TIDMELLA
RNS Number : 9110A
Ecclesiastical Insurance Office PLC
27 September 2022
2022 INTERIM RESULTS
Ecclesiastical Insurance Office plc 27 September 2022
Ecclesiastical Insurance Office plc ("Ecclesiastical"), the
specialist financial services group(1) , today announces its 2022
interim results. A copy of the results will be available on the
Company's website at www.ecclesiastical.com
Group overview
-- Within Ecclesiastical, there was excellent growth in Gross
Written Premiums (GWP) to GBP261.9m (H1 2021: GBP226.5m), driven by
new business, and supported by strong retention and rate
strengthening.
-- Underwriting profit increased to GBP16.6m (H1 2021: GBP2.5m).
-- Our capital position remains robust with Solvency II capital
cover increasing to 280% and AM Best and S&P affirming our
excellent and strong ratings. A consequence of our capital strength
is that we are able to hold a large diversified portfolio of
equities, property, infrastructure and other investments on top of
those assets held to meet our insurance and capital requirements.
This is done to enhance our returns over the long term, although it
can lead to short term volatility in our reported results, as it
has in the first half of the year.
-- Overall loss before tax of GBP27.3m (H1 2021: Profit before
tax of GBP46.5m), which includes GBP79.8m of fair value investment
losses (H1 2021: GBP34.3m gains) as a result of adverse market
conditions. Net investment losses were GBP26.6m (H1 2021: GBP58.2m
profit).
-- As part of the Benefact Group of companies, Ecclesiastical
remained focused on its charitable ambition to grow to give. The
Group has now given GBP182m(2) to charity against its target of
donating GBP250m by the end of 2025.
-- This includes a grant of GBP5m to our owner Benefact Trust
Limited in respect of 2021 performance. Alongside this, thanks to a
robust underlying performance of the Group's businesses, we're
announcing a further GBP5m will be granted to our charitable
owner.
-- Our donations are benefiting charities and communities all
over the UK and Ireland, Canada and Australia, and also helping to
tackle current issues such as the war in Ukraine and cost of living
crisis in the UK.
-- Our parent company Benefact Group plc published its climate
commitments in March, setting out a roadmap to achieve net zero
(direct and indirect) by 2040. This includes an ambitious
commitment to achieve net zero for direct emissions by the end of
2023 and to become net negative for direct emissions by the end of
2025.
-- Continued external recognition of the Group as a trusted and
specialist financial services organisation. This included being
named as the UK's most trusted home insurer for the 15th time by
independent ratings agency Fairer Finance, and our Canadian team
was named one of the Top Employers for Young People for the tenth
consecutive year. Ecclesiastical Financial Advisory Services won
the NatWest Intermediary local hero mortgage awards - South West
& Wales, while EdenTree's Responsible & Sustainable Managed
Income Fund was awarded the ESG Clarity Best Multi-Asset ESG
(Environmental, Social and Governance) fund.
Mark Hews, Group Chief Executive Officer of Ecclesiastical,
said:
"Being owned by a charity, we measure our success less in terms
of the profit we make, but more in terms of the amount we give away
to good causes. Together, thanks to outstanding commitment from all
our supporters, the Group have now become the fourth largest
corporate donor to charity in the UK, and with additional donations
made this year, we have now given GBP182m(2) to good causes against
our target of giving GBP250m by the end of 2025.
"In terms of Group profits, whilst we report short term losses
due to investment volatility, I'm pleased to report a resilient
financial performance for the first half of 2022 from our core
businesses. Our business model is focused on delivering long-term
sustainable profits, which allows us to withstand short-term
economic pressures, and we have continued to grow the business
despite the challenging environment. Our GI businesses reported
excellent premium growth, driven by new business wins, and
supported by strong retention and rate strengthening. This led to
an underwriting profit of GBP16.6m, a significant increase on the
previous year.
"While much of the investment industry saw outflows as investor
sentiment fell, EdenTree, our award-winning responsible and
sustainable investment management business, bucked the trend by
growing its fee income and receiving positive net flows. Our broker
businesses also performed well, with SEIB reporting solid results
with a half year profit before tax of GBP1.9m (H1 2021:
GBP1.7m).
"Our capital position remains strong, with AM Best and S&P
recently affirming our excellent and strong credit ratings, and we
continued to invest in our business. In the UK and Ireland, we saw
the release of our new general insurance system, which will
ultimately enable a better, faster service for our customers and
brokers, and we continued to rollout our innovative Smart
Properties proposition to heritage properties, schools and
cathedrals, which provides an early-warning system to prevent fire
and flood. I'm also pleased that Ecclesiastical Financial Advisory
Services (EFAS) have signed an official partnership to provide
independent financial advice to ordained and lay members of the
various Church of England Pension schemes administered by the
Church of England Pension Board.
"The challenging market conditions in the first half adversely
affected our investment performance as equity prices fell sharply
amid concerns around inflation and the on-going uncertainty in
Ukraine. Our results included fair value losses of GBP79.8m (H1
2021: GBP34.3m gains) on our investment portfolio, which
contributed to a net investment loss of GBP26.6m (H1 2021: GBP58.2m
profit) and overall loss before tax of GBP27.3m (H1 2021: GBP46.5m
profit).
"In these difficult times, we remain resolute in our vision to
build a movement for good in society, helping to transform lives
and communities for the better. In June, we celebrated our
achievement of giving GBP100m to good causes with a Service of
Thanksgiving at Westminster Abbey, attended by HRH The Prince of
Wales, now HM King Charles III, politicians, brokers, clients,
colleagues and some of over 10,000 charities that have benefited
from our giving. It was a remarkable and moving occasion. It
demonstrated our combined impact and inspires us to do even
more.
"In the first half of 2022, we have helped hundreds of charities
in the UK through our Movement for Good Awards. Our charitable
owner, Benefact Trust, stepped up its giving to include a GBP1m
funding package to support those affected by the devastating
conflict in Ukraine.
"Earlier this year we granted GBP5m to Benefact Trust in respect
of our excellent 2021 performance and we have announced a further
grant of GBP5m to be paid in October. This will support even more
people and help us achieve our new ambition of becoming Britain's
biggest corporate donor.
"We are conscious of the financial pressures currently facing
many of our customers. In response, we have provided fundraising
resources to help churches and charities raise much-needed funds.
We have also invested significantly in our risk management
services, both face to face and online, to help customers protect
themselves from losses, and if the worst happens, our expert claims
team are always there for our customers when they need us most.
"Our charitable purpose feels even more relevant in these
difficult times. It spurs us on to grow the business, so that we
may give even more to good causes, and help those in society who
need it most. We are actively seeking new opportunities and paths
to growth in all our markets and we have the appetite and capacity
to achieve this goal."
(1) The 'Group' refers to Ecclesiastical Insurance Office plc
together with its subsidiaries. The 'Benefact Group' and 'wider
group' refers to Benefact Group plc, the immediate parent company
of Ecclesiastical Insurance Office plc, together with its
subsidiaries. The 'Benefact Trust' and 'the Trust' refers to
Benefact Trust Limited, the ultimate parent undertaking of
Ecclesiastical Insurance Office plc.
(2) Cumulative giving since 2014.
Results summary
H1 2022 H1 2021
Gross written premiums GBP261.9m GBP226.5m
Group underwriting profit(3) GBP16.6m GBP2.5m
Group combined operating ratio(3) 88.8% 98.1%
Fair value (losses)/gains on investments (GBP79.8m) GBP34.3m
Net investment (losses) / return (GBP26.6m) GBP58.2m
(Loss) / profit before tax (GBP27.3m) GBP46.5m
30 June 2022 31 Dec 2021
Net asset value GBP611m GBP632m
Solvency II capital cover (solo) 280% 261%
(3) The Group uses Alternative Performance Measures (APMs) to
help explain performance. More information on APMs is included in
note 17.
Financial highlights
General Insurance - UK and Ireland
UK and Ireland reported strong GWP growth of 16% to GBP166m in
the six months to 30 June 2022 (H1 2021: GBP143m). This has been
driven by new business, particularly in Real Estate, and supported
by strong retention and rate strengthening. The business reported
an underwriting profit of GBP9.3m and a net combined ratio of 89.6%
(H1 2021: GBP15.3m profit, COR 81.5%).
Large weather related losses early in the year were
substantially offset by benign weather conditions in the second
quarter of the year. The overall property result performed only
slightly behind expectations, although lower than the prior period
which was driven by more favourable weather conditions. Claims
volumes in our liability business have continued to be lower than
pre-pandemic levels, whilst also benefiting from favourable prior
year releases.
General Insurance - Canada
The Canadian business delivered premium growth of 16% in local
currency, reporting GWP of GBP39.5m (H1 2021: GBP32.4m), driven by
high retention and rate strengthening. This premium growth,
alongside a reduction in expenses, has resulted in an underwriting
profit of GBP5.2m (H1 2021: GBP0.4m loss) and a COR of 85.6% (H1
2021: 101.5%). A lower than average number of weather events in the
first half of the year has led to strong returns in the property
portfolio, whilst the liability portfolio recorded a small
loss.
General Insurance - Australia
Our Australian business reported GWP of GBP54.2m (H1 2021:
GBP49.6m), with premium growth of 9.4% in local currency,
demonstrating the strength of its renewal portfolio and rate
adequacy. The business reported an underwriting profit of GBP0.8m
(H1 2021: GBP3.9m loss). The property result was again impacted by
weather events including the Queensland and New South Wales Floods,
however the liability book reported a strong result in the period
compared with 2021, which had been adversely impacted by
strengthening of historic liability claims.
General Insurance - Other
The Group made a further underwriting profit of GBP1.4m (2021:
GBP8.5m loss) within its internal reinsurance portfolio, in line
with expectations. The prior period result was impacted by reserves
strengthening in respect of historic PSA claims in Ansvar
Australia.
Investment Returns
Our investment result for the first half of the year was a loss
of GBP26.6m (H1 2021: GBP58.2m profit), which includes fair value
losses of GBP79.8m (H1 2021: GBP34.3m gains). Investment markets
have been impacted by macroeconomic disruptions, exacerbated by the
geopolitical turmoil in Ukraine and the cost of living crisis
shadowing the economic outlook. Higher food and energy prices are
pushing inflation to a 40 year high in the UK and other parts of
the world, as central banks respond with tighter monetary policy in
an effort to bring this under control. The resulting outlook for
higher interest rates and a deteriorating economy has driven down
financial asset prices.
Income from financial assets was GBP14.9m (H1 2021: GBP14.2m),
with signs this will continue to increase as interest rates
rise.
We discount some of our liability claims reserves at a rate that
reflects the yield on long-term investment grade bonds. The
reserves relate to liability policies, written over many decades,
and represent very long-tail risks. The movement in yields from the
year end resulted in a gain of GBP38.7m (2021: GBP7.6m) in the
first six months of the year.
We continue to take a long-term view of risk and 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
Despite market movements negatively impacting fund values, our
investment management business, EdenTree, grew fee income by 2.6%
to GBP7.0m (H1 2021: GBP6.8m), supported by positive net flows,
largely into the Short Dated Bond Fund . Investor sentiment had
caused outflows in the industry as a whole, which highlights the
strength of EdenTree performance.
Within the funds EdenTree continues to manage at the period end,
net new money totalled GBP129.5m (2021: GBP190.8m). During the
period, EdenTree transferred or delegated (as appropriate)
investment management to a portfolio management business within the
wider Benefact Group as part of a strategic decision to clarify
functions and associated regulatory permissions. Under this model
EdenTree fulfils the role of Authorised Corporate Director for the
OEIC range and is legally responsible for the day to day management
of the funds to ensure they are managed within applicable
regulations, whilst the other business now performs the Investment
Management function.
As expected, our emphasis on the continued investment in the
business and people contributed to a loss of GBP1.2m (H1 2021:
GBP0.2m loss).
Broking and Advisory - SEIB Insurance Brokers
SEIB has continued to report solid results with a half year
profit before tax of GBP1.9m (H1 2021: GBP1.7m). General commission
and fees, excluding profit share commission, has increased by 7.9%
in the first half of the year to GBP6.4m (H1 2021: GBP5.9m)
primarily as a result of continued strong renewal retention and
rate increases.
Life Business
Our life business reopened to business during 2021, launching a
new product providing guarantees for pre-paid funeral planning
products sold by our Funeral Planning business in the wider
Benefact group. The life business reported a profit before tax of
GBP0.8m at the half year (H1 2021: GBP0.7m). Assets and liabilities
within this business are well matched, though we expect small
variances as margins in the insurance liabilities unwind.
Taxation
The Group's taxation charge in the period is a credit of
GBP18.7m (H1 2021: GBP18.1m charge), driven by reduced deferred tax
liabilities which reflect unrealised losses in the period on the
investment portfolio. Deferred tax is based on tax rates and laws
which have been enacted or substantively enacted at the period-end
date.
Balance Sheet and Capital Position
In the first half of the year, total shareholders' equity
decreased by GBP21.8m from GBP632.4m to GBP610.5m. The decrease was
primarily driven by investment losses as a result of fair value
movements the period which were partially offset by underwriting
profits. There were also actuarial gains, net of tax of GBP7.0m, on
retirement benefit plans driven by an increase in discount rate.
The Group made a GBP5m charitable grant in the period in respect of
prior year performance.
Strategic highlights
The Group's purpose to contribute to the greater good of society
underpins its strategic intent: the Group has a long history of
giving and a commitment to make a difference in the world. During
the first half of 2022 there have been several significant
highlights which contribute to the continued progress of the
Group.
Firstly, the Group's charitable ambition and focus is at the
heart of everything the Group does. In March 2022, the immediate
parent was rebranded and renamed Benefact Group, and the ultimate
charitable owner was rebranded and renamed the Benefact Trust. This
reinforces the distinctive positioning - enabling better
understanding that the Trust and its businesses are united and
motivated by a common purpose to give its profits to good
causes.
This charitable ambition shapes and drives the commitments of
the Group's businesses: each offers distinctive positioning and
support for its customers and communities. The Group's most recent
target to give GBP100m to charity was achieved in 2021.
The Benefact Group has continued to invest in its businesses,
operations and people to drive business benefit and enable
charitable giving to its communities. This investment is
underpinned by the Group's resilience and financial strength. This
is demonstrated by the achievement of key milestones including: the
first go-live of the new policy administration platform;
establishment of the Benefact family across all divisions and
businesses supported by refreshed values, culture and behaviours;
the launch of new investment funds; further acquisitions within the
Broking and Advisory division; and providing financial support to
the people of Ukraine through triple-matching of employee
giving.
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 4 to these condensed financial statements. There has
been no change to the principal risks and uncertainties since the
year end.
Group Outlook
Our robust performance in recent years delivering profitable
growth within the insurance business has been underpinned by strong
underwriting discipline and a real focus on supporting customers to
manage their risks. In order to be able to give more, we are
ambitious in our plans to grow the business on the back of our many
years of success. We are focussing on ways in which we can deliver
even better customer value and reach additional customers and
customer groups while retaining our strong underwriting and risk
management disciplines.
The global outlook remains uncertain, with the UK expected to
enter recession and the Bank of England expected to announce
further increase to interest rates to tackle inflation. Despite
these economic pressures and challenges ahead, we remain confident
about our future and are well placed to withstand potential
volatility.
Challenging times serve to remind us just why we do business -
we are motivated to make a real difference in the lives of the
people and the communities we were built to help.
The Group's Next Chapter strategy enables the Group to
significantly increase its impact, with aspirations to build a
Movement for Good that transforms lives and communities. This
strategy focuses on four themes which encompass both the
longer-term ambitions and the short term priorities, while
enhancing its strong competitive position in its markets. It brings
together the Group's ambitions to grow its profitability, diversify
its portfolio within its specialist areas, continue its investments
in technology, people and proposition development, and anticipates
strong business growth - together enabling the Group to give back
even more to society and its communities through its giving. The
Benefact Group has a new ambition to give over GBP250m cumulatively
by the end of 2025, following the successful delivery of its
GBP100m ambition as part of its previous strategic chapter.
By order of the Board
Mark Hews
Group Chief Executive
27 September 2022
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the 6 months to 30 June 2022
30.06.22 30.06.21 31.12.21
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Revenue
Gross written premiums 261,885 226,529 486,211
Outward reinsurance premiums (114,469) (97,571) (198,601)
Net change in provision for unearned premium 1,048 2,444 (14,620)
Net earned premiums 148,464 131,402 272,990
------------ ------------ ----------
Fee and commission income 41,795 37,275 81,547
Other operating income 2,161 1,000 1,136
Net investment return (26,578) 58,177 101,067
Total revenue 165,842 227,854 456,740
------------ ------------ ----------
Expenses
Claims and change in insurance liabilities (151,734) (151,188) (269,633)
Reinsurance recoveries 77,813 77,711 123,822
Fees, commissions and other acquisition costs (51,761) (45,211) (95,896)
Other operating and administrative expenses (66,605) (61,613) (135,632)
Total operating expenses (192,287) (180,301) (377,339)
------------ ------------ ----------
Operating (loss)/profit (26,445) 47,553 79,401
Finance costs (839) (1,090) (2,364)
(Loss)/profit) before tax (27,284) 46,463 77,037
Tax credit/(expense) 18,695 (18,050) (17,648)
------------ ------------ ----------
(Loss)/profit for the financial period from
continuing operations attributable to equity
holders of the Parent (8,589) 28,413 59,389
------------ ------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months to 30 June 2022
30.06.22 30.06.21 31.12.21
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
(Loss)/profit for the period (8,589) 28,413 59,389
------------ ------------ ----------
Other comprehensive (expense)/income
Items that will not be reclassified subsequently
to profit or loss:
Actuarial (losses)/gains on retirement benefit
plans (9,352) 35,510 38,660
Attributable tax 2,338 (7,314) (8,098)
(7,014) 28,196 30,562
Items that may be reclassified subsequently
to profit or loss:
Gains/(losses) on currency translation differences 7,634 (1,491) (2,356)
(Losses)/gains on net investment hedges (6,496) 1,258 1,912
Attributable tax 1,286 (183) (183)
2,424 (416) (627)
------------ ------------ ----------
Net other comprehensive (expense)/income (4,590) 27,780 29,935
------------ ------------ ----------
Total comprehensive (expense)/income attributable
to equity holders of the Parent (13,179) 56,193 89,324
------------ ------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months to 30 June 2022
Translation
Share Share Revaluation and hedging Retained
capital premium reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2022 (Unaudited)
At 1 January 120,477 4,632 268 17,603 489,381 632,361
Loss for the period - - - - (8,589) (8,589)
Other net income/(expense) - - - 2,424 (7,014) (4,590)
--------- -------- ------------ ------------ --------- ----------
Total comprehensive
income/(expense) - - - 2,424 (15,603) (13,179)
Dividends on preference
shares - - - - (4,591) (4,591)
Gross charitable grant - - - - (5,000) (5,000)
Tax relief on charitable
grant - - - - 950 950
Reserve transfers - - (46) - 46 -
At 30 June 120,477 4,632 222 20,027 465,183 610,541
--------- -------- ------------ ------------ --------- ----------
2021 (Unaudited)
At 1 January 120,477 4,632 599 18,230 425,290 569,228
Profit for the period - - - - 28,413 28,413
Other net (expense)/income - - (21) (416) 28,217 27,780
--------- -------- ------------ ------------ --------- ----------
Total comprehensive
(expense)/income - - (21) (416) 56,630 56,193
Dividends on preference
shares - - - - (4,591) (4,591)
Reserve transfers - - (313) - 313 -
At 30 June 120,477 4,632 265 17,814 477,642 620,830
--------- -------- ------------ ------------ --------- ----------
2021 (Audited)
At 1 January 120,477 4,632 599 18,230 425,290 569,228
Profit for the year - - - - 59,389 59,389
Other net (expense)/income - - (18) (627) 30,580 29,935
--------- -------- ------------ ------------ --------- ----------
Total comprehensive
(expense)/income - - (18) (627) 89,969 89,324
Dividends on preference
shares - - - - (9,181) (9,181)
Gross charitable grant - - - - (21,000) (21,000)
Tax relief on charitable
grant - - - - 3,990 3,990
Reserve transfers - - (313) - 313 -
At 31 December 120,477 4,632 268 17,603 489,381 632,361
--------- -------- ------------ ------------ --------- ----------
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 12.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2022
30.06.22 30.06.21 31.12.21
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Assets
Goodwill and other intangible assets 54,355 59,277 52,512
Deferred acquisition costs 48,204 42,082 46,027
Deferred tax assets 9,083 3,028 8,480
Pension surplus 16,919 25,241 28,304
Property, plant and equipment 35,187 37,973 35,245
Investment property 169,844 146,266 163,355
Financial investments 823,901 847,561 883,770
Reinsurers' share of contract liabilities 303,975 258,464 254,449
Current tax recoverable 8,873 7,981 5
Other assets 302,842 252,836 240,910
Cash and cash equivalents 110,137 108,148 114,036
Total assets 1,883,320 1,788,857 1,827,093
------------ ------------ -----------
Equity
Share capital 120,477 120,477 120,477
Share premium account 4,632 4,632 4,632
Retained earnings and other reserves 485,432 495,721 507,252
Total shareholders' equity 610,541 620,830 632,361
------------ ------------ -----------
Liabilities
Insurance contract liabilities 988,888 921,131 943,292
Investment contract liabilities 38,649 - 15,519
Lease obligations 21,691 24,319 22,738
Provisions for other liabilities 8,928 9,350 6,373
Retirement benefit obligations 5,462 6,283 7,058
Deferred tax liabilities 31,928 54,641 48,355
Current tax liabilities 788 104 1,232
Deferred income 30,714 26,867 28,385
Subordinated liabilities 25,049 24,981 24,433
Other liabilities 120,682 100,351 97,347
Total liabilities 1,272,779 1,168,027 1,194,732
------------ ------------ -----------
Total shareholders' equity and liabilities 1,883,320 1,788,857 1,827,093
------------ ------------ -----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months to 30 June 2022
30.06.22 30.06.21 31.12.21
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
(Loss)/profit before tax (27,284) 46,463 77,037
Adjustments for:
Depreciation of property, plant and equipment 3,016 3,128 6,155
(Profit)/loss on disposal of property, plant
and equipment (10) 28 24
Amortisation of intangible assets 1,104 413 856
Loss on disposal of intangible assets - - 4,765
Net fair value losses/(gains) on financial
instruments and investment property 79,765 (34,285) (58,340)
Dividend and interest income (10,244) (9,733) (21,802)
Finance costs 839 1,090 2,364
Adjustment for pension funding 416 713 1,646
47,602 7,817 12,705
Changes in operating assets and liabilities:
Net increase in insurance contract liabilities 20,602 58,895 83,952
Net increase in investment contract liabilities 23,131 - 15,519
Net increase in reinsurers' share of contract
liabilities (41,291) (52,761) (49,513)
Net increase in deferred acquisition costs (545) (317) (4,376)
Net increase in other assets (57,661) (37,376) (25,891)
Net increase in operating liabilities 21,147 9,452 8,472
Net increase/(decrease) in other liabilities 2,570 2,778 (234)
Cash generated/(used) by operations 15,555 (11,512) 40,634
Purchases of financial instruments and investment
property (117,263) (60,478) (186,514)
Sale of financial instruments and investment
property 98,910 62,504 157,614
Dividends received 3,889 2,929 7,427
Interest received 6,886 6,689 14,068
Tax paid (2,817) (4,042) (3,142)
Net cash from/(used by) operating activities 5,160 (3,910) 30,087
------------ ------------ ----------
Cash flows from investing activities
Purchases of property, plant and equipment (2,336) (3,380) (3,634)
Proceeds from the sale of property, plant
and equipment 27 27 48
Purchases of intangible assets (2,772) (5,557) (3,914)
Proceeds from the sale of intangible assets - 62 -
Net cash used by investing activities (5,081) (8,848) (7,500)
------------ ------------ ----------
Cash flows from financing activities
Interest paid (839) (1,090) (2,364)
Payment of lease liabilities (1,583) (1,560) (3,209)
Proceeds from issue of subordinate debt, net
of expenses - 25,014 25,014
Dividends paid to Company's shareholders (4,591) (4,591) (9,181)
Charitable grant paid to ultimate parent undertaking - - (21,000)
Net cash (used by)/from financing activities (7,013) 17,773 (10,740)
------------ ------------ ----------
Net (decrease)/increase in cash and cash
equivalents (6,934) 5,015 11,847
Cash and cash equivalents at the beginning
of the period 114,036 104,429 104,429
Exchange gains/(losses) on cash and cash equivalents 3,035 (1,296) (2,240)
Cash and cash equivalents at the end of the
period 110,137 108,148 114,036
------------ ------------ ----------
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
1. General information and basis of preparation
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
UK adopted International Financial Reporting Standards (IFRSs)
applicable at 31 December 2021 issued by the International
Accounting Standards Board (IASB) and the Disclosure Guidance and
Transparency Rules issued by the Financial Conduct Authority. The
condensed set of financial statements included in the 2022 interim
results has been prepared in accordance with UK adopted IAS 34,
Interim Financial Reporting.
The information for the year ended 31 December 2021 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.
These condensed consolidated interim financial statements were
approved by the Board on 27 September 2022 and were reviewed by the
Group's statutory auditor but not audited.
The Directors have assessed the going concern status of the
Group. The Directors have considered the Group's plans and
forecasts, financial resources, investment portfolio and solvency
position. The Group's forecasts and projections, taking into
account plausible scenarios, show that the group will have adequate
resources to continue operating over a period of at least 12 months
from the approval of the condensed consolidated interim financial
statements. Accordingly, the Directors continue to adopt the going
concern basis in preparing the consolidated interim financial
statements.
2. Accounting policies
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.
The following standards were in issue but not yet effective and
have not been applied to these condensed financial statements.
IFRS 17, Insurance Contracts, was issued in May 2017 and is
effective for periods beginning on or after 1 January 2023. The
standard establishes revised principles for the recognition,
measurement, presentation and disclosure of insurance contracts.
The Group's long-term business is expected to be the most affected
by the new standard. The Group's expected accounting policy choices
are disclosed in the 2021 Annual Report and Accounts.
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. The
Group has taken the option available to insurers to defer the
application of IFRS 9 until the implementation of IFRS 17 on 1
January 2023.
The Group's implementation of both IFRS 17 and IFRS 9 are in
progress. It is not currently practicable to reliably quantify the
impact on the Group's financial position or performance once these
standards are adopted, however, the Group is on track to be able to
report IFRS 17 results for the first time in its 2023 interim
results. The Group expects to provide further updates in the 2022
Annual Report and Accounts.
Other standards in issue but not yet effective are not expected
to materially impact the Group.
3. Critical accounting estimates and judgements
In preparing these interim financial statements and applying the
Group's accounting policies, the Directors have made judgements and
estimates based on their best knowledge of current circumstances
and expectation of future events. The judgements made in applying
the Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the 31 December
2021 consolidated financial statements. Estimates and their
underlying assumptions continue to be reviewed on an ongoing basis
with revisions to estimates being recognised prospectively. There
have been no significant changes since 31 December 2021. Management
have considered the current economic environment including the
impact of high inflation in their estimates and judgements.
4. Risk management
The principal risks and uncertainties, together with details of
the financial risk management objectives and policies of the Group,
have not changed significantly during the first half of the year.
These risks are disclosed in the latest annual report.
5. 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 an Ecclesiastical branch
in the Republic of Ireland underwriting general 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, adverse development cover and operations
that are in run-off or not separately 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 SEIB Insurance Brokers Limited and financial
advisory services through Ecclesiastical Financial Advisory Services Limited.
- Life business
Ecclesiastical Life Limited provides long-term policies to support funeral planning products.
The business reopened to new investment business in 2021 but it is closed to new insurance
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.
6 months ended 6 months ended
30.06.22 30.06.21
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 165,501 - 165,501 142,751 - 142,751
Australia 54,201 - 54,201 49,594 - 49,594
Canada 39,547 - 39,547 32,399 - 32,399
Other insurance operations 2,644 - 2,644 1,784 - 1,784
Total 261,893 - 261,893 226,528 - 226,528
Life business (8) - (8) 1 - 1
Investment management - 7,024 7,024 - 6,848 6,848
Broking and Advisory - 5,906 5,906 - 5,624 5,624
--------- ---------- --------- --------- ---------- ---------
Group revenue 261,885 12,930 274,815 226,529 12,472 239,001
--------- ---------- --------- --------- ---------- ---------
12 months ended
31.12.21
Gross Non-
written insurance
premiums services Total
GBP000 GBP000 GBP000
General business
United Kingdom and
Ireland 297,235 - 297,235
Australia 93,365 - 93,365
Canada 91,610 - 91,610
Other insurance operations 4,010 - 4,010
Total 486,220 - 486,220
Life business (9) - (9)
Investment management - 14,908 14,908
Broking and Advisory - 11,346 11,346
--------- ---------- ---------
Group revenue 486,211 26,254 512,465
--------- ---------- ---------
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 17.
The life business segment result comprises the profit or loss on
insurance contracts (including return on assets backing liabilities
in the long-term fund), investment return comprising profit or loss
on funeral plan investment business and 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 2022 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 89.6% 9,266 (25,618) (681) (17,033)
Australia 96.0% 801 825 (49) 1,577
Canada 85.6% 5,183 (1,254) (74) 3,855
Other insurance operations 1,380 106 - 1,486
---------- ------------ --------- ---------
88.8% 16,630 (25,941) (804) (10,115)
Life business 799 (7,280) - (6,481)
Investment management - - (1,188) (1,188)
Broking and Advisory - - 1,830 1,830
Corporate costs - - (11,330) (11,330)
Profit/(loss) before tax 17,429 (33,221) (11,492) (27,284)
---------- ------------ --------- ---------
6 months ended Combined
30 June 2021 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 81.5% 15,349 51,179 (952) 65,576
Australia 180.5% (3,929) 104 (19) (3,844)
Canada 101.5% (446) 349 (80) (177)
Other insurance operations (8,466) - - (8,466)
---------- ------------ --------- ---------
98.1% 2,508 51,632 (1,051) 53,089
Life business 719 3,108 - 3,827
Investment management - - (1,249) (1,249)
Broking and Advisory - - 1,681 1,681
Corporate costs - - (10,885) (10,885)
Profit/(loss) before tax 3,227 54,740 (11,504) 46,463
---------- ------------ --------- ---------
12 months ended Combined
31 December 2021 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 85.3% 24,952 87,106 (2,098) 109,960
Australia 156.9% (13,306) 1,924 (34) (11,416)
Canada 88.6% 7,065 246 (156) 7,155
Other insurance operations (9,952) (133) - (10,085)
---------- ------------ --------- ---------
96.8% 8,759 89,143 (2,288) 95,614
Life business 1,117 3,981 - 5,098
Investment management - - (2,525) (2,525)
Broking and Advisory - - 2,984 2,984
Corporate costs - - (24,134) (24,134)
Profit/(loss) before tax 9,876 93,124 (25,963) 77,037
---------- ------------ --------- ---------
6. Net investment return
30.06.22 30.06.21 31.12.21
GBP000 GBP000 GBP000
Investment income 14,921 14,189 30,863
Fair value movements on financial instruments
at fair value through profit or loss (87,557) 31,135 38,102
Fair value movements on investment property 7,792 3,150 20,238
Impact of discount rate change on insurance
contract liabilities 38,266 9,703 11,864
--------- ---------
Net investment (loss)/return (26,578) 58,177 101,067
--------- --------- ---------
7. 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.
Deferred tax is provided in full on temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for tax purposes.
Deferred tax is measured using tax rates expected to apply when the
related deferred tax asset is realised, or the deferred tax
liability is settled, based on tax rates and laws which have been
enacted or substantively enacted at the period-end date.
8. Preference shares
Interim dividends paid on the 8.625% Non-Cumulative Irredeemable
Preference shares amounted to GBP4.6m (H1 2021: GBP4.6m). At the
point these dividends were paid, consideration was given to the
distributable reserves and capital position.
9. Financial investments
Financial investments summarised by measurement category are as
follows:
30.06.22 30.06.21 31.12.21
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Financial investments at fair value through
profit or loss
Equity securities
- listed 244,973 280,270 281,682
- unlisted 61,612 68,499 68,620
Debt securities
- government bonds 199,092 165,705 204,071
- listed 284,022 330,016 313,294
- unlisted 34 551 34
Structured notes 33,232 - 14,649
Derivative financial instruments
- options 365 790 334
- forwards - 628 2
823,330 846,459 882,686
Financial investments at fair value through
other comprehensive income
Derivative financial instruments
- forwards - 475 414
Total financial investments at fair value 823,330 846,934 883,100
Loans and receivables
Other loans 571 627 670
Total financial investments 823,901 847,561 883,770
------------ ------------ ----------
10. Financial instruments held at fair value disclosures
IAS 34 requires that interim financial statements include
certain 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 (as prices) or indirectly (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 illiquidity where appropriate, with the fair values
disclosed being directly sensitive to this input.
There have been no transfers between investment categories in
the current period or prior period.
Fair value measurement
at the
end of the reporting
period based on
-----------------------------
Level Level Level Total
1 2 3
30 June 2022 GBP000 GBP000 GBP000 GBP000
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 244,441 206 61,939 306,586
Debt securities 481,776 1,337 34 483,147
Structured notes - 33,232 - 33,232
Derivative financial instruments - 365 - 365
--------- -------- -------- ---------
Total financial assets at fair value 726,217 35,140 61,973 823,330
--------- -------- -------- ---------
Financial liabilities at fair value
through profit or loss
Other liabilities
Derivative financial instruments - 1,493 - 1,493
Investment contract liabilities - 38,649 - 38,649
--------- -------- -------- ---------
- 40,142 - 40,142
Financial liabilities at fair value
through other comprehensive income
Other liabilities
Derivative financial instruments - 835 - 835
--------- -------- -------- ---------
Total financial liabilities at fair
value - 40,977 - 40,977
--------- -------- -------- ---------
30 June 2021
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 279,688 183 68,898 348,769
Debt securities 494,253 1,467 551 496,271
Derivative financial instruments - 1,418 - 1,418
--------- -------- -------- ---------
773,941 3,068 69,449 846,458
Financial assets at fair value through
other comprehensive income
Financial investments
Derivative financial instruments - 475 - 475
Total financial assets at fair value 773,941 3,543 69,449 846,933
--------- -------- -------- ---------
Financial liabilities at fair value
through other comprehensive income
Other liabilities
Derivative financial instruments - 757 - 757
--------- -------- -------- ---------
Total financial liabilities at fair
value - 757 - 757
--------- -------- -------- ---------
31 December 2021
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 281,169 186 68,947 350,302
Debt securities 515,953 1,412 34 517,399
Structured notes - 14,649 - 14,649
Derivative financial instruments - 336 - 336
797,122 16,583 68,981 882,686
Financial assets at fair value through
other comprehensive income
Financial assets
Derivative financial instruments - 414 - 414
--------- -------- -------- ---------
Total financial assets at fair value 797,122 16,997 68,981 883,100
--------- -------- -------- ---------
Financial liabilities at fair value
through profit or loss
Other liabilities
Derivative financial instruments - 331 - 331
Investment contract liabilities - 15,519 - 15,519
--------- -------- -------- ---------
Total financial liabilities at fair
value - 15,850 - 15,850
--------- -------- -------- ---------
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
2022
At 1 January 68,947 34 68,981
Total losses recognised in profit or loss (7,009) - (7,009)
At 30 June 61,938 34 61,972
----------- ----------- --------
Total losses for the period included in profit
or loss for assets held at the end of the
reporting period (7,009) - (7,009)
----------- ----------- --------
2021
At 1 January 59,688 551 60,239
Total gains recognised in profit or loss 9,210 - 9,210
At 30 June 68,898 551 69,449
----------- ----------- --------
Total gains for the period included in profit
or loss for assets held at the end of the
reporting period 9,210 - 9,210
----------- ----------- --------
2021
At 1 January 59,688 551 60,239
Total gains/(losses) recognised in profit
or loss 9,259 (517) 8,742
At 31 December 68,947 34 68,981
----------- ----------- --------
Total gains/(losses) for the period included
in profit or loss for assets held at the end
of the reporting period 9,259 (517) 8,742
----------- ----------- --------
All the above gains or losses 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.
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.
Structured notes (Level 2)
These financial assets are not traded on active markets. Their
fair value is linked to an index that reflects the performance of
an underlying basket of observable securities, including
derivatives, provided by an independent calculation agent.
Investment contract liabilities (Level 2)
These financial liabilities are not traded on active markets.
Their fair value is obtained directly from the value of structured
notes which are linked to an index that reflects the performance of
an underlying basket of observable securities, including
derivatives, provided by an independent calculation agent. The fair
value is also subject to a minimum guarantee.
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.
The valuation is sensitive to the level of underlying net
assets, the Euro exchange rate, the price-to-tangible book ratio,
an illiquidity discount and a credit rating discount applied to the
valuation to account for the risks associated with holding the
asset. If the illiquidity discount or credit rating discount
applied changes by +/-10%, the value of unlisted equity securities
could move by +/-GBP7m (H1 2021: +/-GBP8m).
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.
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.
11. 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 decrease in reserves of GBP48.8m (H1 2021: GBP20.0m increase)
in addition to a GBP27.1m decrease (H1 2021: partially offset by a
GBP7.6m 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 GBP11.2m decrease (H1 2021: GBP2.1m decrease) in
reserves due to discount rate movements.
12. Translation and hedging reserve
Translation Hedging
reserve reserve Total
GBP000 GBP000 GBP000
2022
At 1 January 13,196 4,407 17,603
Gains on currency translation differences 7,634 - 7,634
Losses on net investment hedges - (6,496) (6,496)
Attributable tax - 1,286 1,286
At 30 June 20,830 (803) 20,027
------------ -------- --------
2021
At 1 January 15,552 2,678 18,230
Losses on currency translation differences (1,491) - (1,491)
Gains on net investment hedges - 1,258 1,258
Attributable tax - (183) (183)
At 30 June 14,061 3,753 17,814
------------ -------- --------
2021
At 1 January 15,552 2,678 18,230
Losses on currency translation differences (2,356) - (2,356)
Gains on net investment hedges - 1,912 1,912
Attributable tax - (183) (183)
At 31 December 13,196 4,407 17,603
------------ -------- --------
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.
13. Insurance contract liabilities and reinsurers' share of
contract liabilities
30.06.22 30.06.21 31.12.21
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
Gross
Claims outstanding 656,913 614,960 616,225
Unearned premiums 268,285 233,808 253,158
Life business provision 63,690 72,363 73,909
Total gross insurance liabilities 988,888 921,131 943,292
------------ ------------ ----------
Recoverable from reinsurers
Claims outstanding 205,177 173,042 166,360
Unearned premiums 98,798 85,422 88,089
Total reinsurers' share of insurance liabilities 303,975 258,464 254,449
------------ ------------ ----------
Net
Claims outstanding 451,736 441,918 449,865
Unearned premiums 169,487 148,386 165,069
Life business provision 63,690 72,363 73,909
Total net insurance liabilities 684,913 662,667 688,843
------------ ------------ ----------
14. Subordinated debt
30.06.22 30.06.21 31.12.21
6 months 6 months 12 months
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
6.3144% EUR 30m subordinated debt 25,049 24,981 24,433
25,049 24,981 24,433
------------ ------------ ----------
Subordinated debt consists of a privately-placed issue of
20-year subordinated bonds, maturing in February 2041 and callable
after February 2031. The Group's subordinated debt ranks below its
senior debt and ahead of its preference shares and ordinary share
capital.
Subordinated debt is stated at amortised cost.
15. 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.
16. Ultimate parent company and controlling party
The Company is a wholly-owned subsidiary of Benefact Group plc.
Its ultimate parent and controlling company is Benefact Trust
Limited. Both companies are incorporated in England and Wales and
copies of their financial statements are available from the
registered office. The parent companies of the smallest and largest
groups for which group financial statements are drawn up are
Ecclesiastical Insurance Office plc and Benefact Trust Limited,
respectively.
17. 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.
The table below provides a reconciliation of the combined
operating ratio to its most directly reconcilable line item in the
financial statements.
30.06.22
Broking
Invt. Invt. and Corporate
Insurance return mngt Advisory costs Total
--------------------
General Life
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Gross written premiums 261,893 (8) - - - - 261,885
Outward reinsurance premiums (114,469) - - - - - (114,469)
Net change in provision
for unearned premiums 1,048 - - - - - 1,048
Net earned premiums [1] 148,472 (8) - - - - 148,464
---------- -------- --------- -------- --------- ---------- ----------
Fee and commission income 28,864 - - 7,025 5,906 - 41,795
Other operating income 2,161 - - - - - 2,161
Net investment return - 4,606 (31,585) (3) 404 - (26,578)
Total revenue 179,497 4,598 (31,585) 7,022 6,310 - 165,842
---------- -------- --------- -------- --------- ---------- ----------
Expenses
Claims and change in insurance
liabilities (148,199) (3,535) - - - - (151,734)
Reinsurance recoveries 77,813 - - - - - 77,813
Fees, commissions and other
acquisition costs (51,654) (33) - (442) 368 - (51,761)
Other operating and administrative
expenses (40,827) (231) (1,636) (7,768) (4,813) (11,330) (66,605)
Total operating expenses (162,867) (3,799) (1,636) (8,210) (4,445) (11,330) (192,287)
---------- -------- --------- -------- --------- ---------- ----------
Operating profit/(loss) [2] 16,630 799 (33,221) (1,188) 1,865 (11,330) (26,445)
Finance costs (804) - - - (35) - (839)
---------- -------- --------- -------- --------- ---------- ----------
Profit/(loss) before tax 15,826 799 (33,221) (1,188) 1,830 (11,330) (27,284)
---------- -------- --------- -------- --------- ---------- ----------
Underwriting profit [2] 16,630
Combined operating ratio
= ( [1] - [2] ) / [1] 88.8%
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].
30.06.21
Broking
Invt. Invt. and Corporate
Insurance return mngt Advisory costs Total
-------------------
General Life
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Gross written premiums 226,528 1 - - - - 226,529
Outward reinsurance premiums (97,571) - - - - - (97,571)
Net change in provision
for unearned premiums 2,444 - - - - - 2,444
Net earned premiums [1] 131,401 1 - - - - 131,402
---------- ------- -------- -------- ------------- --------- -----------
Fee and commission income 24,803 - - 6,848 5,624 - 37,275
Other operating income 1,000 - - - - - 1,000
Net investment return - 1,528 56,276 (5) 378 - 58,177
Total revenue 157,204 1,529 56,276 6,843 6,002 - 227,854
---------- ------- -------- -------- ------------- --------- -----------
Expenses
Claims and change in
insurance
liabilities (150,545) (643) - - - - (151,188)
Reinsurance recoveries 77,711 - - - - - 77,711
Fees, commissions and other
acquisition costs (45,027) - - (481) 297 - (45,211)
Other operating and
administrative
expenses (36,835) (167) (1,536) (7,611) (4,579) (10,885) (61,613)
Total operating expenses (154,696) (810) (1,536) (8,092) (4,282) (10,885) (180,301)
---------- ------- -------- -------- ------------- --------- -----------
Operating
profit/(loss) [2] 2,508 719 54,740 (1,249) 1,720 (10,885) 47,553
Finance costs (1,051) - - - (39) - (1,090)
---------- ------- -------- -------- ------------- --------- -----------
Profit/(loss) before tax 1,457 719 54,740 (1,249) 1,681 (10,885) 46,463
---------- ------- -------- -------- ------------- --------- -----------
Underwriting profit [2] 2,508
Combined operating ratio
= ( [1] - [2] ) / [1] 98.1%
31.12.21
Broking
Invt. Invt. and Corporate
Insurance return mngt Advisory costs Total
---------------------
General Life
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Gross written premiums 486,220 (9) - - - - 486,211
Outward reinsurance premiums (198,601) - - - - - (198,601)
Net change in provision
for unearned premiums (14,620) - - - - - (14,620)
Net earned premiums [1] 272,999 (9) - - - - 272,990
----------- -------- -------- --------- --------- ---------- ----------
Fee and commission income 55,417 - - 14,908 11,222 - 81,547
Other operating income 1,136 - - - - - 1,136
Net investment return - 3,939 96,358 6 764 - 101,067
Total revenue 329,552 3,930 96,358 14,914 11,986 - 456,740
----------- -------- -------- --------- --------- ---------- ----------
Expenses
Claims and change in insurance
liabilities (267,291) (2,342) - - - - (269,633)
Reinsurance recoveries 123,822 - - - - - 123,822
Fees, commissions and other
acquisition costs (95,628) (21) - (979) 732 - (95,896)
Other operating and administrative
expenses (81,696) (450) (3,234) (16,460) (9,658) (24,134) (135,632)
Total operating expenses (320,793) (2,813) (3,234) (17,439) (8,926) (24,134) (377,339)
----------- -------- -------- --------- --------- ---------- ----------
Operating profit/(loss) [2] 8,759 1,117 93,124 (2,525) 3,060 (24,134) 79,401
Finance costs (2,288) - - - (76) - (2,364)
----------- -------- -------- --------- --------- ---------- ----------
Profit/(loss) before tax 6,471 1,117 93,124 (2,525) 2,984 (24,134) 77,037
----------- -------- -------- --------- --------- ---------- ----------
Underwriting profit [2] 8,759
Combined operating ratio
= ( [1] - [2] ) / [1] 96.8%
RESPONSIBILITY STATEMENT
Each of the directors, whose names and functions are listed in
the Board of Directors section of the Company's latest Annual
Report and Accounts, confirm that, to the best of their
knowledge:
(a) the consolidated interim financial statements have been
prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and gives a true and
fair view of the assets, liabilities, financial position and
performance of the Company;
(b) the interim management report includes a fair review of the
information required by:
- DTR 4.2.7R being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
- DTR 4.2.8R being material related party transactions in the
first six months of the financial year and any material changes in
the related party transactions described in the last Annual Report
and Accounts.
By order of the Board
Mark Hews
Group Chief Executive
27 September 2022
DISCLAIMER
Certain statements in this document are forward-looking with
respect to plans, goals and expectations relating to the future
financial position, business performance and results of the Group
and wider group. The statements are based on the current
expectations of management of the Group. Management believe that
the expectations reflected in these forward-looking statements are
reasonable, however, can give no assurance that these expectations
will prove to be an accurate reflection of actual results. By their
nature, all forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances that are
beyond the Group's ability to control or estimate precisely
including, amongst other things, UK domestic and global economic
and business conditions, market-related risks, inflation, the
impact of competition, changes in customer preferences, risks
relating to sustainability and climate change, the policies and
actions of regulatory authorities, the impact of tax or other
legislation and other regulations in the jurisdictions in which the
Group operates.
INDEPENDENT REVIEW REPORT TO ECCLESIASTICAL INSURANCE OFFICE
PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Ecclesiastical Insurance Office Public Limited
Company's condensed consolidated interim financial statements (the
"interim financial statements") in the 2022 interim results of
Ecclesiastical Insurance Office Public Limited Company for the 6
month period ended 30 June 2022 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed Consolidated Statement of Financial Position as at 30 June 2022;
-- the Condensed Consolidated Statement of Profit or Loss and
Condensed Consolidated Statement of Comprehensive Income for the
period then ended;
-- the Condensed Consolidated Statement of Cash Flows for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the 2022 interim
results of Ecclesiastical Insurance Office Public Limited Company
have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
W e conducted our review in accordance with International
Standard on Review Engagements (UK) 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 enquiries, 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.
We have read the other information contained in the 2022 interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with this ISRE.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The 2022 interim results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the 2022
interim results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the 2022 interim results, including
the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the 2022 interim results based on our
review. Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Bristol
27 September 2022
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END
IR VDLFLLKLZBBZ
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