A significant increase in premium income in both health and life insurance business, coupled with a rise in customer numbers for the fourteenth successive year, demonstrate a strong performance against what remains a challenging economic backdrop.
The customer owned business also celebrated a strong performance in the Association of British Insurers’ Customer Impact Survey, the insurance industry’s key service benchmark. Commenting on the results from the industry wide survey, chief executive Andrew Haigh said
“Listening to our customers is a fundamental part of what we do and we are also keen to continue to benchmark ourselves against others. We were delighted that our customers scored us so highly. Improving in every key area on last year, 90% of our customers rated our customer service as very good or good compared to an industry average of 81%.”
This customer feedback, coupled with our sound financial results put us in a great position to ensure that we can continue to meet the needs of more people moving forward.”
Key figures include:
Customer numbers: for the fourteenth successive year the mutual’s customer base has grown, taking it to more than 500,000
Payments to customers: Engage Mutual paid out more than £100million in life insurance claims, healthcare benefits and maturing savings and investments to its customers.
Revenue: gross premium income from customers for the year rose by 6% to £64.1million. This was driven by strong growth in their health business which saw premium income treble to £6.7million, and life insurance where premium income grew by 30% to £35.5million. This enabled the mutual to accommodate the expected fall in payments into the Child Trust Fund business following the government’s withdrawal of the scheme.
Expenses: total expenses rose to £20.1million due to a full year’s operating expenses for the two acquisitions made in 2010. Net of these costs, operating expenses remained level with 2010.
Capital and assets: the mutual remains strongly capitalised. Its year end available capital resources totalled £80.9million, over 3.7 times that which it is required to hold under regulatory requirements. Group assets fell slightly to £919million, reflecting increased maturities paid to customers coupled with a volatile year in investment markets.
Profitability: as a mutual with no shareholders, any surplus generated during the year is used for the benefit of members and is recorded in the fund for future appropriations. The fund for future appropriations on the core non-profit fund grew 5% to £48.6m, and on the open with profits fund it grew 1% to £23.1m. On its closed with profits fund, Engage Mutual has commenced a process of returning surpluses to members, and partly as a result of this the fund for future appropriations fell by 38% to £12.8m.
Andrew Haigh added:
“While working hard for our current customers, last year also saw us make huge strides in defining our future strategy to ensure that we can support our members in dealing with the challenges they face in life, not just through provision of help, support and expertise, but by bringing people together into a community environment where they can share experiences and support each other.”
key developments during 2011
investment in health business
An agreement at the start of the year with York based Benenden Healthcare, saw Engage Mutual become the service provider and underwriter for Benenden’s 30,000 health cash plan customers, with Engage Mutual and Benenden co-developing an additional product specifically for the 66+ market in the latter part of the year.
Taking further steps towards its aim of being a key player in this market, in August Engage Mutual acquired the corporate health cash plan One Fund from National Friendly, along with their sales team which has since expanded from 5 to 7 staff.
Costs were closely managed in the year, and future efficiencies secured through the consolidation of all the mutual’s operations into its Harrogate head office, with the closure last year of its Bedford and Gloucester offices.
Child Trust Fund and unit linked investment structures were simplified, including a reduction in the number of investment managers used by the mutual from four to three, reducing costs and improving future efficiency.
putting customers first
More than 852 customer suggestions were recorded in 2011, resulting in many being implemented in a commitment to continually improve customer experience. In response to feedback received at last year’s AGM, and to try to limit the impact of continued low interest rates, charges for deposit fund customers were capped at £50 per annum.
The mutual’s two with profits funds are both well capitalised. One of its with profits funds is now formally closed to new business, and the capital in the fund will progressively be paid to members by way of enhanced claims values, with the typical level of enhancement initially set at 9%. On its open with profits fund, a proportion of the surplus capital in the fund will be used to improve future payouts, with 2012 claims values receiving an uplift of up to 12.5%.
Engage Mutual’s drive to reconnect customers with forgotten funds stepped up a level in 2011. Leading the way with a proactive campaign ‘keep it, will it, flag it’ the organisation worked to raise awareness of the issue with the aim of preventing people from losing track of their policies. Further to this, continued tracking work has meant that customers have now been reunited with a total of £2.25 million of funds held by the Society.
In addition to this, the results of the ABI’s customer impact survey demonstrated an extremely strong performance, with Engage Mutual outperforming the industry average in all key areas.
In what continue to be challenging economic times, Engage Mutual has a clearly defined strategy for the future. There is a real opportunity for a modern mutual to make a positive impact on people’s lives and to do far more than provide first class products and service.