ENGAGE Mutual reported a fall in total new business sales and premiums in the first half of the year, but was upbeat about its growing life insurance and health business.
The Harrogate-based business has made a strategic decision to switch its focus from savings to the insurance market.
New chief executive Peter Burrows said the decline was in line with expectations and would continue over the coming years as the business changes direction. He emphasised the mutual’s strong capital position.
“You change course on a ship, you don’t see the immediate response. You see it gradually work through the water,” he told the Yorkshire Post.
He said the traditional advantages that mutual societies enjoyed have been eroded with the introduction of ISAs on the High Street and online accounts.
Meanwhile, Engage’s customers, who tend to be over-50s, have become increasingly concerned about providing for themselves and their family, he added.
“They are looking forward to more time in retirement but their finances are a bigger challenge than they might have been 10 years ago,” Mr Burrows said.
“They see increasing pressure on health spending and the NHS to operate efficiently on tighter budgets.
“Individual health provision is certainly an area of growth where we think we can play a really important role.”
Total new business sales fell 8.6 per cent to £2.66m, compared with the same period last year, while total premiums dropped 3.9 per cent to £28.64m.
Engage said the decline in total premiums was in line with sector performance and driven by historical savings products, notably unit-linked savings.
New sales of over-50s life insurance increased by seven per cent to £1.79m. Over-50s life insurance premiums fell grew by two per cent to £12.4m.
Health sales increased by 15 per cent to £400,000. Health premiums climbed by five per cent to £3.7m.
Total claims fell to £42.18m from £49.85m during the period.
Mr Burrows said: “Our savings customers remain incredibly important to us, but in terms of new markets to get into it is life and health insurance that will fuel the growth.”
Engage said its capital strength remained at three times the required regulatory level. Total assets edged up to £937m.
Mr Burrows is considering using some of the capital to give additional benefits back to policyholders. He plans to debate the plan with members at customer forums around the country.
“Being a mutual I believe you have a very special relationship with your customers. They are both consumers of your product but also the owners of your business.
“When we do our own introspective analysis we can be very proud of how we have treated our customers as consumers of product.
“We have some well-priced, very simple and transparent products underpinned by some good customer service and a solid balance sheet that you can sleep at night that it’s a safe business to invest with.
“But when we look at ourselves and say to ourselves ‘have we rewarded our customers for their ownership of the business?’ I think in common with the rest of the sector there’s more we can do in that area.
“We are fortunate we have actually got some capital that we can afford to start thinking what more we can do.”
He said Engage will hone ideas with members to make sure it is using the capital correctly.
“At the end of the day it’s our members’ money and they should choose how best they spend their money for their benefit and the benefit of their community.”
Engage is making six £5,000 grants available to projects voted on by its members through its Engage With Your Community scheme, which is now in its second year. Last year, the company gave out three grants.
Engage, which employs 211 people and has around 500,000 customers, was awarded Investors in People Champion status in July, one of 10 Yorkshire organisations to hold the accolade.