Engage sets sights on growth after ‘solid’ year for mutual

YORKSHIRE-based Engage Mutual today delivered a “solid” set of full year figures, following a period of rapid expansion through acquisition.

The Harrogate-based mutual plans to grow its health insurance business this year, as it continues to seek a replacement for former chief executive Andrew Haigh, who stepped down last year.

Peter Burrows, the mutual’s acting chief executive, said: “2012 was a year of stabilisation. It was a year of making sure we ran the business efficiently, and integrated the acquired activities, and continued our efforts on good customer service.

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“It was a year in which our activity returned to organic growth.”

The accounts reveal that Mr Haigh, who resigned in December, had a total remuneration package of £621,000 in 2012, which included his 2013 notice period remuneration.

In a “challenging” economic climate, Engage Mutual grew its sales by 14 per cent in 2012, with new business annual premium income rising to £5.3m.

Within that total, sales of its over 50s life insurance product grew 50 per cent to £3.2m, while sales in its fledgling health business grew 36 per cent to £600,000.

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Overall premium income fell by 10 per cent to £57.4m. Engage said this was partly due to an anticipated fall in contributions received into child trust fund accounts, following the Government’s closure of the scheme.

According to Engage, the fall was also partly due to a decision to refer customers with maturing pension plans to a specialist third party provider, Key Retirement Solutions, “in order to help secure them the best possible retirement annuity”.

Claims paid out to customers across all products totalled £86.5m, comprising £36.2m of life insurance benefits, £5.2m of health benefits and £45.1m of maturing savings and investments.

A spokesman for Engage said: “The fall from last year, when claims totalled £101.8m, is largely due to a reduction in the number of savings and investment products that matured in the year, and as such does not represent a decline in member benefits.”

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Engage’s total cost base of £20.3m was one per cent higher than in 2011. Engage said this represented a fall in real terms.

At the year end, Engage had available capital resources of £79.9m, which is nearly four times the level which it was required to hold by financial services regulation.

Total assets grew by one per cent over the year, to £931m.

Any surpluses generated by the business are taken to the fund for future appropriations (FFA), to be used for the benefit of members. The FFA ended the year at £83.9m, compared with £84.5m the year before.

Mr Burrows said: “Our 2012 results demonstrate a robust performance in challenging times.

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“We have enhanced our core life insurance product and grown our sales while controlling our costs. Our capital position remains enviably strong, to the extent that we continue to use some of that capital strength to improve returns to savers, through a combination of enhanced policy values and a reduction in contractual charges across a range of product types. In parallel, we are continuing to invest in our future, most notably in our health business.”

Customer numbers, at 499,000, were “marginally down” on the year before.

Mr Burrows said: “The customer number growth in recent years has largely been fuelled by the acquisitions. At the moment, we’ve got a situation where slightly more customers are going off the book than on to it.”

Staff numbers rose from 189 to 212 last year.

Mr Burrows, who was Engage’s finance and operations director, became acting chief executive when Mr Haigh stepped down.

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Mr Burrows said: “The organisation owes huge thanks to Andrew. In his ten years as chief executive, Andrew increased the scale and range of the business, launched the Engage Mutual brand, and more than doubled our customer base to its current level of around half a million customers. He leaves us in a strong capital position and with a clear vision of our future.”

Mr Haigh’s salary was £306,000 in 2011. He resigned as a director on December 24 2012, and received remuneration in respect of his 12-month notice period of £285,000 and a termination payment of £59,000.

Mr Burrows’ pay was £197,000 in 2012 and 2011.

Mr Burrows said it could be a few months before an announcement was made about the new CEO.

“We’re leaving no stone unturned in looking for the best person, and that takes time,’’ said Mr Burrows.