive appointments and succession plans are made on

merit and objective criteria, in the context of the skills and

experience that are needed for the Board to be effective and to

promote ‘diverse thinking’.

The Board has an objective to ensure the appropriate balance is

achieved in the composition of the Board.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Board Experience and Skills

The skills and experience identified by the Board as critical to its

composition and that of its Committees at this time included

expertise in insurance or other financial services, actuarial,

general and farming/agri industry experience, corporate finance,

accounting and auditing, corporate governance, regulatory and

compliance, executive reward, risk, information technology and

distribution/commercial.

The percentage of the Board having the requisite skills and

experience were as follows:

80%

20%

67%

33%

Board Gender

Board Skills

Executive Management Team Gender

63%

37%

Direct Reports Gender

Female

Male

Female

Male

Female

Male

0% 20% 40% 60% 80% 100%

Distribution/

Commercial

Information

Technology

Risk

Executive Reward

Regulatory and

Compliance

Corporate

Governance

Accounting

and Auditing

Corporate Finance

Agri/Farming

General Industry

Actuarial

Insurance or

Financial Services

The Board values the major contribution which a mix of

backgrounds, skills and experience brings to the Group and sees

merit in increasing diversity at Board level in achieving the

Group’s strategic objectives. Differences in background, skills,

experience and other qualities, including gender, are always

considered and formally discussed at the Nomination and

Governance Committee in determining the optimal composition

of the Board, the principal aim being to achieve an appropriate

balance between them.

While all appointments to the Board will have due regard to

diversity, they will be made on merit, ensuring that the skills,

experience and traits noted by the Board as being of particular

relevance at any time are present on the Board and included in

any planned recruitment.

The Board continues to comprise of a mix in backgrounds,

experience and gender in line with the policy. As at the date of

this report, the Board was comprised as follows:

Tenure of Director

0 – 2 years 50%

3 – 6 years 42%

7 – 9 years —%

Over 9 years 8%

Gender

Male 75%

Female 25%

Executive/Non-Executive

Non-executive 83%

Executive 17%

Gender Balance

The gender balance of those in the Senior Management and their

direct reports.

Executive Management Team

80%

20%

67%

33%

Board Gender

Board Skills

Executive Management Team Gender

63%

37%

Direct Reports Gender

Female

Male

Female

Male

Female

Male

0% 20% 40% 60% 80% 100%

Distribution/

Commercial

Information

Technology

Risk

Executive Reward

Regulatory and

Compliance

Corporate

Governance

Accounting

and Auditing

Corporate Finance

Agri/Farming

General Industry

Actuarial

Insurance or

Financial Services

Direct Reports

80%

20%

67%

33%

Board Gender

Board Skills

Executive Management Team Gender

63%

37%

Direct Reports Gender

Female

Male

Female

Male

Female

Male

0% 20% 40% 60% 80% 100%

Distribution/

Commercial

Information

Technology

Risk

Executive Reward

Regulatory and

Compliance

Corporate

Governance

Accounting

and Auditing

Corporate Finance

Agri/Farming

General Industry

Actuarial

Insurance or

Financial Services

FBD are proud members and supporters of the ‘30% Club’.

This International organisation was established with a goal of

achieving a better gender balance on boards and in Executive

leadership. 25 per cent of the Board of Directors of FBD Holdings

plc is female. 33 per cent of executive level and 43 per cent of

manager/specialists level in FBD are female. 60 per cent of FBD’s

overall employees are female.

68 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Nomination and Governance Report (continued)

Board Evaluation

Every year the Board evaluates its performance and that of its

Committees. The evaluation of the Board for 2021 involved the

following:

l Completion by each Director of a detailed questionnaire

covering key aspects of Board effectiveness including

composition of Board, meetings and processes, Board

performance and reporting and performance of Board

Committees.

l Through the completion of a questionnaire each Director

evaluated their performance and this forms part of the

review of their individual performance. Further areas of

discussion include Board performance and effectiveness and

feedback on the evaluation process.

l The Chairman met individually with each Director to discuss

their performance and feedback from the evaluation.

l The results of the evaluation and feedback are collated and

reported to the Board and a plan is developed in relation to

suggested areas for improvement.

The Senior Independent Director is responsible for leading the

evaluation of the performance of the Chairman and this was

carried out through a meeting with the Directors in the absence

of the Chairman. Feedback is provided to the Chairman through

the Senior Independent Director.

Liam Herlihy

On behalf of the Nomination and Governance Committee

3 March 2022

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Report on Directors’ Remuneration

Introductory Letter from the Remuneration Committee Chair

Dear Shareholder,

On behalf of the Remuneration Committee and the Board, I am pleased to present the Directors Remuneration Committee Report for

the year ended 31 December 2021.

The Directors Remuneration Committee report sets out the operation of the Directors Remuneration policy in 2021. Our current

Remuneration Policy runs from 2020 to 2023 inclusive and was approved at our 2021 AGM. The Remuneration Committee ensures

that as a Group, we comply with all relevant remuneration and legislative requirements.

I would like to take this opportunity to thank and recognise the exceptional contribution by all employees across the organisation in

continuing to respond to unprecedented challenges of the Covid-19 pandemic across our business.

FBD financial and business performance was strong in 2021 not withstanding the challenges faced. This is thanks to all of our people

and the strength and resilience of our business model.

Paying for Performance

The Committee ensures alignment with the long term interests of the Group’s key stakeholders by aligning remuneration metrics with

the Group’s business model and strategic objectives and by ensuring sufficient stretch in the performance targets.

External Advice

Willis Towers Watson (WTW) continued to provide advice in respect of FBD’s Remuneration Policy in 2021 and total fees paid were

€14,312.

Shareholder Dialogue and Support

Section 1110N of Companies Act 2014 (EU Shareholder Rights Directive), requires a vote on the Report on Directors’ Remuneration at

the AGM on an advisory basis. At the 2021 AGM, this report received 99.5% support from shareholders.

The Committee requests shareholders to consider and approve the annual remuneration report set out on the pages following at the

2022 AGM.

David O’Connor

Chairperson of the Remuneration Committee

3 March 2022

70 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Role of Remuneration Committee

Responsibility for determining the levels of remuneration of the Executive Directors has been delegated by the Board to the

Remuneration Committee whose membership is set out in the Corporate Governance Report.

In framing remuneration strategy, frameworks and policies, the Committee gives full consideration to the principles and provisions of

the Corporate Governance Requirements for Insurance Undertakings 2015 and UK Corporate Governance Code 2018 as well as the

update to the EU Shareholder Rights Directive in 2020. It also takes into account the long term interests of shareholders, investors

and other stakeholders of the Group.

The duties of the Remuneration Committee are to determine Directors Remuneration Policy and practices by reviewing performance

structures, performance metrics, target setting and application of discretion.

The Remuneration Committee also reviews overall workforce remuneration and related policies and alignment of incentives and

rewards with culture and takes these factors into account when setting the policy for Executive Director remuneration.

The Committee considers and reviews the Remuneration Policy and are in agreement that it is operating as intended in respect of

Group performance quantum.

In determining outcomes under the bonus and the long term incentive plan (LTIP), the Remuneration Committee considers

performance achieved during the year and satisfies themselves that the incentive outcomes were appropriately aligned with the

extent to which the Group met its strategic goals and the shareholder experience.

Remuneration Policy

The following section sets out the Remuneration Policy for Executive and Non-Executive Directors, which was approved on an advisory

basis at 2021 AGM. It is intended that the below Remuneration Policy will apply for a four year period or until an amended

Remuneration Policy is put to shareholders for approval in line with the European Union (Shareholders Rights) Regulations 2020.

Remuneration arrangements are determined throughout the Group based on the same principle – reward should be sufficient in order

to attract, retain and motivate high performing individuals who are critical to the future development of the Group. The fair

distribution of our Group’s profits is an integral part of our corporate culture as we wish to reward our employees’ contribution to the

success of the Group.

The performance measures ensure everyone is focussed on delivering the same business priorities and that employees share in the

success if the business strategy is delivered.

It is the policy of the Group to provide all members of executive management, middle management and employees of the Group with

appropriate remuneration and incentives that reward performance. The aim is to ensure reward aligns to Group objectives in terms of

profitability built on good customer outcomes together with balanced and responsible assumption of risk. This is done by ensuring

that the principles of sound and prudent risk management are fully reflected and that excessive risk taking is neither encouraged nor

rewarded. The appropriateness is assessed with reference to internal and external sources.

The Committee has aimed to build simplicity and transparency into the design and delivery of our Remuneration Policy which was

revised and updated in 2020, to ensure it was in line with any recent updates in legislation. The remuneration structure is simple to

understand for both participants and shareholders and is aligned to the strategic priorities of the business. We aim for our disclosures

to clearly explain the design of our arrangements and the way that they have been operated so that they can be fully understood by all

stakeholders.

When determining Executive Director remuneration policy and practices, all of the following are addressed:

l Clarity – remuneration arrangements should be transparent and promote effective engagement with shareholders and the

workforce;

l Simplicity – remuneration structures should avoid complexity and their rationale and operation should be easy to understand;

l Risk – remuneration arrangements should ensure reputational and other risks from excessive rewards, and behavioural risks that

can arise from target-based incentive plans, are identified and mitigated;

Report on Directors’ Remuneration (continued)

Strategic Report Environmental, Social & Governance Financial Statements Other Information

l Predictability – the range of possible values of rewards to individual Directors and any other limits or discretions should be

identified and explained at the time of approving the policy;

l Proportionality - a significant part of an Executive’s reward is linked to performance with a clear line of sight between business

performance and the delivery of shareholder value;

l Alignment to culture - the incentive arrangements and the performance measures used are strongly aligned to those that the

Board considers when determining the success of the implementation of the Company’s purpose, values and strategy.

The Committee has the discretion to override formulaic outcomes and enable recovery and withholding of bonus where appropriate.

The Committee will continue to monitor corporate governance developments and evolving best practice and take these into account

in the Policy and its implementation.

The Policy includes a number of points in its design, the aim of which is to mitigate potential risk:

l defined limits on the maximum opportunity levels under incentive plans;

l provisions to allow malus and clawback to be applied by the Remuneration Committee where appropriate;

l performance targets calibrated at appropriately stretching but sustainable levels in line with our business strategy so that

executives are incentivised to deliver performance but not at the expense of going beyond the Group’s risk appetite;

l shareholding requirements ensures alignment of interests between Executive Directors and shareholders and encourages

sustainable performance;

l 50% of any Executive Director bonus will be deferred into FBD shares for a period of three years. This practice will allow the

Committee to have flexibility to apply clawback if circumstances warranted; and

l persons subject to the remuneration policy shall commit to not using any personal hedging strategies or remuneration and

liability-related insurance which would undermine the risk alignment effects embedded in their remuneration arrangement.

We aim for our disclosure to be clear to allow shareholders to understand the range of potential values which may be earned under the

remuneration arrangements. All incentive arrangements have defined and disclosed limits on pay out/award levels. Over the past year

we have received specific feedback from investors in relation to the performance metrics used for Bonus and the Committee took this

into account when applying the bonus metrics for 2022.

A significant proportion of Executive Director remuneration arrangements is share-based and we also require significant holding of

shares which ensures that remuneration outcomes are closely aligned to shareholder returns for example, the Chief Executive Officer

is required to build and maintain a shareholding equivalent to two times annual salary.

It is also the policy of the Group to provide a remuneration framework that attracts, motivates and rewards executives of the highest

calibre who bring experience to the strategic direction and management of the Group and who will perform in the long term interests

of the Group and its shareholders.

As part of our annual remuneration cycle a comprehensive analysis is completed in respect of comparison of changes to salary,

benefits and annual bonus for Executive Directors, Senior Management and all employees. A gender pay gap comparison and gap

analysis is also completed in respect of both pay and bonus around total workforce remuneration.

We are committed to ongoing and constructive engagement with our employees and use a number of channels to support our

engagement process in order to incorporate their views into our business activities.

Among our key stakeholders is Farmers Business Development plc and as FBD’s largest shareholder has a seat on the Board which

benefits the Group as they share knowledge in respect of our largest customer base.

FBD is committed to being open and transparent in respect of its remuneration arrangements for all employees and as part of this

transparency table the Report on Directors’ Remuneration at the AGM each year for an advisory vote. The FBD Performance Share

LTIP Plan (LTIP) was approved by shareholders at the AGM on 5th May, 2018. FBD engaged individually with a number of shareholders

prior to the AGM in respect of the Long Term Investment Plan.

As part of our regular interaction with investors we answer questions that they may have on remuneration arrangements and take into

consideration views expressed in to the formulation of policy and setting appropriate performance conditions. In addition we engage

with investor advisory services about any concerns they may have.

72 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

As part of the annual pay cycle, a communication is issued to all employees explaining how their bonus aligns to the Group Strategy

and the steps taken to ensure fairness of distribution for all employees. Regular town halls and updates for all employees are held

throughout the year which include financial and remuneration updates. Two way communication is a key part of these forums with

Q&A to Executive Management at each update. Regular engagement takes place with employer representative bodies to discuss

remuneration and other matters.

FBD also has a programme of Investor Relation Activities where we engage with all shareholders in order to enhance bi-lateral

communication by fostering objective orientated dialogue with shareholders.

The following table sets out the key elements of the Remuneration Policy for Executive Directors and Senior Executives, their purpose

and how they link to strategic rationale.

Element and Link to Strategy Policy and Operation

Base Salary (fixed remuneration)

To help recruit and retain senior

experienced Executives

Base salaries are reviewed annually with effect typically from 1 April taking the following factors

into account:

l The individual’s role and experience

l Group performance

l Personal performance

l Market practice and benchmarking

Although salaries are reviewed annually there is no automatic right of any Executive to receive a

salary increase.

Benefits (fixed remuneration)

To provide market competitive

benefits

Benefits provided include motor allowance and an agreed percentage contribution to health and

other insurance costs.

Pension Provision (fixed remuneration)

To provide market competitive

benefits and reward

performance over a long period,

enabling Executives to save for

retirement

Since 2020, the remuneration policy ensures that all newly appointed Executive Directors receive

defined contribution pension benefits (or equivalent cash in lieu), in line with existing scheme

arrangements available to the wider workforce.

One Executive Director’s defined contribution pension rate is not aligned with the rate in

operation for the majority of the workforce, due to existing contractual arrangements.

The Remuneration Committee intends to bring this contribution rate into line with that of the

wider workforce by the end of 2022.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Element and Link to Strategy Policy and Operation

Annual Performance Bonuses (variable remuneration)

To reward achievement of Group

targets, personal performance

and contribution

Annual bonus is based on stretching performance conditions set by the Remuneration Committee

at the start of the year. The maximum opportunity level under the Policy for the Chief Executive

Officer is 120% of base salary and 100% of base salary for other Executive Directors. In a given

year, the Committee may determine that a maximum opportunity level below the above Policy

levels will be operated.

Annual bonus outcomes will be determined based on performance against Group financial targets

and the achievement of defined individual strategic objectives. The Remuneration Committee will

determine the performance measures, their weightings and the calibration of targets each year

and will clearly disclose these in the Remuneration Report.

Financial targets will determine the majority of the bonus. Financial targets will be set in a

manner which will encourage enhanced performance in the best interests of the Group and its

shareholders and will be approved by the Remuneration Committee.

In addition, if annual Group profit after tax does not reach a minimum level, to be determined

annually by the Remuneration Committee after the budget has been approved, then the bonus

may be revised downwards potentially to zero, the ultimate discretion over which rests with the

Remuneration Committee following consultation with the Chief Executive Officer.

Individual performance will be assessed against agreed performance objectives, which will

include a risk objective to ensure that all employees identify, evaluate and mitigate and control

risks as part of our overall objectives to meet the organisation’s strategic goals.

The Remuneration Committee has the discretion to override formulaic outcomes in

circumstances where it judges it would be appropriate to do so. Any such discretion would

be fully disclosed in the relevant annual report.

Any bonus payments are subject to the potential for the Remuneration Committee to apply

provisions to withhold, reduce or require the repayment of awards for up to two years after

payment if there is found to have been (a) material misstatement of the Group’s financial results

or (b) gross misconduct on the part of the individual.

50% of any executive bonus will be deferred into FBD shares for a period of three years. This

practice will allow the committee to have flexibility to apply clawback if circumstances warranted.

74 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

Element and Link to Strategy Policy and Operation

Long Term Incentives - the FBD Performance Share Plan (variable remuneration)

To align the financial interests of

Executives with those of

shareholders

The Group Performance Share Plan (LTIP) was approved by shareholders in 2018. Under the LTIP,

the Remuneration Committee may, at its sole discretion, make conditional awards of shares to

Executives.

Conditional awards of shares under the LTIP are limited to 10% in aggregate with any other

employee share plan of the Company’s issue ordinary shares of €0.60 each over a rolling 10 year

period. The market value of shares which are the subject of a conditional award to an individual

may not, in any financial year, normally exceed 150% of the participants base salary as at the

date of the grant.

The Remuneration Committee set performance conditions each year, selecting appropriate

metrics based on key strategic priorities. The period over which the performance conditions

applying to a conditional award under the LTIP are measured may not be less than three years.

The extent to which a conditional award may vest in the future will be determined by the

Remuneration Committee by reference to the performance conditions set at the time of the

reward.

These conditions are designed to ensure alignment between the economic interest of the plan

participants and those of shareholders. Different conditions, or the same conditions in different

proportions, can be used by the Remuneration Committee in different years under the LTIP rules,

provided that the Committee is satisfied that they are challenging targets and that they are

aligned with the interest of the Group’s shareholders.

Consistent with prior periods, the LTIP rules allow the Remuneration Committee (at its sole

discretion) to make awards which may be subject to an additional post vesting holding period.

Awards will vest after three years once applicable performance conditions have been achieved

and the vested shares (net of tax) may be required to be held for a further two year period to

provide continued alignment with shareholders. The Remuneration Committee has the discretion

to override formulaic outcomes in circumstances where it judges it would be appropriate to do

so and any such discretion will be fully disclosed in the relevant annual report. In 2022 the

Remuneration Committee will make it a requirement that awards made to Executive Directors

are subject to a two year holding period post vesting.

The LTIP includes provisions that allows the Remuneration Committee to withhold, reduce or

require the repayment of rewards for up to two years after vesting (i.e. up to five years after grant)

if there is found to have been (a) material misstatements of the Group’s financial results; (b) gross

misconduct on the part of the award holder.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Share Ownership Policy

The Group incentivises its Executive Directors and Senior Executives with equity based awards under the Group’s shareholder

approved share schemes. Central to the philosophy underlying awards is the goal of aligning the economic interests of those

individuals with those of shareholders.

Executives are expected to maintain a significant long-term equity interest in the Group. The requirement, which is set out in a policy

document by the Remuneration Committee, approved and reviewed annually, is to build and retain a valuable shareholding relative to

base salary, at a minimum, as noted hereunder.

Executive Share ownership requirement

Group Chief Executive 2 times annual salary

Other Executive Directors 1.5 times annual salary

Other Senior Executives 1 times annual salary

Until such time as the requirement has been met, Executive Directors are precluded from disposing of any shares issued to them

under the group share schemes.

Executive Directors have a post employment shareholding requirement for at least two years at a level equal to the lower of the

shareholding requirement immediately prior to departure or the actual shareholding on departure.

Recruitment Policy

When recruiting new Executive Directors, the policy is to pay what is necessary to attract individuals with the skills and experience

appropriate to the role being filled, taking into account remuneration across the Group, including other senior executives as well as

benchmarking against the financial services industry.

Base salary levels will be set in consideration of the skills, experience and expected contribution to the new role, the current salaries of

other Executive Directors in the Group and current market levels for the role.

The Remuneration Committee has determined that the level of pension contribution for any newly appointed Executive Director, will

be set in line with levels in operation for the majority of the workforce, as is the case with all employees.

Other fixed benefits will be considered in light of relevant market practice for the role and the provisions in place for Executive

Directors.

In exceptional circumstances or where the Remuneration Committee determines that it is necessary for the recruitment of key

executives, the Remuneration Committee reserves the right to offer additional cash and/or share based payments. Such payments

may take into account remuneration relinquished when leaving the former employer and would reflect the nature, time horizons and

performance requirements attached to the remuneration. The Remuneration Committee may also grant share awards on hiring an

external candidate to buy out awards which will be forfeited on leaving previous employer.

For an internal appointment, the Remuneration Committee reserves the right to offer additional cash and/or share based payments

on an internal promotion when it considers this to be in the best interests of the Group and its shareholders.

Service Contracts

The service contract for the Group Chief Executive and the Group Financial Officer provide for the following periods of notice of

termination of employment;

Executive From Company From CEO/CFO

Tomás Ó Midheach CEO 12 Months 6 Months

John O’Grady CFO 6 Months 6 Months

76 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

Termination Payments

Termination payments will be related to performance achieved over the whole period of activity and designed in a way that does not

reward failure.

Bonus awards will generally be pro-rated to reflect the performance period which was worked and the performance outcomes

achieved, although the Remuneration Committee retains discretion to dis-apply such pro-ration where it would be appropriate in the

circumstances.

In the event of an Executive Director leaving before an LTIP award vests for reasons other than death, redundancy, injury, ill health or

disability retirement with the agreement of the Remuneration Committee or any other reason approved by the Remuneration

Committee the awards of the Executive Directors will lapse, except that the Remuneration Committee may at any time prior to

vesting, in its absolute discretion revoke any determination to permit awards to vest where an Executive Director breaches a

protective covenant.

Non-Executive Director Remuneration

The remuneration of the Non-Executive Directors is determined by the Board, and reflects the time commitment and responsibilities

of their role. In setting this level, the Board has regard to the fees payable to the Non-Executive Directors of the other Irish publicly

listed companies and also to the developments and policy for the remuneration of the employees in the wider Group.

Non-Executive Directors receive a basic fee. Additional fees are paid for acting as Senior Independent Director, being a member of

and/or chairing Board Committees. These fees are reflective of their added responsibilities and time commitment.

Non-Executive Directors are not members of the Group’s pension schemes and are not eligible for participation in the Group’s

long-term incentive schemes.

Derogation from Remuneration Policy

The Remuneration Committee intends that remuneration arrangements will operate in accordance with the above Remuneration

Policy for a four year period or until an amended Remuneration Policy is put to shareholders for approval. The European Union

(Shareholders’ Rights) Regulations 2020 allow for the potential for a temporary derogation from the Remuneration Policy where doing

so is necessary in exceptional circumstances, to serve the long-term interests and sustainability of the traded plc as a whole or to

assure its viability.

By definition, it is not possible to fully list all such exceptional circumstances, but the Remuneration Committee would only use such

ability to apply a derogation after careful consideration and where the Remuneration Committee considers the circumstances were

truly exceptional and the consequences for the Group and shareholders of not doing so would be significantly detrimental. Where

time allowed shareholders would be consulted prior to applying such a change, or at minimum where this was not possible, the full

details of the derogation would be communicated as soon as practical (e.g. by market announcement/on the Group’s website) and

disclosed in detail in the next Remuneration Report. Under the potential derogation, the Remuneration Committee would have the

ability to vary the elements of the remuneration described in the above table, including levels of performance conditions applicable to

incentive arrangements.

Remuneration Report

The information below on pages 77 to 84 of the Report on Directors’ Remuneration identified as audited forms an integral part of the

audited financial statements as described in the basis of preparation on page 107. All other information in the report on Directors

Remuneration is additional information and does not form part of the audited financial statements.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Executive and Non-Executive Directors’ Remuneration Details - Audited

The following table sets out in detail the remuneration payable by the Group in respect of any Director who held office for any part of

the financial year:

Fees

€000s

Salary

€000s

Other

Payments

€000s

Benefits

€000s

Pension

Contribution

€000s

2021

Total

€000s

Executive Directors:

Tomás Ó Midheach 500 485 40 40 1,065

John O’Grady 320 156 18 48 542

Non-Executive Directors:

Liam Herlihy (Chairman) 149 149

David O’Connor 103 103

Walter Bogaerts 83 83

Mary Brennan 81 81

Sylvia Cronin 73 73

Tim Cullinan 60 60

Richard Pike 69 69

Padraig Walsh 60 60

Jean Sharp 25 25

John O’Dwyer 20 20

723 820 641 58 88 2,330

Notes (2021)

1. Fees were paid to Non-Executive Directors.

2. Salaries were paid to Executive Directors.

3. Bonuses of €485,000 and €155,520 were awarded to Mr Ó Midheach and Mr O’Grady under the bonus scheme in 2021. The

bonuses were calculated in accordance with the Annual Performance Arrangements described earlier and both Mr Ó Midheach’s

and Mr O’Grady’s bonuses were approved by the Remuneration Committee.

4. Benefits relate exclusively to a motor allowance and contribution towards health insurance costs.

5. Pension contributions relate to contributions to a defined contribution pension scheme or a payment in lieu.

6. John O’Dwyer was appointed Non-Executive Director on the 31st August, 2021.

7. Jean Sharp was appointed Non-Executive Director on the 16th August, 2021.

8. Directors’ fees have been adjusted to reflect the additional time and responsibilities and committee work following the

introduction of dual Boards.

78 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

The following table sets out the detail for the previous financial year (2020):

Fees

€000s

Salary

€000s

Benefits

€000s

Pension

Contribution

€000s

2020

Total

€000s

Executive Directors:

Fiona Muldoon — 700 35 79 814

John O’Grady — 308 18 46 372

Paul D’Alton 790 — — — 790

Non-Executive Directors:

Liam Herlihy (Chairman) 134 — — — 134

Walter Bogaerts 77 — — — 77

Mary Brennan 74 — — — 74

Sylvia Cronin 64 — — — 64

Tim Cullinan — — — — —

Joe Healy 30 — — — 30

David O’Connor 88 — — — 88

Richard Pike 59 — — — 59

Padraig Walshe 55 — — — 55

1,371 1,008 53 125 2,557

Notes (2020)

1. Fees were paid to Non-Executive Directors and to the Interim Chief Executive Officer. Fees of €790,000 were paid to Mr. D’Alton in

line with his contract.

2. Salaries were paid to Executive Directors. Ms. Muldoon received payments arising from her service agreement when her

employment ended.

3. Benefits relate exclusively to a motor allowance and contribution towards health insurance costs.

4. Pension contributions relate to contributions to a defined contribution pension scheme or a payment in lieu.

5. Joe Healy did not go forward for re-election as Non-Executive Director at the AGM on 31 July 2020.

6. Tim Cullinan was appointed Non-Executive Director on the 31 December 2020.

Determination of Annual Performance Bonus for the year ended 31 December 2021

As previously noted, the overall Annual Performance Bonus arrangements, the targets and their achievement are approved by the

Remuneration Committee each year. Specifically the Remuneration Committee approve the merit pay and bonus arrangements for

the Executive Directors in line with FBD’s Remuneration Policy.

In 2021 the Remuneration Committee included a profit threshold that had to be reached in order to qualify for bonus.

The Group’s short and long-term remuneration philosophy is to ensure that remuneration is aligned to FBD’s purpose and values,

supports strategy and promotes long-term success of the Group.

Remuneration includes performance related elements designed to align Directors’ interests with those of shareholders and to

promote long-term sustainable growth and performance in line with our strategy. Market-competitive total remuneration is

structured to attract, motivate and retain individuals of the highest quality.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

The following objectives were set for the Executive Directors for 2021:

Executive

Director

Objective Measure

of Success

Result

Tomás Ó Midheach Operational

Excellence

Ensured the ongoing delivery to our customers in challenging times as

measured by retention and Customer Experience Survey.

Achieved

Technology &

Innovation

Defined FBD’s focus on technology and long term strategic direction. Achieved

Strategy Developed a clear strategy in respect of our five key stakeholders,

Our Investors, The Regulator, Our People, Wider Society and Our

Customer.

Achieved

People & Culture Developed and rolled out a clear plan to engage employees and our

stakeholders on the group’s purpose. Rolled out the new Diversity and

Inclusion Policy. Developed and Rolled out Behaviour Competency

Framework in line with our Values and Behaviours.

Achieved

John O’Grady Financial Strategy Against the backdrop of a challenging environment, successfully

stewarded FBD’s financial strategy and developed plans to optimise the

financial performance of the Group.

Achieved

Innovation Worked closely with the Chief Executive Officer in the drive to innovate

the business, particularly throughout the pandemic and set clear

Group priorities and supporting measures.

Achieved

People & Culture Supported the smooth transition of a new Chief Executive Officer.

Ensured the Group work effectively to formulate and implement plans

and initiatives to respond to the impact of Covid-19 pandemic and

ensured the safety, health and well-being of all employees.

Achieved

Safety and

Environment

Was a visible leader in re-enforcing FBD’s strong safety culture. Achieved

The following bonus conditions were agreed by the Remuneration Committee for Executive Directors in respect of performance for

2021:

Combined Operating Ratio 45%

Overall Gross Written Premium 15%

Retention of Gross Written Premium 15%

Lead Culture Change 25%

In respect of Combined Operating Ratio target outperformance was achieved as well as outperformance in the retention of Gross

Written Premium. The overall gross written premium target was not achieved in 2021. FBD has a very clearly defined culture strategy

that is aligned to our business strategy and is actively considered and set by the Board and EMT. The Board and EMT take a leading

role in communicating the desired culture to the organisation.

Metric % of Target

Available

Range

25%-100%

Target

100%

Max

100%-150%

Results % Achieved

for Bonus

Combined Operating Ratio 45% 96%-93% 93% 93% to 90% 71.5% 150%

Overall Gross Written

Premium

15% €375m-€380m €380m €380m-€385m €370m —%

Retention of Gross Written

Premium

15% €311m-€321m €321m €321m-€324m €324m 150%

Lead Culture Change 15% Communicate and embed purpose and mission. Define, communicate

and embed behaviours. Demonstrate core values.

Achieved

in full

80 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

The Remuneration Committee have assessed the performance of the Chief Executive Officer and Chief Financial Officer in relation to

leadership of culture change. Achievements in the year include:

l A comprehensive reset of the FBD strategy;

l A comprehensive programme of communication of strategy to all employees in a series of town hall meetings;

l The launch of a number of initiatives focused on increasing employee engagement and identification with FBD’s purpose, mission

and values.

The

Remuneration Policy has operated as intended in terms of Group performance and quantum. The Remuneration Committee

considered the above formulaic outcome to ensure that it was both fair and appropriate given wider stakeholder experience. The

Committee did not adjust the outcome as it was comfortable that this was the case.

The Remuneration Committee has determined that given management of unprecedented uncertainties due to Covid-19 we are

postponing applying deferral to the bonus outcome for Chief Executive Officer and Chief Financial Officer. However, from 2022

onwards, 50% of any bonus payment well be deferred in line with the Remuneration Policy.

Long Term Incentives

Conditional Awards of Shares in 2021 - Audited

During 2021 one Conditional Award of shares was made under the Performance Share Plan. This was made in March 2021 to

Executive Directors and Senior Management. The award represented 80% of salary for Chief Executive Officer and 60% Salary for

Chief Financial Officer.

The conditions attached to the award, which reflect the Board’s strategic plans, were based 66.6% on the compound annual growth

rate (CAGR) of Net Asset Value (NAV) per share, relative to the 1 January 2021 NAV for the three years ending 31 December 2023.

The NAV has been chosen because the Committee considers it is the controllable measure most closely correlated to share price and

ultimately to shareholder return. 33.4% of the award was based on Policy Count Growth which was chosen to reflect the ambition of

the Board to grow the business over the strategic time period.

Vesting levels range between a threshold level of 25% to a maximum of 125% for out performance. The CAGR target for NAV and

Policy Count Growth is up to mid single digits percentages. The actual upper level percentages are not disclosed due to commercial

competitor sensitivity and because to do so would also constitute forward looking guidance.

The Committee will publish details regarding targets and vesting levels at the end of the performance period (2024).

The Committee has decided not to include relative performance to market targets as there is no relevant comparator in the Irish

market.

The maximum and threshold for vesting for the performance conditions are as follows:

Weighting

Threshold

Level

Proportion

vesting

Upper

Level

Proportion

vesting

NAV CAGR 66.6% >0.66% 25% Mid Single Digits 125%

Policy Count Growth 33.4% >4.4% 25% Mid Single Digits 125%

Outstanding Conditional Awards (2018-20) - Audited

The Committee considered the extent to which the performance conditions underpinning this award were met in the three financial

years 2018 to 2020 (the ’Performance Period’). The Committee concluded that 125% of NAV was met as the compound annual growth

rate (CAGR) was 11.7% when compared to the actual NAV at 31st December 2017. This was in excess of the upper performance

threshold of 6.7%. Therefore in respect of the conditional awards granted in March 2018 125% vested

Directors’ and Company Secretary’s Conditional LTIP Awards - Audited

Details of the conditional share awards to the Executive Directors who held office for any part of the financial year and to the Company

Secretary made under the 2007 and 2018 LTIP plans are given in the table below. In respect of the 2019, 2020 and 2021 awards the

number of shares could increase to a maximum of 125% of the number of shares outlined below (which is 100%) if the performance

conditions previously described are met at stretch target level.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

At 1

January

2021

Granted

during

year Dividends

Lapsed

during

year

Out-

performance

LTIP

Vested

during

year

At 31

December

2021

Performance

Period

Earliest

vesting

date

Market

price on

award €

Executive Directors (who held office for any part of the financial year)

Tomás Ó

Midheach — 58,055 — — — — 58,055 2021-2023 Mar-24 6.89

Total — 58,055 — — — — 58,055

John O’Grady 17,737 — 1,478 — 4,434 (23,649) — 2018-2020 Aug-21 10.83

15,927 — — — — — 15,927 2019-2021 Mar-22 8.79

22,876 — — — — — 22,876 2020-2022 Apr-23 6.12

— 27,866 — — — — 27,866 2021-2023 Mar-24 6.89

Total 56,540 27,866 1,478 — 4,434 (23,649) 66,669

Company Secretary

(who held office for any part of the financial year)

Derek Hall 11,316 — 943 — 2,829 (15,088) — 2018-2020 Aug-21 10.83

12,969 — — — — — 12,969 2019-2021 Mar-22 8.79

15,931 — — — — — 15,931 2020-2022 Apr-23 6.12

— 19,594 — — — — 19,594 2021-2023 Mar-24 6.89

Total 40,216 19,594 943 — 2,829 (15,088) 48,494

Nadine Conlon was appointed Company Secretary 28th October, 2021.

The total number of shares subject to conditional awards outstanding under the 2018 LTIP Scheme amount to 911,645 being 2.6% of

the Company’s ordinary share capital (excluding treasury shares) at 31 December 2021 (2020: 777,660 shares and 2.2% of ordinary

share capital (excluding treasury shares)).

The aggregate limit of the number of shares over which conditional awards are permitted under the 2007 and 2018 LTIP scheme rules

is 10% of the Company’s issued share capital over a rolling 10 year period. In the past 10 years there have been 10 conditional awards

with an aggregate of 2,404,315 shares or 7.0% of the Company’s ordinary share capital (excluding treasury shares).

Non-Executive Director Remuneration - Audited

The remuneration of the Non-Executive Directors is determined by the Board, and reflects the time commitment and responsibilities

of their role. In setting this level, the Board has regard to the fees payable to the Non-Executive Directors of the other Irish publicly

listed companies and also to the developments and policy for the remuneration of the employees in the wider Group.

The basic Non-Executive Director fee is €60,000 and this was reviewed in July 2020 following a benchmarking exercise carried out by

WTW to ensure our Non-Executive remuneration was in line with the market rate. The previous review of Non-Executive Directors

remuneration had taken place in 2016. Directors receive additional fees for being members of and/or chairing Board Committees as

outlined within the Corporate Governance Report on pages 54 to 65. These fees are reflective of their added responsibilities.

Executive Director and Non-Executive Director Remuneration

European Union (Shareholders’ Rights) Regulations 2020 came into force in Ireland on 30 March 2020 when they were transposed into

Section 1110N of Companies Act 2014. The annual Executive Director and Non-Executive Director Remuneration over the last five

years of those in office in 2021 is set out below:

82 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

2017

€000s

2018

€000s

2019

€000s

2020

€000s

2021

€000s

Executive Directors:

Tomás Ó Midheach Total Remuneration — — — — 1,065

% change in year

— — — — —

John O’Grady Total Remuneration 453 445 462 372 542

% change in year

— (2)% 4% (19)% 46%

Non Executive Directors:

Liam Herlihy (Chairman) Fees 102 119 119 134 149

% change in year

116% 16% — 13% 11%

Walter Bogaerts Fees 68 70 71 77 83

% change in year

4% 2% 2% 8% 8%

Mary Brennan Fees 57 58 62 74 81

% change in year

6% 1% 8% 20% 9%

Sylvia Cronin Fees — — 5 64 73

% change in year

— — — 17% 14%

Tim Cullinan Fees — — — — 60

% change in year

— — — — —

David O’Connor Fees 59 60 70 88 103

% change in year

5% 2% 17% 25% 17%

Richard Pike Fees — — 14 59 69

% change in year

— — — 4% 17%

Padraig Walshe Fees 50 50 50 55 60

% change in year

12% — — 10% 9%

John O’Dwyer Fees — — — — 20

% change in year

— — — — —

Jean Sharp Fees — — — — 25

% change in year

— — — — —

% change shows the increase in remuneration and does not include a percentage change if related to the first year in office.

The Chairman, Liam Herlihy received fees of €149,000 during the year (2020: €133,500) inclusive of the basic Non-Executive

Director fee. David O’Connor, received fees of €103,000 during the year as he held the position of Senior Independent Director

(2020: €88,000) inclusive of the basic Non-Executive Director fee, and reflecting his additional responsibilities as Chairman of the

Remuneration Committee as well as his recent appointment as Chairman of FBD Insurance plc.

The basic fee for Non-Executive Director is €60,000 with additional fees payable in respect of additional responsibility undertaken as

member or chair of committees.

Non-Executive Directors are not members of the Group’s pension schemes and are not eligible for participation in the Group’s

long-term incentive schemes.

The remuneration of the Non-Executive Directors is determined by the Board, and reflects the time commitment and responsibilities

of their role. In setting this level, the Board has regard to the fees payable to the Non-Executive Directors of the other Irish publicly

listed companies and also to the developments and policy for the remuneration of the employees in the wider group. The variance in

fees in 2021 is an outcome of the changes required in committees and the additional workload following the introduction of the dual

Board.

Strategic Report Environmental, Social & Governance Financial Statements Other Information

External Appointments Held by the Executive Directors

In recognition of the benefits to both the Group and to our Executive Directors serving as Non-Executive Directors of other companies,

our Executive Directors are, subject to advance agreement in each case, permitted to take on an external Non-Executive appointment

and to retain any related fees paid to them. At present no current Executive Director holds such an appointment.

Change in Directors’ remuneration, employee remuneration and Group Performance

European Union (Shareholders’ Rights) Regulations 2020 came into force in Ireland on 30 March 2020 when they were transposed into

Section 1110N of Companies Act 2014.

The annual change over the last five years is set out below for Chief Executive Officer remuneration and remuneration of all other

Group employees:

2017 2018 2019 2020 2021

Chief Executive Officer

Remuneration % change year on year 17% -11% 6% -18%

–

All Group Employees

Remuneration % change year on year 9% 1% 2% 2% 1%

In addition Mr D’Alton was paid consultancy fees of €790,000 and overlapped for part of 2020.

Tomás Ó Midheach was appointed in January 2021 and therefore there is no prior year comparison.

The average cost per full time equivalent for 2021, excluding Directors, was €74,000 (2020: €66,000).

When making decisions on executive pay the Remuneration Committee takes into account pay in respect of all employees and is

satisfied that pay arrangements are appropriate.

The Group Net Asset Value (NAV) per share for the last five years is set out below:

2017 2018 2019 2020 2021

Performance of the Group

NAV per share 784 818 1,068 1,095 1,338

Implementation of Policy in 2022

Annual Performance Bonus

The annual performance bonus for Executive Directors in respect of 2022 will be subject to the following performance measures and

weightings:

Performance Metric Weighting

Combined Operating Ratio 60%

Grow Policy Count 20%

Lead Culture Change 20%

Payment of any bonus will be subject to the achievement of a defined minimum level of Group profit after tax.

The Remuneration Committee considers that the above financial metrics are key measures of operational performance for the

business. The culture change metric will assess the achievement of a number of key initiatives being carried out by the business and

will be measured by employee surveys and output from culture initiatives.

84 FBD Holdings PLC Annual Report 2021

Environmental, Social & Governance

Report on Directors’ Remuneration (continued)

Pension

The pension contribution level for the Chief Executive Officer in 2022 will be 8% of base salary, which is in line with the rate for the

wider workforce. The pension contribution rate for the Chief Financial Officer will be 15%. The Remuneration Committee intends to

bring the Chief Financial Officer’s contribution rate into line with that of the wider workforce by the end of 2022.

The full details of targets and performance will be set out on a retrospective basis in next years Remuneration Report.

LTIP

The following conditions will apply in respect of LTIP’s granted for the period 2022-2024:

Metric %

Weighting

Return on Targeted Equity 50%

Policy in Force Growth 30%

Strategic Metrics 20%

Vesting threshold levels will be applied at intervals of 25% to a maximum of 125% if the performance conditions are met.

The Remuneration Committee believes that return on targeted equity is a key strategic measure as it takes into account both business

profitability and balance sheet management. Policies in force growth is a key measure of growth in the business and is a fundamental

to FBD’s strategy.

The strategic metrics element will be determined by performance achieved in relation to a number of key long-term strategic

initiatives. The specific targets cannot be disclosed on a forward looking basis at this time as they are commercially sensitive however

the Remuneration Committee has committed to full disclosure on a retrospective basis. Performance will be measured based on

metrics including the following;

l Development of customer propositions and customer types

l Customer Service Score (CXI)

l Culture Score

l ESG metrics

Strategic Report Environmental, Social & Governance Financial Statements Other Information

Directors’ Responsibilities Statement

The Directors are responsible for preparing the Annual Report

and financial statements, in accordance with the Companies Act

2014 and the applicable regulations.

Irish company law requires the Directors to prepare financial

statements for each financial year. Under the law, the Directors

have elected to prepare the financial statements in accordance

with International Financial Reporting Standards as adopted by

the European Union (“relevant financial reporting framework”).

Under company law, the Directors must not approve the

financial statements unless they are satisfied that they give a

true and fair view of the assets, liabilities and financial position

of the Company as at the financial year end date and of the profit

or loss of the Company for the financial year and otherwise

comply with the Companies Act 2014.

In preparing each of the Company and Group financial

statements, the Directors are required to:

l select suitable accounting policies for the Company and the

Group financial statements and then apply them

consistently;

l make judgements and estimates that are reasonable and

prudent;

l state whether the financial statements have been prepared

in accordance with the applicable accounting standards,

identify those standards, and note the effect and the reasons

for any material departure from those standards; and

l prepare the financial statements on the going concern basis

unless it is inappropriate to presume that the Company will

continue in business.

The Directors are responsible for ensuring that the Company

and the Group keeps or causes to be kept adequate accounting

records which correctly explain and record the transactions of

the Company and the Group, enable at any time the assets,

liabilities, financial position and profit or loss of the Company

and the Group to be determined with reasonable accuracy,

enable them to ensure that the Annual Report and financial

statements comply with the Companies Act 2014 and the

Listing Rules of the Euronext Dublin and enable the financial

statements to be audited.

They are also responsible for safeguarding the assets of the

Group and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The Directors are also required by the Transparency (Directive

2004/109/EC) Regulations 2007 (Transparency (Directive

2004/109/EC) (Amendment) (No. 2) Regulations 2015) to

include a management report containing a fair review of the

business and a description of the principal risks and

uncertainties facing the Group.

Under applicable law and the requirements of the Listing Rules

issued by the Euronext Dublin, the Directors are also responsible

for preparing a Directors’ Report and reports relating to

Directors’ remuneration and corporate governance that comply

with that law and those Rules. The Directors are responsible for

the maintenance and integrity of the corporate and financial

information included on the Group’s website. Legislation in

Ireland governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

The Directors confirm that, to the best of their knowledge and

belief:

l the financial statements, prepared in accordance with IFRSs

as endorsed by the EU, give a true and fair view of the assets,

liabilities and financial position for the Group as at 31

December 2021 and of the result for the financial year

then ended;

l the Report of the Directors, the Chairman’s Statement

and the Review of Operations include a fair review of the

development and performance of the Group’s business and

the state of affairs of the Group for the 12 months ending 31

December 2021, together with a description of the principal

risks and uncertainties facing the Group; and

l the Annual Report and financial statements, taken as a

whole, is fair, balanced and understandable and provides

the information necessary for shareholders to access the

position, performance, strategy and business model of the

Group.

On behalf of the Board

Liam Herlihy

Chairman

Tomás Ó Midheach

Group Chief Executive

3 March 2022

86 FBD Holdings PLC Annual Report 2021FBD Holdings PLC Annual Report 202186

FBD would like to

acknowledge the Team Ireland

success at the Tokyo Olympics

in 2021 and especially our

former brand ambassadors

Kellie Harrington and Paul

O’Donovan who brought

home gold medals.

“FBD’s support of Team Ireland

has been fantastic. Communities

play a vital role in developing

Irish Olympians and FBD as

Ireland’s local, community

insurer was a perfect fit.”

KELLIE HARRINGTON

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Independent Auditors’ Report

to the members of FBD Holdings plc

Report on the audit of the financial statements

Opinion

In our opinion, FBD Holdings plc’s consolidated financial statements and company financial statements (the “financial statements”):

l give a true and fair view of the group’s and the company’s assets, liabilities and financial position as at 31 December 2021 and of

the group’s profit and the group’s and the company’s cash flows for the year then ended;

l have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European

Union and, as regards the company’s financial statements, as applied in accordance with the provisions of the Companies Act

2014; and

l have been properly prepared in accordance with the requirements of the Companies Act 2014 and, as regards the consolidated

financial statements, Article 4 of the IAS Regulation.

We have audited the financial statements, included within the Annual Report, which comprise:

l the Consolidated and Company Statements of Financial Position as at 31 December 2021;

l the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year then ended;

l the Consolidated and Company Statements of Cash Flows for the year then ended;

l the Consolidated and Company Statements of Changes in Equity for the year then ended; and

l the notes to the financial statements, which include a description of the significant accounting policies.

Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial

statements. These are cross-referenced from the financial statements and are identified as audited.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable law. Our

responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for the audit of the financial statements

section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial

statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed public interest entities, and we have fulfilled our

other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by IAASA’s Ethical Standard were not provided

to the group or the company.

Other than those disclosed in note 7 to the financial statements, we have provided no non-audit services to the group or the company

in the period from 1 January 2021 to 31 December 2021.

88 FBD Holdings PLC Annual Report 2021

Financial Statements

Independent Auditors’ Report (continued)

Our audit approach

Overview

Materiality

Audit

scope

Key audit

matters

Materiality

• €4.0 million (2020: €4.0 million) - Consolidated financial statements.

• Based on circa 1% of revenue.

• €1.0 million (2020: €0.96 million) - Company financial statements.

• Based on circa 1% of equity attributable to equity holders of the parent.

Audit scope

• We performed a full scope audit of the complete financial information of the group’s principal

operating entity, FBD Insurance plc, and the holding company. We performed audit procedures on

certain balances and transactions of the group’s shared services entity, FBD Corporate Services

Limited.

• Taken together, the entities where we performed a full scope audit of the complete financial

information and those selected balances at the group’s shared services entity on which we performed

audit procedures accounted for in excess of 95% of group revenues, 95% of group profit before

taxation and 95% of the group’s total assets.

Key audit matters

• Valuation of claims outstanding.

• Valuation of reinsurers’ share of claims outstanding in respect of COVID-19 business interruption

related claims.

• Carrying value of non-financial assets.

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting

estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also

addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the

directors that represented a risk of material misstatement due to fraud.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not

due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of

resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results

of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our

audit.

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Key audit matter How our audit addressed the key audit matter

Valuation of claims outstanding

Refer to Note 3 (E) (v) - Summary of significant accounting policies,

Note 3 (U) - Critical accounting estimates and judgements in

applying accounting policies and note 24 (a) to (c) to the

consolidated financial statements.

The provision for claims outstanding is the group’s largest

liability and its valuation involves considerable judgement.

The booked amount comprises:

l an actuarial best estimate of the ultimate settlement cost of

claims incurred at the reporting date including claims

incurred but not reported at 31 December 2021; and

l a margin over actuarial best estimate to provide for the risk

of adverse development of the actuarial best estimate and

to cater for known risk factors not in the underlying data

used to calculate the actuarial best estimate.

The actuarial best estimate of claims incurred includes a best

estimate in respect of Government COVID-19 restriction related

business interruption claims incurred, primarily under the

group’s public house commercial policies.

For claims excluding Government COVID-19 restriction related

business interruption claims, the actuarial best estimate is

determined using complex actuarial calculations and requires

the consideration of detailed methodologies, multiple

assumptions and significant judgements. Methodologies and

assumptions vary by class of business. The key items underlying

the calculations are past claims development patterns and

assumptions in respect of expected loss ratios and the expected

frequency, severity and duration of claims.

The valuation is dependent on the completeness and accuracy

of the data used in the actuarial modelling, in particular data

relating to amounts of claims paid and incurred in the current

and prior years and historic loss ratios.

We performed procedures to understand the claims and actuarial

reserving processing cycles as they relate to financial reporting.

We tested the design and operating effectiveness of the controls

over claims processing and payment, and the valuation of claims

outstanding.

Based on the results of our risk assessment and materiality, we

selected certain classes of business for independent valuation by

actuarial specialists. This represented over 74% of the actuarial

best estimate.

The results of our independent valuation were compared to the

group’s valuation to assess the reasonability of the estimate.

In respect of the remaining classes of business we assessed the

reasonability of the group’s valuation with the assistance of our

actuarial specialists. This involved:

l assessing the assumptions and methodologies underpinning

management’s actuarial valuation; and

l considering the development of prior accident years’ estimates

and analysis of the current accident year estimate, including

consideration of the group’s historic claims experience,

development in the Irish claims environment and our broader

knowledge of developments in the insurance industry.

We tested the determination of the best estimate provision in

respect of Government COVID-19 restriction related business

interruption claims incurred under the group’s public house

commercial policies. This involved:

l assessing the appropriateness of significant changes to the

group’s model and assumptions since the prior reporting

period, including the impact of the quantum of costs ruling

received;

l assessing the assumptions applied including those in respect

of the level of lost gross profit to be claimed and the level of

expense savings expected to be deductible from this amount

under the policy terms by reference to data available and the

outcome of the quantum hearing; and

l performing our own sensitivity analysis based on alternative

scenarios.

90 FBD Holdings PLC Annual Report 2021

Financial Statements

Independent Auditors’ Report (continued)

Key audit matter How our audit addressed the key audit matter

For COVID-19 business interruption claims, the interpretation

of the business interruption clause within the policy wording, as

it relates to Government closure orders resulting from the

pandemic, was subject to a Commercial Court test case in the

prior year. The Commercial Court judged on 5 February 2021

that the group is liable under the policy. Further hearings have

taken place in the current year and broad principles of quantum

have now been established, including the definition of business

closure, reducing the associated uncertainties.

Given that this type of claim has not been experienced

previously, the group has performed a separate best estimate

calculation in respect of the cost of these claims. The

calculation applies assumptions concerning the level of lost

gross profit to be claimed and the level of expense savings

expected to be deductible from this amount under the policy

terms. While the recent quantum ruling has provided some

clarity on how key aspects of this calculation should operate,

uncertainties remain. As a result of the unique circumstance

of the claims there are no past claims development patterns

available. The Company continues to collect and process claims

data from policyholders.

The unique circumstances of these claims also result in

significant judgement being required in respect of the valuation

of the reinsurers’ share of these claims as set out under the

“Valuation of reinsurers’ share of claims outstanding” below.

The overall provision includes a margin over actuarial best

estimate to provide for the risk of adverse claims development,

to cater for known events not in the underlying data and to

address the risks in respect of the valuation of the reinsurers’

share of claims outstanding.

We determined the valuation of claims outstanding to be a key

audit matter due to the judgements and level of estimation

involved in the measurement thereof.

We tested the reconciliation of the data used in the actuarial models

to the underlying systems and reconciled the actuarial valuation

outputs to the financial statements. For the COVID-19 business

interruption claims, where data has been provided by some

policyholders we tested a sample of this data used in the setting of

the model assumptions for accuracy.

We tested the calculation of the margin over actuarial best estimate

and discussed the rationale for the level of this element of the

provision with management with particular focus on the

consideration of the appropriateness of changes in the amount

since the prior year.

Based on the results of these procedures we concluded that the

valuation of claims outstanding included in the consolidated

financial statements is within an acceptable range of reasonable

estimates.

We also assessed the appropriateness of the disclosures in the

financial statements.

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Key audit matter How our audit addressed the key audit matter

Valuation of reinsurers’ share of claims outstanding in

respect of COVID-19 business interruption related

claims

Refer to Note 3 (E) (vi) - Summary of significant accounting policies,

Note 3 (U) - Critical accounting estimates and judgements in

applying accounting policies and note 24 (b) and (e) to the

consolidated financial statements.

The reinsurers’ share of claims outstanding asset includes an

amount relating to estimated recoveries under the group’s

reinsurance programme on the gross best estimate provision in

respect of Government COVID-19 restriction related business

interruption claims incurred under the group’s public house

commercial policies.

The group has reached a negotiated agreement with those

reinsurers that are expected to be impacted. This has reduced,

but not eliminated, the uncertainties associated with the

valuation of this asset. The remaining uncertainties have been

considered in determining the overall level of margin for

uncertainty attributed to the exposures in respect of these

claims.

We determined this to be a key audit matter as a result of the

significant events impacting this asset that occurred during the

period and the significance of this asset to the financial

statements.

We performed procedures to understand the calculation performed

by the group in arriving at the reinsurers’ share of Government

COVID-19 restriction related business interruption claims

outstanding.

We obtained and considered:

l the group’s correspondence with its reinsurers and reinsurance

broker relating to cover in respect of the underlying claims;

l the reinsurance statements of claim submitted by the group to

its reinsurers to date; and

l the reinsurance contracts under which the group has made a

claim including the relevant terms and any amendments.

We tested the accuracy of the calculation of reinsurance recoveries

and the application of the reinsurance contract terms to the

estimated gross loss.

We also considered the level of margin included in the valuation for

remaining uncertainties.

Based on the results of these procedures we concluded that the

valuation of the reinsurers’ share of claims outstanding asset

included in the consolidated financial statements, in respect of

COVID-19 business interruption related claims, is within an

acceptable range of reasonable estimates.

We also assessed the appropriateness of the disclosures in the

financial statements.

92 FBD Holdings PLC Annual Report 2021

Financial Statements

Independent Auditors’ Report (continued)

Key audit matter How our audit addressed the key audit matter

Carrying value of non-financial assets

Refer to Note 3 (G) to (J) - Summary of significant accounting policies,

Note 3 (U) - Critical accounting estimates and judgements in

applying accounting policies and note 13, 14 and 15 to the

consolidated financial statements

As set out in note 3(U) - Uncertainties in impairment testing,

management identified an impairment trigger related to the

carrying value of non-financial assets as the group’s market

capitalisation is lower than the Total Equity included in the

consolidated statement of financial position as at

31 December 2021 for the group’s general insurance business.

The recoverable amount of the non-financial assets was

assessed through a value in use (“VIU”) calculation. VIU is

calculated based on the present value of expected future cash

flows.

Judgement is exercised in estimating the future cash flows

and the discount rate applied to the cash flows.

We determined this to be a key audit matter due to the

judgements exercised in performing the assessment.

We assessed the value in use prepared by management by:

l assessing the model;

l assessing and challenging the cash flow information used by

reference to the group’s Board approved profitability

projections and historic experience;

l assessing management’s sensitivity analysis performed of the

impact of changes in key assumptions on the assessment; and

l assessing the discount rate used by recalculating an acceptable

range of discount rates using observable inputs from

independent external sources.

We also assessed the appropriateness of the disclosures in the

financial statements.

Based on the results of these procedures we concluded that the

valuation of non-financial assets included in the consolidated

financial statements is reasonable.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements

as a whole, taking into account the structure of the group, the accounting processes and controls, and the industry in which the group

operates.

The group consists of the holding company, FBD Insurance plc, an insurance provider, 5 other entities (4 of which are non-trading) and

a group shared services entity, FBD Corporate Services Limited. All group entities are managed and reported on from a single head

office. The consolidated financial statements are a consolidation of these individual entities.

On the basis of the group structure all audit procedures were performed by a single group audit team. We performed a full scope audit

of the complete financial information of FBD Insurance plc and the holding company. Specific audit procedures on certain balances

and transactions were performed in respect of FBD Corporate Services Limited. We also tested the consolidation process. This gave us

the desired level of audit evidence for our opinion on the consolidated financial statements as a whole.

This gave us coverage in excess of 95% of group revenues, 95% of group profit before taxation and 95% of the group’s total assets.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,

together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit

procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both

individually and in aggregate on the financial statements as a whole.

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Consolidated financial statements Company financial statements

Overall materiality €4.0 million (2020: €4.0 million). €1.0 million (2020: €0.96 million).

How we determined it Circa 1% of revenue. Circa 1% of equity attributable to equity holders

of the parent.

Rationale for benchmark

applied

We have applied this benchmark as it provides a

more stable measure as the group’s result has

fluctuated significantly in recent years.

We have applied this benchmark as it is

considered appropriate given the company’s

activity as a holding company.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €200,000 (group

audit) (2020: €200,000) and €50,000 (company audit) (2020: €48,000) as well as misstatements below that amount that, in our view,

warranted reporting for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the group and company’s ability to continue to adopt the going concern basis of

accounting included:

l testing the mathematical integrity of the forecasts and the models and reconciling these to Board approved budgets;

l evaluating management’s going concern assessment and underlying forecasts for the period of the going concern assessment

(being the period of 12 months from the date on which the financial statements are authorised for issue) and challenging the key

assumptions. In evaluating these forecasts we considered the group’s historic performance and its past record of achieving

strategic objectives;

l considering whether the assumptions were consistent with related assumptions used in other areas of the entity’s business

activities, for example in testing for non-financial asset impairment;

l considering the projected solvency position of FBD Insurance plc under a number of stress scenarios set out in the group’s Own

Solvency Risk Assessment, comparing these to regulatory and the group’s solvency capital requirement; and

l considering the group’s liquidity position and investments maturity profile to assess liquidity through the going concern

assessment period.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the group’s or the company’s ability to continue as a going concern for a

period of at least twelve months from the date on which the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s or the

company’s ability to continue as a going concern.

In relation to the company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add

or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it

appropriate to adopt the going concern basis of accounting.

We are required to report if the directors’ statement relating to going concern in accordance with Rule 6.1.82 (3) (a) of the Listing

Rules for Euronext Dublin Rule 9.8.6R(3) of the Listing Rules of the UK Financial Conduct Authority is materially inconsistent with our

knowledge obtained in the audit. We have nothing to report in respect of this responsibility.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this

report.

94 FBD Holdings PLC Annual Report 2021

Financial Statements

Independent Auditors’ Report (continued)

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’

report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the

other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this

report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or

otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are

required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material

misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement

of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Report of the Directors, we also considered whether the disclosures required by the Companies Act 2014

(excluding the information included in the “Non Financial Statement” as defined by that Act on which we are not required to report)

have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland), the Companies Act

2014 (CA14) and the Listing Rules applicable to the company (Listing Rules) require us to also report certain opinions and matters as

described below (required by ISAs (Ireland) unless otherwise stated).

Report of the Directors

l In our opinion, based on the work undertaken in the course of the audit, the information given in the Report of the Directors

(excluding the information included in the “Non Financial Statement” on which we are not required to report) for the year ended

31 December 2021 is consistent with the financial statements and has been prepared in accordance with the applicable legal

requirements. (CA14)

l Based on our knowledge and understanding of the group and company and their environment obtained in the course of the audit,

we did not identify any material misstatements in the Report of the Directors (excluding the information included in the “Non

Financial Statement” on which we are not required to report). (CA14)

Corporate governance statement

l In our opinion, based on the work undertaken in the course of the audit of the financial statements,

− thedescriptionofthemainfeaturesoftheinternalcontrolandriskmanagementsystemsinrelationtothefinancial

reporting process; and

− theinformationrequiredbySection1373(2)(d)oftheCompaniesAct2014;

included in the Corporate Governance Statement, is consistent with the financial statements and has been prepared in accordance

with section 1373(2) of the Companies Act 2014. (CA14)

l Based on our knowledge and understanding of the company and its environment obtained in the course of the audit of the

financial statements, we have not identified material misstatements in the description of the main features of the internal control

and risk management systems in relation to the financial reporting process and the information required by section 1373(2)(d) of

the Companies Act 2014 included in the Corporate Governance Statement. (CA14)

l In our opinion, based on the work undertaken during the course of the audit of the financial statements, the information required

by section 1373(2)(a),(b),(e) and (f) of the Companies Act 2014 and regulation 6 of the European Union (Disclosure of Non-

Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 is contained in the Corporate

Governance Statement. (CA14)

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency or liquidity of the

group

We have nothing material to add or to draw attention to regarding:

l The directors’ confirmation on page 53 of the Annual Report that they have carried out a robust assessment of the principal risks

facing the group, including those that would threaten its business model, future performance, solvency or liquidity.

l The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.

l The directors’ explanation on page 53 of the Annual Report as to how they have assessed the prospects of the group, over what

period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a

reasonable expectation that the group will be able to continue in operation and meet its liabilities as they fall due over the period

of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of the

principal risks facing the group and the directors’ statement in relation to the longer-term viability of the group. Our review was

substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their

statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the

“Code”); and considering whether the statements are consistent with the knowledge and understanding of the group and the company

and their environment obtained in the course of the audit. (Listing Rules).

Other Code provisions

We have nothing to report in respect of our responsibility to report when:

l The statement given by the directors on page 85 that they consider the Annual Report taken as a whole to be fair, balanced and

understandable and provides the information necessary for the members to assess the group’s and company’s position and

performance, business model and strategy is materially inconsistent with our knowledge of the group and company obtained in

the course of performing our audit.

l The section of the Annual Report on page 57 and 58 describing the work of the Audit Committee does not appropriately address

matters communicated by us to the Audit Committee.

l The directors’ statement relating to the company’s compliance with the Code and the Irish Corporate Governance Annex does not

properly disclose a departure from a relevant provision of the Code or the Annex specified, under the Listing Rules, for review by

the auditors.

96 FBD Holdings PLC Annual Report 2021

Financial Statements

Independent Auditors’ Report (continued)

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Directors’ Responsibilities Statement set out on page 85, the directors are responsible for the

preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and

fair view.

The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’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 the company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing

techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.

We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit

sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the IAASA website at:

https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors responsibilities_for_audit.pdf

This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with section

391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, 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.

Other required reporting

Companies Act 2014 opinions on other matters

l We have obtained all the information and explanations which we consider necessary for the purposes of our audit.

l In our opinion the accounting records of the company were sufficient to permit the company financial statements to be readily and

properly audited.

l The Company Statement of Financial Position is in agreement with the accounting records.

Other exception reporting

Directors’ remuneration and transactions

Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’ remuneration and

transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to report arising from this

responsibility.

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

We are required by the Listing Rules to review the six specified elements of disclosures in the report to shareholders by the Board on

directors’ remuneration. We have no exceptions to report arising from this responsibility.

Prior financial year Non Financial Statement

We are required to report if the company has not provided the information required by Regulation 5(2) to 5(7) of the European Union

(Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 in respect of the

prior financial year. We have nothing to report arising from this responsibility.

Prior financial year Remuneration Report

We are required to report if the company has not provided the information required by Section 1110N of the Companies Act 2014 in

respect of the prior financial year. We have nothing to report arising from this responsibility.

Appointment

We were appointed by the directors on 10 August 2016 to audit the financial statements for the year ended 31 December 2016 and

subsequent financial periods. The period of total uninterrupted engagement is 6 years, covering the years ended 31 December 2016

to 31 December 2021.

Padraig Osborne

for and on behalf of PricewaterhouseCoopers

Chartered Accountants and Statutory Audit Firm

Dublin

3 March 2022

l The maintenance and integrity of the FBD Group 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.

l Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from

legislation in other jurisdictions.

98 FBD Holdings PLC Annual Report 2021

Financial Statements

2021 2020

Note €000s €000s

Revenue 4(a) 386,661 380,999

Income

Gross premium written 4(c) 366,328 358,230

Reinsurance premiums 4(c) (32,652) (43,034)

Net premium written 4(c) 333,676 315,196

Change in net provision for unearned premiums 4(c) 571 36

Net premium earned 4(c) 334,247 315,232

Net investment return 5 15,679 10,388

Financial services income – Revenue from contracts with customers 4(a) 2,930 4,211

– Other financial services income 4(a) 4,375 5,172

Total income 357,231 335,003

Expenses

Net claims and benefits 4(c) (123,538) (221,403)

Other underwriting expenses 4(c) (93,369) (88,527)

Movement in other provisions 4(c) (22,143) (9,681)

Financial services and other costs 4(e) (6,138) (7,276)

Revaluation/(impairment) of property, plant and equipment 13 937 (734)

Finance costs 26 (2,545) (2,580)

Profit before taxation 6 110,435 4,802

Income taxation charge 10 (14,026) (412)

Profit for the financial year 96,409 4,390

Attributable to:

Equity holders of the parent 96,409 4,390

2021 2020

Earnings per share

Note Cent Cent

Basic 12 274 13

Diluted 12 268

Diluted earnings per share reflects the potential vesting of share based payments.

The ‘A’ ordinary shares of €0.01 each that are in issue have no impact on the earnings per share calculation.

The accompanying notes form an integral part of the financial statements.

The financial statements were approved by the Board and authorised for issue on 3 March 2022.

Consolidated Income Statement

For the financial year ended 31 December 2021

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Consolidated Statement of Comprehensive Income

For the financial year ended 31 December 2021

2021 2020

Note €000s €000s

Profit for the financial year 96,409 4,390

Items that will or may be reclassified to profit or loss in subsequent periods:

Net (loss)/gain on available for sale financial assets during the year (11,169) 4,491

(Gain)/loss transferred to the Consolidated Income Statement on disposal during the

year (1,033) 14

Taxation credit/(charge) relating to items that will or may be reclassified to profit or

loss in subsequent periods 1,525 (563)

Items that will not be reclassified to profit or loss in subsequent periods:

Actuarial gain on retirement benefit obligations 27(d) 280 2,326

Property held for own use revaluation gain/(loss) 4 (419)

Taxation charge relating to items not to be reclassified in subsequent periods (265) (431)

Other comprehensive (expense)/income after taxation (10,658) 5,418

Total comprehensive income for the financial year 85,751 9,808

Attributable to:

Equity holders of the parent 85,751 9,808

100 FBD Holdings PLC Annual Report 2021

Financial Statements

Consolidated Statement of Financial Position

At 31 December 2021

ASSETS

2021 2020

Note €000s €000s

Property, plant and equipment 13 24,178 25,085

Policy administration system 14 27,982 36,721

Intangible assets 15 9,031 5,100

Investment property 16 16,055 17,051

Right of use assets 9 5,078 5,635

Loans 577 601

Financial assets

Available for sale investments 17(a) 893,715 863,880

Investments held for trading 17(a) 137,547 116,930

Deposits with banks 17(a) — 40,000

1,031,262 1,020,810

Reinsurance assets

Provision for unearned premiums 24(e) 1,711 1,033

Claims outstanding 24(e) 195,249 122,760

196,960 123,793

Retirement benefit surplus 27(f) 10,901 10,849

Current taxation asset — 7,510

Deferred acquisition costs 18 35,458 34,079

Other receivables 19 58,047 65,402

Cash and cash equivalents 20 164,479 129,535

Total assets 1,580,008 1,482,171

101

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Consolidated Statement of Financial Position (continued)

At 31 December 2021

EQUITY AND LIABILITIES

2021 2020

Note €000s €000s

Equity

Called up share capital presented as equity 21 21,409 21,409

Capital reserves 22(a) 27,406 24,756

Revaluation reserve 752 978

Retained earnings 422,815 336,838

Equity attributable to ordinary equity holders of the parent 472,382 383,981

Preference share capital 23 2,923 2,923

Total equity 475,305 386,904

Liabilities

Insurance contract liabilities

Provision for unearned premiums 24(d) 184,648 184,541

Claims outstanding 24(c) 800,756 794,416

985,404 978,957

Other provisions 25 13,492 12,067

Subordinated debt 26 49,603 49,544

Lease liabilities 9 5,349 5,843

Deferred taxation liability 28 2,761 4,127

Current taxation liability 6,437 —

Payables 29(a) 41,657 44,729

Total liabilities 1,104,703 1,095,267

Total equity and liabilities 1,580,008 1,482,171

The accompanying notes form an integral part of the financial statements.

The financial statements were approved by the Board and authorised for issue on 3 March 2022.

They were signed on its behalf by:

Liam Herlihy Tomás Ó Midheach

Chairman Group Chief Executive

102 FBD Holdings PLC Annual Report 2021

Financial Statements

Consolidated Statement of Cash Flows

For the financial year ended 31 December 2021

2021 2020

Note €000s €000s

Cash flows from operating activities

Profit before taxation 110,435 4,802

Adjustments for:

Profit on investments held for trading (10,839) (5,356)

Loss on investments available for sale 2,429 3,531

Interest and dividend income (8,106) (9,481)

Depreciation/amortisation of property, plant and equipment, intangible assets &

policy administration system 13,14 & 15 18,012 11,041

Depreciation on right of use assets 9 790 821

Share-based payment expense 34 2,650 1,945

Fair value loss on investment property 16 996 1,569

(Revaluation)/impairment of property, plant and equipment 13 (937) 734

(Decrease)/increase in insurance contract liabilities (66,720) 54,638

Increase in other provisions 25 1,425 3,650

Operating cash flows before movement in working capital 50,135 67,894

Decrease/(increase) in receivables and deferred acquisition costs 5,460 (3,154)

(Decrease)/increase in payables (394) 10,680

Interest on lease liabilities 9 236 263

Purchase of investments held for trading (58,432) (54,008)

Sale of investments held for trading 48,653 53,835

Cash generated from operations 45,658 75,510

Interest and dividend income received 8,620 10,204

Income taxes paid (75) (6,611)

Net cash generated from operating activities 54,203 79,103

Cash flows from investing activities

Purchase of available for sale investments (210,499) (217,013)

Sale of available for sale investments 166,034 166,093

Purchase of property, plant and equipment 13 (1,273) (1,839)

Additions to policy administration system 14 (4,685) (4,796)

Purchase of intangible assets 15 (5,398) (3,593)

Refurbishment of investment property 16 — (1,922)

Sale of investment property 16 — 1,994

Decrease in loans and advances 24 10

Maturities of deposits invested with banks 17(a) 40,000 40,000

Additional deposits invested with banks — (20,000)

Net cash used in investing activities (15,797) (41,066)

Cash flows from financing activities

Ordinary and preference dividends paid 30 — —

Interest payments on subordinated debt 26 (2,500) (2,500)

Principal elements of lease payments 9 (962) (984)

Net cash used in financing activities (3,462) (3,484)

Net increase in cash and cash equivalents 34,944 34,553

Cash and cash equivalents at the beginning of the year 20 129,535 94,982

Cash and cash equivalents at the end of the financial year 20 164,479 129,535

The accompanying notes form an integral part of the financial statements.

103

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Consolidated Statement of Changes in Equity

For the financial year ended 31 December 2021

Called up share capital

presented as equity

Capital reserves

Revaluation reserve

Retained earnings

Attributable to

ordinary shareholders

Preference share

capital

Total equity

€000s €000s €000s €000s €000s €000s €000s

Balance at 1 January 2020 21,409 22,811 — 328,008 372,228 2,923 375,151

Reclassification to revaluation reserve* — — 1,345 (1,345) — — —

Profit after taxation — — — 4,390 4,390 — 4,390

Other comprehensive (expense)/income after

taxation — — (367) 5,785 5,418 — 5,418

Total comprehensive income for the year — — 978 8,830 9,808 — 9,808

Recognition of share based payments — 1,945 — — 1,945 — 1,945

Balance at 31 December 2020 21,409 24,756 978 336,838 383,981 2,923 386,904

Profit after taxation — — — 96,409 96,409 — 96,409

Other comprehensive expense after taxation — — (226) (10,432) (10,658) — (10,658)

Total comprehensive (expense)/income for the

year — — (226) 85,977 85,751 — 85,751

Recognition of share based payments — 2,650 — — 2,650 — 2,650

Balance at 31 December 2021 21,409 27,406 752 422,815 472,382 2,923 475,305

*During 2020 the Group reclassified the reserve for revaluation gains on property held for own use previously included in retained earnings into a

separate revaluation reserve.

104 FBD Holdings PLC Annual Report 2021

Financial Statements

Company Statement of Financial Position

At 31 December 2021

2021 2020

Note €000s €000s

Assets

Investments

Investment in subsidiaries 31 91,831 91,831

Financial assets 1 1

91,832 91,832

Cash and cash equivalents 3,417 880

Retirement benefit surplus 2,351 2,367

Deferred taxation asset — 53

Other receivables 4,094 3,864

Total assets 101,694 98,996

Equity and liabilities

Equity

Called up share capital presented as equity 21 21,409 21,409

Capital reserves 22(b) 27,406 24,756

Retained earnings 47,308 47,353

Shareholders’ funds – equity interests 96,123 93,518

Preference share capital 23 2,923 2,923

Equity attributable to equity holders of the parent 99,046 96,441

Payables 29(b) 2,354 2,555

Deferred taxation liability 294 —

Total equity and liabilities 101,694 98,996

The loss attributable to shareholders in the financial statement of the holding company for the year ended 31 December 2021 was

€35,000 (2020 loss: €1,963,000). As permitted by Section 34 of the Companies Act 2014, the Income Statement of the Company has

not been separately presented in these financial statements.

The accompanying notes form an integral part of the financial statements.

The financial statements were approved by the Board and authorised for issue on 3 March 2022.

They were signed on its behalf by:

Liam Herlihy Tomás Ó Midheach

Chairman Group Chief Executive

105

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Company Statement of Cash Flows

For the financial year ended 31 December 2021

2021 2020

€000s €000s

Cash flows from operating activities

(Loss) before taxation (93) (2,420)

Adjustments for:

Share-based payment expense 2,650 1,945

Operating cash flows before movement in working capital 2,557 (475)

Decrease in receivables 179 695

Decrease in payables (199) (74)

Net cash generated from operating activities 2,537 146

Net cash generated from investing activities — —

Cash flows from financing activities

Ordinary and preference dividends paid — —

Net cash used in financing activities — —

Net increase in cash and cash equivalents 2,537 146

Cash and cash equivalents at the beginning of the financial year 880 734

Cash and cash equivalents at the end of the financial year 3,417 880

The accompanying notes form an integral part of the financial statements.

106 FBD Holdings PLC Annual Report 2021

Financial Statements

Company Statement of Changes in Equity

For the financial year ended 31 December 2021

Called up share capital

presented as equity

Capital reserves

Retained earnings

Attributable to ordinary

shareholders

Preference share

capital

Total equity

€000s €000s €000s €000s €000s €000s

Balance at 1 January 2020 21,409 22,811 48,930 93,150 2,923 96,073

Loss after taxation — — (1,963) (1,963) — (1,963)

Other comprehensive income after taxation — — 386 386 — 386

Total comprehensive loss for the year — — (1,577) (1,577) — (1,577)

Recognition of share based payments — 1,945 — 1,945 — 1,945

Balance at 31 December 2020 21,409 24,756 47,353 93,518 2,923 96,441

Loss after taxation — — (35) (35) — (35)

Other comprehensive expense after taxation — — (10) (10) — (10)

Total comprehensive loss for the year — — (45) (45) — (45)

Recognition of share based payments — 2,650 — 2,650 — 2,650

Balance at 31 December 2021 21,409 27,406 47,308 96,123 2,923 99,046

107

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Notes to the Financial Statements

For the financial year ended 31 December 2021

1 GENERAL INFORMATION

FBD Holdings plc is an Irish registered public limited company. The registration number of the company is 135882. The

address of the registered office is FBD House, Bluebell, Dublin 12, Ireland. FBD is one of Ireland’s largest property and casualty

insurers, looking after the insurance needs of farmers, businesses and retail customers. 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, business and retail customers throughout Ireland. It has a network of 34 branches nationwide.

2 GOING CONCERN

The Directors have, at the time of approving the 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 Budget 2022 and projections for 2023 which reflect the latest assumptions used by the

business. The economic environment may impact on premiums including potential reductions in exposures, new business and

retention levels. As all restrictions are lifted and the post pandemic economy fully recovers this will impact on the claims

frequency and severity. Expense assumptions can change depending on the level of premiums as discretionary spend and

resources are adjusted. There were a number of scenario projections run as part of the ORSA process as well as 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 expenditure as they fall due. The business is expected to have adequate cash resources available to

support business requirements as well as claims in relation to public house Business Interruption claims as they fall due. 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.

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.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The Group and Company financial statements have been prepared in accordance with International Financial Reporting

Standards (“IFRSs”) adopted by the European Union and therefore the Group financial statements comply with Article 4 of the

EU IAS Regulation. The Group and Company financial statements are prepared in compliance with the Companies Acts 2014.

ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)

Standards adopted during the period

In the current year, the Group has applied amendments to IFRSs issued by the International Accounting Standards Board

(IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2021, unless otherwise stated.

l Interest Rate Benchmark Reform - phase 2 (Amendments to IFRS 7, IAS 4 and IFRS 16)

The amendments of this standard has not had a material impact on the financial statements of the Group.

108 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Standards and Interpretations not yet effective

IFRS 17 Insurance Contracts

IFRS 9 Financial Instruments

1. Effective for annual periods beginning on or after 1 January 2023, with earlier application permitted.

2. Consolidated financial statements only. Effective for annual periods beginning on or after 1 January 2023, with earlier

application permitted.

IFRS 17 Insurance Contracts

IFRS 17 Insurance Contracts is effective for annual periods beginning on or after 1 January 2023, requiring a transition balance

sheet at 1 January 2022. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of

insurance contracts and supersedes IFRS 4 Insurance Contracts. FBD Group will adopt IFRS 17 and IFRS 9 from the effective

date of 1 January 2023.

The core of IFRS 17 is the general model, supplemented by a specific adaptation for contracts with direct participation features

(the variable fee approach) and a simplified approach (the premium allocation approach) mainly for short-duration contracts.

The main features of the new measurement model for insurance contracts are, as follows: an estimate of the present value of

future net cash flows incorporating a risk adjustment for non-financial risk and re-measured at each reporting period (the

fulfilment cash flows) and a contractual service margin representing the unearned profit of the insurance contracts relating to

the future service to be provided under the contracts. The carrying amount of a group of insurance contracts at the end of each

reporting period shall be the sum of the ‘liability for remaining coverage’ comprising the fulfilment cash flows related to future

service allocated to the group at that date, and the ‘liability for incurred claims’, comprising the fulfilment cash flows related to

past service allocated to the group at that date.

A joint IFRS 17 and IFRS 9 project team sponsored by the Group Chief Financial Officer is in place to deliver the required

reporting in line with required application timelines.

The project’s working group involves individuals from various functions including Financial Control, Actuarial, Pricing and

Underwriting, IT, Investments, Financial Planning and Analysis together with other stakeholders, such as Risk, when required.

A cross functional Steering Committee comprised of senior management from Finance, Underwriting and IT oversees the work

performed by individual work streams. Regular communication on progress, is provided to all relevant stakeholders including

Executive Management and the Audit Committee.

An initial assessment of the business and financial impact of adopting IFRS 17 and IFRS 9 on the Group has been completed

and work is now underway on the solution design and build of the systems that will provide the foundation for reporting under

IFRS 17 and IFRS 9 from 1 January 2023. Key estimates identified by management in applying the standard include;

assumptions used to estimate cash flows within the insurance policy contract boundary, determining discount rates and

deciding on the risk adjustment calculation method. Key judgements identified by management in applying the standard

include; deciding on the level of aggregation of contracts into units of account, demonstrating eligibility to apply the simplified

premium allocation approach (‘PAA’) and recalibrating KPI’s. Parallel run testing of reporting is scheduled to take place in 2022

to assure reporting compliance by 1 January 2023.

Changes to classification and measurement

The adoption of IFRS 17 is not expected to change the classification of the Group’s insurance contracts. The Group expects to

be able to apply the simplified premium allocation approach to all material insurance and reinsurance contract groups.

The measurement principles of the PAA differ from the ‘earned premium approach’ used by the Group under IFRS 4 in the

following key areas:

l The liability for remaining coverage (‘LRC’) reflects premiums received less deferred insurance acquisition cash flows and

less amounts recognised in revenue for insurance services provided.

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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l Measurement of the LRC includes an adjustment for the time value of money and the effect of financial risk where the

premium due date and the related period of services are more than 12 months apart.

l Measurement of the LRC involves an explicit evaluation of risk adjustment for non-financial risk when a group of contracts

is onerous in order to calculate a loss component (previously these may have formed part of the unexpired risk reserve

provision).

l Measurement of the liability for incurred claims (‘LIC’) (previously claims outstanding and incurred-but-not reported (IBNR)

claims) is determined on a discounted probability-weighted expected value basis, and includes an explicit risk adjustment

for non-financial risk. The LIC includes the Group’s obligation to pay other incurred insurance expenses.

On adoption IFRS 17 will significantly impact the measurement and presentation of the contracts in scope within the

consolidated financial statements of the Group. The final figures will depend on the refinement of transition approaches,

particularly, in the areas of discounting, cash flow modelling and risk adjustments. Although an initial assessment of the

financial impact has been completed, as of the date of the publication of these Consolidated Financial Statements, the results

of same are not yet a reliable quantification of the effect on the Group’s Consolidated Financial Statements.

Changes to presentation and disclosure

For presentation in the Statement of Financial Position, the standard requires that the Group aggregate insurance and

reinsurance contracts issued and reinsurance contracts held, respectively and present separately:

l Portfolios of insurance and reinsurance contracts issued that are assets

l Portfolios of insurance and reinsurance contracts issued that are liabilities

l Portfolios of reinsurance contracts held that are assets

l Portfolios of reinsurance contracts held that are liabilities

The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements.

Portfolios of insurance contracts issued include any assets for insurance acquisition cash flows.

The line item descriptions in the Income Statement and the Statement of Comprehensive Income will change significantly.

Previously, the Group reported the following line items:

l Gross premium written

l Reinsurance premiums

l Net premium written

l Change in the net provision for unearned premiums

l Net premium earned

l Gross insurance claims

l Net insurance claims

Instead, IFRS 17 requires separate presentation of:

l Insurance revenue

l Insurance service expenses

l Insurance finance income or expenses

l Income or expenses from reinsurance contracts held

l Reinsurance contracts held are required to be presented separately from the expenses or income from insurance contracts

issued.

110 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Extensive disclosures providing information on the recognised amounts from insurance contracts and the nature and extent of

risks arising from these contracts are required under IFRS17. The Group will be required to provide disaggregated qualitative

and quantitative information about:

l Amounts recognised in its Financial Statements from insurance contracts

l Significant judgements, and changes in those judgements, when applying the standard

IFRS 9 Financial Instruments

IFRS 9 has been issued to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’ (IAS 39). IFRS 4 permits an

insurance company that meets the criteria a temporary exemption from applying IFRS 9 and to continue to apply IAS 39. The

Group meets the criteria and has elected to defer the application of IFRS 9 to the reporting period beginning on 1 January

2023, alongside IFRS 17. Implementation plans are on track.

Under IFRS 9, all equity securities and fund investments, and some debt instruments will be measured at fair value through

profit or loss because the characteristics of the contractual cash flows from such instruments are not solely payments of

principal and interest on the principal amount outstanding. Furthermore, IFRS 9 introduces a new impairment model based

on expected credit losses rather than on an incurred loss basis as well as new presentation and disclosure requirements.

The Group decided to defer the implementation of IFRS 9 until IFRS 17 becomes effective to consider in combination the

option under IFRS 9 to measure debt instruments at fair value through the profit and loss (FVTPL) or fair value through other

comprehensive income (FVOCI), and the option in IFRS 17 to disaggregate insurance finance income and expense between the

Income Statement and the Statement of Comprehensive Income (the OCI option), in order to minimise potential accounting

mismatches.

ACCOUNTING POLICIES

The principal accounting policies adopted by the Board are detailed below. All accounting policies are applicable to the

consolidated and company financial statements unless stated otherwise.

A) ACCOUNTING CONVENTION

The consolidated and company financial statements are prepared under the historical cost convention as modified by the

revaluation of property, investments held for trading, available for sale investments and investment property, which are

measured at fair value.

B) BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings to

31 December. Control is achieved when the Company:

l has power over the investee;

l is exposed, or has rights, to variable returns from its involvement with the investee; and

l has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to

one or more of the elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over an investee when the voting

rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company

considers all the relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are

sufficient to give it power, including:

l the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

l potential voting rights held by the Company, other vote holders or other parties;

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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B) BASIS OF CONSOLIDATION (continued)

l rights arising from other contractual arrangements; and

l any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct

the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’

meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company

loses control of the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the

non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the

non-controlling interests even if this results in the non-controlling interests having a deficit balance.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in a loss of control over the subsidiaries are

accounted for as equity transactions. The carrying amount of the Group’s interests and the non-controlling interests are

adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the

non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity

and attributed to the owners of the Company.

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured as the

aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments

issued by the Group in exchange for control of the acquiree. Any transaction costs incurred are expensed in the period in which

they occur. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition

under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups), that

are classified as held for sale in accordance with IFRS 5, Non Current Assets Held for Sale and Discontinued Operations, which

are recognised and measured at fair value less costs of sale.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the

business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent

liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets,

liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the

Consolidated Income Statement.

When the Group loses control of a subsidiary, the profit or loss on the sale is calculated as the difference between (i) the

aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying

amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. Amounts

previously recognised in the Consolidated Statement of Comprehensive Income in relation to the subsidiary are accounted for

(i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the

relevant assets or liabilities are disposed of. The fair value of any investment retained in the former subsidiary at the date when

control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments:

Recognition and Measurement or, when applicable, costs on initial recognition of an investment in an associate or jointly

controlled entity.

C) INVESTMENTS IN SUBSIDIARIES (Company only)

Investments in subsidiaries are accounted for at cost less accumulated impairment losses.

Dividend income from investments in subsidiaries is recognised when the Company’s right to receive has been established.

D) REVENUE RECOGNITION

Revenue is measured at the fair value of the consideration received or receivable and represents gross premiums written,

broking commissions, fees, other commissions, interest and dividends receivable, rents receivable, net of discounts, levies,

VAT and other sales related taxes.

112 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

D) REVENUE RECOGNITION (continued)

Revenue from insurance contracts is accounted for in accordance with accounting policy (E).

Interest income is accrued on a time basis with reference to the principal outstanding at the effective interest rate applicable.

Broking commission is recognised as the Group satisfies its performance obligations. The Group’s performance obligation in

relation to broking commissions is satisfied at the point in time when the underlying policy has been contractually agreed

between the insured and the provider. The transaction price is the expected commission income receivable by the Group for

the satisfaction of this performance obligation. The transaction price includes a variable consideration estimation on the basis

that elements of commissions receivable are dependent on the outcome of future events, namely the underlying policies sold

remaining in force, and are paid in future periods. Thus an expected level of lapses is applied to policies sold in order to

calculate an appropriate commission receivable in relation to the satisfaction of the performance obligation. Variable

consideration is only recognised to the extent that it is highly probable that a significant reversal of revenue would not occur.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Rental income is recognised on a straight-line basis over the period of the lease.

E) INSURANCE CONTRACTS

(i) Premiums written

Premiums written relate to contracts entered into during the accounting period, together with any difference between

booked premiums for prior years and those previously accrued, and include estimates of premiums due. Premiums

written exclude taxes and duties levied on premiums.

Premium rebates relate to elements of premium written returned to policyholders as a result of agreed reductions in risk

exposure. The earnings impact of premium rebates is recognised over the period of reduced risk exposure.

(ii) Unearned premiums

Unearned premiums are those portions of premium income written in the year that relate to insurance cover after the

year end. Unearned premiums are computed on a 365th of premium written. At 31 December each year, an assessment

is made of whether the provision for unearned premiums is adequate as set out in accounting policy E (iv) below.

(iii) Deferred acquisition costs

Deferred acquisition costs represent the proportion of acquisition costs, net of reinsurance, that are attributable to the

unearned premiums. Acquisition costs comprise the direct and indirect costs of obtaining and processing new insurance

business. These costs are recognised as a deferred acquisition cost asset and amortised on the same basis as the related

premiums are earned, and are tested for impairment at 31 December each year.

(iv) Unexpired risks

At 31 December each year, an assessment is made of whether the provision for unearned premiums is adequate.

Provision for unexpired risks is made where the expected claims, related expenses and deferred acquisition costs are

expected to exceed unearned premiums, after taking account of future investment income. At each reporting date, the

Group reviews its unexpired risks and carries out a liability adequacy test for any overall excess of expected claims and

deferred acquisition costs over unearned premiums, using the current estimates of future cash flows under its contracts

after taking account of the investment return expected to arise on assets. If these estimates show that the carrying

amount of its insurance liabilities (less related deferred acquisition costs) is insufficient in light of the estimated future

cash flows, the deficiency is recognised in the Income Statement by setting up a provision in the Statement of Financial

Position.

113

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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

E) INSURANCE CONTRACTS (continued)

(v) Claims incurred

Claims incurred comprise the cost of all insurance claims occurring during the year, whether reported or not, and any

adjustments to claims outstanding from previous years.

Full provision, net of reinsurance recoveries, is made at the reporting date for the estimated cost of claims incurred but

not settled, including claims incurred but not yet reported and expenses to be incurred after the reporting date in settling

those claims. The Group takes all reasonable steps to ensure that it has appropriate information regarding notified claims

and uses this information when estimating the cost of those claims. Claims reserves are not discounted.

The Group uses estimation techniques, based on statistical analysis of past experience, to calculate the estimated cost of

claims outstanding at the year end. It is assumed that the development pattern of the current claims will be consistent

with previous experience. Allowance is made, however, for any changes or uncertainties that may cause the cost of

unsettled claims to increase or reduce. These changes or uncertainties may arise from issues such as the effects of

inflation, changes in the mix of business or the legal environment.

Receivables arising out of direct insurance operations are measured at initial recognition at fair value and are

subsequently measured at amortised cost, after recognising any impairment loss to reflect estimated irrecoverable

amounts.

(vi) Reinsurance

Premiums payable in respect of reinsurance ceded, are recognised in the period in which the reinsurance contract is

entered into and include estimates where the amounts are not determined at the reporting date. Premiums are

expensed over the period of the reinsurance contract, calculated principally on a daily pro rata basis.

A reinsurance asset (reinsurers’ share of claims outstanding and provision for unearned premium) is recognised to reflect

the amount estimated to be recoverable under the reinsurance contracts in respect of the outstanding claims reported

under insurance liabilities. The amount recoverable from reinsurers is initially valued on the same basis as the underlying

claims provision.

The amount recoverable is reduced when there is an event arising after the initial recognition that provides objective

evidence that the Group may not receive all amounts due under the contract and the event has a reliably measurable

impact on the expected amount that will be recoverable from the reinsurer.

The reinsurers’ share of each unexpired risk provision is recognised on the same basis.

F) OTHER PROVISIONS

Other provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events,

when it is probable that an outflow of resources will be required to settle the obligation, and when the provision can be reliably

estimated. Provisions are not recognised for future operating losses.

Provisions are measured at management’s best estimate, at the balance sheet date, of the expenditure required to settle the

obligation.

G) PROPERTY, PLANT AND EQUIPMENT

(i) Property

Property held for own use in the supply of services or for administrative purposes is stated at revalued amounts, being

the fair value at the date of revaluation which is determined by professional valuers, less subsequent depreciation for

buildings. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially

from that which would be determined using fair values at the reporting date. Any revaluation increase arising on the

revaluation of such property is recognised in other comprehensive income and credited to the revaluation reserve within

equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised. A decrease

on revaluation is charged as an expense to the Income Statement to the extent that it exceeds the balance, if any, held in

the revaluation reserve relating to previous revaluation of that asset.

114 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

G) PROPERTY, PLANT AND EQUIPMENT (continued)

(i) Property (continued)

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales

proceeds and the carrying amount of the asset and is recognised in the Income Statement and any associated revaluation

surplus is transferred to retained earnings.

(ii) Computer equipment and fixtures and fittings

Computer equipment and fixtures and fittings are stated at cost less accumulated depreciation and accumulated

impairment losses.

(iii) Depreciation

Depreciation is provided in respect of computer equipment and fixtures and fittings, and is calculated in order to write off

the cost or valuation of the assets over their expected useful lives on a straight line basis over a three to ten year period.

Depreciation on assets under development commences when the assets are ready for their intended use.

Buildings are depreciated to their residual value over the useful economic life of the building, on a straight line basis.

Land is not depreciated.

The assets’ residual values, useful lives and methods of depreciation are reviewed at least each financial year end and

adjusted if appropriate.

The estimated useful lives of property, plant and equipment are as follows:

Buildings: 30 years

Computer equipment: 3-5 years

Fixtures and fittings: 10 years

H) POLICY ADMINISTRATION SYSTEM

The policy administration system is stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is provided in respect of the policy administration system and is calculated in order to write off the costs incurred

to date, over its expected useful life which is determined to be 4.5 years on a straight line basis.

I) INTANGIBLE ASSETS

Intangible assets are stated at cost less accumulated amortisation and less any accumulated impairment losses. Intangible

assets comprise computer software and these assets are amortised on a straight line basis over a five year period.

J) INVESTMENT PROPERTY

Investment property, which is property held to earn rentals and/or for capital appreciation, is recognised initially at cost and

stated at fair value at the reporting date being the value determined by qualified independent professional valuers. Gains or

losses arising from changes in the fair value are recognised in the Income Statement for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use

and no future economic benefits are expected. Any gain or loss arising on derecognition of the property (calculated as the

difference between the net disposal proceeds and the carrying amount of the asset) is included in the Income Statement for

the period in which the property is derecognised.

K) FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Group becomes a party

to the contractual provisions of the instrument.

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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

K) FINANCIAL INSTRUMENTS (continued)

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.

(i) Investments held for trading at fair value

Investments held for trading are stated at fair value and include quoted shares, quoted debt securities and collective

investment schemes. They are recognised on a trade date basis at fair value and are revalued at subsequent reporting

dates at fair value, using the closing bid price, with gains and losses being included in the Income Statement in the period

in which they arise.

Investments are held for trading if:

l they have been acquired principally for the purpose of selling in the near future; or

l they are part of an identified portfolio of financial instruments that the Group manages together and have a recent

actual pattern of short-term profit-making; or

l they are derivatives that are not designated and effective as hedging instruments.

Investments other than investments held for trading may be designated at FVTPL (fair value through profit or loss) upon

initial recognition if:

l such designation eliminates or significantly reduces a measurement or recognition inconsistency that would

otherwise arise; or

l the investment forms part of a group of investments or financial liabilities or both, which is managed and its

performance is evaluated on a fair value basis, in accordance with the Group’s documented Investment Policy.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in the

Income Statement. The net gain or loss recognised in the Consolidated Income Statement incorporates any dividend or

interest earned on the financial asset and is included in the ‘net investment return’ line item in the Income Statement.

(ii) Available for sale investments

Available for sale investments include quoted debt securities and unquoted investments, and are stated at fair value

where fair value can be reliably measured. Fair value is calculated using closing bid prices. 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.

(iii) 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.

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.

116 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

K) FINANCIAL INSTRUMENTS (continued)

(iv) 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 any impairment loss to reflect estimated irrecoverable

amounts.

Other receivables (Company only)

Other debtors are measured at initial recognition at fair value and are subsequently measured at amortised cost less

expected credit losses. Expected credit losses is a forward looking measure of impairment calculated on a probability of

credit losses basis.

(v) 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.

(vi) Subordinated debt

Subordinated debt issued by the Group comprise callable dated deferrable subordinated notes.

The financial liability is initially recognised at fair value of the subordinated notes net of costs. Subsequent to initial

recognition, 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.

Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4)

The Group applies the temporary exemption from IFRS 9 Financial Instruments, as defined in the amendment “Applying

IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts – IFRS 4 amendments” issued by the IASB in September

2016, in its consolidated financial statements. This amendment allows an entity to defer the implementation of IFRS 9 if

its activities are predominantly connected with insurance. As a result, the Group will continue to apply IAS 39, Financial

Instruments: Recognition and Measurement in its consolidated financial statements until the reporting period beginning

on 1 January 2023.

During 2018 the Group performed an assessment of the amendments and reached the conclusion that its activities were

predominantly connected with insurance as at 31 December 2015. The Group’s percentage of its gross liabilities from

contracts within the scope of IFRS 4 relative to its total liabilities at 31 December 2015 was 94.5% which is in excess of

the 90% threshold required by IFRS 4. There has been no significant change to the activities of the Group requiring

reassessment of the use of the temporary exemption from IFRS 9 to 31 December 2021.

IFRS 9 financial instruments deferral disclosures, as defined in IFRS 4, are included in note 37.

L) LEASES

(i) The Group as Lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial

direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset

and recognised on a straight-line basis over the operating lease term.

(ii) The Group as Lessee

A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a

period of time in exchange for consideration’.

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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

L) LEASES (continued)

(ii) The Group as Lessee (continued)

To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

l the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by

being identified at the time the asset is made available to the Group;

l the Group has the right to obtain substantially all of the economic benefits from use of the identified asset

throughout the period of use, considering its rights within the defined scope of the contract the Group has the right to

direct the use of the identified asset throughout the period of use; and

l The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period

of use.

Measurement and recognition of leases as a lessee

At lease commencement date, the lease liability is measured at the present value of the remaining lease payments,

discounted using the Group’s incremental borrowing rate. The right of use asset is recognised as an amount equal to the lease

liability, adjusted for amount of any prepaid or accrued lease payments relating to the lease.

The Group depreciates the right of use assets on a straight-line basis from the lease commencement date to the earlier of the

end of the useful life of the right of use asset or the end of the lease term. The Group also assesses the right of use assets for

impairment when such indicators exist.

Lease payments included in the measurement of the lease liability are made up of fixed payments, variable payments based on

an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options

reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is

re-measured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

M) CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits with maturities of 3 months or less held for the

purpose of meeting short-term cash commitments rather than for investment or other purposes. Deposits with banks and

cash and cash equivalents are valued at amortised cost.

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.

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.

118 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

N) TAXATION (continued)

Deferred taxation liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except

where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences

will not reverse in the foreseeable future.

Deferred taxation assets and liabilities are offset when there is a legally enforceable right to set off current taxation assets

against current taxation liabilities and when they relate to income taxes levied by the same taxation authority and the Group

intends to settle on a net basis.

O) RETIREMENT BENEFITS

The Group provides either defined benefit or defined contribution retirement benefit schemes for the majority of its

employees.

(i) Defined benefit scheme

A full actuarial valuation of the scheme is undertaken every three years and is updated annually to reflect current

conditions in the intervening periods for the purposes of preparing the financial statements.

The liability or asset recognised in the Statement of Financial Position in respect of defined benefit pension plans is the

present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The

defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The

present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using

interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and

that have terms approximating to the terms of the related obligation. In countries where there is no deep market in such

bonds, the market rates on government bonds are used.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and

the fair value of plan assets. This cost is included in employee benefit expense in the Income Statement.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are

recognised in the period in which they occur, directly in other comprehensive income. They are included in retained

earnings in the Statement of Changes in Equity and in the Statement of Financial Position.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are

recognised immediately in the Income Statement as past service costs.

(ii) Defined contribution schemes

Costs arising in respect of the Group’s defined contribution retirement benefit schemes are charged to the Income

Statement in line with the service received.

P) CURRENCY

For the purpose of the consolidated financial statements, the results and financial position of each Group company are

expressed in Euro, which is the functional currency of the Company, and the presentation currency for the consolidated

financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional

currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each

Statement of Financial Position date, monetary assets and liabilities that are denominated in foreign currencies are

retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign

currencies are translated at the rates prevailing at the date when the fair value was determined.

On consolidation, the assets and liabilities of the Group’s non Euro-zone operations are translated at exchange rates prevailing

on the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange

rates fluctuate significantly, in which case the exchange rates at the date of transactions are used. Exchange differences that

are classified as equity are transferred to the translation reserve. Such translation differences are recognised as income or

expense in the period in which the operation is disposed.

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Q) SHARE-BASED PAYMENTS AND LONG TERM INCENTIVE PLANS

The Group operates a long-term incentive plan based on non-market vesting conditions. The fair value of the non-market

based awarded shares is determined with reference to the share price of the Group at the date of grant. The cost is expensed in

the Income Statement over the vesting period at the conclusion of which the employees become unconditionally entitled to

the shares once performance conditions are met. The corresponding amount to the expense is credited to a separate reserve

in the Statement of Financial position. At each period end, the Group reviews its estimate of the number of shares that it

expects to vest and any adjustment relating to current and past vesting periods is brought to the Income Statement. The share

awards are all equity settled.

R) TREASURY SHARES

Where any group company purchases the Company’s equity share capital, the consideration paid is shown as a deduction from

ordinary shareholders’ equity. Consideration received on the subsequent sale or issue of treasury shares is credited to ordinary

shareholders’ equity. Treasury shares are excluded when calculating earnings per share.

S) IMPAIRMENT OF ASSETS

(i) Impairment of tangible and intangible assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine

whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the

recoverable amount of the asset is estimated to determine the extent of the impairment loss, if any. Where the asset

does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of

the cash generating unit to which the asset belongs.

The recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows attributable to the asset (or cash-generating unit) are discounted to their present value using

a pre-taxation discount rate that reflects current market assessments of the time value of money and the risks specific to

the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the

carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is

recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the

impairment loss is treated as a revaluation decrease.

Where a revaluation loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to

the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying

amount that would have been determined had no revaluation loss been recognised for the asset (or cash-generating unit)

in prior years. A reversal of a revaluation loss, other than in relation to goodwill, is recognised as income immediately,

unless the relevant asset is carried at a revalued amount, in which case the reversal of the revaluation loss is treated as a

revaluation increase.

(ii) Impairment of financial assets

Financial assets, other than those at FVTPL (fair value through profit or loss), are assessed for indicators of impairment

at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more

events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investment

have been impacted. For listed and unlisted equity investments classified as Available for Sale (“AFS”), a significant or

prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

l significant financial difficulty of the issuer or counterparty; or

l default or delinquency in interest or principal payments; or

l it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

120 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

S) IMPAIRMENT OF ASSETS (continued)

(ii) Impairment of financial assets (continued)

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired

individually are, in addition, assessed for impairment on a collective basis.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s

carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original

effective interest rate.

The carrying amount of a financial asset is directly reduced by the impairment loss for all financial assets.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in the

Statement of Comprehensive Income are reclassified to the Income Statement in the period.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases

and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously

recognised impairment loss is reversed through the Income Statement, to the extent that the carrying amount of the

investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the

impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in the Consolidated Income Statement are

not reversed through the Income Statement. Any increase in fair value subsequent to an impairment loss is recognised in

the Statement of Comprehensive Income.

T) OTHER FINANCIAL SERVICES INCOME

Other financial services income comprises interest on instalment premiums which is recognised on an effective interest

method and other financial services income as detailed in accounting policy (D).

U) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The principal accounting policies adopted by the Group are set out on pages 107 to 122. In the application of these 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 source of judgement and estimation in the preparation of

the financial statements are detailed below. The judgements and estimates and associated assumptions are based on

historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The judgements and estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

judgements and estimates are recognised in the period in which the judgement or estimate is revised if the revision affects

only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgements and estimates that the Directors have made in the process of applying the Group’s

accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

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 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.

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CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (continued)

Claims provisions

Claims provisions represent the estimation of the cost of claims outstanding under insurance contracts written. Actuarial

techniques, based on statistical analysis of past experience, are used to calculate the estimated cost of claims outstanding at

the period end.

Also included in the estimation of outstanding claims are factors such as the potential for inflation. Provisions for more recent

claims make use of techniques that incorporate expected loss ratios and average claims cost (adjusted for inflation) and

frequency methods. The average claims cost and frequency methods are particularly relevant when calculating the ultimate

cost of claims for the 2020 and 2021 accident year as historic patterns have been distorted by Covid-19.

The Judgement from the Commercial Court issued on 5 February 2021 confirmed the Group is liable to cover Business

Interruption claims as a consequence of the Covid-19 pandemic for publican customers. In April 2021, the Commercial Court

judgement provided more clarity on likely gross claims costs with the Judge ruling that the pub is still subject to an imposed

closure when customers were not allowed to eat and/or drink indoors and the issue of partial closures would be heard as part

of a quantum hearing. A quantum hearing was held in July 2021 with the judgement issued on 28 January 2022 which

confirmed that FBD must cover the partial closure claims. The judge ruled that the bar counter area continued to be subject to

an imposed closure while the pub was open because the customer was not allowed to sit and consume their alcohol at the bar

counter. In addition, the reduced opening hours of the pub was also deemed to be an imposed closure. The Judge made rulings

on salaries in specific individual cases and rejected arguments that accrued salaries for staff laid off should be indemnified.

The issue of damages for late payment were set aside in this judgement and will be set down at a later date.

The full imposed closure of public houses ceased on 26 July 2021 with indemnity for the closure of the bar counter and early

closing of the pub continuing until the full relaxation of the restrictions on 22 January 2022 or the end of the indemnity period

of the policy, whichever is sooner.

FBD has now received information from approximately 500 public house policyholders in order to assess the claims and has

been making interim payments based on these assessments. The recent data has provided more certainty in respect to a

number of assumptions underlying the best estimate of the Business Interruption losses and will improve as the particulars of

more claims are received.

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.

As a result of the uncertainties noted, the Group sets provisions at a margin above the actuarial best estimate, inclusive of an

amount specifically allocated to the Business Interruption estimate.

Reinsurance assets

The Group spends substantial sums to purchase reinsurance protection from third parties and substantial claims recoveries

from these reinsurers are included in the Statement of Financial Position at the reporting date. A reinsurance asset (reinsurers’

share of claims outstanding and provision for unearned premium) is recognised to reflect the amount estimated to be

recoverable under the reinsurance contracts in respect of the outstanding claims reported under insurance liabilities. The

amount recoverable from reinsurers is initially valued on the same basis as the underlying claims provision. The amount

recoverable is reduced when there is an event arising after the initial recognition that provides objective evidence that the

Group may not receive all amounts due under the contract and the event has a reliably measurable impact on the expected

amount that will be recoverable from the reinsurer.

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.

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.

122 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (continued)

The uncertainty in respect of the reinsurance asset for Business Interruption has reduced considerably as the application of the

reinsurance contract has been agreed with reinsurers for the expected impacted layers of the catastrophe program. Business

Interruption as with all uncertainties, is assessed when the Group is considering the margin for uncertainty, being a provision

held as an amount over the best estimate of claims liabilities net of expected reinsurance recoveries.

Uncertainties in impairment testing

As at the reporting date it is noted that the market capitalisation, that is the quoted share price multiplied by the number of

ordinary shares in issue, is lower than the Shareholders’ Funds as per the Statement of Financial Position. There are a large

number of factors driven by market conditions that can influence the market capitalisation of a company which includes but

are not limited to factors such as shares being traded less frequently. The market capitalisation being below net assets is

considered to be an external indicator of impairment and creates a necessity to make a formal estimate of recoverable amount

to test whether any actual impairment exists. For 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 of the cash generating unit has been determined by estimating the future cash inflows and outflows to be

derived from continuing use of the group of assets, and applying a discount rate to those future cash flows. As with all

projections there are assumptions made that will be different to actual experience, however given the increased uncertainty

surrounding the economic recovery from the pandemic and the impact of Judicial Council changes to Personal Injuries

Guidelines, these estimates are considered a critical accounting estimate as at the reporting date.

The Value in Use cash flow projections are based on the budget 2022 figures and the five year strategic projections approved by

the Board in December 2021. The 2027 figures are extrapolated assuming the performance in 2027 is in line with 2026. 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 from 2022 to 2023 is 2% followed by a 4% growth rate for later years. Future cash

flows are discounted using an estimated weighted average cost of capital (WACC) of 9.5% that is considered a reasonable

estimate for market rate.

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 used to assess the impact on the headroom. The sensitivities include an additional weather

event each year, delayed benefits from the Judgement Council Guidelines and positive impacts of new initiatives.

The scenarios run resulted in headroom ranging from 1.3 to 1.8 times when comparing the Value in Use of the cash generating

unit to the carrying value of the assets, indicating that there is no impairment of the assets.

123

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

4 SEGMENTAL INFORMATION

(a) Operating segments

The principal activities of the Group are underwriting of general insurance business and financial services.

For management purposes, the Group is organised in two operating segments - underwriting and financial services. These two

segments are the basis upon which information is reported to the chief operating decision maker, the Group Chief Executive,

for the purpose of resource allocation and assessment of segmental performance. Discrete financial information is prepared

and reviewed on a regular basis for these two segments.

The following is an analysis of the Group’s revenue and results by reportable segments.

2021 Underwriting

Financial

services Total

€000s €000s €000s

Revenue 379,356 7,305 386,661

Investment return 15,679 — 15,679

Finance costs (2,545) — (2,545)

Profit before taxation 109,268 1,167 110,435

Income taxation charge (13,017) (1,009) (14,026)

Profit after taxation 96,251 158 96,409

Other information

Capital additions 8,545 — 8,545

Impairment of other assets (59) — (59)

Depreciation/amortisation (18,012) — (18,012)

Statement of Financial Position

Segment assets 1,556,680 23,328 1,580,008

Segment liabilities 1,098,654 6,049 1,104,703

Included above in the current period is a net non-cash impairment charge relating to property held for own use and revaluation

loss relating to investment property of €59,000 (2020: revaluation of €2,303,000).

124 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

4 SEGMENTAL INFORMATION (continued)

(a) Operating segments (continued)

2020 Underwriting

Financial

services Total

€000s €000s €000s

Revenue 371,616 9,383 380,999

Investment return 10,388 — 10,388

Finance costs (2,580) — (2,580)

Profit before taxation 2,695 2,107 4,802

Income taxation charge 91 (503) (412)

Profit after taxation 2,786 1,604 4,390

Other information

Capital additions 8,357 — 8,357

(Impairment) of other assets (2,303) — (2,303)

Depreciation/amortisation 11,041 — 11,041

Statement of Financial Position

Segment assets 1,461,755 20,416 1,482,171

Segment liabilities 1,088,963 6,304 1,095,267

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:

l 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

l All liabilities are allocated to reportable segments. Liabilities for which reportable segments are jointly liable are allocated

in proportion to segment assets.

125

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

4 SEGMENTAL INFORMATION (continued)

(a) Operating segments (continued)

An analysis of the Group’s revenue by product is as follows:

2021 2020

€000s €000s

Direct insurance – motor 182,233 180,440

Direct insurance – fire and other damage to property 109,402 105,237

Direct insurance – liability 69,387 67,353

Direct insurance – interest and other revenue 13,028 13,386

Direct insurance – other 5,306 5,200

Financial services income - revenue from contracts with customers 2,930 4,211

Financial services income - other financial services revenue 4,375 5,172

Total revenue 386,661 380,999

The Group’s customer base is diverse and it has no reliance on any major customer. Insurance risk is not concentrated on any

one area or on any one line of business.

See below written premiums, earned premiums, incurred claims including claims handling expense, and other underwriting

expenses split by product lines within the underwriting segment.

2021 2020

Gross Ceded Net Gross Ceded Net

€000s €000s €000s €000s €000s €000s

(i) Written premiums

Motor 182,233 (16,596) 165,637 180,440 (14,567) 165,873

Fire and other damage

to property 109,402 (10,453) 98,949 105,237 (23,109) 82,128

Liability 69,387 (5,222) 64,165 67,353 (4,990) 62,363

Miscellaneous 5,306 (381) 4,925 5,200 (368) 4,832

366,328 (32,652) 333,676 358,230 (43,034) 315,196

Included in the gross premium written balance of €366,328,000 (2020: €358,230,000) are premium rebates of €3,347,000

(2020: €11,817,000) relating to reduced insurance exposure as a result of Covid-19 restrictions.

126 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

4 SEGMENTAL INFORMATION (continued)

(a) Operating segments (continued)

2021 2020

Gross Ceded Net Gross Ceded Net

€000s €000s €000s €000s €000s €000s

(ii) Earned premiums

Motor 184,724 (15,955) 168,769 178,022 (14,041) 163,981

Fire and other damage to property

107,144 (10,416) 96,728 105,882 (22,602) 83,280

Liability 69,105 (5,222) 63,883 68,068 (4,990) 63,078

Miscellaneous 5,248 (381) 4,867 5,262 (369) 4,893

366,221 (31,974) 334,247 357,234 (42,002) 315,232

2021 2020

Gross Ceded Net Gross Ceded Net

€000s €000s €000s €000s €000s €000s

(iii) Incurred claims including

claims handling expenses

Motor 73,868 (3,455) 70,413 55,840 (537) 55,303

Fire and other damage to property

96,637 (79,003) 17,634 198,125 (59,660) 138,465

Liability 32,163 (2,034) 30,129 24,422 (337) 24,085

Miscellaneous 5,419 (57) 5,362 3,594 (44) 3,550

208,087 (84,549) 123,538 281,981 (60,578) 221,403

Net claims and benefits of €123,538,000 includes positive prior year reserve development of €63,600,000, as well as

significant reductions in Motor and Liability claims during the year due to Covid-19 restrictions. Positive prior year

development is made up of a reduction in Business Interruption claims costs, favourable large claims experience in recent

years and better than expected experience on attritional claims.

2021 2020

Gross Ceded Net Gross Ceded Net

€000s €000s €000s €000s €000s €000s

(iv) Other underwriting expenses

Motor 48,370 (2,253) 46,117 46,038 (1,519) 44,519

Fire and other damage to property 29,038 (1,084) 27,954 26,850 (844) 26,006

Liability 18,417 (488) 17,929 17,185 (472) 16,713

Miscellaneous 1,408 (39) 1,369 1,326 (37) 1,289

97,233 (3,864) 93,369 91,399 (2,872) 88,527

127

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

4 SEGMENTAL INFORMATION (continued)

(b) Geographical segments

The Group’s operations are located in Ireland.

2021 2021 2020 2020

€000s €000s €000s €000s

Earned premiums, net of reinsurance

Gross premium written 366,328 358,230

Reinsurance premiums (32,652) (43,034)

Net premium written 333,676 315,196

Change in provision for unearned premium

Gross amount (107) (996)

Reinsurers’ share 678 1,032

Change in net provision for unearned premium 571 36

Net premium earned 334,247 315,232

Claims paid, net of recoveries from reinsurers

Claims paid:

Gross amount (188,338) (160,950)

Reinsurers’ share 12,060 4,167

Claims paid, net of recoveries from reinsurers (176,278) (156,783)

Change in provision for claims

Gross amount (6,340) (111,085)

Reinsurers’ share 72,489 56,411

Change in insurance liabilities, net of reinsurance 66,149 (54,674)

Claims handling expenses (13,409) (9,946)

Net claims and benefits (123,538) (221,403)

Motor insurers bureau of Ireland levy and consequential

payments (22,143) (9,681)

Management expenses (92,308) (86,858)

Deferred acquisition costs 1,380 897

Gross management expenses (90,928) (85,961)

Reinsurers share of expenses 3,864 2,872

Broker commissions payable (6,305) (5,438)

Net operating expenses (93,369) (88,527)

Underwriting result 95,197 (4,379)

128 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

4 SEGMENTAL INFORMATION (continued)

The Group’s Reinsurance Policy dictates that all of the Group’s reinsurers must have a credit rating of A- or better, or provide

alternative satisfactory security. The impact of buying reinsurance was a credit to the Consolidated Income Statement of

€56,024,000 (2020: credit of €21,409,000).

(d) Underwriting management expenses

2021 2020

€000s €000s

Employee benefit expense 46,410 47,069

Rent, rates, insurance and maintenance 6,016 6,472

Depreciation/amortisation 18,012 11,041

Other 21,870 22,276

Total underwriting management expenses 92,308 86,858

(e) Financial services and other costs

2021 2020

€000s €000s

Employee benefit expense 3,398 4,234

Rent, rates, insurance and maintenance 615 434

Other 2,125 2,608

Total financial services and other costs 6,138 7,276

5 NET INVESTMENT RETURN

2021 2020

€000s €000s

Actual return

Interest and similar income 8,607 10,203

Net income from investment properties 543 310

Realised gains on investments 7,918 160

Dividend income 13 1

Revaluation of investment properties (996) (1,569)

Unrealised (loss)/gain on financial investments (406) 1,283

Total investment income 15,679 10,388

By classification of investment

Deposits with banks (386) (197)

Investments held for trading 10,422 5,411

Investment properties 130 (188)

Available for sale investments 5,513 5,362

Total investment income 15,679 10,388

129

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

6 PROFIT BEFORE TAXATION

2021 2020

€000s €000s

Profit before taxation has been stated after charging:

Depreciation and amortisation 18,012 11,041

The remuneration of the Directors is disclosed in the audited section of the Report on Directors’ Remuneration on pages 69 to

84. These disclosures form an integral part of the financial statements.

7 INFORMATION RELATING TO AUDITORS’ REMUNERATION

An analysis of fees payable to the statutory audit firm is as follows:

2021 2020

Company Group Company Group

€000s €000s €000s €000s

Description of service

Audit of statutory financial statements 69 429 66 303

Other assurance services — 121 — 119

Total auditors remuneration 69 550 66 422

Fees payable by the Company are included with the fees payable by the Group in each category.

In 2021 and 2020, other assurance services relate to Solvency II audit which are prescribed under legislation or regulation.

8 STAFF COSTS AND NUMBERS

The average number of persons employed by the Group was as follows:

2021 2020

No. No.

Underwriting 894 891

Financial services 25 27

Total 919 918

2021 2020

The aggregate employee benefit expense was as follows: €000s €000s

Wages and salaries 47,583 46,700

Social welfare costs 4,983 5,646

Pension costs 4,494 5,016

Share based payments 2,650 1,945

Total employee benefit expense 59,710 59,307

130 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

9 LEASES

Leases held are property leases for office space for the Group’s branches and leases for computer equipment. The Group holds

a number of property leases with remaining terms ranging from two to twenty-three years. None of the Group’s leases have

options for extensions or to purchase. There are no contingent rents payable and all lease payments are fixed and at market

rates. Additional information on the Group’s leases is detailed below:

Right of use assets

2021 2020

€000s €000s

Balance at 1 January 5,635 6,115

Additions 233 341

Depreciation charge for the year (790) (821)

Balance at 31 December 5,078 5,635

Lease liabilities

2021 2020

Maturity analysis - contractual undiscounted cash flows €000s €000s

Less than one year (961) (942)

One to five years (3,279) (3,356)

More than five years (2,278) (2,932)

Total undiscounted lease liabilities at 31 December (6,518) (7,230)

Contractual discounted cash flows

Current (806) (969)

Non - current (4,543) (4,874)

Lease liabilities included in the statement of financial position at 31 December (5,349) (5,843)

2021 2020

Amounts recognised in profit or loss €000s €000s

Depreciation charge on right of use assets (included in Other underwriting expenses) (790) (821)

Interest on lease liabilities (included in Other underwriting expenses) (236) (263)

Expenses related to short-term leases (included in Other underwriting expenses) (50) (25)

Income from sub-leasing right of use assets (included in Other financial services income)

79 64

Total cash outflows recognised in the period in relation to leases were €962,000 (2020: €984,000).

131

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

10 INCOME TAXATION CHARGE

2021 2020

€000s €000s

Irish corporation taxation charge (14,149) (893)

Adjustments in respect of prior financial years 17 (69)

Current taxation charge (14,132) (962)

Deferred taxation credit 106 550

Income taxation charge (14,026) (412)

The taxation charge in the Consolidated Income Statement is higher (2020: lower) than the standard rate of corporation

taxation in Ireland. The differences are explained below:

2021 2020

€000s €000s

Profit before taxation 110,435 4,802

Corporation taxation charge at standard rate of 12.5% (2020: 12.5%) 13,804 600

Effects of:

Non-taxable income/unrealised gains/losses or expenses not deductible for tax

purposes (159) (6)

Higher rates of taxation on other income 101 131

Adjustments in respect of prior years 280 (313)

Income taxation charge 14,026 412

Taxation as a percentage of profit before taxation 12.7% 8.6%

In addition to the amount charged to the Consolidated Income Statement, the following taxation amounts have been

recognised directly in the Consolidated Statement of Comprehensive Income:

2021 2020

€000s €000s

Deferred taxation on:

Actuarial gain on retirement benefit obligations (35) (291)

Property held for own use revaluation (230) (140)

Loss/(gain) on available for sale investments 1,525 (563)

Total income taxation credit/(charge) recognised directly in the Consolidated

Statement of Comprehensive Income 1,260 (994)

11 LOSS FOR THE YEAR (COMPANY ONLY)

The Company’s loss for the financial year determined in accordance with IFRS, as adopted by the European Union, is €35,000

(2020 loss: €1,963,000). The Company’s other comprehensive loss for the financial year is €10,000 (2020 other

comprehensive income: €386,000).

In accordance with section 304 of the Companies Act 2014 the Company is availing of the exemption from presenting its

individual Income Statement to the AGM and from filing it with the Registrar of Companies.

132 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

12 EARNINGS PER €0.60 ORDINARY SHARE

The calculation of the basic and diluted earnings per share attributable to the ordinary shareholders is based on the following

data:

2021 2020

Earnings €000s €000s

Profit for the year for the purpose of basic earnings per share 96,127 4,390

Profit for the year for the purpose of diluted earnings per share 96,127 4,390

2021 2020

Number of shares No. No.

Weighted average number of ordinary shares for the purpose of basic earnings per share

(excludes treasury shares) 35,138,959 34,992,763

Weighted average number of ordinary shares for the purpose of diluted earnings per

share (excludes treasury shares) 35,930,762 35,719,059

Cent Cent

Basic earnings per share 274 13

Diluted earnings per share 268 12

The ‘A’ ordinary shares of €0.01 each that are in issue have no impact on the earnings per share calculation. See note 21 for a

description of the ‘A’ ordinary shares.

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:

2021 2020

€000s €000s

Profit attributable to the parent entity for the year 96,409 4,390

2021 dividend of 8.4 cent (2020: 0.0 cent) per share on 14% non-cumulative

preference shares of €0.60 each (113) —

2021 dividend of 4.8 cent (2020: 0.0 cent) per share on 8% non-cumulative preference

shares of €0.60 each (169) —

Profit for the year for the purpose of calculating basic and diluted earnings 96,127 4,390

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:

2021 2020

No. No.

Weighted average number of ordinary shares for the purposes of calculating basic

earnings per share 35,138,959 34,992,763

Potential vesting of share based payments 791,803 726,296

Weighted average number of ordinary shares for the purposes of calculating diluted

earnings per share 35,930,762 35,719,059

133

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

13 PROPERTY, PLANT AND EQUIPMENT

Property held

for own use

Computer

Equipment

Fixtures &

Fittings Total

€000s €000s €000s €000s

Cost or valuation

At 1 January 2020 24,224 97,641 24,547 146,412

Additions — 1,341 292 1,633

Assets under development — 206 — 206

At 31 December 2020 24,224 99,188 24,839 148,251

Additions — 187 961 1,148

Assets under development — 125 — 125

At 31 December 2021 24,224 99,500 25,800 149,524

Comprising:

At cost — 99,500 25,800 125,300

At valuation 24,224 — — 24,224

At 31 December 2021 24,224 99,500 25,800 149,524

Property held

for own use

Computer

Equipment

Fixtures &

Fittings Total

Accumulated depreciation and revaluation €000s €000s €000s €000s

At 1 January 2020 7,378 91,215 19,705 118,298

Depreciation charge for the year 128 2,812 775 3,715

Impairment through the income statement 734 — — 734

Impairment through the statement of

comprehensive income 419 — — 419

At 31 December 2020 8,659 94,027 20,480 123,166

Depreciation charge for the year 116 2,235 770 3,121

Revaluation through the income statement (937) — — (937)

Revaluation through the statement of

comprehensive income (4) — — (4)

At 31 December 2021 7,834 96,262 21,250 125,346

Carrying amount

At 31 December 2021 16,390 3,238 4,550 24,178

At 31 December 2020 15,565 5,161 4,359 25,085

134 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

13 PROPERTY, PLANT AND EQUIPMENT (continued)

Property held for own use

Properties held for own use at 31 December 2021 and 2020 were valued at fair value which is determined by independent

external professional surveyors CB Richard Ellis, Valuation Surveyors. CB Richard Ellis confirm that the properties have been

valued in accordance with RICS Valuation – Global Standards 2017 (Red Book) incorporating the IVSC International Valuation

Standards issued June 2017.

The valuation report states that the valuations have been prepared on the basis of “Market Value” which is defined in the report

as “the estimated amount for which an asset or liability should exchange on valuation date between a willing buyer and a willing seller

in an arm’s-length transaction, after proper marketing where the parties had each acted knowledgeably, prudently and without

compulsion”. The report also states that the market value “has been primarily derived using comparable recent market transactions

on arm’s length terms”.

The Directors believe that the market value, determined by independent professional valuers is not materially different to fair

value.

Had the property been carried at historical cost less accumulated depreciation and accumulated revaluation losses, their

carrying amount would have been as follows:

2021 2020

€000s €000s

Property held for own use 14,235 14,348

Fair value hierarchy disclosures required by IFRS13 Fair Value Measurement have been included in note 17, Financial

Instruments and Fair Value Measurement.

14 POLICY ADMINISTRATION SYSTEM

The most significant investment by the Group in recent years is in its underwriting policy administration system. The Group’s

policy administration system, TIA, is the principal operating and core technology platform of the business.

Policy Admin

System

Cost €000s

At 1 January 2020 57,791

Additions 4,796

At 1 January 2021 62,587

Additions 4,685

At 31 December 2021 67,272

135

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

14 POLICY ADMINISTRATION SYSTEM (continued)

Accumulated amortisation €000s

At 1 January 2020 19,188

Amortisation charge for the year 6,678

At 1 January 2021 25,866

Amortisation charge for the year* 13,424

At 31 December 2021 39,290

Carrying amount

At 31 December 2021 27,982

At 31 December 2020 36,721

* During the annual review of the useful economic life of the policy administration system, the useful life of items of the system developed

in the earlier years of the project have been re-estimated, this has resulted in accelerated amortisation of €5,884,000 in 2021.

The additions to the policy administration system in 2021 are split 74% internally generated assets and 26% externally

generated assets (2020: 75% internally generated assets and 25% externally generated assets).

The amortisation charge for the year is included in ‘Other underwriting expenses’ in the Consolidated Income Statement.

15 INTANGIBLE ASSETS

Cost:

Computer

Software

€000s

At 1 January 2020 2,334

Additions 1,928

Assets under development 1,665

At 31 December 2020 5,927

Additions 2,712

Assets under development 2,686

At 31 December 2021 11,325

Accumulated amortisation:

At 1 January 2020 179

Amortisation charge for the year 648

At 31 December 2020 827

Amortisation charge for the year 1,467

At 31 December 2021 2,294

Carrying amount

At 31 December 2021 9,031

At 31 December 2020 5,100

136 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

15 INTANGIBLE ASSETS (continued)

The additions during 2021 to Intangible Assets are split 28% internally generated assets and 72% externally generated assets

(2020: 20% internally generated assets and 80% externally generated assets).

Assets under development at 31 December 2021 relate to investment in digital and cloud based applications. These assets are

expected to be operational in Q1 2022.

The amortisation charge for the year is included in ‘Other underwriting expenses’ in the Consolidated Income Statement.

16 INVESTMENT PROPERTY

2021 2020

Fair value of investment property €000s €000s

At 1 January 17,051 18,693

Net gains or losses from fair value adjustments (996) (1,569)

Refurbishment of investment property — 1,922

Disposal of investment property — (1,995)

At 31 December 16,055 17,051

Investment property includes a commercial rental property in Dublin City Centre and an immaterial holding of agricultural

land in the United Kingdom.

The investment property held for rental in Ireland was valued at fair value at 31 December 2021 and at 31 December 2020 by

independent external professional valuers, CB Richard Ellis, Valuation Surveyors. The valuation was prepared in accordance

with RICS Valuation – Global Standards 2017 (Red Book) incorporating the IVSC International Valuation Standards issued June

2017. The valuers confirm that they have sufficient current local and national knowledge of the particular property market

involved and have the skills and understanding to undertake the valuations competently.

The valuation statement received from the external professional valuers state that the valuations have been prepared on the

basis of “Market Value” which they define as “the estimated amount for which a property should exchange on the date of valuation

between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted

knowledgeably, prudently and without compulsion”.

The Directors believe that market value, determined by independent external professional valuers, is not materially different

to the fair value.

There was a net decrease in the fair value in 2021 of €996,000 (2020 decrease: €1,569,000).

The rental income earned by the Group from its investment properties amounted to €1,044,104 (2020: €962,000). Direct

operating costs associated with investment properties amounted to €501,099 (2020: €652,000).

The historical cost of investment property is as follows:

2021 2020

€000s €000s

Historical cost at 1 January 22,053 20,210

Refurbishment costs — 1,922

Disposal of investment property — (79)

Historical cost at 31 December 22,053 22,053

137

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

16 INVESTMENT PROPERTY (continued)

2021 2020

Maturity analysis - undiscounted non-cancellable operating lease receivable €000s €000s

Less than one year 733 1,041

One to five years 2,315 2,315

More than five years 1,833 2,894

Maturity analysis - undiscounted non-cancellable operating lease receivables 4,881 6,250

Fair value hierarchy disclosures required by IFRS13 Fair Value Measurement have been included in note 17, Financial

Instruments and Fair Value Measurement.

17 FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT

(a) Financial Instruments

2021 2020

€000s €000s

Financial Assets

At Amortised Cost:

Deposits with banks — 40,000

Cash and cash equivalents 164,479 129,535

Loans 577 601

Other receivables 58,047 65,402

At fair value:

Available for sale investments 893,715 863,880

Investments held for trading 137,547 116,930

Financial Liabilities

At Amortised Cost:

Payables 41,657 44,729

Subordinated debt (note 26) 49,603 49,544

Lease liabilities 5,349 5,843

138 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

17 FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT (continued)

(b) Fair value measurement

The following table compares the carrying value of financial instruments not held at fair value with the fair value of those

assets and liabilities:

2021 2021

Fair value Carrying value

€000s €000s

Assets

Loans 693 577

Liabilities

Subordinated debt 54,341 49,603

2020 2020

Fair value Carrying value

€000s €000s

Assets

Loans 721 601

Liabilities

Subordinated debt 53,924 49,544

The exemption from disclosing the fair value of short term receivables has been availed of.

Certain assets and liabilities are measured in the 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 1 Fair value measurements derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

l Available for sale investments – quoted debt securities are fair valued using latest available closing bid price.

Collective investment schemes, held for trading (Level 1) are valued using the latest available closing NAV of the

fund.

Level 2 Fair value measurements derived from inputs other than 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).

Level 3 Fair value measurements derived from valuation techniques that include inputs for the asset or liability that are not

based on observable market data (unobservable inputs). Valuation techniques used are outlined below;

l Collective investment schemes held for trading (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 year end.

l AFS unquoted investments securities are classified as Level 3 as they are not traded in an active market.

l Investment property and property held for own use were fair valued by independent external professional

valuers at year end. 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.

Please refer to note 13 and note 16 for further details.

139

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

17 FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT (continued)

(b) Fair value measurement (continued)

Level 1 Level 2 Level 3 Total

2021 €000s €000s €000s €000s

Assets

Investment property — — 16,055 16,055

Property held for own use — — 16,390 16,390

Financial assets

Investments held for trading – collective

investment schemes 123,661 — 13,886 137,547

AFS investments - quoted debt securities 892,495 — — 892,495

AFS investments - unquoted investments — — 1,220 1,220

Total assets 1,016,156 — 47,551 1,063,707

Total liabilities — — — —

Level 1 Level 2 Level 3 Total

2020 €000s €000s €000s €000s

Assets

Investment property — — 17,051 17,051

Property held for own use — — 15,565 15,565

Financial assets

Investments held for trading – collective

investment schemes 108,199 — 8,731 116,930

AFS investments - quoted debt securities 863,068 — — 863,068

AFS investments - unquoted investments — — 812 812

Total assets 971,267 — 42,159 1,013,426

Total liabilities — — — —

140 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

17 FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT (continued)

(b) Fair value measurement (continued)

A reconciliation of Level 3 fair value measurement of financial assets is shown in the table below:

2021 2020

€000s €000s

At 1 January 42,159 3,945

Transfers-in — 35,539

Additions 4,522 7,754

Disposals (544) (1,995)

Revaluation/(impairment) 1,531 (2,722)

Unrealised loss recognised in the Consolidated Income Statement (117) (362)

At 31 December 47,551 42,159

The Directors review the inputs to assess fair value measurement at least annually to determine the appropriate level to be

disclosed. A sensitivity analysis of the Level 3 assets is completed in note 36(f).

18 DEFERRED ACQUISITION COSTS

The movements in deferred acquisition costs during the financial year were:

2021 2020

€000s €000s

At 1 January 34,079 33,182

Additions 71,302 68,621

Recognised in the Consolidated Income Statement (69,923) (67,724)

At 31 December 35,458 34,079

All deferred acquisition costs are expected to be recovered within one year from 31 December 2021.

19 OTHER RECEIVABLES

2021 2020

€000s €000s

Policyholders 39,645 41,358

Intermediaries 5,107 6,187

Other debtors 7,087 11,606

Accrued interest and rent — 34

Prepayments and accrued income 6,207 6,217

Total other receivables 58,047 65,402

The Directors have performed an impairment review of the receivables arising out of direct insurance operations and no

objective evidence came to their attention that an impairment exists. There is no significant concentration of risk in

receivables arising out of direct insurance operations or any other activities.

The Directors consider that the carrying amount of receivables is approximate to their fair value. All receivables are due within

one year and none are past due.

141

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

20 CASH AND CASH EQUIVALENTS

2021 2020

€000s €000s

Short term deposits 151,023 123,501

Cash in hand 13,456 6,034

Total cash and cash equivalents 164,479 129,535

21 CALLED UP SHARE CAPITAL PRESENTED AS EQUITY

2021 2020

Number €000s €000s

(i) Ordinary shares of €0.60 each

Authorised:

At the beginning and the end of the year 51,326,000 30,796 30,796

Issued and fully paid:

At the beginning and the end of the year 35,461,206 21,277 21,277

(ii) ‘A’ Ordinary shares of €0.01 each

Authorised:

At the beginning and the end of the year 120,000,000 1,200 1,200

Issued and fully paid:

At the beginning and the end of the year 13,169,428 132 132

Total – issued and fully paid 21,409 21,409

The ‘A’ ordinary shares of €0.01 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 €0.01 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 holders of the two classes of non-cumulative preference shares rank ahead of the two classes of ordinary shares in the

event of a winding up (see note 23). Before any dividend can be declared on the ordinary shares of €0.60 each, the dividend on

the non-cumulative preference shares must firstly be declared or paid.

The number of ordinary shares of €0.60 each held as treasury shares at the beginning of the year (and the maximum number

held during the year) was 408,744 (2020: 598,742). 244,739 ordinary shares were re-issued from treasury shares during the

year under the FBD Performance Plan. The number of ordinary shares of €0.60 each held as treasury shares at the end of the

year was 164,005 (2020: 408,744). This represented 0.5% (2020: 1.2%) of the shares of this class in issue and had a nominal

value of €98,403 (2020: €245,246). There were no ordinary shares of €0.60 each purchased by the Company during the year.

The weighted average number of ordinary shares of €0.60 each in the earnings per share calculation has been reduced by the

number of such shares held in treasury.

All issued shares have been fully paid.

142 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

22 CAPITAL RESERVES

(a) GROUP

premium

Capital

conversion

reserve

Capital

redemption

reserve

Share-based

payment

reserve Total

€000s €000s €000s €000s €000s

Balance at 1 January 2020 5,540 1,627 4,426 11,218 22,811

Recognition of share-based payments — — — 1,945 1,945

Balance at 31 December 2020 5,540 1,627 4,426 13,163 24,756

Recognition of share-based payments — — — 2,650 2,650

Balance at 31 December 2021 5,540 1,627 4,426 15,813 27,406

(b) COMPANY

premium

Capital

conversion

reserve

Capital

redemption

reserve

Share-based

payment

reserve Total

€000s €000s €000s €000s €000s

Balance at 1 January 2020 5,540 1,627 4,426 11,218 22,811

Recognition of share-based payments — — — 1,945 1,945

Balance at 31 December 2020 5,540 1,627 4,426 13,163 24,756

Recognition of share-based payments — — — 2,650 2,650

Balance at 31 December 2021 5,540 1,627 4,426 15,813 27,406

The capital conversion reserve arose on the redenomination of Company’s ordinary shares, 14% non-cumulative preference

shares and 8% non-cumulative preference shares of IR£0.50 each into ordinary shares, 14% non-cumulative preference

shares and 8% non-cumulative preference shares of 63.4869 cent. Each such share was then renominalised to an ordinary or

a non-cumulative preference share of €0.60, an amount equal to the reduction in the issued share capital being transferred to

the capital conversion reserve fund.

Capital redemption reserve arose on the buyback and cancellation of issued share capital.

Share-based payment reserve arose on the recognition of share-based payments.

143

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

23 PREFERENCE SHARE CAPITAL

2021 2020

Number €000s €000s

Authorised:

At the beginning and the end of the year

14% Non-cumulative preference shares of €0.60 each 1,340,000 804 804

8% Non-cumulative preference shares of €0.60 each 12,750,000 7,650 7,650

8,454 8,454

Issued and fully paid:

At the beginning and the end of the year

14% Non-cumulative preference shares of €0.60 each 1,340,000 804 804

8% Non-cumulative preference shares of €0.60 each 3,532,292 2,119 2,119

2,923 2,923

The rights attaching to each class of share capital are set out in the Company’s Articles of Association. In the event of the

Company being wound up, the holders of the 14% non-cumulative preference shares rank ahead of the holders of the 8%

non-cumulative preference shares, who in turn, rank ahead of the holders of both the ‘A’ ordinary shares of €0.01 each and the

holders of the ordinary shares of €0.60 each.

144 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

24 CLAIMS OUTSTANDING

(a) Gross Claims Outstanding 2020

Prior

years 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Total

€000s €000s €000s €000s €000s €000s €000s €000s €000s €000s €000s €000s

Estimate of cumulative claims:

At end of underwriting year 232,311 245,007 307,517 302,581 253,962 247,145 252,435 219,244 371,639

231,182

One year later 215,445 236,839 342,422 304,108 235,972 223,322 235,902 198,195 382,653 —

Two years later 224,720 266,183 344,123 326,052 220,376 205,505 212,647 171,925 — —

Three years later 235,965 260,580 333,544 318,467 206,578 196,235 205,963 — — —

Four years later 233,434 257,859 326,714 228,395 192,022 192,624 — — — —

Five years later 231,159 244,922 318,944 275,014 190,739 — — — — —

Six years later 229,271 243,163 312,800 272,800 — — — — — —

Seven years later 228,677 237,930 309,499 — — — — — — —

Eight years later 225,397 235,748 — — — — — — — —

Nine years later 224,907 — — — — — — — — —

Ten years later — — — — — — — — — —

Estimate of cumulative claims 224,907 235,748 309,499 272,800 190,739 192,624 205,963 171,925 382,653 231,182

Cumulative payments (213,363) (224,377) (282,116) (215,826) (153,076) (135,790) (127,344) (92,419) (130,596) (65,582)

Claims outstanding at

31 December 2021: 23,205 11,544 11,371 27,383 56,974 37,663 56,834 78,619 79,506 252,057 165,600

800,756

Claims outstanding at

31 December 2020: 26,087 13,090 15,579 40,390 66,144 46,250 70,333 95,354 117,427 303,762 —

794,416

Movement during year (2,882) (1,546) (4,208) (13,007) (9,170) (8,587) (13,499) (16,735) (37,921) (51,705) 165,600 6,340

145

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

24 CLAIMS OUTSTANDING (continued)

(b) Net Claims Outstanding 2020

Prior

years 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Total

€000s €000s €000s €000s €000s €000s €000s €000s €000s €000s €000s €000s

Estimate of cumulative claims:

At end of underwriting year 214,793 228,819 256,663 270,279 228,107 212,750 228,501 206,343 265,748

196,617

One year later 201,171 217,098 292,223 274,000 219,905 199,086 216,210 192,984 226,319 —

Two years later 210,422 243,373 295,223 284,636 205,320 186,058 203,584 168,282 — —

Three years later 221,438 237,733 290,243 275,909 190,732 180,938 199,302 — — —

Four years later 218,979 233,750 283,929 262,801 184,554 177,332 — — — —

Five years later 217,104 226,331 275,559 256,358 182,570 — — — — —

Six years later 215,179 224,386 271,945 253,755 — — — — — —

Seven years later 214,396 221,848 267,236 — — — — — — —

Eight years later 212,037 219,272 — — — — — — — —

Nine years later 211,167 — — — — — — — — —

Ten years later — — — — — — — — — —

Estimate of cumulative claims 211,167 219,272 267,236 253,755 182,570 177,332 199,302 168,282 226,319 196,617

Cumulative payments (199,171) (207,457) (239,819) (199,611) (143,507) (126,869) (122,467) (92,428) (130,034) (55,304)

Claims outstanding at

31 December 2021 20,322 11,996 11,815 27,417 54,144 39,063 50,463 76,835 75,854 96,285 141,313

605,507

Claims outstanding at

31 December 2020 23,336 13,922 16,530 41,831 63,703 47,666 63,236 91,159 112,207 198,066 —

671,656

Movement during the year (3,014) (1,926) (4,715) (14,414) (9,559) (8,603) (12,773) (14,324) (36,353) (101,781) 141,313 (66,149)

146 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

24 CLAIMS OUTSTANDING (continued)

(b) Net Claims Outstanding 2021 (continued)

Full provision, net of reinsurance recoveries, is made at the reporting date for the estimated cost of claims incurred but not

settled, including claims incurred but not yet reported and expenses to be incurred after the reporting date in settling those

claims. The Group takes all reasonable steps to ensure that it has appropriate information regarding notified claims and uses

this information when estimating the cost of those claims.

The Group uses estimation techniques, based on statistical analysis of past experience, to calculate the estimated cost of

claims outstanding at the year end. It is assumed that the development pattern of the current claims will be consistent with

previous experience. Allowance is made, however, for any changes or uncertainties that may cause the cost of unsettled

claims to increase or reduce. These changes or uncertainties may arise from issues such as the effects of inflation, changes in

the mix of business or the legal environment.

At each reporting date, liability adequacy tests are performed to ensure the adequacy of the insurance liabilities. In performing

these tests, current best estimates of future cash flows and claims handling and administration expenses are used. Any

deficiency is immediately recognised in the Consolidated Income Statement.

Details regarding the Business Interruption claims provision and reinsurance assets are included in note 3 (U).

Gross Net

€000s €000s

Balance at 1 January 2020 683,332 616,982

Change in provision for claims 111,084 54,674

Balance at 31 December 2020 794,416 671,656

Change in provision for claims 6,340 (66,149)

Balance at 31 December 2021 800,756 605,507

(d) Reconciliation of provision for unearned premium

The following changes have occurred in the provision for unearned premium during the year:

2021 2020

€000s €000s

Balance at 1 January 184,541 183,545

Net premium written 333,676 315,196

Net premium earned (334,247) (315,232)

Changes in provision for unearned premium – reinsurers’ share 678 1,032

Provision for unearned premium at 31 December 184,648 184,541

147

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

24 CLAIMS OUTSTANDING (continued)

(e) Reconciliation of reinsurance assets

Claims

outstanding

Unearned

premium

reserve

€000s €000s

Balance at 1 January 2020 66,349 1

Movement during year 56,411 1,032

Balance at 31 December 2020 122,760 1,033

Movement during year 72,489 678

Balance at 31 December 2021 195,249 1,711

25 OTHER PROVISIONS

Consequential

Payments

Premium

Rebates

MIICF

Contribution

MIBI

Levy Total

€000s €000s €000s €000s €000s

Balance at 1 January 2020 — — 3,652 4,765 8,417

Provided in the year* — 11,817 3,609 6,072 21,498

Net amounts paid — (9,790) (3,652) (4,406) (17,848)

Balance at 31 December 2020 — 2,027 3,609 6,431 12,067

Provided in the year* 13,153 3,347 3,645 5,345 25,490

Net amounts paid (11,208) (4,153) (3,609) (5,095) (24,065)

Balance at 31 December 2021 1,945 1,221 3,645 6,681 13,492

*Premium rebates of €3,347,000 (2020: €11,817,000) are included in Gross premium written, and Consequential Payments, MIICF

and MIBI amounts of €22,143,000 (2020: €9,681,000) are included in Movement in other provisions, both in the Consolidated

Income Statement.

Consequential Payments

This is the best estimate of the Consequential Payments provision in respect of the Financial Services and Pensions

Ombudsman decisions during 2021. The Board approved a consequential payment provision in line with the Central Bank of

Ireland Business Interruption Insurance Supervisory Framework following decisions from the Financial Services and Pensions

Ombudsman in respect of Business Interruption customer complaints. €11,208,000 has been settled in 2021 and the

remaining €1,945,000 will be settled in 2022.

148 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

25 OTHER PROVISIONS (continued)

Premium Rebates

FBD committed to rebating Motor policy and certain elements of Commercial policy premiums to reflect the changing claims

environment and enforced restrictions as a result of the Covid-19 pandemic. The total amount of premium rebates provided

for in the year was €3,347,000 (2020: €11,817,000). The remaining €1,221,000 represents an estimate of the remaining

Commercial rebates due.

MIICF Contribution

The Group’s contribution to the Motor Insurers’ Insolvency Compensation Fund “MIICF” for 2021 is based on 2% of its Motor

Gross Written Premium. Payment is expected to be made in the first half of 2022.

MIBI Levy

The Group’s share of the Motor Insurers’ Bureau of Ireland “MIBI” levy for 2021 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 paid in equal instalments

throughout the year.

26 SUBORDINATED DEBT

2021 2020

€000s €000s

Balance at 1 January 49,544 49,485

Amortised during the year 59 59

Balance at 31 December 49,603 49,544

The amount relates to €50,000,000 Callable Dated Deferrable Subordinated Notes due 2028. The coupon rate on the notes is

5%. Interest costs associated with the subordinated notes totalling €2,500,000 (2020: €2,500,000) were incurred and

recognised during 2021. The actual interest charge can vary year on year due to the amount accrued at each year end, the

amount in 2021 was -€14,000 (2020: €21,000).

27 RETIREMENT BENEFIT SURPLUS

Defined Contribution Pension

The Group operates defined contribution retirement benefit plans for qualifying employees who opt to join. The assets of the

plans are held separately from those of the Group in funds under the control of Trustees. The Group recognised an expense of

€4,146,739 (2020: €4,693,562) relating to these pension schemes during the year ended 31 December 2021.

Defined Benefit Pension

The Group also operates a legacy funded defined benefit retirement pension scheme for certain qualifying employees. This

scheme was closed to new members in 2005 and closed to future accrual in 2015. The defined benefit pension scheme is

administered by a separate Trustee Company that is legally separated from the entity. The Trustee Company, who is

responsible for ensuring compliance with the Pensions Act 1990 and other relevant legislation, is composed of an independent

Trustee and representatives from both the employers and current and former employees. The Trustees are required by law and

by its Articles of Association to act in the interest of the fund and of all relevant stakeholders in the scheme, i.e. deferred

members, retirees and employers. They are responsible for the investment policy with regard to the assets of the scheme.

Under the defined benefit pension scheme, qualifying members are entitled to retirement benefits of 1/60th of final salary for

each year of service on attainment of a retirement age of 65. A full actuarial valuation of the defined benefit pension scheme

was carried out as at 1 July 2019. This valuation was carried out using the projected unit credit method. The minimum funding

standard was updated to 31 December 2021 by the schemes’ independent and qualified actuary. This confirms that the

Scheme continues to satisfy the minimum funding standard. The next full actuarial valuation of the scheme is expected to be

completed no later than as at 1 July 2022.

149

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

27 RETIREMENT BENEFIT SURPLUS (continued)

Defined Benefit Pension (continued)

The long-term investment objective of the Trustees and the Group is to limit the risk of the assets failing to meet the liabilities

of the scheme over the long term, and to maximise returns consistent with an acceptable level of risk so as to control the

long-term costs of the scheme. To meet these objectives, the scheme’s assets are primarily invested in bonds with a smaller

level of investment in diversified growth funds and property. These reflect the current long-term asset allocation ranges,

having regard to the structure of liabilities within the scheme. The scheme typically exposes the Group to actuarial risks such

as: investment risk, interest rate risk and longevity risk.

(a) Assumptions used to calculate scheme liabilities

2021 2020

% %

Inflation rate 1.90 1.20

Pension payment increase 0.00 0.00

Discount rate 1.10 0.50

(b) Mortality assumptions

2021 2020

Years Years

The average life expectancy of current and future retirees used in the scheme at age 65

is as follows:

Male 21.9 21.8

Female 24.3 24.2

When taking into account members who have not yet retired and those who are currently in receipt of pensions, the weighted

average duration of the expected benefit payments from the scheme is circa 15 years.

As required by IAS 19 disclosures; the discount rate is set by reference to yields available at 31 December 2021 on high quality

corporate bonds having regard to the duration of the schemes liabilities. The actual return on the scheme assets for the year

was a loss of €4,165,000 (2020: gain of €7,796,000).

2021 2020

€000s €000s

Charged to Consolidated Income Statement:

Service cost: employer’s part of current service cost 402 391

Net interest credit (54) (81)

Charge to Consolidated Income Statement 348 310

Charges to the Consolidated Income Statement have been included in other underwriting expenses and financial services and

other costs.

150 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

27 RETIREMENT BENEFIT SURPLUS (continued)

(d) Analysis of amount recognised in Group Statement of Comprehensive Income

2021 2020

€000s €000s

Remeasurements in the year due to:

– Changes in financial assumptions (5,484) 5,595

– Experience adjustments on benefit obligations 520 (1,031)

Actual return less interest on scheme assets 4,684 (6,890)

Total amount recognised in OCI before taxation (280) (2,326)

Deferred taxation debit 35 291

Actuarial gain net of deferred taxation (245) (2,035)

(e) History of experience gains and losses

2021 2020 2019 2018 2017

€000s €000s €000s €000s €000s

Present value of defined benefit obligations 86,693 94,927 93,958 83,434 88,103

Fair value of plan assets 97,594 105,776 102,681 96,378 97,877

Net pension (asset)/liability (10,901) (10,849) (8,723) (12,944) (9,774)

Experience (losses)/gains on scheme liabilities (520) 1,031 (1,120) 999 150

Total amount recognised in OCI before taxation 280 2,326 (4,236) 3,232 275

The cumulative charge to the Consolidated Statement of Comprehensive Income is €102,200,000 (2020: €102,480,000).

(f) Assets in scheme at market value

2021 2020

€000s €000s

Managed bond funds - fair value at quoted prices 77,510 87,108

Managed unit trust funds - fair value at quoted prices 5,177 5,173

Managed infrastructure fund - fair value at unquoted prices 5,917 5,442

Managed dividend growth fund - fair value at quoted prices 4,844 4,642

Managed opportunities fund - fair value at quoted prices 2,777 2,610

Cash deposits and other - at amortised cost 1,369 801

Scheme assets 97,594 105,776

Actuarial value of liabilities (86,693) (94,927)

Net pension surplus 10,901 10,849

The assets are part of unitised funds which have a broad geographical and industry type spread with no significant

concentration in any one geographical or industry type.

151

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

27 RETIREMENT BENEFIT SURPLUS (continued)

(g) Movement in net surplus during the year

2021 2020

€000s €000s

Net surplus in scheme at 1 January 10,849 8,723

Current service cost (402) (391)

Employer contributions 120 120

Interest on scheme liabilities (465) (835)

Interest on scheme assets 519 906

Total amount recognised in OCI before taxation 280 2,326

Net surplus at 31 December 10,901 10,849

(h) Movement on assets and liabilities

2021 2020

€000s €000s

Assets

Assets in scheme at 1 January 105,776 102,681

Actual return less interest on scheme assets (4,684) 6,890

Employer contributions 120 120

Interest on scheme assets 519 906

Benefits paid (4,137) (4,821)

Assets in scheme at 31 December 97,594 105,776

Liabilities

Liabilities in scheme at 1 January 94,927 93,958

Experience gains and losses on scheme liabilities 520 (1,031)

Changes in financial assumptions (5,484) 5,595

Current service cost 402 391

Interest on scheme liabilities 465 835

Benefits paid (4,137) (4,821)

Liabilities in scheme at 31 December 86,693 94,927

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are as follows:

l A 1% increase in the discount rate would reduce the value of the scheme liabilities by €11.7 million. A 1% reduction in the

discount rate would increase the value of the scheme liabilities by €14.9 million.

l A 1% increase in inflation would increase the value of the scheme liabilities by €3.7 million. A 1% reduction in inflation

would reduce the value of the scheme liabilities by €3.2 million.

l The effect of assuming all members of the scheme will live one year longer would increase the scheme’s liabilities by

€3.6 million.

l The current best estimate of 2022 contributions to be made by the Group to the pension fund is €0.1million

(2021: €0.1million).

152 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

28 DEFERRED TAXATION LIABILITY

Retirement

benefit

surplus

Unrealised

gains on

investments

& loans

Revaluation

surplus on

investment

properties

Losses

carried

forward

Other

timing

differences Total

€000s €000s €000s €000s €000s €000s

At 1 January 2020 1,089 1,645 1,831 (549) 137 4,153

Debited to the Consolidated

Statement of Comprehensive

Income 291 563 — — 140 994

(Credited) to the Consolidated

Income Statement (20) — (444) (278) (278) (1,020)

At 31 December 2020 1,360 2,208 1,387 (827) (1) 4,127

Debited/(credited) to the

Consolidated Statement of

Comprehensive Income 35 (1,525) — — 230 (1,260)

(Credited)/debited to the

Consolidated Income

Statement (32) — — 417 (491) (106)

At 31 December 2021 1,363 683 1,387 (410) (262) 2,761

A deferred taxation asset of €410,000 (2020: €827,000) has been recognised in respect of losses carried forward. The

Directors have considered and are satisfied that the deferred taxation asset will be fully recoverable against future taxable

profits.

29 PAYABLES

(a) GROUP

2021 2020

€000s €000s

Amounts falling due within one year:

Payables and accruals 30,218 26,025

PAYE/PRSI 1,654 1,403

Payables arising out of direct insurance operations 9,785 17,301

Total payables 41,657 44,729

(b) COMPANY

2021 2020

€000s €000s

Amounts falling due within one year:

Payables and accruals 2,354 2,555

Total payables 2,354 2,555

153

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

30 DIVIDENDS

2021 2020

€000s €000s

Paid during year:

2020 dividend of 0.0 cent (2019: 0.0 cent) per share on 14% non-cumulative preference

shares of €0.60 each — —

2020 dividend of 0.0 cent (2019: 0.0 cent) per share on 8% non-cumulative preference

shares of €0.60 each — —

2020 final dividend of 0.0 cent (2019: 0.0 cent) per share on ordinary shares of

€0.60 each — —

Total dividends paid — —

2021 2020

€000s €000s

Proposed:

2021 dividend of 8.4 cent (2020: 0.0 cent) per share on 14% non-cumulative preference

shares of €0.60 each 113 —

2021 dividend of 4.8 cent (2020: 0.0 cent) per share on 8% non-cumulative preference

shares of €0.60 each 169 —

2021 final dividend of 100.0 cent (2020: 0.0 cent) per share on ordinary shares of

€0.60 each 35,297 —

Total dividends proposed 35,579 —

The proposed dividend excludes any amounts due on outstanding share awards as at 31 December 2021 that are due to vest

in March 2022 and is subject to approval by shareholders at the Annual General Meeting to be held on 12 May 2022. The

proposed dividend has not been included as a liability in the Consolidated Statement of Financial Position as at 31 December

2021.

31 PRINCIPAL SUBSIDIARIES

(a) Subsidiaries Nature of Operations % Owned

FBD Insurance plc General insurance underwriter 100%

FBD Insurance Group Limited Investment services, pensions and life brokers 100%

FBD Corporate Services Limited Employee services company 100%

The Registered Office of each of the above subsidiaries is at FBD House, Bluebell, Dublin 12.

All shareholdings are in the form of ordinary shares.

The financial year end for the Group’s principal subsidiaries is 31 December.

FBD Holdings plc is an Irish registered public limited company. The Company’s ordinary shares of €0.60 each are listed on

Euronext Dublin and the UK Listing Authority and are traded on both Euronext Dublin and London Stock Exchange.

All individual subsidiary’s financial statements are prepared in accordance with FRS 102, the financial reporting standard

applicable in the UK and Republic of Ireland with the exception of FBD Insurance plc whose financial statements are prepared

in accordance with International Financial Reporting Standards (“IFRSs”) adopted by the European Union, in preparation for

the adoption of IFRS 17 Insurance Contracts from 1 January 2023 by the Group.

154 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

32 CAPITAL COMMITMENTS

There are no capital commitments at the financial year end (2020: €nil).

33 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

There were no contingent liabilities or contingent assets at either 31 December 2021 or 31 December 2020.

34 SHARE-BASED PAYMENTS

FBD Group Performance Share Plan

Conditional awards of ordinary shares are made under the FBD Group Performance Share Plan (“LTIP”). The LTIP was last

approved by the shareholders of FBD Holdings plc at the 2018 AGM. Conditional awards are solely based on non-market

conditions. The extent to which the non-market conditions have been met and any award (or part of an award) has therefore

vested will be determined in due course by the Remuneration Committee of the Board of FBD Holdings plc. Further detail on

the LTIP is available within the Report on Directors’ Remuneration on pages 69 to 84.

Accounting charge for share based payments

Grant date

Number

outstanding

at 1 January

2021

Granted

during

year Dividends Outperformance

Forfeited

during

year

Vested

during

year

Number

outstanding

at 31

December

2021

Performance

Period

Earliest

vesting

date

23.08.2018 LTIP 195,679 — 15,297 45,889 (12,126) (244,739) — 2018-2020 Aug-21

25.03.2019 LTIP 242,892 — — — (15,413) — 227,479 2019-2021 Mar-22

24.04.2020 LTIP 339,089 — — — (23,467) — 315,622 2020-2022 Apr-23

25.03.2021 LTIP — 380,647 — — (12,103) — 368,544 2021-2023 Mar-24

Total 777,660 380,647 15,297 45,889 (63,109) (244,739) 911,645

Grant date

Vesting

period

(years)

Number

outstanding at

31 December

2021

% of shares

expected

to vest

Share price

at grant

date

Fair value

of share

award at

grant date 2021 2020

% € € €000s €000s

28.03.2017 LTIP 3 — 90% 7.95 7.95 — 92

23.08.2018 LTIP 3 — 125% 10.80 10.80 565 762

25.03.2019 LTIP 3 227,479 125% 8.79 8.79 961 878

24.04.2020 LTIP 3 315,622 83% 6.12 6.12 378 213

25.03.2021 LTIP 3 368,544 83% 6.89 6.89 746 —

Total 911,645 2,650 1,945

During the financial year 244,739 shares of the August 2018 award vested, with a value of €2,598,000.

The Directors estimate 125% of the March 2019 awards will vest, 83% of the April 2020 awards will vest and 83% of the April

2021 awards will vest.

155

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

35 TRANSACTIONS WITH RELATED PARTIES

Farmer Business Developments plc and FBD Trust Company Ltd have a substantial shareholding in the Group at 31 December

2021. Details of their shareholdings and related party transactions are set out in the Report of the Directors on page 51.

Both companies have subordinated debt investment in the Group. Farmer Business Developments holds a €21.0m investment

and FBD Trust Ltd holds a €12.0m investment. Interest payments are made to both companies on a quarterly basis in

proportion to their holding. Please refer to note 26 for further details.

At 31 December 2021 the intercompany balances with other subsidiaries was €3,739,000 (2020: €3,462,000).

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 Group’s primary subsidiary, FBD Insurance plc and the members of the

Executive Management Team.

The remuneration of key management personnel (“KMP”) during the year was as follows:

2021 2020

€000s €000s

Short term employee benefits

4,131 3,801

Post-employment benefits 262 295

Share based payments 1,346 1,012

Charge to the Consolidated Income Statement 5,739 5,108

Short term benefits include fees to Non-Executive Directors, salaries and other short-term benefits to all key management personnel.

Full disclosure in relation to the 2021 and 2020 compensation entitlements and share awards of the Board of Directors is

provided in the Report on Directors’ Remuneration.

At 31 December 2021 KMP had loans to the value of €18,000 with the Group (December 2020: €9,000). KMP loans with the

Group did not exceed these values at any stage during the year.

In common with all shareholders, Directors received payments/distributions related to their holdings of shares in the

Company during the year, amounting in total to €nil (2020: €nil).

36 FINANCIAL RISK MANAGEMENT

(a) Capital Management Risk

The Group is committed to managing its capital to ensure it is adequately capitalised at all times and to maximise returns to

shareholders. The capital of the Group comprises of issued capital, reserves and retained earnings as detailed in notes 21 to

23. The Group has an Investment Committee, a Pricing & Underwriting Committee, a Capital Management Forum, an Audit

Committee, a Reserving Committee and Board and Executive Risk Committees, all of which assist the Board in the

identification and management of exposures and capital.

The Group maintained its capital position and complied with all regulatory solvency margin requirements throughout both the

year under review and the prior year. In 2021, the Group maintained its Solvency Capital Requirement (SCR) coverage above

its target range of 150-170% of SCR.

An experienced Actuarial team is in place with policies and procedures to ensure that Technical Provisions are calculated in an

appropriate manner and represent a best estimate. Technical Provisions are internally peer reviewed every quarter, audited

once a year and subject to external peer review every two years.

An approved Reinsurance Programme is in place to minimise the solvency impact of Catastrophe events to the Group.

The annual ORSA provides a comprehensive view and understanding of the risks to which the Group is exposed or could face in

the future and how they translate into capital needs or alternatively require mitigation actions.

156 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

36 FINANCIAL RISK MANAGEMENT (continued)

(a) Capital Management Risk (continued)

The Chief Financial Officer is responsible for consideration of the implications for the capital position as part of the strategic

planning process and key strategic decision-making and for ensuring appropriate action is taken as approved by the Board/

Chief Executive Officer/relevant committee.

On at least an annual basis, a target range for its SCR Ratio, developed as part of the annual planning/budgeting process, is

approved by the Board as part of the Risk Appetite Statements in the Risk Appetite Framework.

The Group also devotes considerable resources to managing its relationships with the providers of capital within the capital

markets, for example, existing and potential shareholders, financial institutions, stockbrokers and corporate finance houses.

(b) Liquidity risk

The Group is exposed to daily calls on its cash resources, mainly for claims payments. The Group manages liquidity risk by

continuously monitoring forecast and actual cash flows and ensuring that the maturity profile of its financial assets is well

matched to the maturity profile of its liabilities and maintaining a minimum cash amount available on short term access at all

times.

The following tables provide an analysis of assets and liabilities into their relevant maturity groups based on the remaining

period to contractual maturity. The contracted value below is the undiscounted cash flow.

Carrying

value

total

Contracted

Value

Cashflow

within

1 year

Cashflow

1-5 years

Cashflow

after

5 years

Assets – 2021 €000s €000s €000s €000s €000s

Available for sale investments 893,715 904,983 186,080 490,641 228,262

Investments held for trading 137,547 137,547 123,661 - 13,886

Reinsurance assets 196,960 196,960 124,363 66,604 5,993

Loans and receivables 58,624 58,624 58,624 - -

Cash and cash equivalents 164,479 164,479 164,479 - -

Total 1,451,325 1,462,593 657,207 557,245 248,141

Liabilities – 2021

Insurance contract liabilities 985,404 985,404 422,486 473,404 89,514

Payables 41,657 41,657 41,657 — —

Other provisions 13,492 13,492 13,492 — —

Subordinated bond* 49,603 67,500 2,500 10,000 55,000

Total 1,090,156 1,108,053 480,135 483,404 144,514

*See note 26

157

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

36 FINANCIAL RISK MANAGEMENT (continued)

(b) Liquidity risk (continued)

Carrying

value

total

Contracted

Value

Cashflow

within

1 year

Cashflow

1-5 years

Cashflow

after

5 years

Assets – 2020 €000s €000s €000s €000s €000s

Available for sale investments 863,068 862,204 100,381 533,786 228,037

Investments held for trading 116,930 116,930 108,198 - 8,732

Deposits 40,000 40,000 40,000 - -

Reinsurance assets 123,793 123,793 101,398 19,723 2,672

Loans and receivables 66,003 66,003 66,003 - -

Cash and cash equivalents 129,535 129,535 129,535 - -

Total 1,339,329 1,338,465 545,515 553,509 239,441

Liabilities – 2020

Insurance contract liabilities 978,957 978,957 351,962 533,641 93,354

Payables 44,729 44,729 44,729 — —

Other provisions 12,067 12,067 12,067 — —

Subordinated bond* 49,544 70,000 2,500 10,000 57,500

Total 1,085,297 1,105,753 411,258 543,641 150,854

*See note 27

The Group has invested in term deposits, listed debt securities, investment property and externally managed collective

investment schemes which provide exposure to a broad range of asset classes. These investments are subject to market risk,

whereby the value of the investments may fluctuate as a result of changes in market prices, changes in market interest rates or

changes in the foreign exchange rates of the currency in which the investments are denominated. The extent of the exposure

to market risk is managed by the formulation of, and adherence to, an Investment Policy incorporating clearly defined

investment limits and rules, as approved annually by the Board of Directors and employment of appropriately qualified and

experienced personnel and external investment management specialists to manage the Group’s investment portfolio. The

overriding philosophy of the Investment Policy is to protect and safeguard the Group’s assets and to ensure its capacity to

underwrite is not put at risk.

Interest rate and spread risk

Interest rate and spread risk arises primarily from the Group’s investments in listed debt securities and deposits and their

movement relatively to the Group’s liabilities. The Group reviews its exposure to interest rate and spread risk on a quarterly

basis by conducting an asset liability matching analysis. As part of this analysis it monitors the movement in assets minus

liabilities for defined interest rate stresses and ensures that they remain within set limits as laid out in its Asset Liability

Management Policy. Similar monitoring is done for spread risk.

158 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

36 FINANCIAL RISK MANAGEMENT (continued)

At 31 December 2021, the Group held the following deposits and listed debt securities:

2021 2020

Market

Value

Weighted

average

interest rate

Market

Value

Weighted

average

interest rate

€000s % €000s %

Time to maturity

In one year or less 167,088 1.19 140,609 0.84

In more than one year, but not more than two years 140,867 0.95 201,410 1.13

In more than two years, but not more than three years 79,179 1.28 161,056 1.00

In more than three years, but not more than four years 103,619 1.04 83,953 1.21

In more than four years, but not more than five years 165,158 1.02 64,299 1.13

More than five years 236,584 0.82 251,741 1.17

Total 892,495 903,068

Equity price risk

The Group is subject to equity price risk due to its holdings in collective investment schemes which invest in equities.

The amounts exposed to equity price risk at the reporting date are:

2021 2020

€000s €000s

Equity exposure 50,019 48,931

Foreign currency risk

The Group does not directly hold investment assets in foreign currencies; however, it does have exposure to non-euro

exchange rate fluctuations through its collective investment scheme holdings. The underlying exposure to foreign currency is

as follows.

2021 2020

Assets €000s €000s

Emerging Markets* 17,208 11,238

USD 13,886 9,600

Other OECD — 435

*The Emerging Markets currency exposure is achieved through the collective investment schemes and is highly diversified. The largest

exposure to any one currency as at 31 December 2021 was €2.6m in Hong Kong Dollars.

The Group did not directly hold any derivative instruments at 31 December 2021 or 31 December 2020.

159

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

36 FINANCIAL RISK MANAGEMENT (continued)

(d) Credit risk

Credit risk is the risk of loss in the value of financial assets due to counterparties failing to meet all or part of their obligations.

Financial assets are graded according to current credit ratings issued by the main credit rating agencies. Investment grade

financial assets are classified within the range of AAA to BBB ratings. Financial assets which fall outside this range are

classified as speculative grade. All of the Group’s bank deposits are with financial institutions which have a minimum A- rating.

The Group holds the following listed Government bonds (average credit rating: A) and listed corporate bonds (average credit

rating: A-), with the following credit profile:

2021 2020

Market

Value

Weighted

Average

Duration

Market

value

Weighted

Average

Duration

€000s €000s

Government bonds

AAA 21,205 1.6 47,166 1.5

AA+ 8,056 1.2 8,113 2.2

AA 92,484 4.9 69,101 4.6

A+ 40,072 0.2 40,700 1.2

BBB+ 70,307 5.1 72,624 6.0

BBB 48,509 4.9 — 0.0

BBB- 22,376 4.8 73,171 5.8

Total 303,009 4.0 310,875 4.2

Corporate Bonds

AAA — 0.0 915 0.7

AA+ 2,031 6.2 3,046 1.4

AA 7,373 2.0 11,688 2.4

AA- 32,421 2.9 39,454 2.0

A+ 72,825 3.3 55,059 2.4

A 59,667 2.7 76,189 2.5

A- 134,036 3.1 91,141 2.7

BBB+ 122,694 3.0 117,030 2.7

BBB 118,984 3.0 118,484 3.0

BBB- 39,455 2.7 39,187 2.4

Total 589,486 3.0 552,193 2.6

All of the Group’s current reinsurers either have a credit rating of A- or better. The Group has assessed these credit ratings and

security as being satisfactory in diminishing the Group’s exposure to the credit risk of its reinsurance receivables. At 31

December 2021, the maximum balance owed to the Group by an individual reinsurer, including reinsurers’ share of insurance

contract liabilities not yet called, was €30,148,000 (2020: €25,639,000).

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the

Group’s most significant exposure to credit risk. There are no financial assets past due but not impaired.

Receivables arising out of direct insurance operations are considered by the Directors to have low credit risk and therefore no

provision for bad or doubtful debts has been made. All other receivables are due within one year and none are past due.

160 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

36 FINANCIAL RISK MANAGEMENT (continued)

(e) Concentration risk

Concentration risk is the risk of loss due to overdependence on a singular investment or category of business. The main

concentration risks to which the Group is exposed, and how they are mitigated, are as follows:

l Exposure to a single country, counterparty or security as part of its sovereign or corporate bond portfolio. The Group

mitigates this risk by placing limits on these exposures with its investment managers which are continuously monitored.

l Exposure to a single counterparty as part of its cash and deposit holdings. The Group mitigates this risk by placing limits on

its total exposures to banking counterparties as set out in the Group’s Investment Policy, which is approved annually by the

Board of Directors.

l While all of the Group’s underwriting business is conducted in Ireland, with a significant focus on the agri-sector, it is

spread over a wide geographical area with no concentration in any one county or region. The resultant concentration risk

from adverse weather events, i.e. floods, storms or freezes in Ireland, are mitigated by a flood mapping solution and an

appropriate reinsurance strategy.

Receivables arising out of direct insurance operations and other receivables have no significant concentration of risk.

(f) Sensitivity analysis

The table below identifies the Group’s key sensitivity factors. For each sensitivity test the impact of a change in a single factor is

shown, with other assumptions left unchanged.

Sensitivity factor Description of sensitivity factor applied

Interest rate and investment return The impact of a change in the market interest rate by an increase of 1% or a

decrease of 0.25%. For example if a current interest rate is 2%, the impact of an

immediate change to 3% and 1.75%.

Exchange rates movement The impact of a change in foreign exchange rates by ± 10%.

Equity market values The impact of a change in equity market values by ±10%.

Available for sale investments The impact of a change in bond market valuations by ±5%.

Level 3 - investment property The impact of a change in market rents ±10%.

Level 3 - property held for own use The impact of a change in market rents ±10%.

Level 3 - other investments The impact of a change in valuations by ±10%.

Net loss ratios The impact of an increase in underwriting net loss ratios by 5%.

161

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

36 FINANCIAL RISK MANAGEMENT (continued)

(f) Sensitivity analysis (continued)

The pre-taxation impacts on profit and shareholders’ equity at 31 December 2021 and at 31 December 2020 of each of the

sensitivity factors outlined above are as follows:

2021 2020

€000s €000s

Interest rates 1% (37,488) (30,634)

Interest rates (0.25%) 11,335 6,772

FX rates 10% 3,109 2,127

FX rates (10%) (3,109) (2,127)

Equity 10% 5,002 4,893

Equity (10%) (5,002) (4,893)

Available for sale investments 5% 44,625 43,153

Available for sale investments (5%) (44,625) (43,153)

Level 3 - investment property (note 17) 10% 1,800 2,000

Level 3 - investment property (note 17) (10%) (1,900) (2,000)

Level 3 - property held for own use (note 17) 10% 1,202 1,178

Level 3 - property held for own use (note 17) (10%) (1,440) (1,353)

Level 3 - other investments (note 17) 10% 1,511 954

Level 3 - other investments (note 17) (10%) (1,511) (954)

Net loss ratio (5%) 16,712 15,762

The sensitivity of changes in the assumptions used to calculate general insurance liabilities and reinsurance assets are set out

in the table below:

31 December 2021

Change in

assumptions

Increase

in gross

technical

reserves

Increase/

(decrease)

in net

technical

reserves

Impact

on profit

before

taxation

Reduction/

(increase) in

shareholders’

equity

€000s €000s €000s €000s

Injury claims IBNR and IBNER +10% 9,091 7,077 (7,077) 6,192

Other claims IBNR and IBNER +10% 3,248 (9,850) 9,850 (8,619)

Reinsurance assets - claims outstanding (10)% — 19,525 (19,525) 17,084

31 December 2020

Injury claims IBNR and IBNER +10% 12,253 9,213 (9,213) 8,061

Other claims IBNR and IBNER +10% 5,246 (4,876) 4,876 (5,572)

Reinsurance assets - claims outstanding (10)% — 12,276 (12,276) 10,742

162 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

36 FINANCIAL RISK MANAGEMENT (continued)

(f) Sensitivity analysis (continued)

Limitations of sensitivity analysis

The above tables demonstrate the effect of a change in a key assumption while other assumptions remain unchanged. In

reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are

non-linear, and larger or smaller impacts should not be interpolated or extrapolated from these results. The sensitivity

analysis does not take into consideration that the Group’s assets and liabilities are actively managed. Additionally, the

financial position of the Group may vary at the time that any actual market movement occurs.

Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate potential

risk. They represent the Group’s view of possible near-term market changes that cannot be predicted with any certainty and

assume that all interest rates move in an identical fashion.

37 IFRS 9 FINANCIAL INSTRUMENTS DEFERRAL DISCLOSURES

As set out in accounting policy K in note 3, the Group has chosen to defer application of IFRS 9 due to its activities being

predominantly connected with insurance.

To facilitate comparison with entities applying IFRS 9, the table below presents an analysis of the fair value of the classes of

financial assets as at the end of the reporting period, as well as the change in fair value during the reporting period. The

financial asset classes are divided into two categories:

i. Solely Payments of Principal and Interest (SPPI): assets of which cash flows represent solely payments of principal and

interest on an outstanding principal amount, but are not meeting the definition of held for trading in IFRS 9, or are not

managed on a fair value basis; and,

ii. Other: all financial assets other than those specified in SPPI:

1. with contractual terms that do not give rise on specified dates to cash flows that are solely payments of principal and

interest on the principal amount outstanding;

2. that meet the definition of held for trading in IFRS 9; or

3. that are managed and whose performance are evaluated on a fair value basis.

Fair Values as of 31 December 2021

Financial assets

Financial

assets that

passed SPPI Other *

Total

Fair Value

€000s €000s €000s

Other receivables 58,047 — 58,047

Deposits with banks — — —

Cash and cash equivalents 164,479 — 164,479

Available for sale investments — 893,715 893,715

Investments held for trading — 137,547 137,547

Total Financial Assets 222,526 1,031,262 1,253,788

* Other includes Financial assets that have passed SPPI and are evaluated on a FV basis

163

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

37 IFRS 9 FINANCIAL INSTRUMENTS DEFERRAL DISCLOSURES (continued)

Fair Values as of 31 December 2020

Financial assets

Financial

assets that

passed SPPI Other *

Total

Fair Value

€000s €000s €000s

Other receivables 65,402 — 65,402

Deposits with banks 40,000 — 40,000

Cash and cash equivalents 129,535 — 129,535

Available for sale investments — 863,880 863,880

Investments held for trading — 116,930 116,930

Total Financial Assets 234,937 980,810 1,215,747

* Other includes Financial assets that have passed SPPI and are evaluated on a FV basis

For receivables, loans and cash and cash equivalents carried at amortised cost, the carrying value is considered to be

approximately equal to fair value.

The below table presents fair value movements on financial assets measured on a fair value basis and investments held for

trading.

There was no material change in fair value during the year in respect of financial assets that passed the SPPI test.

Financial

assets

measured

on a fair

value basis

Financial

instruments

held for

trading

€000s €000s

Balance at 1 January 2021 863,880 116,930

Additions 210,500 58,432

Disposals (166,034) (48,654)

Realised gains 1,033 7,783

Unrealised (losses)/gains (15,664) 3,056

Balance at 31 December 2021 893,715 137,547

For financial assets whose cash flows represent SPPI as defined above, the table below provides information on credit risk

exposure. The Group mitigates it’s concentration risk to a single counterparty as part of its cash and deposit holdings by

placing limits on its total exposures to banking counterparties, the Group’s largest exposure to any counterparty for cash and

deposit holdings is €36,200,000 (2020:€33,000,000).The financial assets are categorised by asset class with a carrying

amount measured in accordance with IAS 39 requirements.

164 FBD Holdings PLC Annual Report 2021

Financial Statements

Notes to the Financial Statements (continued)

37 IFRS 9 FINANCIAL INSTRUMENTS DEFERRAL DISCLOSURES (continued)

As at 31 December 2021

Other

receivables

Deposits

with banks

Cash and cash

equivalents Total

Rating €000s €000s €000s €000s

AAA — — — —

AA — — 7,869 7,869

AA- — — 22,884 22,884

A+ — — 15,451 15,451

A- — — 41,865 41,865

A — — 66,178 66,178

BBB — — 10,232 10,232

Unrated 58,047 — — 58,047

Total 58,047 — 164,479 222,526

As at 31 December 2020

Other

receivables

Deposits

with banks

Cash and cash

equivalents Total

Rating €000s €000s €000s €000s

AAA — — — —

AA — — 6,467 6,467

AA- — — 25,494 25,494

A+ — — 34,344 34,344

A- — 40,000 60,997 100,997

BBB — — 2,233 2,233

Unrated 65,402 — — 65,402

Total 65,402 40,000 129,535 234,937

38 SUBSEQUENT EVENTS

The judgement delivered on 28 January 2022 in respect of Business Interruption claims for public houses has provided

considerable clarity on the definition of business closure and on other matters such as allowable wages. While some matters

remain to be clarified, FBD will progress with the settlement of valid claims for customers.

FBD has agreed with reinsurers how reinsurance recoveries will operate in respect of the application of reinsurance cover to

these Business Interruption claims for the expected impacted layers of its catastrophe programme. This reduces the

uncertainty surrounding recoveries from reinsurers and has had a favourable impact on previously booked reserves net of

reinsurance with the net liability reducing.

The judgement and reinsurance agreement are adjusting events for the purposes of the 2021 financial statements on the basis

that they relate to 2021.

165

Strategic Report Financial Statements Other InformationEnvironmental, Social & Governance

Other Information

Alternative Performance Measures

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 premium written.

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 premium written refers to the premium on insurance contracts entered into during the year and is

widely used across the general insurance industry.

The calculation of the APM’s is based on the following data:

2021 2020

Note €000s €000s

Loss ratio

Net claims and benefits 4(c) 123,538 221,403

Movement in other provisions 4(c) 22,143 9,681

Total claims incurred 4(c) 145,681 231,084

Net premium earned 334,247 315,232

Loss ratio (Total claims incurred/Net premium earned) 43.6% 73.3%

Expense ratio

Other underwriting expenses 4(c) 93,369 88,527

Net premium earned 4(c) 334,247 315,232

Expense ratio (Underwriting expenses/Net premium earned) 27.9%* 28.1%

* excluding the accelerated amortisation of the policy administration system (refer to note

14) of €5,884,000, the expense ratio would be 26.1%.

Combined operating ratio % %

Loss ratio 43.6% 73.3%

Expense ratio 27.9% 28.1%

Combined operating ratio (Loss ratio + Expense ratio) 71.5% 101.4%

2021 2020

Investment return Note €000s €000s

Investment return recognised in Consolidated Income Statement 5 15,679 10,388

Investment return recognised in Statement of Comprehensive Income (12,202) 4,505

Total investment return 3,477 14,893

Average investment assets 1,185,036 1,117,036

Investment return % (Total investment return/Average investment assets) 0.3% 1.3%

166 FBD Holdings PLC Annual Report 2021

Other Information

2021 2020

Note €000s €000s

Net asset value per share

Shareholders’ funds – equity interests 472,382 383,981

Number of Shares

Number of ordinary shares in issue (excluding treasury) 21 35,297,201 35,052,462

Cent Cent

Net asset value per share (NAV) (Shareholders’ funds/Closing number of ordinary shares)

1,338 1,095

Return on Equity

Weighted average equity attributable to ordinary equity holders of the parent 428,182 378,105

Result for the year 96,409 4,390

Return on equity (Result for the year/Weighted average equity attributable to ordinary

equity holders of the parent) 23% 1%

Gross premium written: The total premium on insurance underwritten by an insurer or reinsurer during a specified period, before

deduction of reinsurance premium.

Underwriting result: Net premium earned less net claims and benefits, other underwriting expenses and movement in other

provisions.

Expense ratio: Underwriting and administrative expenses as a percentage of net earned premium.

Loss ratio: Net claims incurred as a percentage of net earned premium.

Combined Operating Ratio: The sum of the loss ratio and expense ratio. A combined operating ratio below 100% indicates profitable

underwriting results. A combined operating ratio over 100% indicates unprofitable results.

Alternative Performance Measures (continued)

fbd.ie

FBD House, Bluebell, Dublin 12

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