In March, Irish insurer FBD published its 2014 annual report with the tagline "Seeing through the Storm" printed in large writing on its cover page. We now know that it could barely see past its hand.

Interim results yesterday were the worst in 40 years as the group posted a loss of €96.4 million. This was largely attributed to the €88 million it has set aside for the adverse claims it expects to book in the coming years.

Its reaction has been to axe the dividend, to seek €7 million in cost savings, including voluntary redundancies, and to bin Nononsense.ie, FBD’s no-frills brand set up in 2008 to target a younger, more urban customer base.

These measures are all part of a wider shift in strategy aimed at returning the business to the black by the end of 2016 and returning it to its roots, serving the agri sector and small businesses.

After years of recession, more cars are appearing on Irish roads as the economy recovers, which in turn means more accidents are being recorded. For various reasons, the amounts being awarded in claims is on the rise.

Rising claims

On the other side of the house, stock market volatility and tight bond yields have resulted in declining investment returns, a traditional buffer against rising claims.

Some of this is of the company’s own making. It chased market share in the consumer market for home and motor insurance, offering cover at prices that clearly were not profitable or sustainable. It was a failing across the industry here.

FBD has pulled back from motor insurance, reducing the number of premiums by 21 per cent and pushing through steep double-digit price rises.

It is not clear who will be charged with implementing the new strategy. Andrew Langford stepped down as chief executive in late July and his interim replacement, Fiona Muldoon, who herself only formally joined the business in March, declined to confirm yesterday if she wanted the job on a full-time basis.

Takeover play

The 21 per cent decline in FBD’s share price yesterday indicated clearly what the markets thought of the half-year results. The shares have fallen by more than 50 per cent in the year to date.

This potentially makes the company a takeover play. However, the near 25 per cent holding by Farmer Business Development plc, a co-op comprising about 4,000 farmers, and the 8.9 per cent held by the FBD Trust, give it good cover from predatory rivals.

Either way, FBD will have to navigate some choppy waters in the next few years before it can claim to have come through the storm.