Ecclesiastical Insurance Office plc announces 2020 interim results

A copy of the 2020 interim results will be available on the Company’s website

• During March the Group announced that it had made a record £32m donation to charity for the previous calendar year, almost double our original expectations. Since then the Group has continued to support charities and communities during the pandemic. Notably in the first half of the year the £1m Movement for Good awards were launched again and £500,000 distributed; the Group has also responded to coronavirus response appeals initiated by the National Emergencies Trust, Disasters Emergencies Committee and Association of British Insurers with donations totalling £200,000.
• The Group has now donated over £97m to charity since 2016 and is just short of its enhanced target of giving more than £100m by September 2021. This giving has enabled the Group and its parent charity, Allchurches Trust, to accelerate its giving to churches and charities most in need.
• Following a strong year in 2019, in the first half of 2020 we report a loss before tax of £59.7m (H1 2019: profit before tax £42.8m) due to COVID-19’s impact on financial markets, including an investment loss of £48.9m.
• Gross written premium (GWP) up 9% to £202m (H1 2019: £185m), supported by strong retention and rate increases in hardening markets.
• Underwriting loss of £1.3m (H1 2019: profit £9.5m), giving a Group COR* of 101.1% (H1 2019: 91.4%). This includes £14m for the provision of COVID-19 related claims where there is confirmed cover. Excluding these, the Group’s COR is 89.5%.
• We have prioritised the health and wellbeing of our people, successfully adapting to new ways of working and providing a seamless service to our customers.
• Continued external recognition of the Group as a trusted and specialist financial services organisation. This included being named as the UK’s best and most trusted insurer for the 11th time by independent ratings agency Fairer Finance, and our Canada team was once again awarded Top Employer for Young People.

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

“The first half of 2020 was uniquely challenging due to the significant impact of COVID-19. However, we remain true to our core purpose and have continued to give to church, charities and communities most in need.

“Whilst our headline loss before tax is disappointing, in the main it has been driven by unrealised fair value losses on our investment portfolio. These are investments that are being held for the long term and on which we have already seen some recovery. We expect this to continue over the months and years ahead, and we continue to take a long-term view and look beyond the current pandemic.

“Our underlying performance is resilient and we are starting to see activity returning to normal levels. We are proud of the way that our colleagues rose to the challenge and continued to serve our customers throughout this difficult period while themselves adapting to new ways of working.

“We recognise and understand that the coronavirus pandemic has created a worrying and uncertain time for many customers and businesses and we recognise the challenges they have faced. As an ethical insurer, we are driven by a desire to help our customers in their moment of need and we have continued to pay claims where cover was offered, quickly and fairly. We have also offered enhanced cover, free of charge, to many of our customers alongside a range of additional support measures.

“We also recognise that some customers have been disappointed that their policy has not provided business interruption cover during the pandemic, in common with much of the market. As a result, we were pleased to participate, alongside seven other leading insurers, in the Financial Conduct Authority’s Test Case. We hope that this will provide maximum clarity for all concerned in the shortest amount of time. We expect to hear the outcome, which may be subject to appeal, later in the year.

“Recognising the impact COVID-19 has had on communities, we’ve continued our programme of giving during this difficult time. Following the £32m record grant we announced in March, we launched our £1m Movement for Good awards for the second year and distributed £500,000. We also responded to coronavirus response appeals initiated by the National Emergencies Trust, Disasters Emergencies Committee and Association of British Insurers by donating £200,000.

“We also continue to invest in the future of our business. Our new head office building was completed at the end of June and fit out work is now underway. We are expecting to move into the new building during the first quarter of next year. We are also continuing to invest in new systems to improve our efficiency and improve the customer experience.

“While it has been a difficult period, we delivered a resilient set of results in the first half of 2020 from our operating businesses. We maintained steady progress in our underlying underwriting performance, despite the impact of adverse weather events in Australia and Canada, and gross written premium (GWP) was up 9% to £202m, supported by strong retention and rate increases. However the overall underwriting result was impacted as we reserved £14m for COVID-19 related claims where there is confirmed cover. Ecclesiastical, itself, has a comprehensive programme of reinsurance to mitigate any further claim development that may be incurred over the months ahead.

“The adverse market conditions in the first half affected our investment returns, with a loss of £48.9m, primarily on equity holdings. Although they have stabilised over recent months, there is still a level of uncertainty in markets. As we look ahead, we remain confident about our long-term value investment philosophy, and are relatively defensively positioned and well diversified across a broad range of asset classes.

“Our investment management business EdenTree is recognised for its responsible and sustainable approach and has benefited as we have seen investor confidence starting to return. EdenTree was pleased to report net new external money of £57.8m in exceptional market conditions.

“Our broking and advisory businesses contributed £1.4m profit in the first half of the year despite the difficult trading conditions. Positively, June income levels had returned to 2019 levels.

“Despite the challenging environment, we remain in a strong capital position with S&P recently affirming its credit rating of “A-” and with “stable” outlook. As we head into the second half of the year we recognise the challenges in the economic environment but are energised by the clarity of our charitable purpose and are optimistic about the opportunities ahead.

“On behalf of all our charitable beneficiaries, I would like to thank all those who continue to support the Group’s work, enabling it to give to so many worthy causes at a time when the need has never been higher. Together, we are supporting charities, communities and improving lives.”