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RNS
esure Group plc  -  ESUR   

2017 Interim results

Released 07:00 03-Aug-2017

RNS Number : 9574M
esure Group plc
03 August 2017
 

                                                                      

03 August 2017

esure Group plc interim results for the six months ended 30 June 2017

 

An excellent first half with growth in premiums, policies and profits

 

Highlights

 

·     Gross written premiums up 22.8% to £393.3m (1H 2016: £320.4m)

 

·     In-force policies up 8.8% to 2.258 million (1H 2016: 2.076 million)

 

·     Profit before tax from continuing operations up 44.6% to £45.1m (1H 2016: £31.2m)

 

·     Combined operating ratio improved 2.6ppts to 96.6% (1H 2016: 99.2%)

 

·     Interim dividend of 4.1p per share (1H 2016: 3.0p per share) reflects a payout ratio of 70% of earnings per share, inclusive of a 20% special dividend

 

·     Solvency coverage(1) at 153% (FY 2016: 152%)

 

 

 

Sir Peter Wood, Chairman, said: "esure has performed very well in the first half of the year as the Management team continues to drive the Group's profitable growth strategy. Our solid capital position has led the Board to declare an interim dividend of 4.1 pence per share, which includes a special dividend, at the same time as allowing esure to retain sufficient capital and flexibility to continue to pursue our profitable growth ambitions."

 

 

Stuart Vann, Chief Executive Officer, said: "I am delighted with our performance in the first half of 2017. We have delivered strong growth in premiums, policies and profits as the success and momentum of our footprint expansion programme and disciplined underwriting continues to drive the business forward. In Motor, we are growing across all our customer segments, demonstrating the value and service proposition we offer to customers. 

 

"I am really pleased with the outcome of our reinsurance renewal on 1 July which is testament to our focused underwriting approach and strong relationships with our reinsurance panel. As indicated earlier in the year, we have increased prices in the first half of the year which mitigate this increased cost to the business, whilst continuing to grow.

 

"Overall, it has been a great start to 2017, and we are firmly on track to deliver results at the positive end of our 2017 guidance."

 

 

 

 

 

 

 

 

 

 

 

 

 

For further information:

 

Chris Wensley

Head of Investor Relations & Corporate Strategy

t: 01737 641324

e: investor.relations@esuregroup.com

Chris Barrie/Grant Ringshaw 

Citigate Dewe Rogerson

t: 0207 638 9571

e: esure@citigatedr.co.uk

 

 

Note

 

1. Solvency coverage is the Group's Own Funds divided by its Solvency Capital Requirement. The capital coverage for 1H 2017 is estimated and unaudited. The Group's coverage ratio includes adjustments, which in aggregate, if an adjustment was not made, would increase the Group's interim coverage ratio compared to the position as at the year end. These primarily relate to timing differences in respect of the Group's interim dividend and the loss absorbing capacity of deferred taxes. Were the Group not to adjust for these seasonal factors, the coverage ratio would be 157%.

 

About esure Group plc

 

esure Group plc is an efficient, customer-focused personal lines insurer, founded in 2000 by Chairman, Sir Peter Wood, Britain's foremost general insurance entrepreneur. The Group is one of the UK's leading providers of Motor and Home insurance products through the esure and Sheilas' Wheels brands.

 

Cautionary statement

 

Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and assumptions and are subject to a number of known and unknown risks and uncertainties that may cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward-looking statements. Persons receiving this announcement should not place undue reliance on forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standard, the Group does not undertake to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

 

Disclaimer

 

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.         

 

The esure Group plc LEI number is 213800KOI3F5LM54PT80.                                                                                                                                       

 

Review of 1H 2017

 

Group

 

 

1H

2017

 

1H

2016

 

Gross written premiums (£m)

393.3

320.4

In-force policies (millions)

2.258

2.076

Trading profit from continuing operations (£m)

51.5

37.1

Profit before tax from continuing operations (£m)

45.1

31.2

Earnings per share from continuing operations (pence)

8.7

6.1

Dividend per share (pence)

4.1

3.0

Combined operating ratio (%)

96.6

99.2

Loss ratio (%)

71.2

74.9

Expense ratio (%)

25.4

24.3

Investment return - gross (%)

0.9

1.0

Solvency coverage (%)

153

126(1)

 

(1) The 1H 2016 solvency coverage has not been adjusted.

 

Motor

 

 

1H

2017

 

1H

2016

Gross written premiums (£m)

351.3

275.7

In-force policies (millions)

1.740

1.495

Combined operating ratio (%)

95.3

97.9

Loss ratio

72.6

76.4

Expense ratio

22.7

21.5

 

 

 

Trading profit (£m)

48.1

34.3

Underwriting

12.8

4.5

Non-underwritten additional services

30.0

23.8

Investments

5.3

6.0

 

Gross written premiums increased 27.4% to £351.3m (1H 2016: £275.7m) through a combination of positive rating actions and in-force policy growth. In-force policies increased by 16.4% to 1.740 million (1H 2016: 1.495 million) as the Group's core and footprint expansion segments all grew in the first half of the year.

 

Trading profit of £48.1m is 40.2% higher than 1H 2016 (£34.3m) through an improvement in the underwriting and non-underwritten additional services revenues performance. The underwriting result improved as the Group's positive rating actions earn through ahead of claims inflation, and this is reflected in the improvement in the current year net loss ratio of 76.6% (1H 2016: 82.2%). Favourable development of prior accident year reserves of £11.0m equated to 4.0% of net earned premiums (1H 2016: £13.0m; 5.8%).

 

 

 

1H

2017

 

1H

2016

Reported net loss ratio (%)

72.6

76.4

Prior year reserve releases (%)

4.0

5.8

Current accident year net loss ratio (%)

76.6

82.2

 

Non-underwritten additional services revenues increased 26.1% to £30.0m (1H 2016: £23.8m) largely driven by higher instalment income, where higher average written premiums year-on-year and growth in overall policy count in the first half of 2017 increased income.

 

Home

 

 

1H

2017

 

1H

2016

Gross written premiums (£m)

42.0

44.7

In-force policies (thousands)

517

581

Combined operating ratio (%)

104.9

105.5

Loss ratio

61.6

66.8

Expense ratio

43.3

38.7

 

 

 

Trading profit (£m)

3.4

2.8

Underwriting

(2.0)

(2.3)

Non-underwritten additional services

4.8

4.3

Investments

0.6

0.8

 

Gross written premiums reduced 6.0% to £42.0m (1H 2016: £44.7m) as a result of disciplined underwriting in challenging market conditions. In-force policies are 11.0% lower at 517,000 (1H 2016: 581,000) as the Group increased prices ahead of the wider market as it looked to mitigate against rising claims inflation.

 

Trading profit is 21.4% higher at £3.4m (1H 2016: £2.8m) largely driven by an improvement in the non-underwritten additional services revenues.

 

The underwriting loss of £2.0m reflects the soft rating environment earning through in combination with claims inflation, in particular relating to escape of water claims as noted by the wider market. The first half performance has benefited from a benign period of weather compared to the first half of 2016 when the Group incurred £5.0m of adverse weather claims. Favourable development of prior accident year reserves of £3.7m equated to 9.0% of net earned premiums (1H 2016: £7.5m; 17.9%).

 

 

 

1H

2017

 

1H

2016

Reported net loss ratio (%)

61.6

66.8

Prior year reserve releases (%)

9.0

17.9

Current accident year net loss ratio (%)

70.6

84.7

 

The expense ratio of 43.3% is 4.6ppts higher than the first half of 2016 primarily due to a full period cost of the Flood Re Levy that was introduced on 1 April 2016. Non-underwritten additional services revenues increased 11.6% to £4.8m due to an improvement in the performance of non-underwritten additional insurance products and higher instalment income. 

 

Additional services revenues

 

 

1H

2017

£m

 

1H

2016

£m

Non-underwritten additional insurance products

5.6

4.8

Policy administration fees and other income

10.5

9.6

Claims income

3.8

3.0

Instalment income

21.8

17.8

Non-underwritten additional services

41.7

35.2

Underwritten additional insurance products

17.2

16.3

Total income from additional services

58.9

51.5

Motor

53.5

46.6

Home

5.4

4.9

 

 

 

Non-underwritten additional services trading profit

34.8

28.1

Motor

30.0

23.8

Home

4.8

4.3

 

 

 

ASR per IFP - Motor

63.8

63.9

ASR per IFP - Home

19.4

18.3

 

Total income from additional services increased 14.4% to £58.9m (1H 2016: £51.5m) driven by a strong performance across all income lines. Non-underwritten additional services trading profit increased 23.8% to £34.8m (1H 2016: £28.1m) ahead of the Group's in-force policy growth.

 

Investments

 

 

1H

2017

£m

 

1H

2016

£m

 

Investment income

6.4

7.1

Net gains on investments

1.4

0.5

Investment charges

(2.1)

(1.5)

Net investment return

5.7

6.1

Other income

0.2

0.7

Total investment return

5.9

6.8

 

 

 

Investment return - Gross (%)

0.9

1.0

Investment return - Net (%)

0.7

0.8

 

The Group achieved a gross investment return of 0.9% (1H 2016: 1.0%) and a net investment return of 0.7% (1H 2016: 0.8%). 

 

The net investment return was slightly lower year-on-year at £5.7m (1H 2016: £6.1m) with performance tailing off towards the end of the period following a marked steepening in the UK yield curve. Net gains on investments include a one-off realised gain of £2.0m as the Group partially disposed of its long dated Gilt to ensure an appropriate matching between assets and liabilities under Solvency II. This is not expected to repeat in the second half of 2017.

 

Other income was lower at £0.2m (1H 2016: £0.7m).

 

Trading profit

 

 

 1H

2017

£m

1H

2016

£m

Trading profit from continuing operations

51.5

37.1

Motor

48.1

34.3

Home

3.4

2.8

Trading profit from discontinued operations

-

13.2

Gocompare.com

-

13.2

 

Trading profit from continuing operations, being earnings before interest, tax, non-trading expenses and amortisation of acquired intangible assets, is management's measure of the overall profitability of the Group's operating activities. The Group's reportable segments are Motor and Home and these delivered a trading profit of £51.5m (1H 2016: £37.1m).

 

The Group generated a trading profit from discontinued operations (Gocompare.com) of £nil (1H 2016: £13.2m). Gocompare.com was demerged from the Group on 3 November 2016.

 

Reconciliation of trading profit from continuing operations to profit before tax from continuing operations

 

 

1H

2017

£m

 

1H

2016

£m

Trading profit from continuing operations

51.5

37.1

Non-trading costs

(1.0)

(0.4)

Finance costs

(4.3)

(4.3)

Amortisation of acquired intangible assets

(1.1)

(1.2)

Profit before tax from continuing operations

45.1

31.2

 

The Group incurred £4.3m in finance costs (1H 2016: £4.3m) relating to the £125.0m of 6.75% ten year tier two Subordinated Notes issued on 19 December 2014 ("the Notes").

 

Profit after tax

 

Profit after tax from continuing operations

 

The Group's profit after tax from continuing operations increased 43.1% to £36.5m (1H 2016: £25.5m) largely driven by an improvement in the underwriting and non-underwritten additional service revenues performance.

 

Profit after tax from discontinued operations

 

The Group generated a profit after tax from discontinued operations (Gocompare.com) of £nil (1H 2016: £5.2m). Gocompare.com was demerged from the Group on 3 November 2016.

 

Earnings per share

 

Earnings per share

 

Earnings per share increased 17.6% to 8.7 pence (1H 2016: 7.4 pence).

 

Earnings per share from continuing operations

 

Earnings per share from continuing operations increased by 42.6% to 8.7 pence (1H 2016: 6.1 pence) in line with the increase in profit after tax from continuing operations.

 

Dividend per share

 

An interim dividend of 4.1 pence per share (1H 2016: 3.0 pence per share) has been declared and approved by the Board. The interim dividend is comprised of a base dividend of 2.9 pence per share and a special dividend of 1.2 pence per share. The dividend has been set with reference to the Group's profit after tax and allows for the approximate proportion of one-third (interim dividend) and two-thirds (final dividend), respectively.

 

The ex-dividend date is 31 August 2017, the record date is 1 September 2017 and the payment date is 13 October 2017. These dates are in respect of both the base and special interim dividend.

 

Cash flow

 

 

1H

2017

1H

2016

 

£m

 

£m

Profit after tax

36.5

30.7

 

 

 

Net cash generated from:

 

 

Operating activities

61.3

36.8

Investing activities

(3.4)

(5.2)

Financing activities

(48.0)

(34.6)

 

 

 

Net increase / (decrease) in cash and cash equivalents

9.9

(3.0)

 

 

 

Cash and cash equivalents at the beginning of the year

25.5

31.9

 

 

 

Cash and cash equivalents at the end of the period

35.4

28.9

 

 

The Group's cash and cash equivalents at the end of the period are £35.4m (1H 2016: £28.9m).

 

Operating activities were a net inflow of £61.3m (1H 2016: £36.8m) largely driven by the Group's strong premium growth in the first half of the year.

 

Investing activities were a net outflow of £3.4m (1H 2016: £5.2m) and reflects the Group's investment in property, plant, equipment and software.

 

Financing activities were a net outflow of £48.0m (1H 2016: £34.6m) and includes the Group's 2016 final dividend that was paid in May 2017 of £43.9m (1H 2016: £30.4m).

 

The Group's cash flow statement can be found on page 14.

 

Investments

 

The Group deploys a conservative investment strategy, with the primary objectives of capital preservation and maintaining liquidity. Through better alignment of the investment and liability durations, the Group is able to deliver appropriate returns while minimising earnings and capital volatility. 

 

Strategic investment allocations

 

The Group's investment portfolio is in the process of transitioning towards the following strategic asset allocations and target returns. The Group's target allocations and target returns are outlined below:

 

Investment categories

Target allocations

Gross target returns

Cash & Liquidity

5%

0.1%

Claims backed

65%

1.0%

Surplus

30%

3.0%

 

As at the 30 June 2017 the Group held the following investments:

 

 

1H 2017

FY 2016

 

%

£m

%

£m

Total

100

912.7

100

862.9

 

 

 

 

 

Cash & Liquidity

7%

65.2

5%

45.5

Liquidity funds

 

29.8

 

20.0

Cash

 

35.4

 

25.5

Claims backed

62%

563.7

64%

551.8

Liquidity funds

 

79.7

 

46.2

Fixed income

 

484.0

 

505.6

Surplus

31%

283.8

31%

265.6

Liquidity funds

 

136.2

 

143.0

Equity

 

52.7

 

42.5

Fixed income

 

94.9

 

80.1

 

The Group's total assets under management are 5.8% higher at £912.7m (FY 2016: £862.9m including derivative financial liabilities) reflecting the Group's strong premium growth in the period.

 

The Cash & Liquidity portfolio is accessible cash for operational activities and is inclusive of a buffer for adverse events. The allocation of 7% is in line with the Board approved liquidity risk appetite.

 

The Claims backed portfolio is constructed with reference to the expected future cost of the Group's technical liabilities, as defined under Solvency II. The Group continues to designate newly acquired assets as available-for-sale ("AFS") to minimise the impact of interest rate changes on earnings. As at 30 June 2017 the Group has designated £297.2m as AFS and £266.5m as fair value through profit and loss.

 

The Surplus portfolio seeks to deliver returns while investing in a manner that reflects the Group's risk appetite, in particular with reference to its solvency capital. The strategic asset allocation review continues and the Group expects to allocate surplus liquidity funds on a prudent basis in due course. The remaining assets are invested across a mixture of fixed income and equities.

 

The Group's total investment duration was 2.4 years (FY 2016: 2.6 years) and the Group continues to take a proactive approach to match its asset and liability durations under Solvency II.

 

Fixed income

 

1H

2017

FY

2016

 

£m

£m

Total fixed income

579

586

Corporate bonds

264

281

Covered / residential mortgage backed securities

38

15

Government bonds

191

206

Floating rate notes

86

84

 

 

Fixed income credit risk quality

 

1H

2017

%

FY

2016

%

AAA

14

18

AA

33

35

A

18

22

BBB

25

16

Below BBB or not rated

10

9

 

The credit risk quality of the fixed income portfolio remains strong with 65% held in assets rated 'A' or above.

 

Reserving

 

The Group holds claims reserves, to cover the future cost of settling claims that have been incurred but not settled at the balance sheet date, whether already known to the Group or not yet reported, net of associated reinsurance recoveries.

 

For known periodic payment orders ("PPOs") and potential PPO awards, indexed cash flow projections are carried out in order to estimate an ultimate cost on a gross and net of reinsurance basis. The Group currently has 10 PPOs. The cash flow projections were undertaken on a discounted basis.

 

Due to the inherent uncertainties in reserving, the Group adopts a prudent approach to reserving through reserving in excess of the actuarial best estimate. Over time the inherent uncertainties in the actuarial best estimate reduce and the Group releases the margin above the best estimate. The Group's current reserve margin is comfortably in excess of its actuarial best estimate.

 

On 27 February 2017, the Lord Chancellor changed the Ogden discount rate from plus 2.5% to minus 0.75%, effective 20 March 2017. The impact of this change on the Group's 2017 performance was not material.

 

The Group benefited from strong favourable development of prior accident year reserves, with total prior year releases of £14.7m in 1H 2017 (1H 2016: £20.5m). The favourable development represents 4.6% of net earned premium (1H 2016: 7.8%).

 

Reinsurance

 

The Group purchases reinsurance as a risk transfer mechanism to mitigate risks that are outside the Group's appetite for individual claim or event exposure and to reduce the volatility caused by large individual and accumulation losses. By doing so, the Group reduces the impact that an event can have on its capital position and its underwriting results in both Motor and Home.

 

Currently, the Group has in place excess of loss reinsurance programmes for its Motor and Home underwriting activities. The purpose of these programmes is to provide cover for both individual large losses, for Motor and Home, and accumulation losses arising from natural and other catastrophe events for Home. Motor and Home reinsurance treaties are in place covering all years in which the Group has underwritten policies in each line of business.

 

The Group's Motor reinsurance treaty was renewed on 1 July 2017:

 

Layer

Placement

£1m x £1m

85%

Unlimited x £2m

100%

 

The like-for-like cost increase of the programme was 33%, equating to an increase of £10 per vehicle, as a consequence of the change in the Ogden discount rate in February 2017 from 2.5% to minus 0.75%. The increase in reinsurance costs compares favourably to market estimates and reflects the Group's low risk approach to underwriting, low large loss propensity and strong, long term relationships with its reinsurer panel. The Group has successfully implemented price increases across its Motor portfolio in the first half of the year to help mitigate against the increased cost of reinsurance.

 

The Home treaty was renewed on 1 July 2017 with no material changes to the programme.

 

The Group's reinsurance programmes are reviewed on an annual basis and capital modelling is used to identify the most appropriate structure and risk retention profile, taking into account the Group's business objective of minimising volatility and the prevailing cost and the availability of reinsurance in the market.

 

The Group has no quota share reinsurance or co-insurance arrangements in place.

 

Capital

 

The Group seeks to manage its capital in order to maintain a level of capitalisation and solvency to ensure that regulatory requirements are met with an appropriate buffer and that there is sufficient capital available to fund profitable growth opportunities.

 

The solvency capital requirement ("SCR") is the level of capital the Group is required to hold to meet its obligations if a 1 in 200 year event were to occur in the next 12 months. The Group's normal operating range of coverage of its SCR is 130-150%. The capital surplus above the SCR provides an appropriate level of capital coverage and should enable the Group to continue to meet its regulatory capital requirements. The Group adopts the standard formula to calculate its capital requirements under Solvency II.

 

The Group's capital position, after allowing for the interim dividend, is outlined below:

 

 

 

 

 

1H

2017

£m

 

FY

2016

£m

Own Funds

 

405

355

Tier 1

 

279

238

Tier 2

 

126

117

Solvency Capital Requirement

 

265

233

Coverage ratio

 

153%

152%

 

The figures quoted for 1H 2017 are estimated and unaudited.

 

As at 30 June 2017, the coverage ratio of the Group's SCR was 153% (FY 2016: 152%). The Group's coverage ratio includes adjustments, which in aggregate, if an adjustment was not made, would increase the Group's interim coverage ratio compared to the position as at the year end. These primarily relate to timing differences in respect of the Group's interim dividend and the loss absorbing capacity of deferred taxes. Were the Group not to adjust for these factors, the coverage ratio would be 157%.

 

Own Funds comprise Tier 1 and Tier 2 qualifying capital. The Notes meet the qualifying criteria of a Tier 2 capital instrument and qualify up to a maximum of 50% of the SCR. The quality of the Group's capital remains strong with 69% in Tier 1 and 31% in Tier 2.

 

Solvency Capital Requirement

 

The Group's SCR allocation by risk type, based upon the undiversified capital requirement, can be seen below:

 

 

 

1H

2017

 

FY

2016

Underwriting risk

 

71%

72%

Market risk

 

19%

18%

Operational risk

 

7%

8%

Credit risk

 

3%

2%

 

The main risk driver is underwriting, consisting of premium, reserve and catastrophe risk, reflecting the capital requirements of the core business activities for the Group.

 

Sensitivities

 

The Group's capital structure is positioned to minimise the impact that adverse capital events have on its ability to meet its solvency capital requirements, were they to occur. The adverse capital events below are outlined to demonstrate the Group's capital resilience to such events. 

 

 

Impact on coverage*

 

Motor loss ratio 5ppts worse

(9)ppts

Yield curve 50bps lower

(1)ppts

Equities fall 25%

(2)ppts

Credit spreads widen 50bps

(2)ppts

1987 Hurricane

(3)ppts

 

* Capital coverage movements are stated after earnings, tax and dividend impact.

 

Dividend Policy

                                                              

The Group's dividend policy is to target a base dividend of 50% of profit after tax and enhance the base dividend with a further special dividend, if the Group has sufficient capital and distributable reserves, after allowing for an appropriate level of capital coverage of the Group's SCR and future growth opportunities. The Board remains committed to returning excess capital to shareholders where it does not believe it can utilise retained capital for further profitable growth.

 

The interim dividend will be paid in October of the relevant financial year and the final dividend in May of the following financial year, in the approximate proportions of one-third and two-thirds respectively.

 

Segmental Reporting

 

In 2017, the Group changed its reportable segments to Motor and Home to reflect the lines of business it underwrites and the contribution they deliver to the Group's performance. In 2016, the Group's reportable segments were: Motor underwriting; Home underwriting; Non-underwritten additional services; Investments; and prior to the demerger of Gocompare.com, Price Comparison.

 

Outlook

 

The Group's 2017 guidance provided in March, assuming stable market conditions and normal weather, was: growth in premiums and in-force policies at 15-20% and 5-10%, respectively; the combined operating ratio to be in the region of 96-98%; and non-underwritten additional services revenues to grow ahead of in-force policies in line with the trend seen in the second half of 2016. The Group now expects to deliver results at the positive end of this guidance.

 

The Group's ambition is to grow to 3 million in-force policies by 2020.

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended

 

6 months ended

 

Year
ended

 

 

 

 

 

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

Notes

 

£m

 

£m

 

£m

Gross written premiums

 

 

 

393.3

 

320.4

 

655.0

Gross earned premiums

 

 

 

341.7

 

284.6

 

598.0

Earned premiums, ceded to reinsurers

 

 

(25.0)

 

(20.2)

 

(43.1)

Earned premiums, net of reinsurance

 

 

 

316.7

 

264.4

 

554.9

Investment return and instalment interest

 

 

27.7

 

24.6

 

55.7

Other income

 

 

 

19.9

 

17.4

 

36.9

Total income

 

 

 

364.3

 

306.4

 

647.5

 

 

 

 

 

 

 

 

 

Claims incurred and claims handling expenses

 

(272.3)

 

(221.0)

 

(509.5)

Claims incurred recoverable from reinsurers

 

 

36.0

 

11.7

 

74.4

Claims incurred, net of reinsurance

 

11

 

(236.3)

 

(209.3)

 

(435.1)

Insurance expenses

 

 

 

(69.6)

 

(52.9)

 

(113.3)

Other operating expenses

 

 

 

(9.0)

 

(8.7)

 

(17.7)

Total expenses

 

 

 

(314.9)

 

(270.9)

 

(566.1)

Finance costs

 

 

 

(4.3)

 

(4.3)

 

(8.7)

Profit before tax

 

 

 

45.1

 

31.2

 

72.7

Taxation expense

 

7

 

(8.6)

 

(5.7)

 

(13.2)

Profit from continuing operations, net of tax

 

 

36.5

 

25.5

 

59.5

Profit from discontinued operations, net of tax

 

                 -

 

5.2

 

209.7

Profit attributable to the owners of the parent

 

36.5

 

30.7

 

269.2

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

 

Revaluation of land and buildings

 

 

 

                 -

 

                 -

 

0.3

Tax relating to items that will not be reclassified

 

                 -

 

                 -

 

0.0

 

 

 

 

                 -

 

                 -

 

            0.3

 

 

 

 

 

 

 

 

 

Items that are or may be reclassified to profit or loss:

 

 

 

 

Available-for-sale financial assets - change in fair value

 

0.5

 

4.6

 

1.9

Tax relating to items that are reclassified

 

 

0.1

 

(0.7)

 

(0.3)

 

 

 

 

0.6

 

3.9

 

1.6

Total comprehensive income for the period attributable to owners of the parent

 

 

 

 

 

 

 

37.1

 

34.6

 

271.1

 

 

 

 

 

 

 

 

 

Earnings per share (pence per share)

 

 

 

 

 

 

 

 

- ordinary shares, basic

 

6

 

8.7

 

7.4

 

64.6

- ordinary shares, diluted

 

6

 

8.6

 

7.4

 

64.3

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations (pence per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- ordinary shares, basic

 

6

 

8.7

 

6.1

 

14.3

- ordinary shares, diluted

 

6

 

8.6

 

6.1

 

14.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 15 to 31 form part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                   

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of financial position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

As at

 

As at

 

 

 

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

 

 

 

 

Notes

 

£m

 

£m

 

£m

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Goodwill and intangible assets

 

8

 

13.6

 

176.6

 

12.7

 

Deferred acquisition costs

 

 

 

42.5

 

35.1

 

37.8

 

Property, plant and equipment

 

9

 

30.3

 

35.2

 

32.5

 

Financial investments

 

 

10

 

878.2

 

760.8

 

839.0

 

Reinsurance assets

 

 

11

 

322.5

 

230.0

 

291.7

 

Insurance and other receivables

 

 

 

277.5

 

248.0

 

245.6

 

Cash and cash equivalents

 

10

 

35.4

 

28.9

 

25.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

1,600.0

 

1,514.6

 

1,484.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

0.3

 

0.3

 

0.3

 

Share premium account

 

 

 

45.5

 

44.0

 

45.4

 

Capital redemption reserve

 

 

 

44.9

 

44.9

 

44.9

 

Other reserves

 

 

 

 

3.5

 

4.9

 

2.9

 

Retained earnings

 

 

 

 

173.6

 

252.4

 

178.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

267.8

 

346.5

 

271.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Insurance contract liabilities

 

11

 

1,098.8

 

914.7

 

1,002.3

 

Borrowings

 

 

10

 

122.9

 

122.7

 

122.8

 

Insurance and other payables

 

 

 

98.7

 

100.7

 

77.3

 

Deferred tax liabilities

 

 

 

 

1.6

 

10.2

 

3.2

 

Derivative financial liabilities

 

10

 

0.9

 

11.1

 

1.6

 

Current tax liabilities

 

 

 

 

9.3

 

8.7

 

6.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

1,332.2

 

1,168.1

 

1,213.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

 

1,600.0

 

1,514.6

 

1,484.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 15 to 31 form part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Registered number: 07064312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of changes in equity

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium account

Capital redemption reserve

Other reserves

Retained earnings

Total equity

 

 

 

 

 

 

 

 

 

 

Notes

£m

 

£m

 

£m

 

£m

 

£m

 

£m

6 months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

At 1 January 2017

 

0.3

 

45.4

 

44.9

 

2.9

 

178.0

 

271.5

Profit for the year

 

         -

 

         -

 

         -

 

         -

 

36.5

 

36.5

Other comprehensive income

 

         -

 

         -

 

         -

 

0.6

 

         -

 

0.6

Total comprehensive income

 

         -

 

         -

 

         -

 

0.6

 

     36.5

 

37.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

 

 

Issue of share capital

 

0.0

 

0.1

 

         -

 

         -

 

 

0.1

Share-based payments

 

         -

 

         -

 

         -

 

         -

 

2.3

 

2.3

Deferred tax on share-based payments

 

         -

 

             -

 

                 -

 

            -

 

0.7

 

0.7

 

 

 

 

 

 

Dividends

 

5

         -

 

         -

 

         -

 

         -

 

(43.9)

 

(43.9)

Total transactions with owners

 

0.0

 

0.1

 

         -

 

         -

 

(40.9)

 

(40.8)

At 30 June 2017

 

0.3

 

45.5

 

44.9

 

3.5

 

173.6

 

267.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2016

 

 

 

 

 

 

 

 

 

 

At 1 January 2016

 

0.3

 

44.0

 

44.9

 

1.0

 

251.1

 

341.3

Profit for the year

 

         -

 

         -

 

         -

 

         -

 

30.7

 

30.7

Other comprehensive income

 

         -

 

         -

 

         -

 

3.9

 

           -  

 

3.9

Total comprehensive income

 

         -

 

         -

 

         -

 

3.9

 

     30.7

 

34.6

 

 

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

 

 

Share-based payments

 

         -

 

         -

 

         -

 

         -

 

0.9

 

0.9

Deferred tax on share-based payments

 

         -

 

             -

 

                 -

 

             -

 

0.1

 

0.1

 

 

 

 

 

 

Dividends

 

5

         -

 

         -

 

         -

 

         -

 

(30.4)

 

(30.4)

Total transactions with owners

 

         -

 

         -

 

         -

 

         -

 

(29.4)

 

(29.4)

At 30 June 2016

 

0.3

 

44.0

 

44.9

 

4.9

 

252.4

 

346.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 December 2016

 

 

 

 

 

 

 

 

 

 

At 1 January 2016

 

0.3

 

44.0

 

44.9

 

1.0

 

251.1

 

341.3

Profit for the year

 

         -

 

         -

 

         -

 

         -

 

269.2

 

269.2

Other comprehensive income

 

         -

 

         -

 

         -

 

1.9

 

         -

 

1.9

Total comprehensive income

 

         -

 

         -

 

         -

 

1.9

 

269.2

 

271.1

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

Issue of share capital

 

0.0

 

1.4

 

         -

 

         -

 

           -

 

1.4

Share-based payments

 

         -

 

         -

 

         -

 

         -

 

2.4

 

2.4

Deferred tax on share-based payments

 

         -

 

             -

 

                 -

 

            -

 

(0.0)

 

(0.0)

 

 

 

 

 

 

Demerger of Gocompare.com

 

         -

 

         -

 

         -

 

         -

 

(301.8)

 

(301.8)

Dividends

 

5

         -

 

         -

 

         -

 

         -

 

(42.9)

 

(42.9)

Total transactions with owners

 

0.0

 

1.4

 

         -

 

         -

 

(342.3)

 

(340.9)

At 31 December 2016

 

0.3

 

45.4

 

44.9

 

2.9

 

178.0

 

271.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 15 to 31 form part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of cash flows

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec  2016

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

Notes

 

£m

 

£m

 

£m

 

Profit after tax for the period

 

 

 

36.5

 

30.7

 

269.2

 

Adjustments to reconcile profit after tax to net cash flows:

 

 

 

 

 

 

 

-

Finance costs

 

 

 

4.3

 

4.3

 

8.7

 

-

Depreciation and revaluation of property, plant and equipment

 

 

2.4

 

1.0

 

3.8

 

 

9

 

 

 

 

-

Amortisation of intangible assets

 

8

 

2.3

 

8.7

 

15.2

 

-

Share scheme charges

 

 

 

2.3

 

0.9

 

2.4

 

-

Non-cash gain on demerger of Gocompare.com

 

 

               -

 

               -

 

(213.6)

 

-

Taxation expense

 

 

 

8.6

 

7.0

 

16.0

 

-

Total investment return

 

 

 

(7.8)

 

(8.0)

 

(20.7)

 

-

Instalment interest

 

 

 

(21.8)

 

(17.8)

 

(37.7)

 

-

Loss on the disposal of property, plant and equipment

 

               -

 

              -

 

0.5

 

Operating cash flows before movements in working capital, tax and interest paid

 

26.8

 

26.8

 

43.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of financial investments

 

 

 

436.5

 

157.7

 

358.1

 

Purchase of financial investments

 

 

 

(475.5)

 

(176.7)

 

(465.2)

 

Interest, rent and dividends received less investment  management expenses on financial investments

 

 

 

 

 

 

 

 

7.1

 

6.2

 

15.9

 

Instalment interest received

 

 

 

25.9

 

20.7

 

41.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in working capital:

 

 

 

 

 

 

 

 

 

-

Increase  in insurance liabilities including reinsurance assets, unearned premium reserves and deferred acquisition costs

 

 

 

 

 

 

 

 

 

61.0

 

13.5

 

36.5

 

-

Increase in insurance and other receivables

 

(32.8)

 

(31.3)

 

(49.3)

 

-

Increase in trade and other payables including insurance payables

 

18.5

 

26.6

 

31.8

 

 

 

 

 

 

Taxation paid

 

 

 

(6.2)

 

(6.7)

 

(17.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash generated / (used) in operating activities

 

61.3

 

36.8

 

(3.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment, and software

8, 9

 

(3.4)

 

(5.2)

 

(8.3)

 

 

 

 

 

 

 

 

 

Net cash outflow from the demerger of Gocompare.com

 

              -

 

               -

 

(17.4)

 

Net cash used in investing activities

 

 

 

(3.4)

 

(5.2)

 

(25.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows (used in) / generated from financing activities

 

 

 

 

 

 

Proceeds on issue of ordinary shares

 

 

 

0.1

 

0.0

 

1.3

 

Interest paid on loans

 

10

 

(4.2)

 

(4.2)

 

(8.4)

 

Gocompare.com debt raise

 

 

 

              -

 

               -

 

        73.1

 

Dividends paid

 

5

 

(43.9)

 

(30.4)

 

(42.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used in) / generated from financing activities

 

(48.0)

 

(34.6)

 

23.1

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

9.9

 

(3.0)

 

(6.4)

 

Cash and cash equivalents at the beginning of the year

 

 

 

 

 

 

 

 

25.5

 

31.9

 

31.9

 

Cash and cash equivalents at the end of the period

 

35.4

 

28.9

 

25.5

 

The notes on pages 15 to 31 form part of these financial statements.

 

 

 

 

 

                                                   

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

.

General information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc is a company incorporated in England and Wales. Its registered office is The Observatory, Reigate, Surrey, RH2 0SG.

 

 

 

 

 

 

The nature of the Group's operations is the writing of general insurance for private cars and homes. The Company's principal activity is that of a holding company.

 

 

 

 

 

 

All of the Company's subsidiaries are located in the United Kingdom, except for esure S.L.U., which is incorporated in Spain.

 

 

 

 

2

.

Accounting policies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis of preparation

 

 

 

 

 

 

 

 

 

These condensed consolidated interim financial statements present the Group's financial information for the six months ended 30 June 2017 and have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU). 

 

 

 

 

 

 

 

 

They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016 which are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.

 

 

 

 

 

 

 

 

 

 

At a General Meeting on 1 November 2016, the Company's shareholders approved the demerger of Gocompare.com plc ('Gocompare.com') and on 3 November 2016 the demerger was completed. 

 

 

 

 

 

 

Under IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations there is no impact on the interim financial statements as a result of this demerger, other than a change in the presentation of the results of the Gocompare.com business to discontinued operations in 2016.  There is no impact on the statement of financial position. 

 

 

 

 

 

 

 

 

 

 

These condensed consolidated interim financial statements have been presented in Sterling and rounded to the nearest hundred thousand. Throughout these condensed consolidated financial statements any amounts which are less than £0.05m are shown by 0.0, whereas a dash (-) represents that no balance exists.

 

 

 

 

 

 

 

 

 

 

As required by the FCA's Disclosure and Transparency Rules, the condensed set of financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2016.

 

 

 

 

 

 

 

 

 

 

These condensed consolidated interim financial statements have been prepared on a going concern basis. The Directors have assessed the Group's prospects and viability for the next 12 months and beyond, including cash flow forecasts and regulatory capital surpluses. Based on this robust assessment, the Directors confirm that they have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least the next 12 months.

 

 

 

 

 

 

 

 

 

 

 

 

The financial information contained in these interim results does not constitute statutory accounts of esure Group plc within the meaning of Section 435 of the Companies Act 2006. Statutory accounts for esure Group plc for the year ended 31 December 2016 have been delivered to the Registrar of Companies. The auditor has reported on the accounts, their report:

 

 

 

 

 

 

 

 

(i)

was unqualified;

 

 

(ii)

did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and

 

 

 

 

 

(iii)

did not constitute a statement under Section 498 (2) or (3) of the Companies Act 2006.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                       

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

.

Critical accounting judgements and estimates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group's 2016 Annual Report and Accounts provide details of significant judgements and estimates used in the application of the Group's accounting policies. There have been no significant changes to the judgements and estimates during the interim period.

 

 

 

 

 

 

 

 

Key sources of estimation uncertainty and critical judgements in applying the Group's accounting policies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance contract liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimates have to be made both for the expected ultimate cost of claims reported at the reporting date and for the expected ultimate cost of claims incurred but not reported ('IBNR') at the reporting date. It can take a significant period of time before ultimate claims cost can be established with certainty for some types of claims.

 

 

 

 

 

 

 

 

 

 

The ultimate cost of outstanding claims is estimated by carrying out standard actuarial projections. These techniques use past claims information and development patterns of these claims to project the expected future claims cost both for notified and non-notified claims.

 

 

 

 

 

 

 

 

Similar judgements, estimates and assumptions are employed in the assessment of adequacy of provisions for unearned premium and hence whether there is a requirement for an unexpired risk provision.

 

 

 

 

 

 

 

 

Please refer to note 11 for additional details.

 

 

4

.

Segmental information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Differences to the Group's 2016 annual report and accounts in the basis of segmentation

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group makes decisions on customer acquisition and retention based on contribution.  In addition to the underwriting contribution from Motor and Home, a diversified suite of additional insurance products and services provide opportunities to deliver enhanced customer contributions.

 

 

 

 

 

 

 

 

In order to facilitate the management of the Group the reporting to the Board of Directors has changed and the reportable segments under IFRS 8 Operating Segments reflect this change.  The 2016 segments have been restated to reflect the new segmental reporting. 

 

 

 

 

 

 

 

 

Operating segments

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group has two operating segments as described below. These segments are also the Group's reportable segments and represent the manner in which the business is regularly reported to the Group's executive and Board of Directors.

 

 

 

 

 

 

 

 

Motor underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

This segment incorporates the revenues and expenses attributable to the Group's Motor insurance underwriting activities inclusive of additional insurance products underwritten by the Group and related non-underwritten additional services.  Investment income is allocated to the segment on the basis of premium income. 

 

 

 

 

 

 

 

 

 

 

Home underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

This segment incorporates the revenues and expenses attributable to the Group's Home insurance underwriting activities and related non-underwritten additional services.  Investment income is allocated to the segment on the basis of premium income.

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

.

Segmental information (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segmental revenues, expenses and other information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

An analysis of the Group's results by reportable segment is shown below:

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

 

 

 

 

 

 

 

Six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Motor

 

Home

 

Continuing operations total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£m

 

£m

 

£m

 

 

Gross written premiums

351.3

 

42.0

 

393.3

 

 

 

 

 

 

 

 

 

 

 

Earned premiums, net of reinsurance

275.5

 

41.2

 

316.7

 

 

Investment income

 

5.3

 

0.6

 

5.9

 

 

Instalment interest income

19.2

 

2.6

 

21.8

 

 

Other income

17.1

 

2.8

 

19.9

 

 

 

 

 

 

 

 

 

 

 

Total income

317.1

 

47.2

 

364.3

 

 

 

 

 

 

 

 

 

 

 

Net incurred claims

(200.1)

 

(25.4)

 

(225.5)

 

 

Claims handling costs

(9.3)

 

(1.5)

 

(10.8)

 

 

Insurance expenses

(53.3)

 

(16.3)

 

(69.6)

 

 

Other operating expenses

(6.3)

 

(0.6)

 

(6.9)

 

 

 

 

 

 

 

 

 

 

 

Total expenses

(269.0)

 

(43.8)

 

(312.8)

 

 

 

 

 

 

 

 

 

 

 

Trading profit

48.1

 

3.4

 

51.5

 

 

 

 

 

 

 

 

 

 

 

Amortisation of acquired intangibles

 

 

 

 

 

(1.1)

 

 

Non-trading costs

 

 

 

 

(1.0)

 

 

Finance costs

 

 

 

 

(4.3)

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

 

 

45.1

 

 

Tax expense

 

 

 

 

(8.6)

 

 

 

 

 

 

 

 

 

 

 

Profit after taxation

 

 

 

 

 

36.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expense ratio

 

22.7%

 

43.3%

 

25.4%

 

 

Net loss ratio

 

72.6%

 

61.6%

 

71.2%

 

 

Combined operating ratio

 

95.3%

 

104.9%

 

96.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

.

Segmental information (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segmental revenues, expenses and other information (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

 

 

 

 

 

 

 

 

Six months ended 30 June 2016 (restated)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Motor

 

Home

 

 

 

 

 

 

£m

 

£m

 

£m

 

 

 

Gross written premiums

 

275.7

 

44.7

 

320.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums, net of reinsurance

 

222.5

 

41.9

 

264.4

 

 

 

Investment income

 

6.0

 

0.8

 

6.8

 

 

 

Instalment interest income

 

15.4

 

2.4

 

17.8

 

 

 

Other income

 

14.9

 

2.5

 

17.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income

 

258.8

 

47.6

 

306.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Net incurred claims

 

(170.1)

 

(28.0)

 

(198.1)

 

 

 

Claims handling costs

 

(9.4)

 

(1.8)

 

(11.2)

 

 

 

Insurance expenses

 

(38.5)

 

(14.4)

 

(52.9)

 

 

 

Other operating expenses

 

(6.5)

 

(0.6)

 

(7.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

(224.5)

 

(44.8)

 

(269.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading profit

 

34.3

 

2.8

 

37.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of acquired intangibles

 

 

 

 

 

(1.2)

 

 

 

Non-trading costs

 

 

 

 

 

(0.4)

 

 

 

Finance costs

 

 

 

 

 

(4.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

 

 

 

31.2

 

 

 

Tax expense

 

 

 

 

 

(5.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit after taxation

 

 

 

 

 

25.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expense ratio

 

21.5%

 

38.7%

 

24.3%

 

 

 

Net loss ratio

 

76.4%

 

66.8%

 

74.9%

 

 

 

Combined operating ratio

 

97.9%

 

105.5%

 

99.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

.

Segmental information (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segmental revenues, expenses and other information (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

 

 

 

 

 

 

 

 

 

Year ended 31 December 2016 (restated)

 

 

 

 

 

 

 

 

 

 

 

Home

Continuing operations total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Motor

 

 

 

 

 

 

 

 

£m

£m

£m

 

 

 

Gross written premiums

563.7

91.3

655.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums, net of reinsurance

470.6

84.3

554.9

 

 

 

Investment income

 

 

 

 

16.1

2.0

18.1

 

 

 

Instalment interest income

32.6

5.0

37.6

 

 

 

Other income

31.5

5.4

36.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income

550.8

96.7

647.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net incurred claims

(356.4)

(55.6)

(412.0)

 

 

 

Claims handling costs

(19.5)

(3.6)

(23.1)

 

 

 

Insurance expenses

(85.8)

(27.5)

(113.3)

 

 

 

Other operating expenses

(13.4)

(1.1)

(14.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses

(475.1)

(87.8)

(562.9)

 

 

 

 

 

 

 

 

 

 

Trading profit

75.7

8.9

84.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of acquired intangibles

 

 

 

 

(2.3)

 

 

 

Non-trading costs

 

 

(0.9)

 

 

 

Finance costs

 

 

(8.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation from continuing operations

72.7

 

 

 

Tax expense

 

 

(13.2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit after taxation from continuing operations

59.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expense ratio

 

 

 

 

22.4%

36.9%

24.6%

 

 

 

Net loss ratio

 

 

 

 

75.7%

66.0%

74.2%

 

 

 

Combined operating ratio

 

 

 

 

98.1%

102.9%

98.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

.

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the six months ended 30 June 2017, a dividend per share of 10.5p (£43.9m) was declared by the Board of Directors as a final dividend for the year ended 31 December 2016.  Subsequent to 30 June 2017, an interim dividend per share of 4.1p (£17.1m) has been declared by the Board of Directors (2016: interim dividend per share of 3.0p (£12.5m)).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

.

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

Basic earnings per share is calculated by dividing the earnings attributable to the owners of the Group and the weighted average of Ordinary Shares in issue during the period, excluding Ordinary Shares held as employee trust shares.  A calculation is also shown based on the earnings from continuing operations attributable to the owners of the Group.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share is calculated by dividing the earnings attributable to the owners of the Group by the weighted average of Ordinary Shares in issue during the period adjusted for any dilutive potential Ordinary Shares. A calculation is also shown based on the earnings from continuing operations attributable to the owners of the Group.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The difference between the basic and diluted weighted average number of shares outstanding during the year, being 5,428,444 (31 December 2016: 2,009,742; 30 June 2016: 1,370,598), relates to the dilutive potential of the share-based payment arrangements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended

 

6 months ended

 

Year
 ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

 

 

 

 

£m

 

£m

 

£m

 

 

 

Profit after taxation

 

 

36.5

 

30.7

 

269.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares (million) - basic

417.9

 

416.1

 

416.6

 

 

 

 

 

 

 

 

 

 

 

Unadjusted earnings per share - basic (pence)

8.7

 

7.4

 

64.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares (million) - diluted

423.4

 

417.5

 

418.6

 

 

 

 

 

 

 

 

 

 

 

Unadjusted earnings per share - diluted (pence)

8.6

 

7.4

 

64.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations earnings per share

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended

 

6 months ended

 

Year
ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

 

 

 

 

£m

 

£m

 

£m

 

 

 

Profit from continuing operations, net of tax

36.5

 

25.5

 

59.5

 

 

 

Weighted average number of Ordinary Shares (million) - basic

417.9

 

416.1

 

416.6

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - basic (pence)

8.7

 

6.1

 

14.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares (million) - diluted

423.4

 

417.5

 

418.6

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - diluted (pence)

8.6

 

6.1

 

14.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

.

Earnings per share (continued) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

 

Audited

 

 

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

 

 

 

 

£m

 

 

 

£m

 

£m

 

 

Profit from discontinued operations, net of tax

 

-

 

 

 

5.2

 

 

 

209.7

 

 

Weighted average number of Ordinary Shares (million) - basic

 

417.9

 

 

 

416.1

 

 

 

416.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from discontinued operations - basic (pence)

 

-

 

 

 

1.2

 

 

 

50.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of Ordinary Shares (million) - diluted

 

423.4

 

 

 

417.5

 

 

 

418.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from discontinued operations - diluted (pence)

 

-

 

 

 

1.2

 

 

 

50.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

.

Taxation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group incurred an effective tax rate of 19.1% in the six months ended 30 June 2017 (30 June 2016: 18.3%; 31 December 2016: 18.2%) on continuing operations. The prevailing UK tax rate at 30 June 2017 is 19%.           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

.

Goodwill and intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

Goodwill

 

Software

 

Acquired brands

 

Customer relationships

 

Total

 

 

 

 

 

 

 

 

 

 

£m

 

 

£m

 

 

 

£m

 

 

 

£m

 

£m

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2016

127.7

 

 

10.5

 

65.1

 

21.5

 

224.8

 

 

Additions in the year

-

 

 

5.2

 

-

 

-

 

5.2

 

 

Disposals in the year

-

 

 

(0.2)

 

-

 

-

 

(0.2)

 

 

Demerger of Gocompare.com

(127.7)

 

 

(1.7)

 

(40.9)

 

(10.2)

 

(180.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016

-

 

 

13.8

 

24.2

 

11.3

 

49.3

 

 

Additions in the period

-

 

 

3.2

 

-

 

-

 

3.2

 

 

Disposals in the period

-

 

 

-

 

-

 

-

 

-

 

 

As at 30 June 2017

-

 

 

17.0

 

24.2

 

11.3

 

52.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortisation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2016

-

 

 

4.7

 

23.5

 

15.1

 

43.3

 

 

Amortisation for the year

-

 

 

2.3

 

9.0

 

4.3

 

15.6

 

 

Disposals in the year

-

 

 

(0.2)

 

-

 

-

 

(0.2)

 

 

Demerger of Gocompare.com

-

 

 

(1.1)

 

(12.9)

 

(8.1)

 

(22.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016

-

 

 

5.7

 

19.6

 

11.3

 

36.6

 

 

Amortisation for the period

-

 

 

1.2

 

1.1

 

-

 

2.3

 

 

Disposals in the period

-

 

 

-

 

-

 

-

 

-

 

 

As at 30 June 2017

-

 

 

6.9

 

20.7

 

11.3

 

38.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016

-

 

 

8.1

 

4.6

 

-

 

12.7

 

 

As at 30 June 2017

-

 

 

10.1

 

3.5

 

-

 

13.6

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

.

Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and buildings

 

Fixtures, fittings and equipment

 

Total

 

 

 

Reviewed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£m

 

£m

 

£m

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2016

 

 

 

12.9

 

28.5

 

41.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions in the year

 

 

 

-

 

3.4

 

3.4

 

 

 

Demerger of Gocompare.com

 

-

 

(2.3)

 

(2.3)

 

 

 

Disposals in the year

 

 

 

-

 

(1.5)

 

(1.5)

 

 

 

Revaluation of land and buildings

 

0.0

 

-

 

0.0

 

 

 

As at 31 December 2016

 

 

 

12.9

 

28.1

 

41.0

 

 

 

Additions in the period

 

 

 

-

 

0.2

 

0.2

 

 

 

Disposals in the period

 

 

 

-

 

-

 

-

 

 

 

As at 30 June 2017

 

 

 

12.9

 

28.3

 

41.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2016

 

 

 

-

 

6.6

 

6.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation for the year

 

 

 

0.1

 

3.9

 

4.0

 

 

 

Demerger of Gocompare.com

 

-

 

(0.9)

 

(0.9)

 

 

 

Disposals in the year

 

 

 

-

 

(1.1)

 

(1.1)

 

 

 

Revaluation of land and buildings

 

(0.1)

 

-

 

(0.1)

 

 

 

As at 31 December 2016

 

 

 

-

 

8.5

 

8.5

 

 

 

Depreciation for the period

 

 

 

0.0

 

2.4

 

2.4

 

 

 

Disposals in the period

 

 

 

-

 

-

 

-

 

 

 

As at 30 June 2017

 

 

 

0.0

 

10.9

 

10.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2016

 

 

 

12.9

 

19.6

 

32.5

 

 

 

As at 30 June 2017

 

 

 

12.9

 

17.4

 

30.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

.

Financial assets and liabilities

 

 

 

 

 

 

 

 

 

 

                                                                                                                     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.1.  Financial assets

 

 

 

Reviewed

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

As at

 

As at

 

 

 

 

 

 

30 June 2017

30 June 2016

 

31 Dec 2016

 

 

 

Financial investments designated at FVTPL:

 

£m

 

 

£m

 

£m

 

 

 

Shares and other variable yield securities and units in unit trusts

 

48.3

 

 

39.7

 

39.3

 

 

 

 

 

 

 

 

 

Debt securities and other fixed income securities

 

277.7

 

 

491.3

 

394.5

 

 

 

Deposits with credit institutions

245.7

 

 

181.6

 

209.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial investments held for trading:

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

4.9

 

 

0.0

 

0.1

 

 

 

Financial investments at FVTPL

576.6

 

 

712.6

 

 

 

643.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AFS financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities and other fixed income securities

297.2

 

 

44.5

 

 

 

192.6

 

 

 

Shares in unquoted equity investments

4.4

 

 

3.7

 

 

 

3.2

 

 

 

Total financial investments:

878.2

 

 

760.8

 

 

 

839.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance and other receivables

227.6

 

 

197.7

 

 

 

198.2

 

 

 

Cash and cash equivalents

 

 

35.4

 

 

28.9

 

 

 

25.5

 

 

 

Total financial assets

 

 

1,141.2

 

 

987.4

 

 

 

1,062.7

 

                                         

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

.

Financial assets and liabilities (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.1.  Financial assets (continued)

 

 

 

 

 

 

 

 

Investments bearing credit risk and cash and cash equivalents, are summarised below, together with an analysis by credit rating as at the reporting date:

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

As at

 

As at

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

 

 

 

£m

 

£m

 

£m

 

 

Derivative financial instruments             

 

4.9

 

0.0

 

0.1

 

 

Debt securities

 

574.9

 

535.8

 

587.1

 

 

Deposits with credit institutions

 

245.7

 

181.6

 

209.3

 

 

Cash and cash equivalents

 

35.4

 

28.9

 

25.5

 

 

Investments bearing credit risk and cash and cash equivalents

 

860.9

 

746.3

 

822.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAA

 

 

329.4

 

273.2

 

300.9

 

 

AA

 

 

188.2

 

185.4

 

204.8

 

 

A

 

 

141.9

 

154.1

 

155.5

 

 

BBB

 

 

142.3

 

56.8

 

94.0

 

 

Below BBB or not rated

 

59.1

 

76.8

 

66.8

 

 

Investments bearing credit risk and cash and cash equivalents

 

860.9

 

746.3

 

822.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares and other variable yield securities and units in unit trusts do not bear credit risk. Cash and cash equivalents are "A" rated.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group's allocation to BBB assets has increased in the period as the Group continues to implement outcomes from its recent strategic asset allocation review which aims to deliver efficient risk adjusted returns.

 

 

 

 

 

 

The movement in the AFS assets consists of:

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

As at

 

As at

 

As at

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

 

 

 

£m

 

£m

 

£m

 

 

AFS assets held at start of period

195.8

 

2.4

 

2.4

 

 

Additions in period/year

103.7

 

41.2

 

191.5

 

 

Fair value gains in other comprehensive income

0.5

 

4.6

 

1.9

 

 

Fair value gains reclassified to profit and loss on disposal

1.6

 

                     -

 

                    -

 

 

AFS assets held at reporting date

301.6

 

48.2

 

195.8

 

 

 

 

 

 

 

 

 

 

 

 

In accordance with the Group's investment strategy additional assets acquired during the period with a fair value of £103.7m were designated as AFS.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the period, in order to maintain an appropriate match between the Group's claims backing assets and liabilities, certain assets held as AFS were disposed of. Upon disposal, a fair value gain of £1.6m was recycled to the profit and loss statement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

.

Financial assets and liabilities (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.2.  Financial liabilities

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

As at

 

As at

 

 

 

 

 

 

30 June 2017

 

30 June 2016

 

31 Dec 2016

 

 

Financial liabilities held for trading:

 

 

£m

 

£m

 

£m

 

 

Derivative financial instruments

 

 

0.9

 

11.1

 

1.6

 

 

Other financial liabilities:

 

 

 

 

 

 

 

 

 

Borrowings (see below)

 

 

122.9

 

122.7

 

122.8

 

 

Insurance and other payables

 

 

23.3

 

24.8

 

17.1

 

 

Total financial liabilities

 

 

147.1

 

158.6

 

141.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reviewed

 

Reviewed

 

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

As at

 

As at

 

 

 

 

 

 

31 Dec

2017

 

30 June 2016

 

31 Dec 2016

 

 

Borrowings

 

 

£m

 

£m

 

£m

 

 

10 year Subordinated Notes

 

 

122.9

 

122.7

 

122.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Total borrowings

 

 

122.9

 

122.7

 

122.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments are due within one year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3.  Fair value estimation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In accordance with IFRS 13 Fair Value Measurement financial instruments reported at fair value and revalued properties have been categorised into a fair value measurement hierarchy as follows:

 

 

 

 

 

 

Quoted prices (unadjusted) in active markets for identical assets or liabilities - (Level 1)

 

 

Inputs to Level 1 fair values are quoted prices (unadjusted) in active markets for identical assets. An active market is a market in which transactions for the asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

 

 

 

 

 

 

 

 

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) - (Level 2)

 

 

 

 

Fair value measurements that are derived from inputs other than quoted prices included in Level 1, if all significant inputs required to fair value an instrument are observable, would result in the instrument being included in Level 2. The majority of assets classified as Level 2 are over-the-counter corporate bonds, where trades are less frequent owing to the nature of the assets. Inputs used in pricing the Group's level 2 assets include:

 

 

 

 

 

 

 

 

 

 

 

 

quoted prices for similar (i.e not identical) assets in active markets;

 

 

 

 

 

 

 

 

 

 

 

 

 

quoted prices for identical or similar assets in markets that are not active, the prices are not current, or price quotations vary among market makers, or in which little information is released publicly;

 

 

 

 

 

inputs that are derived principally from, or corroborated by, observable market data by correlation; and

 

 

for forward exchange contracts, the use of observable forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.

 

 

 

 

 

 

 

 

The Group's policy, should there be a change to the valuation techniques or level of activity in the market in which that asset is traded, is to transfer the asset between levels effective from the beginning of the reporting period. In line with the requirements of IFRS 13 Fair Value Measurement, the Group classifies all debt securities as Level 2 assets with the exception of Government backed securities which are classified as Level 1 unless they are illiquid.

 

 

 

 

 

 

 

 

 

 

 

 

There have been no changes in respect of the categorisation of debt securities between Levels 1 and 2 during the period.

 

 

 

esure Group plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the financial statements

 

 

 

 

 

 

 

 

 

For the six months ended 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

.

Financial assets and liabilities (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3.  Fair value estimation (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inputs for the asset or liability that are not based on observable market data (unobservable inputs) -  (Level 3)

 

 

 

 

Unobservable inputs have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date (or market information for the inputs to any valuation models). As such, unobservable inputs reflect assumptions about the inputs that market participants would use in pricing the asset.

 

 

 

 

 

 

 

 

 

 

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. The Group held Level 3 AFS financial assets of £4.4m as at 30 June 2017 (31 December 2016: £3.2m; 30 June 2016: £3.7m), representing a joint venture which has been valued using a discounted cash flow valuation model.

 

 

 

 

 

 

 

 

Under IFRS 13, land and buildings with a carrying value at 30 June 2017 of £12.9m (31 December 2016: £12.9m; 30 June 2016: £12.9m) are classified as Level 3 assets. Owner-occupied properties are stated at their revalued amounts, as assessed by qualified external valuers annually, all with recent relevant experience. These values are assessed in accordance with the relevant parts of the current RICS Valuation Standards in the UK (''Red Book''). The valuer's opinion of fair value was primarily derived using comparable recent market transactions on arm's length terms. No sensitivity analysis has been performed due to the nature of the valuation.

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the Group's assets and liabilities measured at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total fair value

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

 

 

Financial assets

 

 

£m

 

£m

 

£m

 

£m

 

 

Derivative financial instruments

 

 

           -

 

       4.9

 

           -

 

4.9

 

 

Equity securities

 

 

     48.3

 

           -

 

           -

 

48.3

 

 

Debt securities

 

 

     80.9

 

   196.8

 

           -

 

277.7

 

 

Deposits with credit institutions

 

 

          -  

 

   245.7

 

           -

 

245.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

 

 

 

   129.2

 

   447.4

 

           -

 

576.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

 

   124.8

 

   172.4

 

           -

 

297.2

 

 

Unquoted equity securities

 

 

           -

 

           -

 

       4.4

 

4.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total AFS financial assets

 

 

   124.8

 

   172.4

 

       4.4

 

    301.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and buildings

 

 

           -

 

           -

 

     12.9

 

12.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

           -

 

0.9

 

           -

 

0.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total financial liabilities reported at fair value

           -

 

0.9

 

           -

 

0.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

esure Group plc