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Feb 21 2019, 07:25 GMT
FBD reports 2018 results on February 27th, which we expect to provide support against an unjustified de-rating. Despite a positive refinancing of the convertible bond, a greater tilt towards growth and favourable underwriting trends, FBD has underperformed the wider European sector by over 20% since end-H1 2018. On a 2019 earnings forecast multiple of 8.4x, FBD trades at a significant discount to the sector. Low investment returns are a challenge, and the ability to offset this by improved underwriting performance may be impacted by Axa’s rural market entry.