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Law360, London (February 26, 2021, 11:55 AM GMT) -- Irish insurer FBD Insurance PLC said on Friday that it set aside €65 million ($79 million) to pay out on business interruption claims made by pubs forced to close during the country's national lockdown, after it decided not to appeal a High Court ruling.
FBD said in its full-year results for 2020 that the figure included claims and reinsurance costs after the High Court of Ireland found in favor of four publicans at the beginning of February. The insurer said last year that it would face a €30 million hit if the court's decision went against it.
Tómas Ó'Mídheach, FBD group chief executive, said that 2020 had been a "uniquely challenging" year for the insurer.
"We have commenced paying interim payments for all valid claims and will endeavor to settle claims as quickly as possible," he said. "We are considering the impact of this judgment with our reinsurance partners and are confident about a satisfactory outcome."
The legal challenge was brought last year by three Dublin pubs — Sinnotts, The Leopardstown Inn and Lemon and Duke — and Sean's Bar in Athlone, in central Ireland.
All had business interruption policies with FBD, which offered cover if the pubs were forced to close as a result of an infectious disease outbreak at the premises or within 25 miles.
The judgment is likely to have a wide impact, as FBD sold policies with similar wording to an estimated 1,300 pub owners. A further High Court hearing has yet to be scheduled, which will determine how much FBD must pay out to the affected businesses.
The company said on Friday that the €65 million it had set aside included €54 million for claims and a further €11 million for additional costs from reinsurance. The total costs of claims arising from the pandemic, including legal expenses, is likely to be around €150 million, the company said.
The insurer reported a pre-tax profit in 2020 of just €4.8 million, down from €112 million the previous year.
FBD said its combined operating ratio — an indicator of underwriting profitability — rose from 72.3% to 101.4% in the same period. A combined ratio of under 100% reflects underwriting profit, while a figure of more than 100% indicates a loss.
--Editing by Joe Millis.
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