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Name | Symbol | Market | Type |
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Ecclesiastl.8fe | LSE:ELLA | London | Preference Share |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 132.00 | 131.00 | 133.00 | 132.50 | 132.00 | 132.50 | 58,466 | 08:00:12 |
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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IR VDLFLLKLZBBZ
(END) Dow Jones Newswires
September 28, 2022 02:00 ET (06:00 GMT)
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