Warwickshire mutual declares £1bn in profits

Customers of Warwickshire-based NFU Mutual are set for a significant increase in their annual bonus after the insurer revealed 2016 profits of more than £1bn.

The Stratford-Upon-Avon-based insurer made a profit for the year of £1,026m (2015: £359m), a performance it said was underpinned by prudent cost management, claims handling, pricing and risk selection – all of which resulted in a combined operating ratio of 88.3%.

Helped by stable weather conditions for most of the year, the insurer made an underwriting profit of £151m.

In a very good year for stock markets and commercial property, the insurer made substantial investment gains and overall investment assets under management by the group increased by £2.5bn in 2016 to £18.8bn.

Lindsay Sinclair, Group Chief Executive, said: “Because we’re a mutual, running our business in the long term interest of our members, we’ll be sharing our financial success with our members.

“All our General Insurance customers – around a million people with farms, businesses, homes and cars insured with us – will see a significant increase in our Mutual Bonus payment, which comes in the form of a discount off renewal premiums.   It’s a very important way of showing our appreciation of our customers’ loyalty to the business.

“Both our insurance and investment activities performed very well in 2016.  The very solid results for both the General Insurance and Life sides of the business have put us in a great position to continue to build on our financial strength during a period of ongoing uncertainty in the current market.”

On the Life side of the business, limited investor confidence from economic and political uncertainty led to a slight reduction in Annual Premium Equivalent from £57.5m to £56.7m.

The new rates for the Mutual Bonus will be announced later in 2017 and will come into effect from July. The bonus will be paid as a percentage of renewal premiums.

Results highlights were:
•             Underwriting profit £151m (2015: £281m)
•             General Insurance Premium Income of £1.397bn (2015: £1.362bn)
•             Combined Operating Ratio of 88.3% (2015: 77.5%)
•             Life Annual Premium Equivalent of £56.7m (2015: £57.5m)
•             Total funds under management £18.8bn (2015: £16.3bn)