TIDMELLA
RNS Number : 6808J
Ecclesiastical Insurance Office PLC
20 August 2019
2019 INTERIM RESULTS
Ecclesiastical Insurance Office plc 20 August 2019
Ecclesiastical Insurance Office plc ("Ecclesiastical"), the
specialist financial services group, today announces its 2019
interim results. A copy of the 2019 interim results will be
available on the Company's website at www.ecclesiastical.com
Highlights
-- Gross written premiums (GWP) up 7% from the same period last
year at GBP185.0m (H1 2018: GBP172.7m), supported by strong
retention, new propositions and benefiting from favourable foreign
exchange
-- Profit before tax of GBP42.8m (H1 2018: GBP19.4m)
-- Investment returns of GBP42.0m (H1 2018: GBP17.7m), where
markets have recovered since the end of 2018
-- Continuing to see steady measured progress in our insurance
business with underwriting profits* of GBP9.5m giving a combined
operating ratio (COR) of 91.4% (H1 2018: profit of GBP8.0m, COR
92.3%)
-- We will grant a further GBP5m to our charitable owner in
September to give to good causes. This will take us to GBP70m
towards our target of GBP100m in charitable donations by the end of
2020.
Mark Hews, Group Chief Executive Officer of Ecclesiastical,
said: "Our purpose at Ecclesiastical is to contribute to the
greater good of society. By delivering sustainable, profitable,
long-term growth, we are able to support thousands of good causes
across the UK through our charitable giving. I'm very proud that in
April we launched the Movement for Good Awards, giving away GBP1m
to charities in 2019.
"Alongside this we're announcing today a further GBP5m will be
granted to our charitable owner in September. This will bring us to
GBP70m towards our target of GBP100m by the end of 2020.
"This giving is made possible thanks to the hard work and
dedication of everyone at Ecclesiastical. I'm delighted to report a
positive financial performance in the first half of 2019,
underpinned by continued strong underwriting performance. This is a
result of our disciplined underwriting approach, and a benign
environment in the first half of the year. Positive growth in
global stock markets has also delivered strong investment returns,
demonstrating the benefit of our long term equity investment
strategy.
"Our strategic goal is to be the most trusted and ethical
specialist financial services group and we continue to win external
accolades for the way we do business.
"Ecclesiastical home insurance was once again rated first by
Fairer Finance overall and came first for trust and first for
customer happiness. Ecclesiastical Canada was awarded Top Employer
for Young people 2019 for the seventh consecutive year.
"Our reputation for claims excellence was also enhanced with our
UKGI business being the only insurer to win multiple awards at the
Insurance Post Claims Awards."
*The Group uses APMs to help explain performance. More
information on APMs is included in note 12.
Key Financial Performance Data
H1 2019 H1 2018
Gross written premiums GBP185.0m GBP172.7m
Group underwriting result* GBP9.5m GBP8.0m
Group combined operating ratio* 91.4% 92.3%
Investment return GBP42.0m GBP17.7m
Profit before tax GBP42.8m GBP19.4m
30 June 2019 31 Dec 2018
Net asset value GBP617m GBP586m
Solvency II capital cover (solo) 226% 215%
*The Group uses APMs to help explain performance. More
information on APMs is included in note 12.
Interim Management Report
It has been a good first half of the year with a stable
underwriting performance and strong investment returns, with stock
markets recovering from the falls seen at the end of 2018. We
report a profit before tax of GBP42.8m (H1 2018: GBP19.4m).
Our strategy over the medium term continues to deliver moderate
GWP growth, by maintaining our strong underwriting discipline and
focusing on profit over growth. We have deep specialist
capabilities, which we continue to develop through investment in
technology and innovation, and by providing appealing customer
propositions and excellent service.
We have delivered good growth and steady underwriting profits in
the first half with underwriting profit of GBP9.5m (H1 2018:
GBP8.0m). This reflects improved current year performance which
benefited from benign weather and favourable large loss experience
in most of our territories compared with previous years with the
COR of 91.4% (H1 2018: 92.3%).
Gross written premiums grew by 7.1% to GBP185.0m (H2 2018:
GBP172.7m), benefiting from strong retention, new business wins and
favourable currency movements.
Investment markets have partially recovered from a poor Q4 2018
where worldwide markets fell but remain around 3% below half year
2018 levels. Interest rates have been held and there has been less
volatility from quarter to quarter than in the prior year. The
unrealised investment losses we suffered at the end of 2018 were
partially recovered as we have benefited from unrealised gains in
H1 2019. Our overall investment return for the first half of the
year was above our expectations at GBP42.0m (H1 2018: GBP17.7m). We
are expecting further volatility in the second half of the year as
the uncertainty around Brexit and global economic conditions
continues.
These positive half-year results allow us to make a grant of
GBP5m (H2 2018: GBP5m) to our charitable owner, Allchurches Trust,
which has been approved by the Board and will be paid in September
2019.
Strategic Update
Investment in both our business and our people continues under a
broad range of initiatives. Within the UK, a new private client
product has been launched to help capitalise on growth
opportunities available in this market. In May we launched a series
of enhancements to our education proposition with a redesigned
survey report, e-learning support, cyber guidance and a lesson kit
for teachers to assist with the promotion of digital resilience
with primary and secondary pupils. Investment in our staff
continues to take place through our General Insurance Academy and
as part of this a national training plan has been created, focusing
on the continued development of our underwriters.
Investment in new technology is also progressing well: our new
policy administration system for the UK and Ireland is under
development; the UK's new claims workflow and document repository
system is expected to go live shortly; and our Australian
subsidiary has begun development of its new policy administration
system. Our UK broking business has completed a successful trial of
a new claims portal and will begin to roll this out more widely
during 2019.
Our work in innovation and loss prevention continues. The UK has
successfully piloted thermal imaging equipment that identifies
electrical faults before they can cause a fire, with the rollout of
training and equipment now underway. Work continues on the use of
drones and their potential to support our risk management
proposition. The UK has undertaken a series of trial drone flights.
This will enable us to develop our understanding of how this
technology can be embedded within our current survey approach. We
are exploring how connected technology can prevent common losses
thus saving the customer time and expense on the cost of property
maintenance, including a trial of a smart water leak detector and
equipping a heritage property with a wide range of sensors to
identify potential risks.
Our purpose is to contribute to the greater good of society.
Earlier this year we launched our GBP1m Movement for Good Awards,
and recently announced awards of GBP1,000 each to 500 charities.
Further grants totalling GBP500,000 to 10 charities will be
announced during September. We continue to be motivated by our
target to donate GBP100m to charity by the end of 2020 - after the
GBP5m grant, we will have donated GBP70m towards this goal.
Together with our customers and business partners, we are building
a movement for good - championing a more caring, ethical and
trusted way of doing business.
General Insurance - UK and Ireland
UK and Ireland report an underwriting profit of GBP9.2m and a
net combined ratio of 87.8% (H1 2018: GBP11.8m profit, COR 83.8%).
The property result has been better than expected in the first half
of the year due to unusually benign weather and lower than average
large loss experience. The strong performance of our liability
business has continued into 2019 with the current year liability
claims experience similar to last year, but with levels of reserve
releases less than last year. We expect to see this trend of a
reduction in the level of these releases continue as the run-off of
claims in respect of the unprofitable business we exited in 2012
and 2013 is now well progressed.
UK and Ireland GWP grew by 4% to GBP124m in the six months to 30
June 2019 (H1 2018: GBP119.3m). This is driven by particularly
strong growth in our Art & Private Client, Real Estate and
Schemes business together with continued growth in our Heritage
business as we demonstrate our position as a leading insurer of
heritage, listed and period properties.
General Insurance - Canada
Canada reports GWP of GBP25.5m (H1 2018: GBP22.4m), an increase
of 12.5% in local currency. Good progress continues to be made in
strengthening the existing portfolio through rate and retention.
New business production is behind the prior year as we continued to
focus on profitability over growth.
Canada delivered an underwriting profit of GBP0.4m with a net
combined operating ratio of 98.0% (H1 2018: GBP3.7m loss, COR
119.1%) which represented an improved performance in large loss and
catastrophe events compared with both 2018 and 2017 where
underwriting losses were delivered. Although the first few months
saw a higher level of claims from the adverse winter weather, the
last few months have seen the benefit of the rating action and a
return to more normal weather experience.
General Insurance - Australia
Our Australian business continues to be successful in generating
new business which has been a key driver of an 18% increase in GWP
in local currency. After the negative effects of exchange, reported
GWP was up 15% to GBP33.7m (H1 2018: GBP29.4m). We expect to see
growth continue into the second half of the year although the
market is becoming more competitive.
The underwriting loss for the period has remained relatively
stable at GBP0.4m with a net combined ratio of 103.3% (H1 2018:
GBP0.3m loss, COR 103.0%). Australia's gross underwriting results
were significantly impacted by the Townsville floods however, these
events were substantially reinsured and made a minimal impact on
the net results. The small loss is in line with expectations.
Group Investment Returns
Investment performance has performed above our expectations in
the first half of the year, with the markets recovering from a poor
Q4 2018 where worldwide markets fell. There has been less
volatility from quarter to quarter than in the prior year.
Our investment portfolio delivered profit of GBP42.0m (H1 2018:
GBP17.7m). The returns were predominantly driven by fair value
gains and dividend and interest income.
We discount some of our liability claims reserves. The reserves
relate to liability policies, written over many decades, and
represent very long-tail risks. The movement in yields from the
year end has resulted in a negative impact of GBP8.5m in the first
six months of the year, which partially offset the fair value gains
on our financial investments.
We remain cautious on our expectations for investment returns
given continued uncertainty around the UK's exit from the EU and
the US's international trade disputes. Our approach to the
management of risks resulting from the Group's exposure to
financial markets is outlined in note 4 to our latest annual
report.
Asset Management - EdenTree
Fee income grew by 1% reflecting positive market movements and
new flows. Our strategic investment in people and technology has
resulted in lower overall profitability, with EdenTree reporting a
small loss less than GBP0.1m (H1 2018: GBP0.8m).
Total assets under management (AUM) increased by 4% over the six
months to stand at almost GBP2.9bn (H1 2018: GBP2.8bn).
Despite positive market movements, investors remained cautious
during the early part of the year as the industry reported weak
retail inflows and particularly hard hit has been UK equity sector
with many groups suffering net outflows. Against this background
EdenTree were pleased to report OEIC pooled funds delivered
positive flows of GBP24m (H1 2018: GBP94m) into our pooled fund
products. Net inflows were driven by our multi asset product and
bond funds.
Overall net inflows from all sources was GBP25m (H1 2018:
GBP125m).
Broking and Advisory - SEIB Insurance Brokers
SEIB general commission and fees, excluding profit share
commission, has increased by 6% in the first half of the year.
Retention rates remain high but new business in some sectors is
proving to be challenging. SEIB continues to deliver stable returns
to the Group, reporting a half year profit before tax of GBP1.6m
(H1 2018: GBP1.8m).
Life Business
Our life insurance business, which is closed to new business,
reported a profit before tax of GBP0.2m at the half year (H1 2018:
GBP0.4m). Assets and liabilities are well matched, and the small
profit is in line with what we would expect as the business runs
off.
Balance Sheet and Capital Position
Total shareholders' equity increased by GBP30.8m to GBP616.8m in
the first six months of the year. Profits in the period were
partially offset by actuarial losses on retirement benefit plans
and a small exchange loss on overseas operations.
We paid the normal first-half dividend to preference
shareholders of GBP4.6m (H1 2018: GBP4.6m) and also expect to make
a grant of GBP5m (H1 2018: GBP5m) to our charitable owner in
September 2019.
Our Solvency II regulatory capital position remains strong. Own
funds increased in line with profits and our estimated internal
model capital requirement has also increased in line with the
growth in our business. Overall, the level of Solvency II cover is
ahead of the position at the end of 2018 (226% vs 215%), in line
with our expectations.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group and our
approach to managing them are outlined in our latest annual report
and in note 1 to these condensed financial statements.
Group Outlook
We remain confident about future profitability and have
delivered a fifth consecutive year of strong underwriting profits
at the half year, with a greater contribution coming from the
current year performance than we have seen in more recent years.
Our short term underwriting results can be subject to volatile
items such as weather and large losses and we recognise that there
is the potential for challenges in the period ahead.
In the first half of the year we have seen a strong performance
in our investment result, reflecting the recovery seen in
investment markets since the start of the year. We recognise that
there is continued political and economic uncertainty and this has
the potential to create short term volatility in the second half of
the year. We remain well placed to withstand any such volatility
and have substantial headroom over our Solvency II capital
requirement.
Core to our purpose is to deliver strong and sustainable returns
to our ultimate shareholder, and to benefit not only our customers
but also the wider communities we serve. We do this through our
deep understanding and management of risks; by providing trusted
specialist expertise and by maintaining the strength of our capital
base. We benefit from the diversity within our financial services
group which gives us the opportunity us to grow both organically
and inorganically within our chosen markets and remain well placed
to deliver sustainable profitable growth.
By order of the Board
Mark Hews
Group Chief Executive
20 August 2019
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the 6 months to 30 June 2019
30.06.19 30.06.18 31.12.18
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Revenue
Gross written premiums 185,002 172,729 356,971
Outward reinsurance premiums (71,172) (66,924) (137,640)
Net change in provision for unearned premium (4,351) (877) (5,241)
Net earned premiums 109,479 104,928 214,090
------------ ------------ ----------
Fee and commission income 30,582 28,994 62,996
Other operating income 339 1,039 1,039
Net investment return 42,017 17,739 3,994
Total revenue 182,417 152,700 282,119
------------ ------------ ----------
Expenses
Claims and change in insurance liabilities (78,962) (67,054) (111,873)
Reinsurance recoveries 31,512 19,493 26,188
Fees, commissions and other acquisition costs (35,165) (32,192) (66,346)
Other operating and administrative expenses (56,705) (53,227) (114,388)
Total operating expenses (139,320) (132,980) (266,419)
------------ ------------ ----------
Operating profit 43,097 19,720 15,700
Finance costs (324) (297) (329)
Profit before tax 42,773 19,423 15,371
Tax expense (6,309) (2,301) (958)
------------ ------------ ----------
Profit for the financial period from continuing
operations attributable to equity holders
of the Parent 36,464 17,122 14,413
------------ ------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months to 30 June 2019
30.06.19 30.06.18 31.12.18
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Profit for the period 36,464 17,122 14,413
------------ ------------ ----------
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss:
Fair value gains on property - - 105
Actuarial (losses)/gains on retirement benefit
plans (1,113) 7,949 4,288
Attributable tax 189 (1,351) (747)
(924) 6,598 3,646
Items that may be reclassified subsequently
to profit or loss:
Gains/(losses) on currency translation differences 1,213 (2,380) (3,082)
(Losses)/gains on net investment hedges (1,643) 1,614 1,692
Attributable tax 292 (436) (187)
(138) (1,202) (1,577)
------------ ------------ ----------
Other comprehensive income (1,062) 5,396 2,069
------------ ------------ ----------
Total comprehensive income attributable to
equity holders of the Parent 35,402 22,518 16,482
------------ ------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months to 30 June 2019
Translation
Share Share Revaluation and hedging Retained
capital premium reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2019 (Unaudited)
At 1 January 120,477 4,632 565 19,071 441,259 586,004
Profit for the period - - - - 36,464 36,464
Other comprehensive
income - - - (138) (924) (1,062)
--------- -------- ------------ ------------ --------- ---------
Total comprehensive
income - - - (138) 35,540 35,402
Dividends on preference
shares - - - - (4,591) (4,591)
At 30 June 120,477 4,632 565 18,933 472,208 616,815
--------- -------- ------------ ------------ --------- ---------
2018 (Unaudited)
At 1 January 120,477 4,632 478 20,648 446,238 592,473
Profit for the period - - - - 17,122 17,122
Other comprehensive
income - - - (1,202) 6,598 5,396
--------- -------- ------------ ------------ --------- ---------
Total comprehensive
income - - - (1,202) 23,720 22,518
Dividends on preference
shares - - - - (4,591) (4,591)
At 30 June 120,477 4,632 478 19,446 465,367 610,400
--------- -------- ------------ ------------ --------- ---------
2018 (Audited)
At 1 January 120,477 4,632 478 20,648 446,238 592,473
Profit for the year - - - - 14,413 14,413
Other comprehensive
income - - 87 (1,577) 3,559 2,069
--------- -------- ------------ ------------ --------- ---------
Total comprehensive
income - - 87 (1,577) 17,972 16,482
Dividends on preference
shares - - - - (9,181) (9,181)
Gross charitable grant - - - - (17,000) (17,000)
Tax credit on charitable
grant - - - - 3,230 3,230
At 31 December 120,477 4,632 565 19,071 441,259 586,004
--------- -------- ------------ ------------ --------- ---------
The revaluation reserve represents cumulative net fair value
gains on owner-occupied property. Further details of the
translation and hedging reserve are included in note 8.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2019
30.06.19 30.06.18 31.12.18
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Assets
Goodwill and other intangible assets 33,517 28,288 30,064
Deferred acquisition costs 34,113 30,488 33,907
Deferred tax assets 1,807 1,666 1,749
Retirement benefit asset 14,815 26,823 16,131
Property, plant and equipment 22,214 8,209 8,391
Investment property 152,046 152,238 152,182
Financial investments 851,780 855,366 798,974
Reinsurers' share of contract liabilities 156,359 157,803 140,346
Current tax recoverable 688 222 59
Other assets 169,612 161,225 153,630
Cash and cash equivalents 94,657 90,507 109,417
Total assets 1,531,608 1,512,835 1,444,850
------------ ------------ -----------
Equity
Share capital 120,477 120,477 120,477
Share premium account 4,632 4,632 4,632
Retained earnings and other reserves 491,706 485,291 460,895
Total shareholders' equity 616,815 610,400 586,004
------------ ------------ -----------
Liabilities
Insurance contract liabilities 752,525 750,202 720,049
Lease obligations 14,370 1,592 1,379
Provisions for other liabilities 7,329 7,133 5,216
Retirement benefit obligation 6,102 10,626 5,813
Deferred tax liabilities 35,332 39,886 31,665
Current tax liabilities 585 2,637 2,905
Deferred income 20,623 18,955 19,900
Other liabilities 77,927 71,404 71,919
Total liabilities 914,793 902,435 858,846
------------ ------------ -----------
Total shareholders' equity and liabilities 1,531,608 1,512,835 1,444,850
------------ ------------ -----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months to 30 June 2019
30.06.19 30.06.18 31.12.18
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Profit before tax 42,773 19,423 15,371
Adjustments for:
Depreciation of property, plant and equipment 2,665 1,219 2,437
Revaluation of property, plant and equipment - - (85)
Loss/(profit) on disposal of property, plant
and equipment 94 (11) (3)
Amortisation of intangible assets 501 459 949
Net fair value (gains)/losses on financial
instruments and investment property (34,542) 3,138 35,506
Dividend and interest income (14,263) (13,575) (27,107)
Finance costs 324 297 329
Adjustment for pension funding 511 750 2,931
(1,937) 11,700 30,328
Changes in operating assets and liabilities:
Net increase/(decrease) in insurance contract
liabilities 28,790 (12,990) (42,161)
Net (increase)/decrease in reinsurers' share
of contract liabilities (15,497) (673) 16,431
Net decrease/(increase) in deferred acquisition
costs 141 414 (3,078)
Net increase in other assets (15,005) (12,074) (5,388)
Net increase in operating liabilities 2,012 3,050 5,838
Net increase/(decrease) in other liabilities 3,224 1,654 (286)
Cash generated/(used) by operations 1,728 (8,919) 1,684
Purchases of financial instruments and investment
property (76,741) (61,197) (125,739)
Sale of financial instruments and investment
property 64,644 62,794 149,562
Dividends received 5,396 5,002 9,790
Interest received 8,292 8,278 17,347
Tax paid (5,189) (2,538) (4,998)
Net cash (used by)/from operating activities (1,870) 3,420 47,646
------------ ------------ ----------
Cash flows from investing activities
Purchases of property, plant and equipment (3,593) (566) (1,822)
Proceeds from the sale of property, plant
and equipment - 54 55
Purchases of intangible assets (3,823) (393) (2,371)
Acquisition of business, net of cash acquired - - (225)
Net cash used by investing activities (7,416) (905) (4,363)
------------ ------------ ----------
Cash flows from financing activities
Interest paid (324) (297) (329)
Payment of principal element of lease liabilities (1,447) (169) (346)
Dividends paid to Company's shareholders (4,591) (4,591) (9,181)
Donations paid to ultimate parent undertaking - - (17,000)
Net cash used by financing activities (6,362) (5,057) (26,856)
------------ ------------ ----------
Net (decrease)/increase in cash and cash equivalents (15,648) (2,542) 16,427
Cash and cash equivalents at the beginning
of the period 109,417 93,767 93,767
Exchange gains/(losses) on cash and cash equivalents 888 (718) (777)
Cash and cash equivalents at the end of the
period 94,657 90,507 109,417
------------ ------------ ----------
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
1. General information
The information for the year ended 31 December 2018 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor
reported on those accounts: its report was unqualified, did not
draw attention to any matters by way of emphasis without qualifying
the report, and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
The condensed consolidated interim financial statements were
approved by the Board on 20 August 2019. These condensed
consolidated interim financial statements have been reviewed, not
audited.
The principal risks and uncertainties of the Group are in
respect of insurance risk and financial risk. The risk under any
one insurance contract is the possibility that the insured event
occurs and the uncertainty of the amount and timing of the
resulting claim. Factors such as the business and product mix, the
external environment including market competition and reinsurance
capacity all may vary from year to year, along with the actual
frequency, severity and ultimate cost of claims and benefits. The
Group's underwriting strategy is designed to ensure that the
underwritten risks are well diversified in terms of type and amount
of risk and geographical spread. In all operations, pricing
controls are in place, underpinned by sound statistical analysis,
market expertise and appropriate external consultant advice. Gross
and net underwriting exposure is protected through the use of a
comprehensive programme of reinsurance using both proportional and
non-proportional reinsurance and supported by proactive claims
handling. The overall reinsurance structure is regularly reviewed
and modelled to ensure that it remains optimum to the Group's
needs. The optimum reinsurance structure provides the Group with
sustainable, long-term capacity to support its specialist business
strategy, with effective balance sheet and profit and loss
protection at a reasonable cost.
The Group derives insurance premiums from a range of
geographical locations and classes of business. Depending on the
location and class of the risk, there may be a seasonal pattern to
the incidence of claims. However, given the mix of business that
the Group writes, overall the consolidated interim financial
statements are not subject to any significant impact arising from
the seasonality or cyclicality of operations.
The most important components of financial risk are interest
rate risk, credit risk, currency risk and equity price risk. The
Group is exposed to equity price risk because of financial
investments held by the Group which are stated at fair value
through profit or loss. The Group mitigates this risk by holding a
diversified portfolio across geographical regions and market
sectors, and through the use of derivative contracts from time to
time which would limit losses in the event of a fall in equity
markets. The Group's exposure to interest rate risk arises
primarily from movements on financial investments that are measured
at fair value and have fixed interest rates, which represent a
significant proportion of the Group's assets, and from those
insurance liabilities for which discounting is applied at a market
interest rate. The Group's investment strategy is set in order to
control the impact of interest rate risk on anticipated cash flows
and asset and liability values. The fair value of the Group's
investment portfolio of fixed income securities reduces as market
interest rates rise as does the present value of discounted
insurance liabilities, and vice versa. These principal risks and
uncertainties, together with details of the financial risk
management objectives and policies of the Group, are disclosed in
the latest annual report.
The Directors have assessed the going concern of the Group. The
directors have considered the Group's plans and forecasts,
financial resources, investment portfolio and solvency position.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the consolidated interim financial
statements.
2. Accounting policies
Ecclesiastical Insurance Office plc (hereafter referred to as
the "Company"), a public limited company incorporated and domiciled
in England, together with its subsidiaries (collectively the
"Group") operates principally as a provider of general insurance
and in addition offers a range of financial services, with offices
in the UK & Ireland, Australia and Canada.
The annual financial statements are prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. The condensed set of financial statements
included in the 2019 interim results has been prepared in
accordance with IAS 34, Interim Financial Reporting.
Other than those detailed below, the same accounting policies
and methods of computation are followed in the consolidated interim
financial statements as applied in the Group's latest audited
annual financial statements.
IFRS 16, Leases
The Group has adopted IFRS 16 from 1 January 2019 using the
modified retrospective approach, as permitted by the standard. The
reclassifications and the adjustments arising from the new leasing
rules are therefore recognised in the opening balance sheet on 1
January 2019. Comparative figures for the 2018 reporting period
have not been restated, as permitted under the specific
transitional provisions in the standard. There was no impact on the
Group's opening equity.
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17, Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 January 2019. The Group's weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
January 2019 was 4.0%.
2019
GBP000
Operating lease commitments disclosed as at 31 December
2018 19,605
Contract elements reassessed as service agreements (1,579)
Payments due in periods covered by extension options that
are included in the lease term 957
Leases committed but not yet commenced at 31 December
2018 (4,969)
Short-term leases, sales taxes and other (1,451)
Discounted using the lessee's incremental borrowing rate
at the date of initial application (1,480)
Finance liabilities recognised as at 31 December 2018 1,379
Lease liability recognised as at 1 January 2019 12,462
--------
Right-of-use assets have been measured at 1 January 2019 at an
amount equal to the lease liability, adjusted by the amount of any
prepaid or accrued lease payments relating to that lease recognised
in the balance sheet as at 31 December 2018.
For leases previously classified as finance leases the Group
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right of use asset and the lease liability at the date of
initial application.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics;
-- the accounting for operating leases with a remaining term of
less than 12 months as at 1 January 2019 as short-term leases;
-- the exclusion of initial direct costs for the measurement of
right-of-use assets at the date of initial application; and
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
The change in accounting policy affected the following items on
the balance sheet on 1 January 2019:
31.12.18 Adjustment 01.01.19
GBP000 GBP000 GBP000
Property, plant and equipment 8,391 10,353 18,744
Other assets 153,630 (447) 153,183
Lease obligations (1,379) (11,083) (12,462)
Provisions for other liabilities (5,216) (503) (5,719)
Other liabilities (71,919) 1,680 (70,239)
From 1 January 2019, leases are recognised as a right-of
use-asset and a corresponding liability at the date at which the
lease asset is available for use by the Group. Each lease payment
is deducted from the lease liability. Finance costs are charged to
the profit and loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease term on a
straight-line basis.
Lease liabilities include the net present value of:
-- fixed payments less any lease incentives receivable;
-- variable lease payments that are based on an index or rate;
-- amounts expected to be payable by the lessee under residual value guarantees;
-- the exercise price of an option if the lessee is reasonably
certain to exercise that option; and
-- payments and penalties from terminating the lease, if the
lease term reflects the lessee exercising that option.
Right-of-use assets are measured at cost comprising:
-- the amount of the initial measurement of lease liability;
-- any lease payment made at or before the commencement date,
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right-of-use assets are presented within property, plant and
equipment in the statement of financial position.
Payments associated with short term leases are recognised on a
straight-line basis as an expense in profit or loss. Short-term
leases are leases with a lease term of 12 months or less.
Other standards adopted since the year end are either outside
the scope of Group transactions or do not significantly impact the
Group.
The following standards were in issue but not yet effective and
have not been applied to these condensed financial statements.
IFRS 9, Financial Instruments, which provides a new model for
the classification and measurement of financial instruments, is
effective for periods beginning on or after 1 January 2018. However
the Group has taken the option available to insurers to defer the
application of IFRS 9 as permitted by IFRS 4, Insurance Contracts.
The Group qualifies for the temporary exemption, which is available
until annual periods beginning on or after 1 January 2021, since at
31 December 2015 greater than 90% of the Group's liabilities were
within the scope of IFRS 4. There has been no significant change to
the Group's operations since that date and, as a result, the Group
continues to apply IAS 39, Financial Instruments.
IFRS 17, Insurance Contracts, was issued in May 2017 and is
effective for periods beginning on or after 1 January 2021. A
one-year deferral has tentatively been proposed by the
International Accounting Standards Board (IASB) subject to due
process. The standard establishes revised principles for the
recognition, measurement, presentation and disclosure of insurance
contracts. The Group has progressed implementation of the standard
in line with expectations.
3. Segment information
The Group segments its business activities on the basis of
differences in the products and services offered and, for general
insurance, the underwriting territory. Expenses relating to Group
management activities are included within 'Corporate costs'. This
reflects the management and internal Group reporting structure.
The activities of each operating segment are described
below.
- General business
United Kingdom and Ireland
The Group's principal general insurance business operation is in the UK, where it operates
under the Ecclesiastical and Ansvar brands. The Group also operates in the Republic of Ireland,
underwriting general insurance business across the whole of Ireland.
Australia
The Group has a wholly-owned subsidiary in Australia underwriting general insurance business
under the Ansvar brand.
Canada
The Group operates a general insurance Ecclesiastical branch in Canada.
Other insurance operations
This includes the Group's internal reinsurance function and operations that are in run-off
or not reportable due to their immateriality.
- Investment management
The Group provides investment management services both internally and to third parties through
EdenTree Investment Management Limited.
- Broking and Advisory
The Group provides insurance broking through South Essex Insurance Brokers Limited, financial
advisory services through Ecclesiastical Financial Advisory Services Limited and risk advisory
services through Ansvar Risk Management Services Pty Limited which operates in Australia.
- Life business
Ecclesiastical Life Limited provides long-term insurance policies to support funeral planning
products. It is closed to new business.
- Corporate costs
This includes costs associated with Group management activities.
Inter-segment and inter-territory transfers or transactions are
entered into under normal commercial terms and conditions that
would also be available to unrelated third parties.
Segment revenue
The Group uses gross written premiums as the measure for
turnover of the general and life insurance business segments.
Turnover of the non-insurance segments comprises fees and
commissions earned in relation to services provided by the Group to
third parties. Segment revenues do not include net investment
return or general business fee and commission income, which are
reported within revenue in the consolidated statement of profit or
loss.
Revenue is attributed to the geographical region in which the
customer is based. Group revenues are not materially concentrated
on any single external customer.
6 months ended 6 months ended
30.06.19 30.06.18
Gross Non- Gross Non-
written insurance written insurance
premiums services Total premiums services Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and
Ireland 123,957 - 123,957 119,292 - 119,292
Australia 33,652 - 33,652 29,420 - 29,420
Canada 25,481 - 25,481 22,353 - 22,353
Other insurance operations 1,911 - 1,911 1,660 - 1,660
Total 185,001 - 185,001 172,725 - 172,725
Life business 1 - 1 4 - 4
Investment management - 6,270 6,270 - 6,185 6,185
Broking and Advisory - 4,776 4,776 - 4,972 4,972
--------- ---------- --------- --------- ---------- ---------
Group revenue 185,002 11,046 196,048 172,729 11,157 183,886
--------- ---------- --------- --------- ---------- ---------
12 months ended
31.12.18
Gross Non-
written insurance
premiums services Total
GBP000 GBP000 GBP000
General business
United Kingdom and
Ireland 242,339 - 242,339
Australia 56,946 - 56,946
Canada 54,158 - 54,158
Other insurance operations 3,507 - 3,507
Total 356,950 - 356,950
Life business 21 - 21
Investment management - 12,601 12,601
Broking and Advisory - 9,049 9,049
--------- ---------- ---------
Group revenue 356,971 21,650 378,621
--------- ---------- ---------
Segment result
General business segment results comprise the insurance
underwriting profit or loss, investment activities and other
expenses of each underwriting territory. The Group uses the
industry standard net combined operating ratio (COR) as a measure
of underwriting efficiency. The COR expresses the total of net
claims costs, commission and underwriting expenses as a percentage
of net earned premiums. Further details on the underwriting profit
or loss and COR, which are alternative performance measures that
are not defined under IFRS, are detailed in note 12.
The life business segment result comprises the profit or loss on
insurance contracts (including return on assets backing liabilities
in the long-term fund), shareholder investment return and other
expenses.
All other segment results consist of the profit or loss before
tax measured in accordance with IFRS.
6 months ended Combined
30 June 2019 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 87.8% 9,198 33,345 (158) 42,385
Australia 103.3% (354) 677 (37) 286
Canada 98.0% 434 993 (84) 1,343
Other insurance operations 186 - - 186
---------- ------------ --------- ---------
91.4% 9,464 35,015 (279) 44,200
Life business 241 4,327 - 4,568
Investment management - - (18) (18)
Broking and Advisory - - 1,425 1,425
Corporate costs - - (7,402) (7,402)
Profit before tax 9,705 39,342 (6,274) 42,773
---------- ------------ --------- ---------
6 months ended Combined
30 June 2018 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 83.8% 11,826 12,782 (258) 24,350
Australia 103.0% (337) 847 (39) 471
Canada 119.1% (3,653) 569 - (3,084)
Other insurance operations 212 - - 212
---------- ------------ --------- ---------
92.3% 8,048 14,198 (297) 21,949
Life business 429 770 - 1,199
Investment management - - 745 745
Broking and Advisory - - 1,593 1,593
Corporate costs - - (6,063) (6,063)
Profit before tax 8,477 14,968 (4,022) 19,423
---------- ------------ --------- ---------
12 months ended Combined
31 December 2018 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 80.2% 29,426 (1,836) (252) 27,338
Australia 93.7% 1,400 2,073 (77) 3,396
Canada 106.5% (2,599) 1,655 - (944)
Other insurance operations 963 - - 963
---------- ------------ --------- ---------
86.4% 29,190 1,892 (329) 30,753
Life business 1,642 (3,181) - (1,539)
Investment management - - 941 941
Broking and Advisory - - 2,045 2,045
Corporate costs - - (16,829) (16,829)
Profit before tax 30,832 (1,289) (14,172) 15,371
---------- ------------ --------- ---------
4. Tax
Income tax for the six month period is calculated at rates
representing the best estimate of the average annual effective
income tax rate expected for the full year, applied to the pre-tax
result of the six month period.
5. Dividends
Interim dividends paid on the 8.625% Non-Cumulative Irredeemable
Preference shares amounted to GBP4.6m (H1 2018: GBP4.6m).
6. Financial instruments' held at fair value disclosures
IAS 34 requires that interim financial statements include
certain of the disclosures about the fair value of financial
instruments set out in IFRS 13, Fair Value Measurement and IFRS 7,
Financial Instruments Disclosures.
The fair value measurement basis used to value those financial
assets and financial liabilities held at fair value is categorised
into a fair value hierarchy as follows:
Level 1: fair values measured using quoted prices (unadjusted)
in active markets for identical assets or liabilities. This
category includes listed equities in active markets, listed debt
securities in active markets and exchange-traded derivatives.
Level 2: fair values measured using inputs other than quoted
prices included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This category includes listed debt or equity
securities in a market that is not active and derivatives that are
not exchange-traded.
Level 3: fair values measured using inputs for the asset or
liability that are not based on observable market data
(unobservable inputs). This category includes unlisted debt and
equities, including investments in venture capital, and suspended
securities. Where a look-through valuation approach is applied,
underlying net asset values are sourced from the investee,
translated into the Group's functional currency and adjusted to
reflect current market conditions.
There have been no transfers between investment categories in
the current period.
Fair value measurement
at the
end of the reporting period
based on
--------------------------------
Level 1 Level Level Total
2 3
30 June 2019 GBP000 GBP000 GBP000 GBP000
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 279,806 197 63,108 343,111
Debt securities 494,523 1,200 260 495,983
Derivative securities - 2,022 - 2,022
Total financial assets at fair value 774,329 3,419 63,368 841,116
----------- --------- -------- ---------
Financial liabilities at fair value
through profit or loss
Financial liabilities
Derivative securities - (4,261) - (4,261)
- (4,261) - (4,261)
----------- --------- -------- ---------
Financial liabilities at fair value
through other comprehensive income
Other liabilities
Derivative securities - (2,560) - (2,560)
Total financial liabilities at fair
value - (6,821) - (6,821)
----------- --------- -------- ---------
30 June 2018
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 287,383 245 43,725 331,353
Debt securities 509,468 1,282 259 511,009
Derivative securities - 3,053 - 3,053
796,851 4,580 43,984 845,415
--------- -------- -------- ---------
Financial assets at fair value through
other comprehensive income
Financial investments
Derivative securities - 47 - 47
--------- --------
Total financial assets at fair value 796,851 4,627 43,984 845,462
--------- -------- -------- ---------
Financial liabilities at fair value
through profit or loss
Financial liabilities
Derivative securities - (1,115) - (1,115)
- (1,115) - (1,115)
--------- -------- -------- ---------
Financial liabilities at fair value
through other comprehensive income
Other liabilities
Derivative securities - (2,356) - (2,356)
Total financial liabilities at fair
value - (3,471) - (3,471)
--------- -------- -------- ---------
31 December 2018
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 241,115 246 44,773 286,134
Debt securities 495,348 1,233 261 496,842
Derivative securities - 5,331 - 5,331
736,463 6,810 45,034 788,307
--------- -------- -------- ---------
Financial assets at fair value through
other comprehensive income
Financial investments
Derivative securities - 737 - 737
Total financial assets at fair value 736,463 7,547 45,034 789,044
--------- -------- -------- ---------
The derivative liabilities of the Group at the end of the prior
year were measured at fair value through profit or loss and
categorised as level 2.
Fair value measurements in level 3 consist of financial assets,
analysed as follows:
Financial assets at fair
value
through profit or loss
----------------------------------
Equity Debt
securities securities Total
GBP000 GBP000 GBP000
2019
At 1 January 44,773 261 45,034
Total gains recognised in profit or loss 4,342 (1) 4,341
Purchases 13,993 - 13,993
At 30 June 63,108 260 63,368
----------- ----------- --------
Total gains for the period included in profit
or loss for assets held at the end of the
reporting period 4,342 (1) 4,341
----------- ----------- --------
2018
At 1 January 42,279 125 42,404
Total gains recognised in profit or loss 1,580 - 1,580
Transfers (134) 134 -
At 30 June 43,725 259 43,984
----------- ----------- --------
Total gains for the period included in profit
or loss for assets held at the end of the
reporting period 1,608 - 1,608
----------- ----------- --------
2018
At 1 January 42,279 125 42,404
Total gains recognised in profit or loss 2,628 5 2,633
Transfers (134) 134 -
Disposal proceeds - (3) (3)
At 31 December 44,773 261 45,034
----------- ----------- --------
Total gains for the period included in profit
or loss for assets held at the end of the
reporting period 2,656 5 2,661
----------- ----------- --------
All the above gains included in profit or loss for the period
are presented in net investment return within the statement of
profit or loss.
The valuation techniques used for instruments categorised in
Levels 2 and 3 are described below.
Listed debt and equity securities not in active market (Level
2)
These financial assets are valued using third party pricing
information that is regularly reviewed and internally calibrated
based on management's knowledge of the markets. Where material,
these valuations are reviewed by the Group Audit Committee.
Non exchange-traded derivative contracts (Level 2)
The Group's derivative contracts are not traded in active
markets. Foreign currency forward contracts are valued using
observable forward exchange rates corresponding to the maturity of
the contract and the contract forward rate. Over-the-counter equity
or index options and futures are valued by reference to observable
index prices.
Unlisted equity securities (Level 3)
These financial assets are valued using observable net asset
data, adjusted for unobservable inputs including comparable
price-to-book ratios based on similar listed companies, and
management's consideration of constituents as to what exit price
might be obtainable. Where material, these valuations are reviewed
by the Group Audit Committee.
The valuation is most sensitive to the level of underlying net
assets, the Euro exchange rate, the price-to-book ratio chosen, an
illiquidity discount and a credit rating discount applied to the
valuation to account for the risks associated with holding the
asset. If the price-to-book ratio, illiquidity discount and credit
rating discount applied changes by +/-10%, the value of unlisted
equity securities could move by +/-GBP7m (H1 2018: +/-GBP5m). The
range is higher than the half year due to the increase in
value.
The increase in value during the period is the result of a
purchase of additional shares in the current holding and an
increase in the underlying net assets.
Unlisted debt (Level 3)
Unlisted debt is valued using an adjusted net asset method
whereby management uses a look-through approach to the underlying
assets supporting the loan, discounted using observable market
interest rates of similar loans with similar risk, and allowing for
unobservable future transaction costs. Where material, these
valuations are reviewed by the Group Audit Committee.
The valuation is most sensitive to the level of underlying net
assets, but it is also sensitive to the interest rate used for
discounting and the projected date of disposal of the asset, with
the exit costs sensitive to an expected return on capital of any
purchaser and estimated transaction costs. Reasonably likely
changes in unobservable inputs used in the valuation would not have
a significant impact on shareholders' equity or the net result.
7. Changes in estimates
The estimation of the ultimate liability arising from claims
made under general insurance business contracts is a critical
accounting estimate. There are various sources of uncertainty as to
how much the Group will ultimately pay with respect to such
contracts. There is uncertainty as to the total number of claims
made on each class of business, the amounts that such claims will
be settled for and the timing of any payments.
During the six month period, changes to claims reserve estimates
made in prior years as a result of reserve development resulted in
a net release of GBP13.0m (H1 2018: GBP16.8m) offset by a GBP8.5m
increase (H1 2018: GBP2.3m decrease) in reserves due to discount
rate movements.
The estimation of the ultimate liability arising from claims
made under life insurance business contracts is also a critical
accounting estimate. Estimates are made as to the expected number
of deaths in each future year until claims have been paid on all
policies, as well as expected future real investment returns from
assets backing life insurance contracts. During the six month
period there was a GBP2.7m increase (H1 2018: GBP1.0m decrease) in
reserves due to discount rate movements.
8. Translation and hedging reserve
Translation Hedging
reserve reserve Total
GBP000 GBP000 GBP000
2019
At 1 January 14,940 4,131 19,071
Gains on currency translation differences 1,213 - 1,213
Losses on net investment hedges - (1,643) (1,643)
Attributable tax - 292 292
At 30 June 16,153 2,780 18,933
------------ -------- --------
2018
At 1 January 18,022 2,626 20,648
Losses on currency translation differences (2,380) - (2,380)
Gains on net investment hedges - 1,614 1,614
Attributable tax - (436) (436)
At 30 June 15,642 3,804 19,446
------------ -------- --------
2018
At 1 January 18,022 2,626 20,648
Losses on currency translation differences (3,082) - (3,082)
Gains on net investment hedges - 1,692 1,692
Attributable tax - (187) (187)
At 31 December 14,940 4,131 19,071
------------ -------- --------
The translation reserve arises on consolidation of the Group's
foreign operations. The hedging reserve represents the cumulative
amount of gains and losses on hedging instruments in respect of net
investments in foreign operations.
9. Insurance contract liabilities and reinsurers' share of
contract liabilities
30.06.19 30.06.18 31.12.18
6 months 6 months 12 months
GBP000 GBP000 GBP000
Gross
Claims outstanding 481,747 492,359 457,319
Unearned premiums 188,624 173,888 180,766
Life business provision 82,154 83,955 81,964
Total gross insurance contract liabilities 752,525 750,202 720,049
--------- --------- ----------
Recoverable from reinsurers
Claims outstanding 92,354 98,874 78,731
Unearned premiums 64,005 58,929 61,615
Total reinsurers' share of contract liabilities 156,359 157,803 140,346
--------- --------- ----------
Net
Claims outstanding 389,393 393,485 378,588
Unearned premiums 124,619 114,959 119,151
Life business provision 82,154 83,955 81,964
Total net insurance liabilities 596,166 592,399 579,703
--------- --------- ----------
10. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation.
Charitable grants to the ultimate parent company are disclosed
in the condensed consolidated statement of changes in equity.
There have been no material related party transactions in the
period or changes thereto since the latest annual report which
require disclosure.
11. Holding company
The ultimate holding company is Allchurches Trust Limited, a
company limited by guarantee and a registered charity incorporated
in the United Kingdom.
12. Reconciliation of Alternative Performance Measures
The Group uses alternative performance measures (APM) in
addition to the figures which are prepared in accordance with IFRS.
The financial measures in our key financial performance data
include the combined operating ratio (COR). This measure is
commonly used in the industries we operate in and we believe it
provides useful information and enhances the understanding of our
results.
Users of the accounts should be aware that similarly titled APM
reported by other companies may be calculated differently. For that
reason, the comparability of APM across companies might be
limited.
In line with the European Securities and Markets Authority
guidelines, we provide a reconciliation of the combined operating
ratio to its most directly reconcilable line item in the financial
statements.
30.06.19
Broking
Inv'mnt Inv'mnt and Corporate
Insurance return mngt Advisory costs Total
-------------------
General Life
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Gross written premiums 185,001 1 - - - - 185,002
Outward reinsurance premiums (71,172) - - - - - (71,172)
Net change in provision
for unearned premiums (4,351) - - - - - (4,351)
Net earned premiums [1] 109,478 1 - - - - 109,479
---------- ------- -------- -------- --------- ---------- ----------
Fee and commission income 19,537 - - 6,269 4,776 - 30,582
Other operating income 339 - - - - - 339
Net investment return - 724 40,865 8 420 - 42,017
Total revenue 129,354 725 40,865 6,277 5,196 - 182,417
---------- ------- -------- -------- --------- ---------- ----------
Expenses
Claims and change in insurance
liabilities (78,617) (345) - - - - (78,962)
Reinsurance recoveries 31,512 - - - - - 31,512
Fees, commissions and other
acquisition costs (34,968) - - (410) 213 - (35,165)
Other operating and administrative
expenses (37,817) (139) (1,523) (5,885) (3,939) (7,402) (56,705)
Total operating expenses (119,890) (484) (1,523) (6,295) (3,726) (7,402) (139,320)
---------- ------- -------- -------- --------- ---------- ----------
Operating profit/(loss) [2] 9,464 241 39,342 (18) 1,470 (7,402) 43,097
Finance costs (279) - - - (45) - (324)
---------- ------- -------- -------- --------- ---------- ----------
Profit before tax 9,185 241 39,342 (18) 1,425 (7,402) 42,773
---------- ------- -------- -------- --------- ---------- ----------
Underwriting profit [2] 9,464
Combined operating ratio
( = ( [1] - [2] ) / [1]
) 91.4%
The underwriting profit of the Group is defined as the operating
profit of the general insurance business.
The Group uses the industry standard net combined operating
ratio as a measure of underwriting efficiency. The COR expresses
the total of net claims costs, commission and underwriting expenses
as a percentage of net earned premiums. It is calculated as
( [1] - [2] ) / [1].
30.06.18
Broking
Inv'mnt Inv'mnt and Corporate
Insurance return mngt Advisory costs Total
-------------------
General Life
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Gross written premiums 172,725 4 - - - - 172,729
Outward reinsurance
premiums (66,924) - - - - - (66,924)
Net change in
provision
for unearned premiums (877) - - - - - (877)
Net earned premiums [1] 104,924 4 - - - - 104,928
---------- ------- -------- --------- --------- ---------- ----------
Fee and commission
income 17,837 - - 6,185 4,972 - 28,994
Other operating income 1,039 - - - - - 1,039
Net investment return - 1,019 16,302 4 414 - 17,739
Total revenue 123,800 1,023 16,302 6,189 5,386 - 152,700
---------- ------- -------- --------- --------- ---------- ----------
Expenses
Claims and change in
insurance
liabilities (66,604) (450) - - - - (67,054)
Reinsurance recoveries 19,493 - - - - - 19,493
Fees, commissions and
other
acquisition costs (31,812) - - (468) 88 - (32,192)
Other operating and
administrative
expenses (36,829) (144) (1,334) (4,976) (3,881) (6,063) (53,227)
Total operating
expenses (115,752) (594) (1,334) (5,444) (3,793) (6,063) (132,980)
---------- ------- -------- --------- --------- ---------- ----------
Operating profit [2] 8,048 429 14,968 745 1,593 (6,063) 19,720
Finance costs (297) - - - - - (297)
---------- ------- -------- --------- --------- ---------- ----------
Profit before tax 7,751 429 14,968 745 1,593 (6,063) 19,423
---------- ------- -------- --------- --------- ---------- ----------
Underwriting profit [2] 8,048
Combined operating
ratio
( = ( [1] - [2] )/
[1] ) 92.3%
31.12.18
Broking
Inv'mnt Inv'mnt and Corporate
Insurance return mngt Advisory costs Total
-------------------------------
General Life
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Gross written premiums 356,950 21 - - - - 356,971
Outward reinsurance
premiums (137,640) - - - - - (137,640)
Net change in
provision
for unearned premiums (5,241) - - - - - (5,241)
Net earned
premiums [1] 214,069 21 - - - - 214,090
---------- ------------------- -------- --------- --------- ---------- ----------
Fee and commission
income 41,346 - - 12,601 9,049 - 62,996
Other operating income 1,039 - - - - - 1,039
Net investment return - 1,573 1,600 13 808 - 3,994
Total revenue 256,454 1,594 1,600 12,614 9,857 - 282,119
---------- ------------------- -------- --------- --------- ---------- ----------
Expenses
Claims and change in
insurance
liabilities (112,222) 349 - - - - (111,873)
Reinsurance recoveries 26,188 - - - - - 26,188
Fees, commissions and
other
acquisition costs (65,687) (15) - (943) 299 - (66,346)
Other operating and
administrative
expenses (75,543) (286) (2,889) (10,730) (8,111) (16,829) (114,388)
Total operating
expenses (227,264) 48 (2,889) (11,673) (7,812) (16,829) (266,419)
---------- ------------------- -------- --------- --------- ---------- ----------
Operating
profit [2] 29,190 1,642 (1,289) 941 2,045 (16,829) 15,700
Finance costs (329) - - - - - (329)
---------- ------------------- -------- --------- --------- ---------- ----------
Profit before tax 28,861 1,642 (1,289) 941 2,045 (16,829) 15,371
---------- ------------------- -------- --------- --------- ---------- ----------
Underwriting
profit [2] 29,190
Combined operating
ratio
( = ([1] - [2]) / [1]
) 86.4%
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the consolidated interim financial statements have been
prepared in accordance with IAS 34, 'Interim Financial Reporting'
as adopted by the European Union;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and changes therein).
The Board of Directors is as per the latest audited annual
financial statements, with the following changes:
- A. Winther was appointed as a Non-Executive Director on 19
March 2019 and was appointed to the Finance and Investment
Committee and Remuneration Committee on 3 April 2019
- F.X. Boisseau was appointed as a Non-Executive Director on 19
March 2019 and was appointed to the Group Audit Committee and Group
Risk Committee on 3 April 2019
- J.F. Hylands resigned as Chairman on 19 March 2019
- R.D.C. Henderson was appointed as Chairman on 19 March 2019
- C.H. Taylor succeeded R.D.C Henderson as Chair of Remuneration Committee on 21 June 2019
- On 13 June 2019, the Board appointed D.P. Cockrem as an
Executive Director and Group Chief Financial Officer, subject to
regulatory approval
By order of the Board,
Mark Hews David Henderson
Group Chief Executive Chairman
20 August 2019
INDEPENT REVIEW REPORT TO ECCLESIASTICAL INSURANCE OFFICE
PLC
We have been engaged by the company to review the consolidated
interim financial statements in the 2019 interim results report for
the six months ended 30 June 2019 which comprises the condensed
consolidated statement of profit or loss, the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of changes in equity, the condensed
consolidated statement of financial position, the condensed
consolidated statement of cash flows and related notes 1 to 12. We
have read the other information contained in the 2019 interim
results report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the consolidated interim financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The 2019 interim results report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the 2019 interim results report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
company are prepared in accordance with IFRSs as adopted by the
European Union. The consolidated interim financial statements
included in this 2019 interim results report have been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the consolidated interim financial statements in the 2019 interim
results report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the consolidated interim financial
statements in the 2019 interim results report for the six months
ended 30 June 2019 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
20 August 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR ZBLFLKVFLBBX
(END) Dow Jones Newswires
August 20, 2019 10:36 ET (14:36 GMT)
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