TIDMELLA
RNS Number : 0366X
Ecclesiastical Insurance Office PLC
25 August 2015
ECCLESIASTICAL INSURANCE OFFICE PLC
HALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED 30 JUNE
2015
INTERIM MANAGEMENT REPORT
In our annual report and accounts we set out the transformation
of performance delivered in 2014, and our intention to build on
that success in 2015. Our vision and strategic aims outlined in
that report are underpinned by the on-going delivery of our clear
and consistent business plans and ambitious Group-wide change
programme.
I am pleased to report continued success in the first half of
2015. We have seen strong underwriting performance across all our
business units and profit before tax in the first half of the year
was GBP35.3m, which exceeded our expectations.
Achieving growth has been challenging as all our markets remain
very competitive. In the UK and Ireland another year of benign
weather has meant very good underwriting results for property
insurers, but has also put rates under pressure. Faced with these
market conditions we have maintained our disciplined approach to
underwriting and, combined with the final stages of reshaping our
portfolio during 2014, this has meant that gross written premium
(GWP) fell GBP10.5m to GBP153.9m at the half-year. Our underwriting
profit was GBP14.3m (H1 2014: GBP3.8m), with a combined operating
ratio (COR) of 85.8% (H1 2014: 96.7%).
Strong half-year results mean we are able to pay a further
substantial charitable grant to our owner, Allchurches Trust. A
grant of GBP15m will be paid in early September which will take our
total charitable giving since the start of 2014 to GBP40.3m, well
on track to reach our key strategic goal of donating GBP50m to
charity over the three years to the end of 2016.
Most trusted specialist insurer
UK and Ireland
The actions we took during 2013 and 2014 to address losses in
our liability business have delivered the anticipated step change
in performance; half-year underwriting profits for liability are
higher than anticipated. Performance of the property portfolio has
also exceeded expectations, largely due to the very benign weather.
Our UK and Ireland business delivered an overall underwriting
profit of GBP13.8m and a COR of 81.9% (H1 2014: GBP3.9m profit, COR
95.7%).
The completion of our exit from the non-charity care segment and
finalisation of other actions taken to improve profitability in our
liability business mean premiums are below this time last year. GWP
was GBP115.0m in the six months to 30 June 2015 (H1 2014:
GBP124.7m).
Australia
Our business in Australia has continued to deliver improved
performance, returning to an underwriting profit for the first time
since the catastrophe events of 2010 and 2011. The Australian
portfolio achieved an underwriting profit of GBP0.1m and a COR of
98.3% (H1 2014: GBP0.6m loss, COR 106.6%).
Canada
The start of the year was challenging with severe weather
events, and one of the coldest Canadian winters on record,
significantly affecting property business. Despite this, our
Canadian business has continued to deliver stable underwriting
performance reporting a half-year underwriting profit of GBP0.5m
and a COR of 96.9% (H1 2014: GBP0.6m profit, COR 95.5%). GWP has
increased 12% (8% after exchange rate movements) to GBP17.6m as a
result of strong premium retention and on-target new business
wins.
Investment return
Geopolitical uncertainty and low levels of growth continue to
contribute to volatility in equity markets and low bond yields
respectively. We continue to maintain an equity portfolio
diversified both by geography and market sector to reduce our level
of exposure to equity price volatility. Our approach to management
of risks resulting from the Group's exposure to financial markets
is outlined in note 4 to our latest annual report.
With our conservative bond portfolio and relatively high
exposure to equity markets, our investment performance for the
first six months has been in line with expectations. The investment
return on our general insurance funds was GBP18.1m (H1 2014:
GBP11.5m).
Best ethical investment provider
Our investment management division has had an exciting and
successful start to the year. A significant milestone was reached
in its growth and development with a successful rebrand of the
business as EdenTree Investment Management.
Building on a long and successful past, the decision to rebrand
was based on a desire to reach a wider audience and to firmly
establish EdenTree as the responsible investment choice for
advisers and their clients. Supporting the new brand was the launch
of a new EdenTree website, digital advertising, use of social media
and national outdoor advertising. The team also delivered a new
front office IT platform to support investment trading and
compliance activities.
Against challenging investment markets, net inflows of GBP42m
were 31% ahead of the same period last year and assets under
management in our pooled funds increased by 6% in the first six
months of the year, with total assets under management reaching
GBP2.4bn. EdenTree reported a profit of GBP1.6m (H1 2014: GBP2.1m
profit), the decrease from 2014 reflecting the investment we have
made in the business in the first half of the year.
Most trusted specialist adviser
SEIB Insurance Brokers had a challenging start to the year but
continues to provide a stable flow of income for the Group,
returning a profit before tax of GBP1.3m (H1 2014: GBP1.4m).
Our team of fully independent advisers, Ecclesiastical Financial
Advisory Services (EFAS), continue to review and refine their
offering to the Anglican clergy. Following the successful sale of
its small mortgage portfolio at the start of the year, the business
reported a small half-year loss of GBP0.2m (H1 2014: GBPnil).
Life business
Ecclesiastical Life Limited reported a profit before tax of
GBP0.2m at the half year (H1 2014: GBP0.4m) following the decision
in 2013 to cease writing new funeral plan business. This is in line
with our expectations that modest profits will emerge as the
existing book runs off.
Related party transactions
Related party transactions and changes to them since the last
annual report are disclosed in note 8 to the condensed set of
financial statements. The latest annual report is available from
the registered office and at
www.ecclesiastical.com/general/investorrelations/reportandaccounts.
Principal risks and uncertainties
The principal risks and uncertainties that could have a material
impact on the Group's performance, such that actual results differ
from expected and historical results, are detailed in note 1 to the
condensed set of financial statements. The principal risks and
uncertainties that were disclosed in the Risk Management section of
the Strategic Report and notes 3 and 4 to our latest annual report
still apply.
Going concern
The Group has considerable financial resources: financial
investments of GBP868.6m, 97% of which are liquid (H1 2014:
financial investments of GBP912.2m, 97% liquid); cash and cash
equivalents of GBP98.2m and no borrowings (H1 2014: cash and cash
equivalents of GBP89.8m and no borrowings); and a regulatory
enhanced capital cover of 3.2 (H1 2014: 2.6). As a consequence, the
Directors have a reasonable expectation that the Group is
well-placed to manage its business risks successfully and continue
in operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing the
half-yearly financial report.
There have been no material subsequent events to disclose in
this report.
Outlook
We have had a successful start to the year and are very pleased
with the continuing consistent financial performance across all our
business units.
We operate in a challenging commercial environment, and we
expect the current tough conditions to continue for all our
businesses into 2016. We will continue to balance our desire for
moderate, profitable growth over the coming years with the need to
manage our exposure to risk, particularly when we believe prices
are at unrealistic levels. We have plenty of room for profitable
growth in our chosen specialist niches where we can demonstrate our
expertise and deliver superior customer service, but we will not
write business at any price and jeopardise our future success or
sustainability.
We have a clear strategy and the resources, skills and desire to
deliver it. I remain confident that we can continue to make a real
difference to the lives of people in the markets and communities in
which we operate.
I thank our employees, our customers and our business partners
for their ongoing loyalty and support as we continue towards our
goal of giving GBP50m to charity over three years, working together
for the greater good.
Mark Hews
Group Chief Executive
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with IAS 34, 'Interim Financial Reporting' and gives
a true and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings included in
the consolidation as a whole;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and changes therein).
The Board of Directors is as per the latest audited annual
financial statements.
By order of the Board,
Mark Hews Will Samuel
Group Chief Executive Chairman
25 August 2015
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 09:32 ET (13:32 GMT)
For the 6 months to 30 June 2015
30.06.15 30.06.14 31.12.14
6 months 6 months 12 months
GBP000 GBP000 GBP000
Revenue
Gross written premiums 153,924 164,473 328,797
Outward reinsurance premiums (56,065) (74,765) (135,132)
Net change in provision for unearned premium 2,824 26,964 31,178
---------- ---------- ----------
Net earned premiums 100,683 116,672 224,843
---------- ---------- ----------
Fee and commission income 29,828 28,565 62,258
Net investment return 21,642 16,844 46,197
---------- ---------- ----------
Total revenue 152,153 162,081 333,298
---------- ---------- ----------
Expenses
Claims and change in insurance liabilities (63,394) (110,072) (197,170)
Reinsurance recoveries 17,208 40,577 62,306
Fees, commissions and other acquisition costs (31,844) (35,860) (70,813)
Other operating and administrative expenses (38,777) (38,236) (79,381)
---------- ---------- ----------
Total operating expenses (116,807) (143,591) (285,058)
---------- ---------- ----------
Operating profit 35,346 18,490 48,240
Finance costs (57) (48) (86)
---------- ---------- ----------
Profit before tax 35,289 18,442 48,154
Tax expense (6,150) (3,252) (7,837)
---------- ---------- ----------
Profit for the financial period attributable to equity holders of the Parent 29,139 15,190 40,317
---------- ---------- ----------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months to 30 June 2015
30.06.15 30.06.14 31.12.14
6 months 6 months 12 months
GBP000 GBP000 GBP000
Profit for the period 29,139 15,190 40,317
--------- --------- ----------
Other comprehensive income
Items that will not be reclassified to profit or loss:
Fair value gains on property - - 30
Actuarial losses on retirement benefit plans (11,239) (10,226) (13,184)
Attributable tax 2,264 2,045 2,647
--------- --------- ----------
(8,975) (8,181) (10,507)
Items that may be reclassified subsequently to profit or loss:
(Losses)/gains on currency translation differences (5,059) 60 (1,697)
--------- --------- ----------
Net other comprehensive income (14,034) (8,121) (12,204)
--------- --------- ----------
Total comprehensive income attributable to equity holders of the Parent 15,105 7,069 28,113
--------- --------- ----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months to 30 June 2015
Share Share Equalisation Revaluation Translation Retained
capital premium reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2015
At 1 January 120,477 4,632 25,299 541 12,643 331,041 494,633
Profit for the period - - - - - 29,139 29,139
Other net expense - - - - (5,059) (8,975) (14,034)
--------- -------- ------------- ------------ ------------ --------- ---------
Total comprehensive
income - - - - (5,059) 20,164 15,105
Dividends - - - - - (4,591) (4,591)
Reserve transfers - - (349) (97) - 446 -
--------- -------- ------------- ------------ ------------ --------- ---------
At 30 June 120,477 4,632 24,950 444 7,584 347,060 505,147
--------- -------- ------------- ------------ ------------ --------- ---------
2014
At 1 January 120,477 4,632 25,837 700 14,340 328,157 494,143
Profit for the period - - - - - 15,190 15,190
Other net
income/(expense) - - - - 60 (8,181) (8,121)
--------- -------- ------------- ------------ ------------ --------- ---------
Total comprehensive
income - - - - 60 7,009 7,069
Dividends - - - - - (4,591) (4,591)
Gross charitable
grant - - - - - (8,500) (8,500)
Tax relief on
charitable grant - - - - - 1,827 1,827
Reserve transfers - - (396) (136) - 532 -
--------- -------- ------------- ------------ ------------ --------- ---------
At 30 June 120,477 4,632 25,441 564 14,400 324,434 489,948
2014
At 1 January 120,477 4,632 25,837 700 14,340 328,157 494,143
Profit for the year - - - - - 40,317 40,317
Other net
income/(expense) - - - 40 (1,697) (10,547) (12,204)
--------- -------- ------------- ------------ ------------ --------- ---------
Total comprehensive
income - - - 40 (1,697) 29,770 28,113
Dividends - - - - - (9,181) (9,181)
Gross charitable
grant - - - - - (23,500) (23,500)
Tax relief on
charitable grant - - - - - 5,053 5,053
Group tax relief in
excess of standard
rate - - - - - 5 5
Reserve transfers - - (538) (199) - 737 -
--------- -------- ------------- ------------ ------------ --------- ---------
At 31 December 120,477 4,632 25,299 541 12,643 331,041 494,633
The equalisation reserve is not distributable and must be kept in compliance with the insurance
companies' reserves regulations. The revaluation reserve represents cumulative net fair value
gains on owner-occupied property. The translation reserve arises on consolidation of the Group's
foreign operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 09:32 ET (13:32 GMT)
At 30 June 2015
30.06.15 30.06.14 31.12.14
GBP000 GBP000 GBP000
Assets
Goodwill and other intangible assets 29,351 29,126 28,998
Deferred acquisition costs 27,074 29,665 31,117
Deferred tax assets 1,199 2,398 1,295
Pension assets 9,572 23,466 21,068
Property, plant and equipment 7,139 6,559 6,405
Investment property 83,013 60,779 69,775
Financial investments 868,595 912,216 886,186
Reinsurers' share of contract liabilities 141,523 157,952 157,465
Current tax recoverable - 12 -
Other assets 137,468 137,101 119,394
Cash and cash equivalents 98,210 89,772 107,526
Current assets classified as held for sale - - 6,204
Total assets 1,403,144 1,449,046 1,435,433
----------- ----------- -----------
Equity
Share capital 120,477 120,477 120,477
Share premium account 4,632 4,632 4,632
Retained earnings and other reserves 380,038 364,839 369,524
----------- ----------- -----------
Total shareholders' equity 505,147 489,948 494,633
----------- ----------- -----------
Liabilities
Insurance contract liabilities 773,024 835,822 820,328
Finance lease obligations 1,360 1,410 1,259
Provisions for other liabilities 1,826 4,928 3,588
Pension liabilities 282 - 250
Retirement benefit obligations 12,697 12,729 12,547
Deferred tax liabilities 35,310 37,297 36,014
Current tax liabilities 6,174 4,264 5,767
Deferred income 15,394 16,909 16,432
Other liabilities 51,930 45,739 44,615
----------- ----------- -----------
Total liabilities 897,997 959,098 940,800
----------- ----------- -----------
Total shareholders' equity and liabilities 1,403,144 1,449,046 1,435,433
----------- ----------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months to 30 June 2015
30.06.15 30.06.14 31.12.14
6 months 6 months 12 months
GBP000 GBP000 GBP000
Profit before tax 35,289 18,442 48,154
Adjustments for:
Depreciation of property, plant and equipment 825 871 1,638
Revaluation of property, plant and equipment (25) - -
Loss/(profit) on disposal of property, plant and equipment 223 (113) (32)
Amortisation of intangible assets 563 886 1,751
Loss on disposal of intangible assets - - 19
Net fair value (gains)/losses on financial instruments and investment property (5,704) 689 (8,918)
Dividend and interest income (13,330) (16,897) (34,709)
Finance costs 57 48 86
Changes in operating assets and liabilities:
Net decrease in insurance contract liabilities (33,719) (11,576) (21,413)
Net decrease/(increase) in reinsurers' share of contract liabilities 12,288 (25,272) (26,814)
Net decrease in deferred acquisition costs 3,279 4,972 3,327
Net (increase)/decrease in other assets (17,780) (13,045) 3,792
Net increase in operating liabilities 7,444 9,781 8,814
Net decrease in other liabilities (1,718) (1,575) (3,498)
--------- --------- ----------
Cash used by operations (12,308) (32,789) (27,803)
Dividends received 3,654 3,706 8,624
Interest received 11,446 13,284 26,889
Interest paid (57) (48) (86)
Tax (paid)/recovered (4,129) 641 1,127
--------- --------- ----------
Net cash (used by)/from operating activities (1,394) (15,206) 8,751
--------- --------- ----------
Cash flows from investing activities
Purchases of property, plant and equipment (1,534) (592) (1,369)
Proceeds from the sale of property, plant and equipment 6 562 677
Purchases of intangible assets (1,087) (772) (1,548)
Acquisition of business - (5,000) (5,000)
Disposal of business 5,260 - -
Purchases of financial instruments and investment property (58,675) (80,448) (152,899)
Sale of financial instruments and investment property 56,377 97,241 185,401
Net cash from investing activities 347 10,991 25,262
--------- --------- ----------
Cash flows from financing activities
Payment of finance lease liabilities (163) (195) (359)
Payment of group tax relief in excess of standard rate - - (15)
Dividends paid to Company's shareholders (4,591) (4,591) (9,181)
Donations paid to ultimate parent undertaking - (8,500) (23,500)
Net cash used by financing activities (4,754) (13,286) (33,055)
--------- --------- ----------
Net (decrease)/increase in cash and cash equivalents (5,801) (17,501) 958
Cash and cash equivalents at the beginning of the period 107,526 107,241 107,241
Exchange (losses)/gains on cash and cash equivalents (3,515) 32 (673)
--------- --------- ----------
Cash and cash equivalents at the end of the period 98,210 89,772 107,526
--------- --------- ----------
NOTES TO THE HALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED
30 JUNE 2015
1. General information
The information for the year ended 31 December 2014 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.
The half-yearly financial report was approved by the Board on 25
August 2015. The Group results for the six-month periods to 30 June
2015 and 30 June 2014 are unaudited, but have been reviewed by
Deloitte LLP whose review report is at the end of this report.
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 09:32 ET (13:32 GMT)
The principal risks and uncertainties of the Group are in
respect of insurance risk and financial risk. The risk under any
one insurance contract is the possibility that the insured event
occurs and the uncertainty of the amount and timing of the
resulting claim. Factors such as the business and product mix, the
external environment including market competition and reinsurance
capacity all may vary from year to year, along with the actual
frequency, severity and ultimate cost of claims and benefits. The
Group's underwriting strategy is designed to ensure that the
underwritten risks are well diversified in terms of type and amount
of risk and geographical spread. In all operations pricing controls
are in place, underpinned by sound statistical analysis, market
expertise and appropriate external consultant advice. Gross and net
underwriting exposure is protected through the use of a
comprehensive programme of reinsurance using both proportional and
non-proportional reinsurance, and is supported by proactive claims
handling and customer education on risk management. The overall
reinsurance structure is regularly reviewed and modelled to ensure
that it remains optimum to our needs. The optimum reinsurance
structure can best be described as the one that provides us with
sustainable, long-term capacity to support our specialist business
strategy. This combines effective balance sheet protection with,
over time, the required underwriting result and return on
capital.
The most important components of financial risk are interest
rate risk, credit risk, currency risk and equity price risk. The
Group is exposed to equity price risk because of financial
investments held by the Group and stated at fair value through
profit or loss. The Group mitigates this risk by holding a
diversified portfolio across geographical regions and market
sectors and, from time to time, through the use of derivative
contracts which would limit losses in the event of a fall in equity
markets. These principal risks and uncertainties, together with
details of the financial risk management objectives and policies of
the Group, are disclosed in the latest annual report.
The Group derives insurance premiums from a range of
geographical locations and classes of business. Depending on the
location and class of the risk, there may be a seasonal pattern to
the incidence of claims. However, given the mix of business that
the Group writes, overall the half-yearly results are not subject
to any significant impact arising from the seasonality or
cyclicality of operations.
The Group has considerable financial resources and, as a
consequence, the Directors have a reasonable expectation that the
Group is well placed to manage its business risks successfully and
continue in operational existence for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly financial report.
2. Accounting policies
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 and Ireland, Australia and Canada.
The annual financial statements are prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with IAS 34, Interim Financial Reporting.
The same accounting policies and methods of computation are
followed in the condensed set of financial statements as applied in
the Group's latest audited annual financial statements.
There have been no newly issued Standards or changes to existing
Standards during the interim period which significantly impact on
the condensed set of financial statements.
3. 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.
Group activities that are not reportable operating segments on the
basis of size are included within an 'Other activities' category.
Changes have been made to segments during 2015 as follows:
- The United Kingdom and Ireland segments have been combined on
the basis of their similar economic characteristics, products and
customer base
- Corporate costs which were previously included in 'Central
operations' have been identified as a discrete segment and the
definition of corporate costs has been widened during the
period
- The 'Central operations' segment has been renamed 'Other insurance operations'
The prior period has been restated to the revised basis.
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, corporate underwriting costs, adverse
development cover sold to ACS (NZ) Limited and operations that are in run-off or not 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 South Essex Insurance Brokers Limited and financial
advisory services through Ecclesiastical Financial Advisory Services Limited.
- Life business
Ecclesiastical Life Limited provides long-term insurance policies to support funeral planning
products. It is closed to new business.
- Corporate costs
This includes costs associated with Group management activities.
- Other activities
This includes costs relating to acquisition of businesses.
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.
Group revenues are not materially concentrated on any single
external customer.
(restated)
6 months ended 6 months ended
30.06.15 30.06.14
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 114,956 - 114,956 124,666 - 124,666
Australia 19,744 - 19,744 21,124 - 21,124
Canada 17,634 - 17,634 16,300 - 16,300
Other insurance operations 1,524 - 1,524 2,283 - 2,283
--------- ---------- --------- --------- ---------- ---------
Total 153,858 - 153,858 164,373 - 164,373
Life business 66 - 66 100 - 100
Investment management - 5,837 5,837 - 6,256 6,256
Broking and Advisory - 4,847 4,847 - 4,926 4,926
--------- ---------- --------- --------- ---------- ---------
Group revenue 153,924 10,684 164,608 164,473 11,182 175,655
--------- ---------- --------- --------- ---------- ---------
(restated)
12 months ended
31.12.14
Gross Non-
written insurance
premiums services Total
GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 245,528 - 245,528
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 09:32 ET (13:32 GMT)
Australia 40,083 - 40,083
Canada 39,365 - 39,365
Other insurance operations 3,654 - 3,654
--------- ---------- ---------
Total 328,630 - 328,630
Life business 167 - 167
Investment management - 12,045 12,045
Broking and Advisory - 9,865 9,865
--------- ---------- ---------
Group revenue 328,797 21,910 350,707
--------- ---------- ---------
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.
The life business segment result comprises the profit or loss on
insurance contracts (including return on assets backing liabilities
in the long-term fund), 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 2015 operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 81.9% 13,801 16,151 (2) 29,950
Australia 98.3% 139 1,164 (49) 1,254
Canada 96.9% 464 827 - 1,291
Other insurance operations (85) - - (85)
---------- ------------ -------- --------
85.8% 14,319 18,142 (51) 32,410
Life business 181 2,170 (2) 2,349
Investment management - 1,596 - 1,596
Broking and Advisory - - 1,085 1,085
Corporate costs - - (2,151) (2,151)
---------- ------------ -------- --------
Profit before tax 14,500 21,908 (1,119) 35,289
---------- ------------ -------- --------
6 months ended Combined
30 June 2014 (restated) operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 95.7% 3,921 6,784 (47) 10,658
Australia 106.6% (592) 3,824 - 3,232
Canada 95.5% 627 895 - 1,522
Other insurance operations (145) - - (145)
---------- ------------ -------- --------
96.7% 3,811 11,503 (47) 15,267
Life business 407 494 (2) 899
Investment management - 2,118 - 2,118
Broking and Advisory - - 1,403 1,403
Corporate costs - - (948) (948)
Other activities - - (297) (297)
---------- ------------ -------- --------
Profit before tax 4,218 14,115 109 18,442
---------- ------------ -------- --------
12 months ended Combined
31 December 2014 (restated) operating Insurance Investments Other Total
ratio GBP000 GBP000 GBP000 GBP000
General business
United Kingdom and Ireland 94.0% 10,359 23,648 70 34,077
Australia 106.2% (1,129) 7,619 (139) 6,351
Canada 94.2% 1,662 1,598 - 3,260
Other insurance operations (172) - - (172)
---------- ------------ -------- --------
95.2% 10,720 32,865 (69) 43,516
Life business (178) 1,522 (4) 1,340
Investment management - 3,164 - 3,164
Broking and Advisory - - 2,071 2,071
Corporate costs - - (1,521) (1,521)
Other activities - - (416) (416)
---------- ------------ -------- --------
Profit before tax 10,542 37,551 61 48,154
---------- ------------ -------- --------
4. 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 release of GBP7m (H1
2014: GBP17m).
5. 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.
6. Dividends
Dividends paid on the 8.625% Non-Cumulative Irredeemable
Preference shares amounted to GBP4.6m (H1 2014: GBP4.6m).
7. Retirement benefit schemes
On 30 June 2015, Ecclesiastical gave formal notice to the
Trustees of the Ecclesiastical Insurance Office plc Pension &
Life Assurance Scheme to wind-up the defined benefit pension
scheme. The wind-up formally commenced on 1 July and is expected to
complete by the end of the year. At 31 December 2014, the scheme
had a surplus of GBP0.6m which was derecognised in the statement of
financial position due to uncertainty over its recoverability. It
is the intention of the Trustee to distribute some or all of the
surplus to Ecclesiastical Insurance Office plc on wind-up.
8. 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 other changes to related party transactions
in the period which require disclosure.
9. Holding company
The ultimate holding company is Allchurches Trust Limited, a
company limited by guarantee and a registered charity.
10. Financial instruments' fair value disclosures
IAS 34 requires that interim financial statements include
certain of the 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 (i.e. as prices) or indirectly (i.e.
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 and
adjusted to reflect illiquidity and a credit rating adjustment
where appropriate, with the fair values disclosed being directly
sensitive to this input.
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 09:32 ET (13:32 GMT)
There have been no transfers between investment categories in
the current period.
Fair value measurement
at the
end of the reporting
period based on
----------------------------
Level Level Level Total
1 2 3
30 June 2015 GBP000 GBP000 GBP000 GBP000
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 282,147 208 20,417 302,772
Debt securities 559,355 4,462 238 564,055
Derivatives - 1,751 - 1,751
841,502 6,421 20,655 868,578
--------- ------- -------- ---------
30 June 2014
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 269,114 201 20,927 290,242
Debt securities 610,184 4,165 207 614,556
--------- ------- -------- ---------
879,298 4,366 21,134 904,798
--------- ------- -------- ---------
31 December 2014
Financial assets at fair value through
profit or loss
Financial investments
Equity securities 269,347 209 20,349 289,905
Debt securities 591,542 4,485 238 596,265
860,889 4,694 20,587 886,170
--------- ------- -------- ---------
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
30 June 2015
Opening balance 20,349 238 20,587
Total gains recognised in profit or loss 68 - 68
Closing balance 20,417 238 20,655
----------- ----------- ----------
Total gains for the period included in profit
or loss for assets held at the end of the reporting
period 68 - 68
30 June 2014
Opening balance 19,390 317 19,707
Total gains/(losses) recognised in profit or
loss 1,537 (110) 1,427
Closing balance 20,927 207 21,134
----------- ----------- ----------
Total gains/(losses) for the period included
in profit or loss for assets held at the end
of the reporting period 1,537 (110) 1,427
31 December 2014
Opening balance 19,390 317 19,707
Total gains/(losses) recognised in profit or
loss 959 (79) 880
Closing balance 20,349 238 20,587
----------- ----------- ----------
Total gains/(losses) for the period included
in profit or loss for assets held at the end
of the reporting period 959 (79) 880
----------- ----------- ----------
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. Where material,
these valuations are reviewed by the Group Audit Committee.
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 and interest rates corresponding
to the maturity of the contract. Over-the-counter equity or index
options and futures are valued by reference to observable index
prices.
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. Where material, these valuations are reviewed
by the Group Audit Committee.
The valuation is most sensitive to the level of underlying net
assets, the euro exchange rate, the price-to-book ratio chosen,
together with an illiquidity margin and credit rating adjustment
applied to the valuation to account for the risks associated with
holding the asset. If the price-to-book ratio and illiquidity
discount applied changed by +/- 10% the value of unlisted equity
securities could move by +/- GBP3m.
The increase in value during the period is the result of an
increase in underlying net assets, partially offset by the movement
in the euro exchange rate, with the other inputs remaining
unchanged from the year end.
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. Where material, these
valuations are reviewed by the Group Audit Committee.
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.
There has been no change in the value of unlisted debt during
the period.
11. Disposal of business
Ecclesiastical Financial Advisory Services Limited, which is
included in the Broking and Advisory segment, ceased to offer new
mortgages following a strategic review in 2007, although it
continued to administer the existing book. Management decided to
dispose of the mortgage book in order to more clearly focus their
attention on the core business operations. During the prior year,
the company entered into an agreement to transfer its legacy
mortgage business to Holmesdale Building Society. The transfer was
completed on 1 February 2015.
GBP000
The net assets at the date of disposal were:
Financial investments 6,084
Consideration and costs of sale:
Cash received (5,260)
Contingent consideration arrangement (824)
Sale costs and related net expenses 19
Loss on disposal 19
--------
The net cash inflow arising on disposal was GBP5,260,000.
The deferred consideration will be settled over the next seven
years and is dependent on the development of the mortgage book.
12. Non-adjusting events after the reporting period
A change in the UK standard rate of corporation tax was
announced in the Budget on 8 July 2015. It is expected that the
rate will reduce from 20% to 19% in 2017 and to 18% in 2020. These
changes have yet to be substantively enacted.
INDEPENDENT REVIEW REPORT TO ECCLESIASTICAL INSURANCE OFFICE
PLC
Introduction
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 09:32 ET (13:32 GMT)
Grafico Azioni Ecclesiastl.8fe (LSE:ELLA)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Ecclesiastl.8fe (LSE:ELLA)
Storico
Da Gen 2024 a Gen 2025