NFUS bullish despite rising cost of insurance pay-outs

Despite underwriting losses of £150 million last year, NFU Mutual, the UK's leading rural insurer, remained optimistic that this part of its business would return to profit in 2012.

Lindsay Sinclair, chief executive of NFU Mutual, said the losses were as a result of a number of factors including two significant cold snaps, floods in Cornwall, an increase in the cost of large losses and increases in claims costs. All these contributed to the increase in underwriting losses from 118m in 2009. "The total loss was better than planned and we remain on target to return our underwriting result back into profit in 2012."

Sinclair pointed out that agriculture was now the UK's most dangerous occupation according to Health and Safety Executive figures.

"Our farm safety awareness campaign - launched in 2010 - set about helping farmers reduce the incidence of farming related accidents and, in turn, the number of claims." He also highlighted the major claims initiative aimed at tackling the increasing problem of tractor thefts. This has already demonstrated good results, having returned over 1m in just 12 months," he stated.

"In addition, our market-leading rehabilitation programme helped 364 people to resume work, regain mobility or maximise their independence. Rehabilitation can speed up the recovery process of seriously injured people by enabling employees to return to work quickly and safely, thereby reducing the cost of claims and helping policyholders to keep their businesses profitable."

Having celebrated its centenary year, Sinclair said the NFU Mutual had become part of the fabric of rural life. "Our philosophy sits at the heart of this and remains unchanged since we began back in 1910," he said. "We continue to provide our members with the cover they need, at a fair price and with a first-class personal service."

He claimed the company had an extremely loyal customer base, with 93 per cent of customers renewing annually. Word-of-mouth referrals continued to bring in new business he added.

Overall the company made a pre-tax profit of 159m compared with 366m the previous year. Total funds managed rose to 12.4 billion. General insurance premium income rose to 1.2bn, 139m above the 2009 figure and life premium income rose 9 per cent on the year.