NFU Mutual, the UK’s leading rural insurer, is rewarding loyal members with Mutual Bonus rates of up to 17.5% after its 2018 financial results marked eight consecutive years of underwriting profit. However, the strong performance of the company’s core insurance business was offset by a reduction in investment returns affected by volatile global financial markets which contributed to an overall financial loss for the year of £290m.
The sustained growth of the General Insurance business is in part due to the insurer’s high levels of customer retention, and a record 95.5% of members chose to renew their insurance with NFU Mutual last year. All General Insurance customers will continue to receive a Mutual Bonus, in the form of a discount off their premium at renewal. The discounts of 12.5% to 17.5% will be applied from July 2019 until June 2020.
Following several years of exceptional growth, global stock markets and the UK commercial property market as a whole experienced a turbulent 2018. This was reflected in NFU Mutual’s own investment performance which saw overall investment assets under management by the Group decrease by £1.2bn in 2018 to £18.9bn.
Lindsay Sinclair, Group Chief Executive, said: “Despite an overall Group loss caused by challenging global investment markets, the sustained growth of our core insurance business is great news for our members. They are central to everything we do and it’s a privilege to be part of an organisation that shares its success with its members.
“We believe loyalty should be rewarded and our members have responded in kind with nearly 96 per cent choosing to renew their policies with us last year. Our continued success and robust capital position means around a million members – people who have insured their homes, cars, farms and businesses with us – will continue to get a Mutual Bonus discount when they renew. I’m proud that our financial strength and continued sustainable growth has enabled us to return £253m to our members in this way last year.
“Our overall financial performance shows a loss for the year and this is due to the effect of global political, social and economic uncertainty on our investment portfolio. Our financial strength allows us to take a more balanced approach to our long-term investments and the benefits of this are evident in our five-year returns. While stocks and shares may have had a turbulent year across the globe, we believe our investments in companies in the UK and abroad will deliver better long-term value for our members and we expect returns will improve substantially over time.
“Our continuing success in delivering excellent products and local service is down to the skills and commitment of the people in our offices across the UK. Being a Great Place to Work is one of our three strategic objectives and I am proud that NFU Mutual is the only UK-headquartered company to have been given a Great Workplace Award for 2018 from Gallup, the global employee engagement specialist.
“By running our business in the long-term interests of our members, we remain able to set ourselves apart from our competitors, offering value to our members and rewarding loyalty, which keeps us in a strong position going into 2019 and beyond.”
NFU Mutual’s strong financial position continued to be underpinned by its prudent management of costs, claims handling, pricing and risk selection. This resulted in a combined operating ratio of 90.1% (2017: 92.5%).
For the Life side of the business, which provides pensions, investments, protection and financial advice, a year of tough market conditions contributed to a slight reduction in Annual Premium Equivalent from £71.4m to £68.3m. However, significant progress made over the past five years reflects continued strong investor confidence in NFU Mutual’s products despite recent market uncertainty.
The company’s reputation for value and excellent service continues to receive recognition from Which?. NFU Mutual was named Insurance Provider of the Year in 2018 and it continues to top the Best Buy tables as a Which? Recommended Provider for both car and home insurance. Consumers also voted NFU Mutual as Auto Express Best Car Insurer for the ninth time in the last ten years and Moneywise’s Most Trusted Home Insurer for the seventh time.