THE CHIEF executive of insurance group FBD, which has been the subject of takeover speculation in recent months, says there needs to be greater disclosure behind stake-building through contracts for difference (CFDs) derivatives.
Philip Fitzsimons repeated criticisms made by Greencore chairman Ned Sullivan last month on the use of CFDs, which allow investors to take an interest in a company without directly owning shares or having to disclose their interest. "There should be more disclosure and more transparency," said Fitzsimons.
FBD finance director Andrew Langford said: "In terms of the general marketplace the rules regarding disclosure are there to ensure an orderly and fair marketplace for everyone." He said changes were required if "those rules can be got around or bent".
Mr Fitzsimons said the UK Listing Authority had invited submissions from interested parties on how CFDs should be operated. "There will be some outcome from that in the short-term rather than the long-term because it is such a hot topic," he said.
FBD's share price has risen 17 per cent since December when it was speculated that the firm was a takeover target by a major European insurer, following heavy share trading. Irish financial stocks have fallen 10 per cent during the same period. Allianz has built up a 5.5 per cent stake in FBD through Dresdner Kleinwort Securities, a division of the German insurer's Dresdner Bank.
Shares closed down 0.2 per cent at €24.13 after FBD posted a 45 per cent fall in pretax profit to €162.1 million for 2007. It lost €69.1 million on equity investments, compared to a profit of €61 million in 2006. The 2006 profit included €81.8 million made from the sale of land at FBD's La Cala golf resort in Spain.
FBD made an operating profit of €112 million in its insurance business in 2007, down from €124.5 million a year earlier and €16.1 million on its leisure and property development business, a decrease from €10 million a year earlier.
Mr Fitzsimons said he was "surprised" that premiums had kept falling into 2008 and had returned to 2000 levels.
"The cycle may well have bottomed out," he said. He expects premiums to start rising in the coming months.
