Engage Mutual rising above turmoil

SUPER League sponsor Engage Mutual said its prudent and diverse balance sheet helped protect it against the recent turmoil in the financial markets.

Announcing half-year results yesterday, the Harrogate-based friendly society said equity falls have “not materially impacted” on its capital strength.

Engage, which sells savings, investment and life insurance products, manages assets of more than £925m. Of this, £375m has exposure to equities, including £145m in child trust funds.

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Peter Burrows, finance director, said the child trust funds have had “a bit of a tough time” as they track the FTSE-100, which has fallen by 12 per cent in the last three months. Engage has 215,000 customers with child trust funds, many of whom continue to pay money in.

The mutual’s with-profit funds, which represent nearly £200m in savings with around a quarter exposed to equities, have also borne some losses from recent stock market falls. This means the funds will have lower surpluses from which to allocate bonuses to customers.

“But it’s a long-term game and in a couple of years’ time it might be a different story,” said Mr Burrows.

He added: “Markets do go up and down and while we are in the midst of a volatile period if you look at the FTSE-100 over the last 12 months it is down around two per cent, which includes the recent period. It puts the current volatility into perspective.”

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Engage said its capital strength continues to be “very strong” and is made up of funds with no exposure to equities. A large chunk of its surplus is in UK Government bonds, which are regarded as a safe haven for investors, said Mr Burrows.

Andrew Haigh, chief executive, told the Yorkshire Post: “Market turmoil is always a concern for business and a concern for consumers.

“We are very mindful of that, particularly for those people who have investments in the stock market and are concerned about the short term impact of volatility.”

He added: “It’s very clear we are in for a long, slow and volatile recovery. That’s certainly the way we are positioning ourselves as a business. We expect the volatility to continue.

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“We therefore take a cautious approach but continue to grow the business in a steady and managed fashion, with a close eye on costs and a very close eye on managing a strong capital base to help deal with the effects of volatility.”

He said the capital base is running at three times the requirement of regulators.

Mr Haigh said that, in the first half of the year, Engage continued on its growth trajectory and saw growth in its new health business and an overall rise of six per cent in customer numbers. It now has around 500,000.

Engage entered the health market in summer 2008 and has seen the current annual premium grow to nearly £7m. First-half premiums were £3.3m, more than three times the same period last year, while customers received £2.7m in benefits, according to unaudited figures.

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Engage plans to become one of the top-10 health cash plan providers by the end of next year following the recent acquisition of National Friendly’s sales team and the One Fund health cash plan aimed at the corporate market.

At the start of the year Engage agreed a deal with York-based Benenden Healthcare to deliver and further develop Benenden’s health cash plan.

It has since become the service provider and underwriter for more than 15,000 Benenden health cash plans.

On the life insurance and savings side, Engage said half-year premiums stayed level overall at £29.5m, despite a decline in child trust fund premiums prompted by the withdrawal of the Government-backed scheme, a victim of the public spending cuts.

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Customers received more than £58m in insurance claims, savings maturities and pay-outs, while £1.6m of the £65m surplus was transferred for future appropriations.

Mr Haigh said it would more of the same in the second half of the year, while Engage consolidates its acquisitions into the Harrogate base, a process which will create 20 new jobs in the town.

As for more acquisitions, he said: “If we can see a real strategic benefit that would be good for the business and our members we are always interested.

“This year the focus is on consolidating what we did last year and the focus is on organic growth.”

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Engage Mutual was established as the Homeowners’ Friendly Society in 1980. It was rebranded as Engage Mutual Assurance in 2005.

SPONSORSHIP COMING TO A CLOSE

after seven years, Engage Mutual’s sponsorship of Super League Rugby draws to a close at October’s Grand Final.

The friendly society invested a seven-figure sum each year on its support for Europe’s top rugby league competition.

Andrew Haigh, chief executive of Engage, said: “Sponsorship was about communicating the Engage Mutual brand. We wanted to use sponsorship to build awareness of that.”

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He added: “It’s been an extremely successful relationship but we have now finished that phase of our development and so we will be looking at how best to deliver marketing activity going forward.”

He said the mutual would not be looking for a direct replacement.

Leeds Rhinos and Huddersfield Giants remain in contention for a place in the keenly-awaited Grand Final.