RNS Number : 5862F
Ecclesiastical Insurance Office PLC
25 September 2024
 

2024 INTERIM RESULTS

Ecclesiastical Insurance Office public limited company                                                        24 September 2024

Ecclesiastical Insurance Office public limited company ("Ecclesiastical" or "Ecclesiastical Insurance Office plc"), the specialist insurance group1, today announces its 2024 interim results. A copy of the results will be available on the Company's website at www.ecclesiastical.com

Financial highlights

·      Gross Written Premiums (GWP)2 continued to grow, rising to £301.1m (H1 2023: £288.2m). This was driven by new business wins and supported by strong retention and customer loyalty. In the UK and Ireland, GWP rose by 11.3% from £190.9m to £212.5m.

·      For general insurance, we reported a strong underwriting profit2 of £20.4m (H1 2023: £0.3m). This result benefited from a more stable claims environment thanks to fewer major events compared to H1 2023.

·      Overall profit before tax of £41.4m (H1 2023: £10.2m), achieved through a substantial insurance service result of £36.8m (H1 2023: £23.0m) and boosted by an investment result of £34.6m (H1 2023: £14.7m), driven by fair value movements in our equities portfolio.

·      Our capital position remains strong with Moody's and AM Best ratings remaining Stable. This gives confidence we can deliver for our customers, clients and partners whilst maintaining our capital strength.

Key achievements

·      Ecclesiastical UK continued its growth into new sectors with the launch of its new Office Professions product in July 2024, for office-based businesses providing professional services, and widened its leisure appetite following a successful launch in 2023.

·      Our insurance businesses continue to be recognised for their award-winning service with prestigious awards including:

Ecclesiastical UK home insurance was placed top of the Fairer Finance table in its Spring ratings and first for both customer trust and customer happiness.

Ecclesiastical UK once again received the Gracechurch Service Quality Marque, reflecting its outstanding service quality for claims handling.

Ecclesiastical Ireland received the Investors in Diversity Bronze Award.

Ecclesiastical Canada was again named one of Greater Toronto's Top Employers for 2024, achieving the title for the sixth consecutive year. The business also received the Excellence in Philanthropy & Community Service and P&C Insurer of the Year awards at Insurance Business Canada's Excellence Awards 2023.

·      As part of our mission to contribute to the greater good of society, we announced a grant of £8m to our charitable owner Benefact Trust in respect of our first half performance. This brings the total given to good causes in the past decade to £231m - and keeps us on course to deliver our ambition to give £250m to good causes by the end of 2025.

·      We continued to invest in our teams, promoting and recruiting talent across all our territories, as part of our drive to be a world-class employer.

 

Mark Hews, Group Chief Executive Officer of Ecclesiastical, said:

"We are clearly delighted by these results and would like to thank all our supporters for their help in growing our business so that we can give even more to good causes, transforming lives and communities in this country and abroad. The first half of 2024 saw continued positive trading momentum in the UK with excellent growth in premiums, both in our existing specialisms and in our new Leisure sector, which launched last year and has driven 20% of our open market new business.

"In the UK we continued our expansion into adjacent sectors with the launch of our Office Professions product in July 2024, targeted at all clerical-based office risks, such as accountants, architects, estate agents, lawyers, insurance brokers, call centres, graphic designers, and consultants. Alongside this we expanded our distribution capabilities with the introduction of our digital portal Schemes+ to help brokers manage their schemes more effectively.

"For general insurance, we reported a strong underwriting profit of £20.4m, helped by a more stable claims environment and our continued focus on protecting our prestigious portfolio of heritage properties, both in the UK and abroad. As a specialist insurer, we are trusted to safeguard some of the nation's most beloved buildings, and we take that responsibility very seriously, helping our customers to manage their risks effectively through our best-in-class risk management advice and guidance. And when the time comes for a customer to make a claim, our award-winning claims team is there to help. Our commitment to excellent customer service was recognised with multiple award wins in the first half of the year, including being awarded Gracechurch's Service Quality Marque for the third year running, and Fairer Finance's Home Insurance First Place Gold Ribbon for the 19th consecutive time.

"As a business with a purpose to contribute to the greater good of society, we donated £8m earlier this year to charity in respect of 2023 performance and I'm delighted that we've agreed to donate a further £8m, which will fund grants to those most in need in society. Thanks to all our supporters, we are now the third biggest corporate donor to charity in the UK3 and this brings our total giving since 2014 to £231m and keeps us on course to meet our ambition to give £250m to good causes by the end of 2025.   

"I'd like to thank all our colleagues, brokers, customers, and partners for their continued support for our unique business. Every one of them is helping us give even more to good causes and making a real difference in the world."

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 The Group uses Alternative Performance Measures (APMs) to help explain performance. More information on APMs is included in note 17.

3 Directory of Social Change's The Guide to UK Company Giving 2023/24.

 

Financial Highlights


H1 2024

H1 2023




Insurance revenue

£311.7m

£284.1m




Insurance service result

£36.8m

£23.0m

 




 

Net investment result

£34.6m

£14.7m

 




 

Profit before tax

£41.4m

£10.2m

 




 

Group combined operating ratio4

88.6%

99.8%


 

 


 

 


30 June 2024

31 December 2023




Net asset value

 

£648.5m

£628.9m




Solvency II capital cover (Ecclesiastical solo)

275%

254%

4 The Group uses Alternative Performance Measures (APMs) to help explain performance. More information on APMs is included in note 17.

 

The Group has achieved an excellent six months of trading with premium growing 4.5% to over £300m and a Combined Operating Ratio (COR) of 88.6% (H1 2023: 99.8%). Underwriting performance has benefitted from benign weather claims and, together with a strong net investment result to £34.6m (H1 2023: £14.7m), has resulted in a profit before tax of £41.4m (H1 2023: £10.2m).

On an IFRS basis, the Group reported an insurance services result of £36.8m (H1 2023: £23.0m).

General Insurance - UK and Ireland

UK and Ireland reported GWP growth of 11.3% to £212.5m in the six months to 30 June 2024 (H1 2023: £190.9m). This has been driven by strong retention, supported by targeted rate strengthening and new business wins. The business reported an underwriting profit of £18.0m and a COR of 84.2% (H1 2023: £6.5m loss, COR 106.6%).

The underwriting profit at half-year benefited from benign weather claims. In comparison, H1 2023 was adversely impacted by a large claim in relation to the St Mark's Church fire in London.

General Insurance - Canada

The Canadian business reported GWP of £37.7m, a reduction of 4.0% in local currency compared to the prior half year period of £40.3m. This was primarily as a result of increased competition in the retirement sector and the non-renewal of certain accounts.

The business reported an underwriting profit of £6.3m (H1 2023: £5.0m) and a COR of 83.2% (H1 2023: 86.8%), driven by favourable development of prior period claims. The current period loss includes the impact of the 'Western Deep Freeze' weather event in January but remains in a strong position.

General Insurance - Australia

The Australian business reported an 8.3% decrease in local currency GWP to £47.9m (H1 2023: £54.2m), primarily driven by lapses in line with strategy and lower retention in SME and mid-market portfolios. The business reported an underwriting loss of £1.1m (H1 2023: £0.5m) and a COR of 104.9% (H1 2023: 97.8%), largely driven by adverse development of historical business interruption claims.

Investment Returns

There was a significant improvement in the net investment result for the first half of the year resulting in a profit of £34.6m (H1 2023: £14.7m). Investment income increased to £24.6m (H1 2023: £21.1m). Fair value profits of £10.1m in the first half of the year (H1 2023: £6.4m losses), were primarily due to unrealised profits on unlisted equities.

The Group continues to navigate the uncertain geopolitical and economic environment and remains committed to its long-term investment philosophy. The Group is well-diversified and relatively defensively positioned.

Life Business

The life business provides products which give guarantees for pre-paid funeral planning products sold by the Funeral Planning business in Benefact Group (Ecclesiastical Planning Services Limited). A legacy book remains closed to new business. The life business reported a profit before tax of £0.3m at the half year (H1 2023: £0.5m).

Balance Sheet and Capital Position

In the first half of the year, total shareholders' equity increased by £19.6m to £648.5m. Underwriting profits and investment returns were offset by a £8.0m charitable grant paid to the Company's ultimate shareholder, Benefact Trust Limited, in relation to 2023 performance and a dividend on preference shares. Our capital position remains robust with Solvency II capital ratio cover for Ecclesiastical solo increasing to 275% from 254%.

Strategic Highlights

The Ecclesiastical Insurance Office Group (Group) is part of the wider Benefact Group, a diverse family of specialist financial services businesses. The Benefact Group is proud of its owner, the Benefact Trust, and inspired by its charitable purpose. The businesses within Benefact Group are specialists within their own field united by a common purpose to give all available profits to charity and are driven by a common ambition to be trusted by customers, clients and business partners to do the right thing. These principles set the Benefact Group apart from others in the financial services sector, as its portfolio of businesses seek to contribute to the greater good. 

Stretching targets were set for all general insurance teams to achieve profitable gross written premium growth across all geographies. This planned growth enables the insurance businesses that comprise the Ecclesiastical Insurance Office Group to contribute to the Benefact Group's ambition to 'Grow to Give'.  

As part of the Benefact Group, the Group is aligned with its overarching strategy and strategic focus. The Group has continued to strengthen its positioning as a trusted specialist in its markets, leading to growth through developing its proposition, entering new segments and by improving efficiency.

This strong performance is underpinned by strategic investment in its capabilities, operations and people to drive business benefit and in turn enable charitable giving to its communities. This investment is made possible by the Group's resilience and financial strength.

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 which is available on www.ecclesiastical.com and in note 4 to these condensed financial statements. There has been no change to the principal risks and uncertainties since the year end.

Board Changes

During 2024, we are focusing on reshaping the Boards of Ecclesiastical Insurance Office plc and Benefact Group plc to increase the independence of Ecclesiastical Insurance Office plc and have reduced the commonality of membership.  James Coyle, Maria Darby-Walker and the Venerable Karen Best were appointed to the Board of Ecclesiastical Insurance Office plc in May, July and August 2024 respectively.  On 24 September 2024 Rita Bajaj and Chris Moulder stepped down from the Board of Ecclesiastical Insurance Office plc, but will continue as directors of Benefact Group plc, and Sir Stephen Lamport, Angus Winther and Francois Boisseau stepped down from the Board of Benefact Group plc but will continue as directors of Ecclesiastical Insurance Office plc.

In addition, Denise Cockrem, Chief Financial Officer, retired in June 2024.  We are grateful for all that Denise has helped the Group achieve during her six years in the role.  A process to appoint her successor is underway and Mark Bennett, Chief Actuary, is acting Chief Financial Officer in the interim.

Outlook

As we look ahead to the remainder of 2024, we remain cautiously optimistic about the prospects for our business amidst a complex and evolving economic landscape.

We are committed to deliver profitable growth so that we are able to give more and 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.

Sustainability and corporate responsibility are integral to our strategy. We are making significant strides in our sustainability initiatives. These efforts are expected to drive long-term value creation and align with evolving regulatory requirements and stakeholder expectations.

There is continued investment in updating the systems that support underwriting. Other investment has focused on continued improvement in organisational resilience and exploiting data as an asset. Alongside this, there has been a significant focus on building a World Class Team, with the Group committed to building on its inclusive culture where every colleague feels valued, respected and treated fairly. 

Everything that the Group does is aimed at contributing to the greater good. Our charitable giving and our Movement for Good programme will continue to transform lives for the better.

 

By order of the Board

Mark Hews

Group Chief Executive

24 September 2024

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the 6 months to 30 June 2024

 


 

 

30.06.24

30.06.23

31.12.23


 

 

6 months

6 months

12 months


Notes

 

£000

£000

£000


 

 

 



Insurance revenue

13

 

 311,734

 284,082

 586,484

Insurance service expenses

13

 

(228,611)

(225,820)

(408,584)

Insurance service result before reinsurance contracts held

 

 

 83,123

 58,262

 177,900

Net expense from reinsurance contracts

13

 

(46,305)

(35,265)

(107,174)

Insurance service result

 

 

 36,818

 22,997

 70,726

Net insurance financial result

13

 

(250)

 2,606

(19,540)

Net investment result

 7

 

 34,636

 14,737

 57,469

Fee and commission income


 

 218

  -

  -

Other operating expenses

 

 

(28,477)

(28,454)

(60,751)

Other finance costs

 

 

(1,507)

(1,638)

(3,151)

Profit before tax

 

 

 41,438

 10,248

 44,753

Tax expense

8

 

(9,486)

(2,806)

(8,018)

Profit for the financial period from continuing operations

 

 

 31,952

 7,442

 36,735

Net profit attributable to discontinued operations

 

 

  -

 718

 719

Profit for the financial period

 

 

 31,952

 8,160

 37,454

 

 



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 6 months to 30 June 2024


30.06.24

30.06.23

31.12.23


6 months

6 months

12 months


£000

£000

£000


 



Profit for the period

 31,952

 8,160

 37,454


 



Other comprehensive (expense)/income




Items that will not be reclassified subsequently to profit or loss:




Fair value gains on property

  -

  -

 850

Actuarial (losses)/gains on retirement benefit plans

(827)

(595)

 5,103

Attributable tax

 207

 149

(1,492)


(620)

(446)

 4,461

Items that may be reclassified subsequently to profit or loss:

 



Losses on currency translation differences

(3,046)

(6,873)

(4,024)

Gains on net investment hedges

 2,482

 5,827

 4,860

Attributable tax

(576)

(1,112)

(688)


(1,140)

(2,158)

 148

Net other comprehensive (expense)/income

(1,760)

(2,604)

 4,609

Total comprehensive income

 30,192

 5,556

 42,063

 

 

 

 



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 6 months to 30 June 2024





Translation

 



Share

Share

Revaluation

and hedging

Retained

 


capital

premium

reserve

reserve

earnings

Total

 

£000

£000

£000

£000

£000

£000

2024

 






At 1 January

 120,477

 4,632

 857

 19,704

 483,246

 628,916

Profit for the period

  -

  -

  -

  -

 31,952

 31,952

Other net expense

  -

  -

  -

(1,140)

(620)

(1,760)

Total comprehensive (expense)/income

  -

  -

  -

(1,140)

 31,332

 30,192

Dividends on preference shares

  -

  -

  -

  -

(4,591)

(4,591)

Gross charitable grant

  -

  -

  -

  -

(8,000)

(8,000)

Tax relief on charitable grant

  -

  -

  -

  -

 2,000

 2,000

At 30 June

 120,477

 4,632

 857

 18,564

 503,987

 648,517

 







2023

 






At 1 January

 120,477

 4,632

 222

 19,556

 465,596

 610,483

Profit for the period

  -

  -

  -

  -

 8,160

 8,160

Other net expense

  -

  -

  -

(2,158)

(446)

(2,604)

Total comprehensive (expense)/income

  -

  -

  -

(2,158)

 7,714

 5,556

Dividends on ordinary shares

  -

  -

  -

  -

(5,223)

(5,223)

Dividends on preference shares

  -

  -

  -

  -

(4,591)

(4,591)

Gross charitable grant

  -

  -

  -

  -

(6,000)

(6,000)

At 30 June

 120,477

 4,632

 222

 17,398

 457,496

 600,225








2023

 






At 1 January

 120,477

 4,632

 222

 19,556

 465,596

 610,483

Profit for the year

  -

  -

  -

  -

 37,454

 37,454

Other net income

  -

  -

 635

 148

 3,826

 4,609

Total comprehensive income

  -

  -

 635

 148

 41,280

 42,063

Dividends on ordinary shares

  -

  -

  -

  -

(5,223)

(5,223)

Dividends on preference shares

  -

  -

  -

  -

(9,181)

(9,181)

Gross charitable grant

  -

  -

  -

  -

(13,000)

(13,000)

Tax relief on charitable grant

  -

  -

  -

  -

 3,837

 3,837

Group tax relief in excess of standard rate

  -

  -

  -

  -

(63)

(63)

At 31 December

 120,477

 4,632

 857

 19,704

 483,246

 628,916

 

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 2024



 

30.06.24

30.06.23

31.12.23


Notes

 

£000

£000

£000

Assets


 

 



Cash and cash equivalents


 

 84,884

 100,736

 112,082

Financial investments

 10

 

 974,950

 867,122

 941,755

Current tax recoverable


 

 1,817

 3,257

 5,181

Reinsurance contract assets

 13

 

 244,045

 250,302

 220,108

Investment property


 

 126,634

 135,088

 130,813

Pension assets


 

 18,361

 14,231

 19,788

Property, plant and equipment


 

 33,316

 30,723

 34,183

Goodwill and other intangible assets


 

 26,835

 28,429

 25,866

Deferred tax assets


 

 7,906

 7,923

 8,483

Other assets


 

 180,283

 153,964

 165,104

Total assets


 

 1,699,031

 1,591,775

 1,663,363



 

 



Equity






Share capital


 

 120,477

 120,477

 120,477

Share premium account


 

 4,632

 4,632

 4,632

Retained earnings and other reserves


 

 523,408

 475,116

 503,807

Total shareholders' equity


 

 648,517

 600,225

 628,916



 

 



Liabilities






Insurance contract liabilities

 13

 

 784,498

 778,083

 781,842

Investment contract liabilities


 

 117,353

 74,992

 95,886

Current tax liabilities


 

 799

 910

 2,931

Lease obligations


 

 20,554

 17,487

 21,687

Retirement benefit obligations


 

 4,438

 4,781

 4,801

Subordinated liabilities

 14

 

 25,539

 25,363

 25,853

Provisions for other liabilities


 

 9,822

 8,932

 6,330

Deferred tax liabilities


 

 41,148

 37,096

 37,838

Other liabilities


 

 46,363

 43,906

 57,279

Total liabilities


 

 1,050,514

 991,550

 1,034,447



 

 



Total shareholders' equity and liabilities


 

 1,699,031

 1,591,775

 1,663,363

 



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the 6 months to 30 June 2024


 

Restated*



30.06.24

30.06.23

31.12.23


6 months

6 months

12 months


£000

£000

£000





Profit before tax from continuing operations

 41,438

 10,248

 44,753

Profit before tax from discontinued operations

  -

 718

 719

 

 



Adjustments for:

 



Depreciation of property, plant and equipment

 3,139

 2,863

 5,879

Revaluation of property, plant and equipment

  -

  -

(35)

Profit on disposal of property, plant and equipment

 16

  -

 2

Amortisation and impairment of intangible assets

 1,579

 2,389

 5,583

Movement in expected credit loss provision

 31

(1,272)

(1,255)

Profit on disposal of subsidiary

  -

(718)

(718)

Net fair value (gains)/losses on financial instruments and investment property

(10,051)

 6,406

(12,928)

Dividend and interest income

(19,751)

(16,868)

(35,077)

Finance costs

 1,507

 1,638

 3,151

Other adjustments for non-cash items

 242

 325

 1,560


 18,150

 5,729

 11,634

Changes in operating assets and liabilities:

 



Net (increase)/decrease in reinsurance contract assets

(25,948)

(17,851)

 13,974

Net increase in investment contract liabilities

 21,467

 16,513

 37,407

Net increase in insurance contract liabilities

 8,829

 6,096

 6,430

Net increase in other assets

(14,380)

(11,743)

(16,857)

Net (decrease)/increase in other liabilities

(5,094)

 3,403

 11,615

Cash generated by operations

 3,024

 2,147

 64,203





Purchases of financial instruments and investment property

(81,607)

(74,523)

(202,338)

Sale of financial instruments and investment property

 56,583

 66,247

 147,364

Dividends received

 5,784

 5,156

 10,452

Interest received

 12,729

 10,417

 23,618

Tax paid

(2,745)

(459)

(2,705)

Net cash (used by)/from operating activities

(6,232)

 8,985

 40,594





Cash flows from investing activities

 



Purchases of property, plant and equipment

(2,334)

(318)

(2,358)

Proceeds from the sale of property, plant and equipment

  -

 18

 296

Purchases of intangible assets

(2,576)

(614)

(1,245)

Net cash used by investing activities

(4,910)

(914)

(3,307)





Cash flows from financing activities

 



Interest paid

(1,256)

(1,227)

(2,491)

Payment of lease liabilities

(1,130)

(3,578)

(3,128)

Dividends paid to Company's shareholders

(4,591)

(4,591)

(9,181)

Charitable grant paid to ultimate parent undertaking

(8,000)

  -

(13,000)

Net cash used by financing activities

(14,977)

(9,396)

(27,800)





Net (decrease)/increase in cash and cash equivalents

(26,119)

(1,325)

 9,487

Cash and cash equivalents at the beginning of the period 

 112,082

 104,664

 104,664

Exchange losses on cash and cash equivalents

(1,079)

(2,603)

(2,069)

Cash and cash equivalents at the end of the period

 84,884

 100,736

 112,082

 

* The comparative financial statements have been restated to exclude £5.2m of cash from both the opening cash balance and from the cash flows related to the disposal of interest in a subsidiary. This adjustment was made to correct the presentation of these cash flows. The opening cash balance as of 30 June 2023 has been reduced from £109.8m to £104.7m. The cash flows related to the disposal of interest in the subsidiary have been reduced from £5.2m to £nil.

 

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', or 'Parent'), a public limited company incorporated and domiciled in England, together with its subsidiaries (collectively, the 'Group') operates principally as a provider of general insurance with offices in the UK & Ireland, Australia and Canada. The principal accounting policies adopted in preparing the International Financial Reporting Standards (IFRS) financial statements of the Group and Parent are set out below.

The annual financial statements are prepared in accordance with UK adopted International Accounting Standards and the Disclosure Guidance and Transparency Rules issued by the Financial Conduct Authority. The condensed consolidated financial statements included in the 2024 interim results has been prepared in accordance with UK adopted IAS 34 Interim Financial Reporting and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.

The information for the year ended 31 December 2023 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The comparative results for the year ended 31 December 2023 have been taken from the Group's 2023 Annual Report and Accounts. 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 24 September 2024 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 except for the new standards, interpretations and amendments that became effective in the current period, as stated below.

The following standards and amendments were in issue but not yet effective and have not been applied to these condensed financial statements:

-       IFRS 18 Presentation and Disclosure in Financial Statements was issued on 9 April 2024, effective for periods beginning on or after 1 January 2027. The new standard sets out the requirements for presentation and disclosure of financial statements, aiming to improve the structure and content of the primary financial statements. As of 30 June 2024, it was not practicable to determine what the potential impact would be on the Group's financial statements disclosures once the standard is adopted.

-       Amendments to the Classification and Measurement Requirements for Financial Instruments in IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures

These amendments were issued on 30 May 2024, effective for periods beginning on or after 1 January 2026. These amendments improve the requirements in IFRS 9 and IFRS 7 related to settling financial liabilities using an electronic payment system; and assessing contractual cash flow characteristics of financial assets, including those with environmental, social and governance (ESG)-linked features.

The amendments also modify disclosure requirements relating to investments in equity instruments designated at fair value through other comprehensive income and add disclosure requirements for financial instruments with contingent features that do not relate directly to basic lending risks and costs. The adoption of this standard may have a significant impact on how the Group's income statement is presented and may potentially impact disclosures on our alternative performance metrics. The Group is currently assessing the impact of adopting this standard.

 

3. Adoption of new and revised accounting standards

The following new or revised IFRS standards, interpretations and amendments to IFRS standards became effective for reporting periods starting on 1 January 2024. None of these changes had a significant impact on the condensed consolidated interim financial statements of the Group:

 

Amendments to IAS 1 Presentation of Financial Statements:

• Classification of Liabilities as Current or Non-current (issued on 23 January 2020);

• Classification of Liabilities as Current or Non-current - Deferral of Effective Date (issued on 15 July 2020); and

• Non-current Liabilities with Covenants (issued on 31 October 2022)

Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022)

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments - Disclosures: Supplier Finance Arrangements (issued on 25 May 2023)

 

4. 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 2023 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 2023.

Pensions

The outcome of the Court of Appeal's judgement in the case of Virgin Media v NTL Trustees, which was released on 25 July, is being considered. The relevance and implications, if any, of this ruling for the Ecclesiastical defined benefit pension scheme are not yet known.

 

5. 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.

 

6. Segment information

The Group's primary operating segments are based on geography and are engaged in providing general insurance and life insurance services. The Group also considers investments a separate reporting segment, also based on geography. Expenses relating to Group management activities are included within 'Corporate costs'. The Group's life insurance business is carried out within the United Kingdom.

The Group's chief operating decision maker is considered to be the Group Management Board whose members include the Company's executive directors.

The activities of each operating segment are described below.

-  General insurance 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 reportable due to their immateriality.

-  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.

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 performance

The Group uses the following key measures to assess the performance of its operating segments:

·      Gross written premium

·      Underwriting result

·      Investment return

 

Gross written premium is the measure used in internal reporting for turnover of the general and life insurance business segments. The underwriting result is used as a measure of profitability of the insurance business segments. The investment return is used as a profitability measure of the Group's investments. Gross written premium and underwriting result are attributed to the geographical region in which the customer is based.

The Group also uses 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 gross written premiums, underwriting profit or loss and COR, which are alternative performance measures, 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.

 

Segment gross written premiums


30.06.24

30.06.23

31.12.23


6 months

6 months

12 months


£000

£000

£000

General business




   United Kingdom and Ireland

 212,471

 190,949

 399,716

   Australia

 47,864

 54,238

 102,668

   Canada

 37,656

 40,329

 106,937

   Other insurance operations

 3,305

 2,681

 5,686

Total

 301,296

 288,197

 615,007

Life business

(236)

(23)

(24)

Group gross written premium

 301,060

 288,174

 614,983

 

Segment results

6 months ended

Combined

 




30 June 2024

operating

Underwriting

Investments

Other

Total

 

ratio

£000

£000

£000

£000

General business






   United Kingdom and Ireland

84.2%

 18,048

 31,235

(1,320)

 47,963

   Australia

104.9%

(1,121)

 1,536

 107

 522

   Canada

83.2%

 6,337

 3,353

(484)

 9,206

   Other insurance operations

 

(2,825)

  -

 93

(2,732)

 

88.6%

 20,439

 36,124

(1,604)

 54,959

 

 





Life business


 320

 693

  -

 1,013

Corporate costs

 

  -

  -

(14,534)

(14,534)

Profit/(loss) before tax

 

 20,759

 36,817

(16,138)

 41,438

 












6 months ended

Combined

 




30 June 2023

operating

Underwriting

Investments

Other

Total


ratio

£000

£000

£000

£000

General business






   United Kingdom and Ireland

106.6%

(6,465)

 13,692

(1,334)

 5,893

   Australia

97.8%

 462

 3,512

(454)

 3,520

   Canada

86.8%

 4,993

 2,063

(65)

 6,991

   Other insurance operations


 1,357

  -

  -

 1,357


99.8%

 347

 19,267

(1,853)

 17,761







Life business


 457

 1,950

  -

 2,407

Corporate costs


  -

  -

(10,639)

(10,639)

Other activities


  -

  -

 719

 719

Profit/(loss) before tax


 804

 21,217

(11,773)

 10,248







 






12 months ended

Combined

 




31 December 2023

operating

Underwriting

Investments

Other

Total


ratio

£000

£000

£000

£000

General business






   United Kingdom and Ireland

92.1%

 16,371

 30,751

(2,640)

 44,482

   Australia

113.4%

(5,120)

 6,031

(377)

 534

   Canada

80.4%

 14,924

 6,500

(134)

 21,290

   Other insurance operations


(1,655)

(1,027)

 87

(2,595)


92.6%

 24,520

 42,255

(3,064)

 63,711







Life business


 1,240

 3,881

  -

 5,121

Corporate costs


  -

  -

(24,079)

(24,079)

Profit/(loss) before tax

 

 25,760

 46,136

(27,143)

 44,753

 

7. Net investment result


30.06.24

30.06.23

31.12.23


6 months

6 months

12 months


£000

£000

£000


 



Investment income

 24,585

 21,143

 44,506

Fair value movements on financial instruments at fair value through profit or loss

 14,044

(3,544)

 19,579

Fair value movements on investment property

(3,993)

(2,862)

(6,651)

Fair value movements on property, plant and equipment

  -

  -

 35

Net investment result

 34,636

 14,737

 57,469

 

8. 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.

 

9. Preference shares

Interim dividends paid on the 8.625% Non-Cumulative Irredeemable Preference shares amounted to £4.6m (H1 2023: £4.6m). At the point these dividends were paid, consideration was given to the distributable reserves and capital position.

 

10. Financial investments

Financial investments summarised by measurement category are as follows:


 

Restated*



30.06.24

30.06.23

31.12.23


£000

£000

£000

Financial investments at fair value through profit or loss

 



Equity securities

 



- listed

 257,897

 232,347

 250,106

- unlisted

 87,044

 79,140

 76,898

Debt securities

 



- government bonds

 209,342

 217,761

 202,251

- listed

 305,773

 261,098

 316,672

Structured notes

 113,228

 73,952

 94,970

Derivative financial instruments

 



- options

  -

 100

  -

- forwards

 1,652

 2,650

 824

 

 974,936

 867,048

 941,721

 

 



Measured at amortised cost




Other loans

 14

 74

 34


 



Total financial investments

 974,950

 867,122

 941,755

 

* The comparative financial statements have been restated to correctly classify derivatives as fair value through profit or loss, in accordance with IFRS 9 Financial Instruments and reflect the current year disclosures for composition of OEICs. OEICs previously included in equity securities but relating to bond OEICs have been restated in debt securities to better reflect the nature of the assets and requirements of IFRS 7.

 

11. 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 bid 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.

Instruments move between fair value hierarchies primarily due to increases or decreases in market activity or changes to the significance of unobservable inputs to valuation and are recognised at the date of the event or change in circumstances which caused the transfer.

 


Fair value measurement at the 

 


end of the reporting period based on

 


Level 1

Level 2

Level 3

Total

30 June 2024

£000

£000

£000

£000

Financial assets at fair value through profit or loss

 




Financial investments





   Equity securities

 257,897

  -

 87,044

 344,941

   Debt securities

 514,560

 555

  -

 515,115

   Structured notes

  -

 113,228

  -

 113,228

   Derivatives

  -

 1,652

  -

 1,652

 

 772,457

 115,435

 87,044

 974,936

 

 

 

 

 

30 June 2023 (restated*)

 




Financial assets at fair value through profit or loss

 




Financial investments





   Equity securities

 232,348

  -

 79,139

 345,338

   Debt securities

 478,047

 812

  -

 445,008

   Structured notes

  -

 73,952

  -

 73,952

   Derivatives

  -

 2,750

  -

 2,750


 710,395

 77,514

 79,139

 867,048






31 December 2023

 




Financial assets at fair value through profit or loss

 




Financial investments





   Equity securities

 250,106

  -

 76,898

 327,004

   Debt securities

 516,844

 2,079

  -

 518,923

   Structured notes

  -

 94,970

  -

 94,970

   Derivatives

  -

 824

  -

 824


 766,950

 97,873

 76,898

 941,721






* The comparative financial statements have been restated to correctly classify derivatives as fair value through profit or loss, in accordance with IFRS 9 Financial Instruments and reflect the current year disclosures for composition of OEICs. OEICs previously included in equity securities but relating to bond OEICs have been restated in debt securities to better reflect the nature of the assets and requirements of IFRS 7.

 

Fair value measurements in level 3 consist of financial assets at fair value through profit or loss, analysed as follows:

 

Equity


securities

 

£000

2024

 

At 1 January

 76,898

Total gains recognised in profit or loss

 10,146

At 30 June

 87,044


 

Total gains for the period included in profit or loss for assets held at the end of the reporting period

 10,146

 


2023

 

At 1 January

 85,726

Total losses recognised in profit or loss

(6,587)

At 30 June

 79,139



Total losses for the period included in profit or loss for assets held at the end of the reporting period

(6,587)



2023

 

At 1 January

 85,726

Total losses recognised in profit or loss

(8,780)

Disposal proceeds

(48)

At 31 December

 76,898



Total losses for the period included in profit or loss for assets held at the end of the reporting period

(8,780)

 

All the above gains or losses included in profit or loss for the period are presented in the net investment result within the consolidated 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.

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, normalised for performance measures where appropriate, 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. The sensitivity of the valuation to reasonable changes in the unobservable inputs is as follows:


Change in

 

Potential increase/


variable

 

(decrease) in the valuation


 

 

30.06.24

30.06.23

31.12.23



 

£000

£000

£000


 

 

 



Increase in price-to-tangible book ratio

+10%

 

 8,704

 7,914

 7,690

Decrease in price-to-tangible book ratio

-10%

 

(8,704)

(7,914)

(7,690)

Increase in illiquidity discount

+5%

 

 (5,120)

 (4,655)

 (4,523)

Decrease in illiquidity discount

-5%

 

5,120

 4,655

4,523

 

12. Translation and hedging reserve


Translation

Hedging

 


reserve

reserve

Total

 

£000

£000

£000

2024

 



At 1 January

 14,814

 4,890

 19,704

Losses on currency translation differences

(3,046)

  -

(3,046)

Gains on net investment hedges

  -

 2,482

 2,482

Attributable tax

  -

(576)

(576)

At 30 June

 11,768

 6,796

 18,564

 




2023

 



At 1 January

 18,838

 718

 19,556

Losses on currency translation differences

(6,873)

  -

(6,873)

Gains on net investment hedges

  -

 5,827

 5,827

Attributable tax

  -

(1,112)

(1,112)

At 30 June

 11,965

 5,433

 17,398





2023

 



At 1 January

 18,838

 718

 19,556

Losses on currency translation differences

(4,024)

  -

(4,024)

Gains on net investment hedges

  -

 4,860

 4,860

Attributable tax

  -

(688)

(688)

At 31 December

 14,814

 4,890

 19,704

 

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


 

Restated*



30.06.24

30.06.23

31.12.23


£000

£000

£000

Gross

 



General insurance contract liabilities for incurred claims

 645,822

 636,123

 634,819

General insurance contract liabilities for remaining coverage

 86,122

 85,970

 90,994

Life insurance contract liabilities for remaining coverage

 52,554

 55,990

 56,029

Total gross insurance contract liabilities

 784,498

 778,083

 781,842


 



Recoverable from reinsurers




General reinsurance contract assets for incurred claims 

 189,889

 196,572

 179,928

General reinsurance contract assets for remaining coverage 

 54,156

 53,730

 40,180

Total reinsurers' share of insurance liabilities

 244,045

 250,302

 220,108


 



Net




General insurance contract liabilities for incurred claims

 455,933

 439,551

 454,891

General insurance contract liabilities for remaining coverage

 31,966

 32,240

 50,814

Life insurance contract liabilities for remaining coverage

 52,554

 55,990

 56,029

Total net insurance liabilities

 540,453

 527,781

 561,734

 

* The comparative financial statements have been restated to correctly classify insurance contract liabilities for remaining coverage between general and life insurance.

 

A risk adjustment of £61.9m net of reinsurance has been included in the measurement of closing net insurance contract liabilities, representing an increase over the half year of £0.7m (H1 2023: increase of £0.8m).

 


 

 

Reinsurance




Insurance contract liabilities

 

contract assets




General

General

Life

 

General

General




liabilities

liabilities

liabilities

 

assets

assets




for

for

for

 

for

for



 

remaining

incurred

remaining

 

remaining

incurred



 

coverage

claims

coverage

 

coverage

claims


Total


£000

£000

£000

 

£000

£000


£000


 

 

 

 

 





 

 

 

 

 




At 1 January 2023

 93,140

 636,638

 59,263

 

(37,650)

(202,474)


 548,917


 

 

 

 

 




Insurance revenue

(280,876)

  -

(3,206)


  -

  -


(284,082)


 

 

 

 

 




Incurred claims and other insurance service expenses

  -

 171,199

  -

 

  -

  -


 171,199

Changes that relate to current service

  -

  -

 3,169

 

  -

  -


 3,169

Changes that relate to past service

  -

(6,804)

  -

 

  -

  -


(6,804)

Losses on onerous contracts and reversal of those losses

 348

  -

  -

 

  -

  -


 348

 


Insurance acquisition cash flows amortisation

 57,908

  -

  -

 

  -

  -


 57,908

Insurance service expenses

 58,256

 164,395

 3,169


  -

  -


 225,820


 

 

 

 

 




Insurance service result before reinsurance contracts held 

(222,620)

 164,395

(37)


  -

  -


(58,262)


 

 

 

 

 




Allocation of reinsurance premiums

  -

  -

  -

 

 76,104

  -


 76,104

Recoveries of incurred claims and other insurance service expenses

  -

  -

  -

 

 926

(48,524)


(47,598)

 


Changes that relate to past service

  -

  -

  -

 

  -

 6,891


 6,891

Recoveries of losses on onerous contracts and reversal of those losses

  -

  -

  -

 

(132)

  -


(132)

 


Net expense/(income) from reinsurance contracts

  -

  -

  -


 76,898

(41,633)


 35,265


 

 

 

 

 




Insurance service result

(222,620)

 164,395

(37)


 76,898

(41,633)


(22,997)





 





Finance income from insurance contracts issued

  -

(950)

(837)

 

  -

  -


(1,787)

Finance income from reinsurance contracts held

  -

  -

  -

 

  -

(819)


(819)

Net insurance financial result

  -

(950)

(837)


  -

(819)


(2,606)


 

 

 

 

 




Total amounts recognised in statement of profit or loss

(222,620)

 163,445

(874)


 76,898

(42,452)


(25,603)


 

 

 

 

 




Exchange differences

(1,893)

(16,733)

  -

 

 1,576

 6,199


(10,851)


 

 

 

 

 




Premiums received

 283,603

  -

  -

 

  -

  -


 283,603

Insurance acquisition cash flows

(66,260)

  -

  -

 

  -

  -


(66,260)

Claims and other directly attributable expenses paid

  -

(147,227)

(2,399)

 

  -

  -


(149,626)

Premiums paid

  -

  -

  -

 

(94,554)

  -


(94,554)

Amounts received

  -

  -

  -

 

  -

 42,155


 42,155

Total cash flows

 217,343

(147,227)

(2,399)


(94,554)

 42,155


 15,318


 

 

 

 

 




At 30 June 2023

 85,970

 636,123

 55,990


(53,730)

(196,572)


 527,781

 









Insurance revenue

(299,099)

  -

(3,303)


  -

  -


(302,402)

 









Incurred claims and other insurance service expenses

  -

 136,870

  -


  -

  -


 136,870

Changes that relate to current service

  -

  -

 2,533


  -

  -


 2,533

Changes that relate to past service

  -

(17,743)

  -


  -

  -


(17,743)

Losses on onerous contracts and reversal of those losses

(193)

  -

  -


  -

  -


(193)



Insurance acquisition cash flows amortisation

 61,297

  -

  -


  -

  -


 61,297

Insurance service expenses

 61,104

 119,127

 2,533


  -

  -


 182,764

 









Insurance service result before reinsurance contracts held 

(237,995)

 119,127

(770)


  -

  -


(119,638)

 









Allocation of reinsurance premiums

  -

  -

  -


 71,990

  -


 71,990

Recoveries of incurred claims and other insurance service expenses

  -

  -

  -


 4,087

(28,524)


(24,437)



Changes that relate to past service

  -

  -

  -


  -

 24,133


 24,133

Recoveries of losses on onerous contracts and reversal of those losses

  -

  -

  -


 223

  -


 223



Net expense/(income) from reinsurance contracts

  -

  -

  -


 76,300

(4,391)


 71,909

 

 








Insurance service result

(237,995)

 119,127

(770)


 76,300

(4,391)


(47,729)










Finance expense from insurance contracts issued

  -

 25,052

 3,465


  -

  -


 28,517

Finance income from reinsurance contracts held

  -

  -

  -


  -

(6,371)


(6,371)

Net insurance financial result

  -

 25,052

 3,465


  -

(6,371)


 22,146

 









Total amounts recognised in statement of profit or loss

(237,995)

 144,179

 2,695


 76,300

(10,762)


(25,583)

 









Exchange differences

 232

 3,424

  -


(647)

(979)


 2,030

 









Premiums received

 313,190

  -

  -


  -

  -


 313,190

Insurance acquisition cash flows

(70,403)

  -

  -


  -

  -


(70,403)

Claims and other directly attributable expenses paid

  -

(148,907)

(2,656)


  -

  -


(151,563)

Premiums paid

  -

  -

  -


(62,103)

  -


(62,103)

Amounts received

  -

  -

  -


  -

 28,385


 28,385

Total cash flows

 242,787

(148,907)

(2,656)


(62,103)

 28,385


 57,506

 









At 31 December 2023

 90,994

 634,819

 56,029


(40,180)

(179,928)


 561,734

 









Insurance revenue

(308,821)

  -

(2,913)


  -

  -


(311,734)

 









Incurred claims and other insurance service expenses

  -

 163,577

  -


  -

  -


 163,577

Changes that relate to current service

  -

  -

 2,793


  -

  -


 2,793

Changes that relate to past service

  -

(2,242)

  -


  -

  -


(2,242)

Losses on onerous contracts and reversal of those losses

(290)

  -

  -


  -

  -


(290)



Insurance acquisition cash flows amortisation

 64,773

  -

  -


  -

  -


 64,773

Insurance service expenses

 64,483

 161,335

 2,793

 

  -

  -

 

 228,611

 









Insurance service result before reinsurance contracts held 

(244,338)

 161,335

(120)

 

  -

  -

 

(83,123)

 









Allocation of reinsurance premiums

  -

  -

  -


 82,432

  -


 82,432

Recoveries of incurred claims and other insurance service expenses

  -

  -

  -


(795)

(39,543)


(40,338)

Changes that relate to past service

  -

  -

  -


  -

 3,979


 3,979

Recoveries of losses on onerous contracts and reversal of those losses

  -

  -

  -


 232

  -


 232



Net expense/(income) from reinsurance contracts

  -

  -

  -

 

 81,869

(35,564)

 

 46,305

 









Insurance service result

(244,338)

 161,335

(120)

 

 81,869

(35,564)

 

(36,818)


 

 

 


 

 


 

Finance expense/(income) from insurance contracts issued

  -

 1,838

(203)


  -

  -


 1,635



Finance income from reinsurance contracts held

  -

  -

  -


  -

(1,385)


(1,385)

Net insurance financial result

  -

 1,838

(203)

 

  -

(1,385)

 

 250

 









Total amounts recognised in statement of profit or loss

(244,338)

 163,173

(323)

 

 81,869

(36,949)

 

(36,568)

 









Exchange differences

(808)

(5,439)

  -


 502

 1,495


(4,250)

 









Premiums received

 302,115

  -

  -


  -

  -


 302,115

Insurance acquisition cash flows

(61,841)

  -

  -


  -

  -


(61,841)

Claims and other directly attributable expenses paid

  -

(146,731)

(3,152)


  -

  -


(149,883)

Premiums paid

  -

  -

  -


(96,347)

  -


(96,347)

Amounts received

  -

  -

  -


  -

 25,493


 25,493

Total cash flows

 240,274

(146,731)

(3,152)

 

(96,347)

 25,493

 

 19,537

 









At 30 June 2024

 86,122

 645,822

 52,554

 

(54,156)

(189,889)

 

 540,453

 

 

14. Subordinated debt


30.06.24

30.06.23

31.12.23


£000

£000

£000





6.3144% EUR 30m subordinated debt

 25,539

 25,363

 25,853

 

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. Alternative Performance Measures

The Group uses alternative performance measures (APMs) in addition to the figures which are prepared in accordance with IFRS. The financial measures in our key financial performance data include gross written premiums and the combined operating ratio (COR). These measures are commonly used in the industries we operate in and we believe they provide useful information and enhance the understanding of our results.

Users of the accounts should be aware that similarly titled APMs reported by other companies may be calculated differently. For that reason, the comparability of APMs across companies might be limited.

The tables below provide a reconciliation of the gross written premiums and the combined operating ratio to their most directly reconcilable line items in the financial statements.

 

 


 

30.06.24


 


 

6 months


 


 

£000


 


 

 


Gross written premiums


 

 301,296


Change in the gross unearned premium provision

7,262


Insurance revenue


[1]

 308,558


 


 

30.06.24



 

 

 

 

 

Other



 

 

 

Investment

Corporate

income and

 



 

Underwriting

return

costs

charges

Total



 

General

Life

 

 

 

 



 

£000

£000

£000

£000

£000

£000


 









Insurance revenue

[1]

 308,558

 2,913

 272

  -

(9)

 311,734


Insurance service expenses


(230,186)

(2,793)

 4,359

  -

 9

(228,611)


Insurance service result before reinsurance contracts held


 78,372

 120

 4,631

  -

  -

 83,123


Net expense from reinsurance contracts


(46,305)

  -

  -

  -

  -

(46,305)


Insurance service result


 32,067

 120

 4,631

  -

  -

 36,818


Net insurance financial result


  -

 202

(452)

  -

  -

(250)


Net investment result


  -

 578

 34,058

  -

  -

 34,636


Fee and commission income


  -

  -

  -

  -

 218

 218


Other operating expenses


(11,628)

(580)

(1,420)

(14,534)

(315)

(28,477)


Other finance costs


  -

  -

  -

  -

(1,507)

(1,507)


Profit/(loss) before tax

[2]

 20,439

 320

 36,817

(14,534)

(1,604)

 41,438




 

 

 

 

 

 


Reconciliation to net earned premiums

 

 

 

 

 




 

 

 

 

 

 


Insurance revenue

[1]

 308,558

 

 

 

 

 


Outward reinsurance premiums earned


(129,692)

 

 

 

 

 


Net earned premiums

[3]

 178,866

 

 

 

 

 


 


 







Combined operating ratio = ( [3] - [2] ) / [3]


88.6%

 






 

The underwriting profit of the Group is defined as the profit/(loss) before tax 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
( [3] - [2] ) / [3].

 

 


 

30.06.23


 


 

6 months


 


 

£000


 


 

 


Gross written premiums


 

 288,197


Change in the gross unearned premium provision

 

(7,671)


Insurance revenue


[1]

 280,526


 

 


 

30.06.23



 

 

 

 

 

Other



 

 

 

Investment

Corporate

income and

 



 

Underwriting

return

costs

charges

Total



 

General

Life

 

 

 

 



 

£000

£000

£000

£000

£000

£000


 









Insurance revenue

[1]

 280,526

 3,206

 353

  -

(3)

 284,082


Insurance service expenses


(228,380)

(3,169)

 5,941

  -

(212)

(225,820)


Insurance service result before reinsurance contracts held


 52,146

 37

 6,294

  -

(215)

 58,262


Net expense from reinsurance contracts


(35,265)

  -

  -

  -

  -

(35,265)


Insurance service result


 16,881

 37

 6,294

  -

(215)

 22,997


Net insurance financial result


  -

 837

 1,769

  -

  -

 2,606


Net investment result


  -

 119

 14,618

  -

  -

 14,737


Other operating expenses


(16,534)

(536)

(1,464)

(10,639)

 719

(28,454)


Other finance costs


  -

  -

  -

  -

(1,638)

(1,638)


Profit/(loss) before tax

[2]

 347

 457

 21,217

(10,639)

(1,134)

 10,248




 

 

 

 

 

 


Reconciliation to net earned premiums

 

 

 

 

 




 

 

 

 

 

 


Insurance revenue

[1]

 280,526

 

 

 

 

 


Outward reinsurance premiums earned


(119,423)

 

 

 

 

 


Net earned premiums

[3]

 161,103

 

 

 

 

 


 









Combined operating ratio = ( [3] - [2] ) / [3]


99.8%

 






 

 


 

31.12.23

 

 

 

 


 


 

12 months

 

 

 

 


 


 

£000

 

 

 

 


 


 

 

 

 

 

 


Gross written premiums


 

 615,007

 

 

 

 


Change in the gross unearned premium provision

 

(35,861)

 

 

 

 


Insurance revenue


[1]

 579,146

 

 

 

 


 

 


 

31.12.23



 

 

 

 

 

Other

 



 

 

 

Investment

Corporate

income and

 



 

Underwriting

return

costs

charges

Total



 

General

Life

 

 

 

 



 

£000

£000

£000

£000

£000

£000


 









Insurance revenue

[1]

 579,146

 6,509

 832

  -

(3)

 586,484


Insurance service expenses


(415,686)

(5,702)

 12,801

  -

 3

(408,584)


Insurance service result before reinsurance contracts held


 163,460

 807

 13,633

  -

  -

 177,900


Net expense from reinsurance contracts


(107,174)

  -

  -

  -

  -

(107,174)


Insurance service result


 56,286

 807

 13,633

  -

  -

 70,726


Net insurance financial result


  -

(2,628)

(16,912)

  -

  -

(19,540)


Net investment result


  -

 4,274

 53,195

  -

  -

 57,469


Other operating expenses


(31,766)

(1,213)

(3,780)

(24,079)

 87

(60,751)


Other finance costs


  -

  -

  -

  -

(3,151)

(3,151)


Profit/(loss) before tax

[2]

 24,520

 1,240

 46,136

(24,079)

(3,064)

 44,753




 

 

 

 

 

 


Reconciliation to net earned premiums

 

 

 

 

 




 

 

 

 

 

 


Insurance revenue

[1]

 579,146

 

 

 

 

 


Outward reinsurance premiums earned


(249,091)

 

 

 

 

 


Net earned premiums

[3]

 330,055

 

 

 

 

 


 









Combined operating ratio = ( [3] - [2] ) / [3]


92.6%

 






 

 



Responsibility Statement

Each of the directors, as listed below, confirm that these condensed consolidated interim financial statements 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 and that the interim management report includes a true and fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

- an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

 

 

By order of the Board

Mark Hews

Group Chief Executive

24 September 2024

 

Directors

R. D. C. Henderson                             Chair

R. Bajaj

K. Best

F. X. Boisseau

J. Coyle

M. E. Darby-Walker

M. C. J. Hews                                       Group Chief Executive

Sir S. M. J. Lamport 

N. P. Maidment 

C. J. G. Moulder

S. J. Whyte                                            Deputy Group Chief Executive

A. Winther

 

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 2024 interim results of Ecclesiastical Insurance Office Public Limited Company for the 6 month period ended 30 June 2024 (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 2024;

·    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 2024 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

We 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 ("ISRE (UK) 2410"). 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 2024 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 ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.

Our responsibilities and those of the directors

The 2024 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 2024 interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the 2024 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 2024 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

24 September 2024

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