September 2011

Another strong set of results for AFM members in 2010

 

 

Association of Financial Mutuals, Sector key statistics - 2010

2010 was a mixed year for the economy and the insurance industry, but mutuals appear to have fared well overall. Data collected from AFM members for the year to 31 December 2011 show that premiums written grew during the year by a very impressive 14%.

Assets were also sharply up, exceeding £85 billion for the first time, and predicted to grow to over £100 billion by the year end, assuming the transfer takes place of the life book of Co-operative Financial Services to AFM member Royal London Group.

In another notable milestone, AFM members reported that policies in force have now increased to over 20 million.

Growth in the sector is further evidence that mutual insurers were not directly impacted by the recent financial crisis, and that continued innovation in the sector, and a determination to treat customers well, has made mutuals increasingly attractive to consumers and their advisers.

Mutual insurance companies firmly believe they are in business to serve customers and to pay their claims. As a result, AFM members paid out £22 million a day in 2010.

At the end of 2010, key statistics included the following (2009 figure in brackets):

Total assets under management	£85.9 billion (£78.7 billion)
Gross premiums written	£7.6 billion (£6.8 billion)
Employees	16,030 (14,300)
Policies in force	20,300,000 (19,200,000)
Claims paid out	£8.3 billion (£7.3 billion)

Note that some AFM members have moved across to new European accounting principles which means that figures reported by different companies are not necessarily on the same basis. We have used published accounts data wherever possible, supplemented by a survey of members.

 

Life sector:

A number of AFM providers that focus on investment and life products showed spectacular growth rates during 2010. This is despite the announcement by the government that it was killing off the Child Trust Fund, a key source of growth in previous year.  We also saw announcements from some AFM members that the weight of regulation, as well as the general market environment, are leading to a new series of closures and mergers. 

More broadly, the Financial Services Authority’s “Retail Conduct Risk Outlook” published in the Spring of 2011 noted that life industry premiums have been in decline generally for a number of years, and that uncertainty remained, through for example lower returns, asset price falls and low consumer confidence. Indeed, data for the life insurance sector provided by the Association of British Insurers indicated that premiums across all life companies had fallen 7% in the year.

A report by Money Management in August 2011 compared the robustness of life companies, based on their realistic free asset ratios (total assets less total liabilities, divided by liabilities). Of the 31 companies analysed, ten were members of AFM. Of these, eight are open to new business, and these occupy the first eight places in the Money Management rankings:

Source: Money Marketing, August 2011

 

General Insurance and Healthcare:

A growing number of AFM members are more prominent now across a range of non-life businesses. A number write a wide range of general insurance lines, whilst many others are more specialist.

At the time of writing (5 September 2011), no sector wide data was available, although FSA’s Product Sales Data released in late August indicated that pure protection sales reduced by 1% in the previous year. But much as the trend seen in the life sector, market share of mutuals in non-life markets is expected to have grown. As opposed to some of the changes charted in the life sector, there were no notable mergers or closures of non-life AFM businesses in 2010.

Amongst prominent contributions from AFM members in 2010 include:

• Private medical insurance: AFM members were included in a survey of Which? Members, looking at the quality of product. Both AFM members included, Exeter Friendly and CS Healthcare, were ranked highest of all providers.
• In line with a policy of transparency, AFM members offering income protection have been in the lead in publishing claims statistics. Of 8 companies that participated in a survey by Money Management on 2010 claims data, seven were AFM members, including six Holloway friendly societies. Decline rates amongst AFM members represented between 1 and 8% only of all claims.
• NFU Mutual was amongst category winners at this year’s British Insurance Awards, with LV= and Ecclesiastical shortlisted. Separately, Benenden was voted the UK’s most trusted healthcare provider.

 

Largest AFM Members at the end of 2009, by asset size

1	Royal London Group	£34.2 billion
2	NFU Mutual	£12.2 bn
3	Equitable Life	£8.8 bn
4	LV=	£7.7 bn
5	Wesleyan Assurance	£4.6 bn
6	Royal Liver	£3.0 bn
7	MGM Advantage	£1.9 bn
8	Reliance Mutual	£1.7 bn
9	Ecclesiastical	£1.6 bn
10	Family Investment	£1.2 bn

 

Largest AFM Members at the end of 2009, by premiums written

1	Royal London Group *	£1,057 million
2	LV=	£1,732 m
3	NFU Mutual	£1,321 m
4	Ecclesiastical Insurance	£488 m
5	MGM Advantage	£219 m
6	Wesleyan Assurance	£211 m
7	Royal Liver	£160 m
8	Scottish Friendly	£119 m
9	Police Mutual	£110 m
10	Forester Life	£108 m

 

Note: * Royal London Group reports against new international standards which significantly understate premiums: on a comparable basis in 2009, Royal London premiums written were around £2.5 billion.

 

Further information on AFM member statistics is available on the AFM website, with more information on 2010 data available soon: http://www.financialmutuals.org/advantage/key-statistics

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