Jim McLaren, Chairman
Despite our AGM being held under very different circumstances this year due to the Coronavirus pandemic it still gives me great pleasure to present my first annual report as Chairman of NFU Mutual.
In 2019, on the back of what was a challenging year for the farming industry and the wider business community, NFU Mutual performed well and I’m happy to report another sound set of results and an overall group profit of £573m.
The General Insurance (GI) business delivered another strong performance in 2019 resulting in an underwriting profit of £167m with a combination of premium growth and lower levels of claims incurred. This is the ninth consecutive year of delivering an underwriting profit.
GWPI reached £1,648m showing a 5.1% increase over the previous year.
Our exceptional persistency continued in 2019 with 95.3% of members choosing to renew their policies with us, an achievement we’re particularly proud of. We continue to set ourselves apart from the competition by recognising our customers’ loyalty through Mutual Bonus – a discount applied to your General Insurance premium when you renew.
In 2019 we provided a total of £258m in Mutual Bonus to our members. As we move through 2020, we will continue to support our customers and expect to provide £250m in Mutual Bonus from July 2020 to June 2021.
Moving on to new business written during the year, this totalled £105.8m, representing an 8.3% increase with strong performance across all lines of business.
Our prudent management of costs, sound and fair claims handling, accurate pricing and risk selection resulted in a Combined Operating Ratio (COR) of 88.9%. On a longer-term 10-year basis the average COR continues to be within our 98% target.
Group funds under management increased to £20.8bn reflecting the upturn in investment markets. The General Business fund achieved a return of 10.7% and the three-year annualised return was a healthy 5.1%.
These results are testimony to our long-term objective of sustainable profitable growth. It’s this long-term focus that ensures our business remains resilient during these continued turbulent times with the worldwide Coronavirus outbreak.
Our pensions and investment business performed well in very challenging market conditions. Low consumer confidence seen across the industry led to us returning an Annual Premium Equivalent (APE) result of £60.1m.
Like all businesses, NFU Mutual will continue to be challenged by unprecedented levels of uncertainty and we will continue to evolve and work hard, as we have for over 100 years, to provide the products and services that our valued customers are looking for.
As a farmer myself, I understand the ongoing challenges for the agricultural industry and the vital role we have to play right now. In 2019 we donated £7m to support the farming unions across the UK and we will continue this support going forwards.
The role played by our staff along with our Agents and their staff is vital in providing our customers with the first-class service they have come to expect. I would personally like to thank everyone for their hard work and dedication. NFU Mutual is a people business and it is with your support that we remain in a strong position to continue to serve our members year on year.
Coronavirus continues to have a huge impact on everybody, including our customers and their local communities. Over the last few months we’ve committed to a £32m package of support including updates to pricing, cover, and claims, as well as increased funding allocated to local organisations via our agencies.
We know that many of our customers have been affected by this outbreak and a significant number of them are key workers, responsible for helping to feed and support the nation in difficult circumstances. On behalf of NFU Mutual I would like to thank you for all you are doing for the country.
We will continue to support our customers through this crisis and 2020 will be another challenging year for us all. As a company with a strong balance sheet that invests for the long-term, with our dedicated staff and loyal members, NFU Mutual remains in a strong position through these turbulent times.
Our members and their loyalty will always be a great source of pride for us. I would also like to thank you for your continued support and for choosing NFU Mutual.
To read more about NFU Mutual’s work as a responsible business read our 2019 responsible business report.
Set up by NFU Mutual in 2014, The Farm Safety Foundation has compiled a guide of ways to care for your mental wellbeing at this time.
To read our latest rural crime report showing a detailed picture of the financial and social impact of rural crime.