The customer owned business, which helps families provide for their financial needs with life insurance, savings and health cash plan products, celebrated a rise in customer numbers for the thirteenth consecutive year. Group assets increased to £946m; the mutual’s capital strength increased threefold; and its health business start up, launched in 2008, recorded its first operating profit.
“Solid growth, backed by two successful transactions meant that, despite wider economic uncertainties, we concluded the year in a position of significant financial strength,” said chief executive, Andrew Haigh.
Key figures include:
Increased by 7% to nearly 470,000 for 2010. Two successful acquisitions (see below) accounted for three quarters of this growth.
Gross premiums for the year were £61m.
– around half of this was premiums on life insurance and health cash plans, with the other half savings and investment policies, and child trust funds. Net of reinsurance this represents a 15% rise in premiums compared to last year
– in addition, the mutual received a one-off £158m life reinsurance1premium due to the structuring of one of the acquisitions.
Payments to customers:
The mutual paid out more than £75m in life insurance claims, healthcare benefits and maturing savings and investments to its customers.
There was a 10% reduction in both life and general insurance underlying operating expenses. Total expenses rose to £19m due to one-off costs associated with acquisitions, and a different accounting treatment for an improved reinsurance contract.
Assets under management:
The group increased the total assets it manages on behalf of customers, by 52% to £946m.
All of Engage Mutual’s funds increased their available capital resources in 2010 and now have over three times their regulatory capital requirement, good news for the security of customers’ hard earned money.
As a mutual with no shareholders, any surplus generated during the course of the year is for the benefit of members and is recorded in the fund for future appropriations. This year the sum transferred to the fund for future appropriations was £36m.
Andrew Haigh commented:
“Engage Mutual had a solid foundation, but the fruition of our recent strategy provides further strength and security to support the organisation going forward. We now have a springboard to propel our plans for future growth, and help consolidate our relevance as a business that is owned by and run for its customers.”
Key developments during 2010
Acquisitions, transfers and health growth:
The acquisitions of healthcare provider, PHSA and part of the long term insurance business of Ecclesiastical Life Limited (ELL) were key milestones for the year.
The acquisition of PHSA nearly doubled the premium income of Engage Mutual’s health business, adding £1.5m a year, and 7,000 new customers.
Despite being launched only in 2008, Engage Mutual’s health business is going from strength to strength and achieved its first operating profit in 2010.
The ELL transfer significantly increased the scale of Engage Mutual’s business, bringing cost synergies to the enlarged organisation and further improving the capital position.
The transfer added over 15,000 new customers and £270 million of assets.
Child trust fund
The government’s withdrawal of the child trust fund scheme was disappointing, but the mutual continues to manage more than £143 million of funds on behalf of 215,000 existing child trust fund customers. The fund will continue to grow as existing child trust fund customers add to their investment in future years.
Putting customers first
In order to deliver a better customer experience, more than 400 processes were remodelled and revised throughout the year.
Engage Mutual’s drive to reconnect customers with forgotten funds (an issue for many financial organisations) gained additional momentum in 2010. Following work to track down those who had lost touch with, or were unaware of, funds held on their behalf, more than £700,000 was returned to customers or their beneficiaries in the year.