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Ecclesiastical Insurance Office plc
Annual Report & Accounts 2022
Building a
Movement
for Good
Financial Statements Other InformationGovernance Strategic Report
Contents
Financial Statements Other Information
Building a Movement for Good 2
Foreword 3
Section one Strategic report 4
Ecclesiastical at a glance 5
Our businesses 6
Chair’s Statement 7
Chief Executive’s Report 9
Our business model and strategy 13
Strategy in action 14
Responsible business report highlights 18
Key performance indicators 36
Chief Financial Officer’s Report 41
Risk Management Report 45
Principal risks 48
Going Concern and Viability Statement 58
Non Financial Information Statement 60
Section 172 Statement 61
Section two Governance 61
Board of Directors 63
Directors’ Report 68
Corporate Governance 71
Finance & Investment Committee Report 85
Group Nominations Committee Report 87
Risk Committee Report 92
Group Audit Committee Report 94
Group Remuneration Report 103
Section three Financial Statements 119
Independent auditors’ report to the members 120
of Ecclesiastical Insurance Office plc
Consolidated statement of profit or loss 125
Consolidated and parent statement of comprehensive income 125
Consolidated and parent statement of changes in equity 126
Consolidated and parent statement of financial position 126
Consolidated and parent statement of cash flows 127
Notes to the financial statements 127
Section four Other Information 164
Directors, executive management and company information 165
Notice of meeting 165
Building a
Movement
for Good
Giving thanks
June 8th 2022, was an unforgettable day.
It was the day of our Thanksgiving Service at
Westminster Abbey, held to mark our £100m
giving milestone. It was an amazing day,
celebrating a tremendous achievement
– one only made possible with the help of
some truly extraordinary people.
It was humbling to stand among many of these
remarkable people at the service, a service held in the
presence of His Royal Highness The Prince of Wales,
now His Majesty King Charles III. Many of those who
have benefited from our giving attended the service
too – people whose lives have been transformed. And
it’s this transformational power, this desire to effect
positive change, that lies at the heart of the Benefact
Group.
Since 1887, our mission has been to transform the lives
of those in need. Owned by a charity, the Benefact
Trust, it’s why we give all our available profits to
charity. Of course, we can only keep giving with the
help of our customers, brokers, colleagues, partners
and people who take part in our Movement for Good
Awards. And for that, I want to say an enormous thank
you. You can learn more about the Awards on page 22.
Our Thanksgiving Service was our way of recognising
your united efforts. Seeing so many people gathered to
celebrate what we have achieved together, filled me not
just with gratitude but with hope and indeed a belief that
we can do even more. Together, we can keep building
a Movement for Good.
Mark Hews
Group Chief Executive
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
Section One
Strategic Report
Ecclesiastical at a glance 5
Our businesses 6
Chair’s Statement 7
Chief Executive’s Report 9
Our business model and strategy 13
Strategy in action 14
Responsible business report highlights 18
Key performance indicators 36
Chief Financial Officer’s Report 41
Risk Management Report 45
Principal risks 48
Going Concern and Viability Statement 58
Non Financial Information Statement 60
Section 172 Statement 61
The Strategic Report, Governance, Financial
Statements and Other Information sections
form the Ecclesiastical Insurance Office
plc Annual Report and Accounts 2022.
The Strategic Report contains information
about the Group and how we run our
businesses, our strategy, business model,
key performance indicators, our approach to
risk and the responsibilities we have to our
people, communities and the planet.
The Strategic Report is only part of the
Annual Report and Accounts which was
approved by the Board of directors.
By order of the Board
Mark Hews
Group Chief Executive 16 March 2023
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Ecclesiastical at a glance Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 5
Leading
insurer for
the Anglican
Church
in all our territories
Protecting
churches,
synagogues,
mosques and
Hindu, Sikh
and Buddhist
temples across
our territories
A leading
multi-faith insurer
Since 1994
Ansvar’s Community Education Program
has helped over 100 different charities
and not for profit organisations supporting
the education and life skill development
needs of disadvantaged young Australians.
Proudly part of
Benefact Group,
a specialist financial
services group that
gives all its available
profits to charity
and good causes
98%+
UK overall customer satisfaction
across all the sectors we measure*
*Based on FY 2022 results for Home New Business and Renewals – Ecclesiastical UK;
Church Renewals; Ecclesiastical claims; Risk Management; EFAS
Movement
for Good
Through our Movement
for Good Awards
– our biggest ever giving
campaign – we gave over
£1m to help a wide range
of charitable causes
£4.8m
loss before tax
(£79.2m profit before
tax in previous year)
Gross written premium
(£486.2m in previous year)
£558.6m
Rated best
insurer by
UK brokers
in the charity,
commercial
heritage,
education and
faith sectors*
*15th consecutive year – 200 broker
interviews (randomly selected from BIBA
approved panel) carried out by FWD - 2022
In Canada our
Community Impact
Grants supported
projects that make
a positive impact
on the community
Trusted to protect over
£300bn of property around
the world
Ecclesiastical at a glance
Our specialist brokers
provide tailored
insurance products
particularly for customers in the
high net worth, farming and rural
estates, equine, animal trades, and
specialist motor insurance sectors
3rd largest
corporate donor
to charity
The Benefact Group,
is already the UK’s 3rd largest
corporate donor* and it aims
to be the largest
*DSC – The guide to UK Company Giving 2023-24
Best Ethical
Investment
Provider
Voted by the Financial
Adviser community
at the Moneyfacts Life
& Pensions Awards
for 14 consecutive
years (2009 – 2022)
– EdenTree Investment
Management
£198m+
One of the UK’s
largest charitable
donors. We are
proud of our
ambition to give
more than £250m
to good causes.
Since 2014 we have given over
£198m in grants and donations
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Chair’s Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 6Strategic Report – Our businesses Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 6
This Annual Report & Accounts is for Ecclesiastical Insurance Office plc which is sometimes
abbreviated to EIO. The following terms are used throughout this report:
Terms Definition
The ‘Company’, ‘Parent’ or
‘Ecclesiastical’
Ecclesiastical Insurance Office plc (EIO)
The ‘Ecclesiastical Insurance Office
Group’ or ‘Group’
Ecclesiastical Insurance Office plc together with
its subsidiaries
‘Benefact Group’, ‘wider group’ or
‘Benefact Family’
Benefact Group plc, the parent company of Ecclesiastical
Insurance Office plc, together with its subsidiaries
Benefact Trust Benefact Trust Limited, the ultimate parent undertaking of
Ecclesiastical Insurance Office plc
The Ecclesiastical Insurance Office Group is part of the wider Benefact Group which is
organised into the divisions Specialist Insurance, Investment Management, and Broking and
Advisory. All are underpinned by our specialist knowledge and a reputation for delivering an
outstanding service to our customers.
A number of changes have recently been made within the Ecclesiastical Insurance Office Group
and Benefact Group to better align our businesses across the three divisions and support
our strategic objectives. On 30 December 2022, SEIB Insurance Brokers was disposed of to
an associate of the Benefact Group, Lloyd & Whyte Group Limited. On 3 January 2023 the
investment management business, EdenTree, and the financial advisory business Ecclesiastical
Financial Advisory Services were transferred from the Ecclesiastical Insurance Office Group to
the Benefact Group. Note 16 to the financial statements within this Annual Report & Accounts
contains further information.
Following these changes, the Ecclesiastical Insurance Office Group now exclusively represents
our Specialist Insurance division providing products to businesses, organisations and retail
customers, both directly and through intermediaries. The Investment Management and Broking
and Advisory divisions, included in the Benefact Group, along with the Specialist Insurance
division in the Group, all primarily operate from the UK and their associated businesses are:
Our businesses
Specialist Insurance
Ecclesiastical UK / Ansvar UK / Ansvar Australia / Ecclesiastical Canada / Ecclesiastical Ireland
/ Ecclesiastical Life
Our award-winning insurance businesses offer insurance products and risk management services
to customers in the faith, heritage, charity, education and real estate markets. We have particular
expertise in valuing and protecting distinctive properties both old and new – from cathedrals to
concert halls, schools to stately homes and iconic modern buildings to youth hostels.
Ecclesiastical Life provides long-term policies to support funeral planning products.
We also provide a discrete range of specialist products including household insurance for
churches and congregations and fine art insurance to the high net worth market. Committed to
being the most trusted and ethical specialist financial services group, we are proud that our UK
home insurance has again been awarded the First Place Gold Ribbon in this year’s independent
Fairer Finance Customer Experience ratings, for the 16th consecutive time.
Investment Management¹
EdenTree Investment Management and EdenTreee Asset Management (EdenTree)
With over 30 years of experience in responsible and sustainable investing, our investment
management team manages and sells Environmental, Social and Governance investment
products to institutional customers, including the charity and faith markets, and to retail
customers through the advisory market. EdenTree also manages the majority of the Group’s
financial investments. This year, for the 14th consecutive year, EdenTree celebrated winning
‘Best Ethical Investment Provider’ at the Moneyfacts Investment Life & Pensions Awards.
Broking and Advisory¹
Ecclesiastical Financial Advisory Services (EFAS) / Ecclesiastical Planning Services Ltd
(EPSL) / Lycetts Insurance Brokers (Lycetts) / Lycetts Financial Services
Our specialist brokers, Lycetts, provide tailored insurance products for customers, particularly
those in the high net worth, farming and rural estates, equine, animal trades, and specialist
motor insurance sectors.
EFAS and Lycetts Financial Services offer financial advice to businesses and individual
customers including Church of England clergy. EPSL markets and administers prepayment
funeral plans under the Perfect Choice brand.
¹The businesses in these divisions are owned by the Benefact Group plc
Strategic Report – Chair’s Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 7
‘None of our
achievements
would be possible
without the
commitment
of our colleagues
and I want to thank
them for all their
efforts in 2022.’
Governance Financial Statements Other InformationStrategic Report
It also saw the successful launch of the
Benefact brand, providing not just a new
name for Ecclesiastical’s parent Group
and Trust, but a renewed sense of energy
and focus on our purpose to contribute to
the greater good of society. Speaking to
customers and brokers over the past few
months, it’s clear the new name resonates
and has landed well in our markets. It’s a
fantastic achievement that we should all be
proud of.
Of course, 2022 also brought its challenges.
The return to prosperity that many of us
hoped for after the pandemic failed to
materialise as economic and political events
pushed us into a cost-of-living crisis, while
the devastating war in Ukraine continues
to take its toll on innocent lives. In these
difficult times, our mission to help those
most in need in society is more important
than ever.
In response to both challenges, our
charitable owner the Benefact Trust moved
swiftly to support charities on the frontline.
In March it announced £1m of funding to
give immediate and longer-term support to
people fleeing the devastating conflict in
Ukraine. In December, the Trust announced
a £500,000 funding package to support
charities working to keep people safe and
warm this winter.
This giving is only possible thanks to the
customers, brokers and colleagues that
support Ecclesiastical Insurance Office
Group, which gives all its available profits
to charities and good causes. I’m pleased
to say we granted £20m to Benefact Trust
in 2022. Alongside this we gave £2.7m
through our direct giving programmes in the
UK, Ireland and Canada, helping thousands
of charities to make a difference in their
communities.
This combined giving brings us closer to our
ambition of being the UK’s biggest corporate
donor with a cumulative target of giving
£250m to good causes by the end of 2025.
Results
Despite the challenging economic conditions,
our businesses performed well in 2022. We
continued to attract and retain prestigious
customers across all divisions, which helped
to drive double-digit premium growth. We also
reported an improved underwriting result,
with a profit of £27.4m. We reported an overall
loss before tax of £4.8m as our results were
affected by investment losses, due to falls in
global markets.
Achievements and reflections
I’m now in my fourth year as Chairman and
I’m delighted with the progress we’ve made
as a business. We’ve invested considerably
over the past few years, from launching new
brands for the General Insurance business
and the Group, a new head office, and
new systems and technology to improve
the broker and customer experience. The
launch of our new General Insurance
system last year was a major milestone
and an incredible achievement by everyone
involved in the project.
Despite the challenging environment, 2022 was a year of celebration for
Ecclesiastical Insurance. We marked the achievement of giving £100m to
good causes over the past five years, with a Service of Thanksgiving at
Westminster Abbey - an incredible moment in the Company’s 136-year
history that saw hundreds of beneficiaries and supporters, among them King
Charles III, come together to celebrate our Movement for Good.
Chair’s Statement
Strategic Report – Chair’s Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 8Strategic Report – Chair’s Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 8
Governance Financial Statements Other InformationStrategic Report
‘We want to build
a workplace
where everyone
feels welcome
and can realise
their full potential,
while helping
to make a
difference to the
lives of our
customers and
communities.’
I’m also pleased that we announced our
climate commitments in spring last year,
outlining our roadmap to achieve net zero by
2040. In my report last year, I talked about
the importance of responding to the issues
of sustainability and climate change and as
a responsible business, we are committed
to making a positive environmental impact
in the world. Much work has taken place
over the past 12 months to understand our
climate impact and identify the measures we
need to take to reduce our carbon emissions.
This has included training sessions for
the Board, which have helped deepen our
understanding of how we can do the right
thing as a business.
None of our achievements would be
possible without the commitment of
our colleagues and I want to thank
them for all their efforts in 2022. Our
customer satisfaction and Net Promoter
Scores remain high and the Group again
achieved Best Companies two-star status,
demonstrating outstanding employee
engagement. It’s always pleasing to see
this commitment and effort is recognised by
others and this was reflected in 18 awards
last year including products, service quality,
risk management, marketing and customer
engagement.
I was fortunate to visit our offices in
Australia and Ireland and spent time with
our excellent teams, learning how they’re
working hard to improve our services to our
brokers and customers.
Looking ahead
While some companies are retrenching
in the face of economic difficulties,
Ecclesiastical has set itself an ambitious
target to double in size. The strategy
announced last year provides a clear
roadmap to achieve this stretching goal
and I’m excited by the potential within the
business to grow.
Across our businesses, we have identified
new areas of growth, both in existing
segments and in new ones, and we have the
ambition and capacity to benefit from these
opportunities.
This year will see continued investment in
new systems to improve the customer and
broker experience, and we will continue to
invest in new technology to drive innovation
and growth to enable yet more giving to
charities and communities. In particular,
we will continue to invest in our risk
management offering so that we can help
to protect our customers from new and
emerging threats.
We will also continue to invest in our
people as we seek to become a world-class
employer. We want to build a workplace
where everyone feels welcome and can
realise their full potential, while helping
to make a difference to the lives of our
customers and communities.
Board activity
For the first time since I became Chairman,
there have been no changes to the Board in
the past 12 months. It is a genuine pleasure
to work with such a talented group of
individuals who bring a range of different
experience and perspectives. I would like to
thank all of them for their service over the
past year.
The future
It is an immense privilege to be a part of
a business with such a special purpose of
contributing to the greater good of society.
With the new strategy in place, I believe we
are well positioned to grow our business so
that we can give more to help those most in
need.
David Henderson
Chair
‘Ecclesiastical
Insurance is now
proudly part of the
Benefact Group,
a family of financial
services businesses
with a common goal
to give all available
profits to good
causes. We are
here to protect
communities and
transform lives.’
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Chief Executive’s Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 9
For over 135 years, Ecclesiastical has understood what matters most to our
customers and communities.
Chief Executive’s Report
Trusted to protect and preserve much of the
nation’s irreplaceable heritage and history,
we’re distinguished in the financial services
industry by our specialist expertise, our
caring approach and our unique charitable
purpose. Unlike many other businesses,
we prefer to measure success not in sales
or profits but in the amount we give to
communities to help transform lives for the
better. Guided by this purpose, we are driven
to grow the business, so that we may give
even more to good causes.
Last year was a transformational year
for our Ecclesiastical Group family. We
launched a new brand, prepared for a
new Group structure, new strategy, new
governance framework, new systems, and
strengthened our leadership.
In particular, our immediate owner,
Ecclesiastical Insurance Group, became
Benefact Group, and our ultimate parent,
Allchurches Trust, became Benefact Trust.
The launch of the Benefact brand is a
momentous occasion for our charity-owned
Group and at the start of 2023 Benefact Group
announced a simplified structure to build on
this to help us realise our growth ambitions.
This new structure, which aligns our
businesses to our three divisions -
specialist expert Insurance, responsible
and sustainable Investment Management
and Broking & Advisory - provides the
foundation for our family of businesses to
grow even more, to give even more.
By simplifying and streamlining the Benefact
Group structure, we have created dynamic,
empowered businesses with clarity of focus,
a compelling purpose, and the ideal operating
environment for each of our new operating
divisions to thrive. This is in stark contrast to
some other business models where decision
making can be centralised, slow and prioritise
profits ahead of customer’s interests.
Ecclesiastical Insurance is now proudly part
of the Benefact Group, a family of financial
services businesses with a common goal
to give all available profits to good causes.
We are here to protect communities and
transform lives.
Building a movement for good
A few years ago we set ourselves (and
subsequently met) a stretching ambition to
give £100m to charity.
This level of giving means that Benefact
Group is now the third largest corporate
donor to charity in the UK. An amazing
achievement when you consider that there
are over five million companies.
It means that our ultimate parent company,
Benefact Trust, is now one of the biggest
grant-making charities in the UK and is
able to provide transformative funding to
charities both in the UK and abroad as, for
example, they did in response to the crisis in
Ukraine. We thank the Trust enormously for
the outstanding work they undertake.
Indeed, our combined giving has helped
thousands of charities in recent years,
changing countless lives and communities
for the better. Many of those charities, along
with His Majesty King Charles III, joined us
at Westminster Abbey last summer for a
Service of Thanksgiving to celebrate our
£100m giving milestone. It was a proud
moment for our business and, for me, a rare
moment to reflect on our incredible progress.
Hearing moving testimonials about the life
changing work of the charities we support,
and taking inspiration from the Parable of
the Good Samaritan, we would like to go
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Chief Executive’s Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 10
further and hold out a hand to many,
many more.
We have therefore raised our ambition, and
have set a new cumulative target to give
£250m for good causes by the end of 2025.
Delivering for our customers
Our giving is only possible thanks to the
support of our brokers, customers, investors,
business partners, and the tremendous
efforts of our colleagues. For generations,
we have been trusted to protect many of
the UK’s iconic treasures, from palaces,
castles and stately homes to cathedrals,
churches and schools. Today we insure
world-renowned buildings such as St Pauls
Cathedral, Royal Albert Hall, Chatsworth
House and Westminster Abbey, the home of
the coronation. We pride ourselves on our
specialist expertise in our markets and our
commitment to customer service.
As an insurance company, our goal is to
protect our customers through our specialist
risk-management advice and insurance
cover. But as a trusted expert committed to
creating a movement for good, our dedication
to our customers goes beyond that.
Many of our church and charity customers
have seen their incomes fall due to the
challenging economic climate and we
recognise the difficulties they face. We
have established resources to help these
organisations raise much-needed funds
and we invest significantly in our risk-
management services to help customers
reduce the risk of losses occurring. And if
the worst happens, our expert claims team
are always there for our customers when
they need us most.
As the UK’s leading insurer of Grade I
listed buildings, we are passionate about
protecting Britain’s heritage. We know the
key to protecting our built environment from
climate change is adaptation and resilient
repairs. However, the challenge for heritage
buildings, compared to modern properties, is
that adaptation can be more complicated to
do sensitively. We are working to be at the
forefront of this issue and collaborating with
partners like English Heritage to research
and understand this important issue better.
The threat of climate change is one of the
biggest challenges facing our customers
and communities. We are committed to
making a positive environmental impact and
we recognise the importance of reducing our
own climate impact as well as supporting
our customers to reduce theirs. Last year
we announced our climate commitments
to achieve net zero by 2040 and we are
making good progress against our targets,
which are detailed in our Responsible
Business Report.
Providing exceptional service
Our customers tell us that our expert
service and our compassion makes us
stand out in the insurance industry. In
the UK, Ecclesiastical retained its top spot
in the Fairer Finance Home Insurance
league table for a record sixteenth time
and remains the UK’s most trusted home
insurance provider. It was also named Risk
Management Specialist Company of the
Year – Large in the CIR Risk-Management
Awards. Ecclesiastical Canada was named
one of Canada’s Top Employers for Young
people for the 10th consecutive year and
won Excellence in Claims Service in the
Insurance Business Canada Awards.
Also, for a second year, I’m delighted
the independent research consultancy,
Gracechurch, put Ecclesiastical ahead of
all other insurers for claims service. In
addition, an incredible 98% of customers are
satisfied with the service they receive from
Ecclesiastical, whether that is making a claim
or experiencing our risk management service.
The Net Promoter Score, which measures
how likely a customer is to recommend
a company’s products and services, for
Ecclesiastical Insurance puts us ahead of
many well-known and respected brands.
Financial performance
Despite the challenging external
environment, our businesses performed
strongly in 2022. In general insurance
we saw excellent premium growth of
15%, driven by new business wins, strong
retention and inflationary pressures. In
Investment Management we saw record
gross inflows of over £1.2bn as we launched
new funds; net inflows place us well inside
the top 10 fastest growing asset managers
in 2022.
Given our overall financial strength and
excellent solvency position, we hold
a significant portion of our investment
portfolio in real assets such as property and
infrastructure. Whilst we expect this to lead
to positive real returns over the long term,
it can introduce some volatility into annual
reported results.
With our long term approach we look
through and beyond this short term volatility,
however it did mean that, in 2022, our strong
operating performance was offset by fair
value losses from our assets of around
£94.1m on our investment portfolio, leading
to an overall Group loss before tax of £4.8m
(2021: £79.2m profit). In addition to these fair
value losses, the results include a total credit
of £30m from a fair value gain on an equity
investment and a credit arising from a change
to our discounting accounting policy. More
detail on these items is included within the
Chief Financial Officer’s Report.
The GI Underwriting result was a profit of
£27.4m, a significant increase on the previous
year of £8.8m, which was lower due to
strengthening of PSA reserves. This gives
a combined operating ratio of 91%, which
compares favourably in the insurance market.
We were able to give a further £22.7m to
charitable causes, including Benefact Trust,
in 2022. This takes our cumulative giving to
£198.2m against our £250m target.
We remain in a strong capital position and
I’m pleased that our credit rating agencies
affirmed our excellent and strong credit
ratings in the second half of 2022. In line
with normal business practice, we routinely
review our rating agencies and we have now
appointed Moody’s to join AM Best as our
two agencies for the next period.
Strategic ambitions
To paraphrase T.S. Eliot...
It is only when one tries to go too far, that
one finds out how far it is possible to go.
Inspired by the impact of our giving on
so many, we are extremely ambitious for
the future. We have launched an exciting
new strategy to invest, energise and grow
our Group across all our divisions and
all our territories. With a strengthened
rate environment, tightened insurance
Governance Financial Statements Other InformationStrategic Report
‘We are
committed to
making a positive
environmental
impact and we
recognise the
importance of
reducing our own
climate impact as
well as supporting
our customers to
reduce theirs.’
Strategic Report – Chief Executive’s Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 11
capacity and an increasing market focus
on Environmental, Social and Governance
(ESG) performance, the timing to push for
growth has arguably never been better.
This year will see continued investment
in new systems, helping to deliver even
better service and value for our customers
and brokers. We will pursue growth
opportunities, both in our existing sectors
and in new niches where we can leverage
our specialist expertise. We will make
significant investment in digital propositions,
helping to build our distribution capability
and reach, as we seek to find ways to meet
our customers’ changing needs. We will
also continue to prioritise risk management
innovation, exploring new ways to protect
our customers from losses, particularly from
the growing threat of climate change.
To achieve all of this we need to be at our
best personally and professionally and we
will continue to foster a culture where all
our colleagues have the space to grow and
perform to their full potential.
For a second year running, we were named
an “Outstanding” company to work for by
Best Companies following the results of our
annual engagement survey. Our ambition
is to become a world-class employer,
attracting, retaining and developing the best
talent in the industry by creating career
opportunities for every colleague, no matter
what their background.
On behalf of the Board and thousands of
our beneficiaries, we say a heartfelt, sincere
“thank you” to all our customers, business
partners and dedicated colleagues for their
exceptional support. I very much hope that
they are inspired when they look back at
what has been achieved, and the positive
impact that they have had. I certainly am.
Join our movement for good
With a new brand, a clear strategy for
growth and a renewed sense of confidence,
we go into 2023 energised and inspired
to work together for our customers and
society.
To those who are reading about Benefact
Group for the first time, I invite you to
join us, whether as a colleague, customer
or business partner, and experience for
yourself how it is possible to do business
differently. There is no doubt that, together,
we are creating something very special
– a movement for good that touches and
transforms lives in our homes, in our
communities, in this country and abroad.
As we said when we filled Westminster
Abbey in the presence of His Majesty King
Charles III in June last year… “Individually
we can all make a difference. Together, we
can perform miracles.”
By order of the Board
Mark Hews
Group Chief Executive
Dumfries House
Cumnock, Scotland
One of Britain’s most beautiful stately homes, Dumfries House
in Scotland was saved in 2007 by the intervention of His Royal
Highness the Prince of Wales, Duke of Rothesay, now His Majesty
King Charles III. Today, it’s a popular tourist attraction open to
the public, a wedding and events venue and a five-star country
guest house.
It is also the home of The Prince’s Foundation, which runs a diverse
programme of education and training for all ages and backgrounds,
and regenerates and cares for places where communities can thrive
and which visitors can enjoy.
We are proud to insure this important historic building
– whose broad diversity of risks demonstrates our specialist
expertise. We are proud too to support The Prince’s Foundation’s
Governance Financial Statements Other InformationStrategic Report
Benefact Group, our parent company, is a diverse family of specialist
financial services businesses, driven by our shared ambition to do
right by our customers and clients, and united by a common purpose
to give all available profits to charity and good causes.
Being owned by a charity – Benefact Trust – places good intentions
at the foundations of our Group. Benefact aims to be a ‘different kind
of business’, prioritising trust, ethics and philanthropic donations over
the acquisition of higher profits.
Benefact Group is organised on a divisional basis; Ecclesiastical
Insurance Office plc is part of the general insurance division,
alongside divisions for Investment Management, Broking and
Advisory and Shared Services.
Recent changes have been made to the legal entity structure to
optimise the composition and alignment of these divisions and enable
greater connectivity of the ambitions across the Group.
The Benefact Group’s overarching strategy encompasses all divisions
and businesses to ensure alignment and strategic focus. Whether in
specialist insurance, investment management, broking or advisory,
every business in the Benefact family is a specialist in their respective
field, built on genuine insight and ethics. Together we offer products
and services that help protect in the present, pre-empt the possible
and invest in a healthier financial future.
This is illustrated by three strategic aims:
The most trusted specialist insurer
Our aim is to be the most trusted specialist insurer, offering
unrivalled expertise and knowledge in our core markets, with
appealing customer propositions and an excellent claims service
that meet the concerns and needs of our customers and business
partners.
The most trusted specialist adviser
We aim to be the most trusted specialist adviser in our chosen
markets, delivering excellent service with long-term sustainable
relationships with clients and insurer partners. Providing our
customers with the best independent and impartial insurance or
financial advice in order to meet their needs.
The best ethical investment provider
We aim to be the best ethical investment provider and thought
leader on socially responsible investment, building on industry-
leading reputation and consistent, proven approach to deliver
long-term investment success. Building on an impressive track
record, we will continue to enhance our proposition and our ethical
credentials, leading the debate on the ethical investment issues
that matter to our customers.
Our charitable purpose drives our strategic goal of being the most
trusted and ethical business in our chosen markets. It shapes the way
we do business, particularly our focus on doing the right thing for our
customers and business partners. It creates an environment where
sustainable, long-term value generation is prized over short-term results.
Thanks to our long-term approach, we have built long-standing
relationships with our customers and brokers, as demonstrated
by their high levels of trust, loyalty and engagement with our
business. These enduring relationships have helped us build deep
understanding and expertise within our sectors, allowing us to
provide highly valued products and services.
These factors combine to support our drive to deliver sustainable and
growing returns over the long term, creating long-term value for our
charitable owner and demonstrating that a distinctly ethical, specialist
financial services group can succeed in competitive markets.
Strategic Report – Our business model and strategy Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 13
Our business model and strategy
‘Benefact aims
to be a ‘different
kind of business’,
prioritising
trust, ethics and
philanthropic
donations over
the acquisition of
higher profits.’
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Strategy in action Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 14
Striving to be the most trusted and ethical business in our
chosen markets
Delivered valued and trusted approach across the diverse family of specialist
financial services businesses, driven by our shared ambition to do right by our
customers and clients
Continued to attract and retain prestigious customers across all divisions of the
Group
High levels of retention and customer advocacy across all divisions of the
Group with strong satisfaction and excellent Net Promoter Scores
External recognition for this distinctive approach with eighteen awards
including products, service quality, risk management, marketing and customer
engagement
Helped charity and church communities to raise funds with tailored fundraising
support in the UK, Ireland and Canada
Seeking to be the most trusted specialist insurer, operating with the highest
ethical standards
• Demonstrated strong business growth, launched new Art & Private Client product
and several new schemes to support customer needs
• Reflected needs of customers by providing specialist risk management advice on
diverse topics including temporary accommodation for refugees, flood safety, and
church tower tours
• Offered targeted support for broker partners with wellbeing and mental health
guidance, and the ‘Covered in 15’ podcast addressing key issues
Strategy in action
Introduction
Ecclesiastical Insurance Office plc is a member of
Benefact Group, a diverse family of specialist financial
services businesses.
Benefact Group is driven by a shared ambition to do right by our
customers and clients, and united by a common purpose to give all
available profits to charity and good causes. The Group’s charitable
purpose drives our strategic goal of being the most trusted and
ethical business in our chosen markets. It shapes the way we do
business, particularly our focus on doing the right thing for our
customers and business partners. It creates an environment where
sustainable, long-term value generation is prized over short-term
results.
The Group is delighted to continue to make significant contributions
to good causes with a further £20m grant to its charitable owner,
Benefact Trust in 2022. This accomplishment has been made possible
through the significant efforts of all the businesses across Benefact
Group, which have focused on meeting the needs of their customers,
clients and business partners.
The Benefact Group’s overarching strategy encompasses all
divisions and businesses to ensure alignment and strategic focus.
This strategy demonstrates our ambitions for the future, responding
to global trends and the external market context, building on our
distinctive position in our chosen markets and our intent to have
a positive impact on all communities that are important to us.
Throughout 2022, we continued to progress the key elements of this
ambitious strategy, delivering value to our customers and enabling
further investment in the Group and its businesses. These are some of
the highlights of our strategy:
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Strategy in action Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 15
Striving to be the most trusted and ethical business in our
chosen markets
Seeking to be the best ethical investment provider, building on industry-
leading reputation and consistent, proven approach to deliver long-term
investment success
• Demonstrated strong business growth, attracting record levels of money inflows
against a worldwide context of market volatility
• Broadened investment waterfront with the launch of three new investment funds
and embedding of new adviser relationships
• Provided an expert voice including responsible investment insights including
water and rivers, modern slavery, and the Just Transition
Seeking to be the most trusted specialist adviser, providing excellent service
with long-term sustainable relationships with clients and insurer partners
• Ecclesiastical Planning Services* achieved regulated status and onboarded
80,000 new customers
• The Church of England Pensions Board awarded its first-ever partnership to
Ecclesiastical Financial Advisory Services*
* Part of the Benefact Group plc
Developing the Benefact Group and its businesses
Successfully launched the new Benefact Group brand, reflecting the Group’s
distinctive positioning and uniting its businesses under a common purpose
Continuing to grow the Broking and Advisory division with acquisitions of
broking businesses that complement existing specialist expertise
Launched first phase of new administration platform and completed migration
of church policies and associated claims handling
Successful implementation of product governance, fair value and pricing
practice framework aligned with new FCA Regulations
Made significant progress towards forthcoming regulatory changes including
new IFRS 17 financial accounting standards and Consumer Duty requirements
Revised and implemented new investment strategy to deliver future
improvements and potential for increased value to the Group
Optimised composition of the Group’s divisions to streamline decision-making
and enable greater alignment of growth ambitions
Produced carbon footprint for direct emissions and shared commitments to
achieve net zero ambitions
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Strategy in action Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 16
Developing a world class team
Continued strengthening of employee satisfaction with B-Heard ‘Outstanding’
accreditation against external context of deteriorating employee happiness
Six prestigious awards won by Group employees including Elite Women
(Canada and UK), CII Distinguished Service Award, Most Inspiring Returner,
Unsung Hero and Meritorious Service Medal (HM the Queen’s Birthday
Honours)
New values and performance management process launched across the
Group, creating greater alignment across the Benefact family of businesses
Implemented new Benefact family programme to capitalise on emerging talent
and enhance talent acquisition and tracking
Implemented an integrated approach to diversity and inclusion including
awareness raising campaign and creation of an inclusion network across the
Group
Delivered a single consistent platform to share resources while providing
bespoke learning spaces for each business to inform development, talent and
succession planning
Responded to the global cost of living crisis with financial wellbeing awards
offered to employees in greatest need
Relaunched employee-led giving, creating multiple opportunities for
employees to give to charity including individual personal grants, volunteering
and matched funding
Continuing to be recognised for excellence
Ecclesiastical Canada
• 5-Star award for property insurance, Insurance Business Canada
• Canada Top Employer for Young People (10th consecutive year)
• Greater Toronto Top Employer (4th consecutive year)
• Excellence in Claims Service, Insurance Business Canada
Ecclesiastical UK
• #1 for Home Insurance, Fairer Finance (16th consecutive time, over 8 years)
• Continued to be the ‘Most Trusted’ with the ‘Happiest Customers’, Fairer Finance
• Risk Management Specialist Company of the Year (Large), CIR Risk Management
• Best Home Insurance Provider, The Times Money Mentor Awards
EdenTree Investment Management
• Best Ethical Investment Provider, Moneyfacts awards (14th consecutive year)
• Best Multi-Asset ESG fund (for Responsible & Sustainable Managed Income fund),
ESG Clarity
• ESG Advocate (Asset Management), Portfolio Adviser Wealth Management
Ecclesiastical Financial Advisory Services
• Local Hero Mortgage awards – South West & Wales, NatWest Intermediary
SEIB Insurance Brokers
• Marketing & Customer Engagement Award, Insurance Age Broker Awards
The Group’s people continue to be recognised for their excellence:
• Distinguished Service Award, CII/PFS Awards (Ecclesiastical UK)
• Elite Women 2022, Insurance Business magazine Canada (Ecclesiastical Canada)
• Elite Women 2022, Insurance Business magazine UK (Shared Services)
• Meritorious Service Medal, HM the Queen’s Birthday Honours (Ecclesiastical UK)
• Most Inspiring Returner, Women in Financial Advice awards (EdenTree)
• Unsung Hero of the Year Award, Insurance Post Claims and Fraud Awards
(Ecclesiastical UK)
Willowbank School of Restoration Arts
Ontario, Canada
Located near Niagara-on-the-Lake, Ontario, Willowbank School of
Restoration Arts is Canada’s premier heritage conservation school.
Its unique three-year diploma programme combines theory with hands-
on learning and provides students with a valuable professional network.
As part of our continued commitment to supporting heritage conservation,
we’re donating CAN$30,000 for second-year student bursaries over three
years (2023-2025). In doing so, we’re supporting students, who may
otherwise have struggled financially, to focus entirely on their education,
immerse themselves in an experiential curriculum and develop the skills
and knowledge required to help conserve our built and cultural heritage.
As specialist insurers we understand the importance of heritage
conservation and sustainability and we’re proud to contribute to the
learning of our country’s next generation of heritage conservationists.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Global trends in financial services Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 18Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 18
Responsible Business Report highlights
>£200,000
Nearly £250,000 of charitable
funding for climate-related projects
92,631 kWh
of energy
self-generated,
equivalent to 18
tonnes of carbon
ClimateWise
member
of voluntary
industry
initiative
Environmentally-positive
1,291
tonnes
carbon footprint;
or 0.61 tonnes
– carbon intensity
per employee
Socially-positive
Outstanding
employer
awarded a 2 star rating,
demonstrating outstanding
levels of employee
engagement – judged by
Best Companies
of colleagues feel
that the company
supports mental
health at work
from the Group
overall; £2.7m to
charity direct
£22.7m
98%
Award-winning
across the Group
including Best Ethical
Investment Provider
for 14 consecutive years
>400,000
nominations for charities
in the 2022 Movement
for Good awards
Top 3
Corporate Giver
– according to the
Directory of Social
Change 2023/24
Guide to UK Company
Giving
82.95%
lower
Group equity investment footprint:
18.09 tCO
2
e/£m invested – 82.95% lower
than the benchmark
commitment by
2023 for direct
impact, 2040
for the Group
Net
Zero
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Global trends in financial services Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 19Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 19
Socially positive
Charitable giving
The Benefact Group is a unique family of financial services businesses
committed to giving to good causes. Benefact Group is proud to be a top
company donor, ranked third in the Directory of Social Change’s Guide to UK
Company Giving. The following table summarises giving across the ‘Benefact
Group’ which includes Ecclesiastical Insurance Office plc, its subsidiaries and
the subsidiaries of the Benefact Group. This table also summarises giving
from the Benefact Trust, the ultimate parent undertaking of Ecclesiastical
Insurance Office plc.
Giving via
Benefact Trust – ambition to be one of
the UK’s most impactful Christian grant-
making charities
Benefact Group – Group-led giving
programmes designed to achieve
maximum reach and impact
Businesses – giving led by subsidiary
businesses of the Benefact Group
focused on customers and communities
Colleagues – enabling Benefact Group
colleagues to give to causes they care
about and doubling their efforts
Highlights
• Benefact Trust awarded over £22m in
grants during 2022
• New crisis response grants programmes
were awarded - £1m to assist Ukrainian
refugees and £500k to help those in need
due to the cost of living crisis
• Our £1m+ Movement for Good continues
to give through small donations and large
grants
• It generated over 420,000 nominations for
charities – the highest ever
• Hundreds of charities benefited from £1k
donations
• £500k in large grants
• £200k+ to climate/environmental projects
• Continuing partnership with The Prince’s
Foundation
• 1,700+ attendees of free fundraising
webinars
Key business giving initiatives included:
• £80,000 to charities UK insurance brokers
care about
• Ecclesiastical Canada’s Community Impact
Programme selected 50 charities to mark
their 50th anniversary
• EdenTree’s community fund is in its fifth
year
• Lycetts held an inaugural fundraising ball
to support the British Eventing Support
Trust
• Over £500,000 given in total
• Highest-ever level of employee
fundraising – over £140,000
• Retained gold payroll giving standard and
grew number of givers
• 500+ volunteering days
• £250,000+ in £100+ personal grants to
colleagues’ charities of choice
• Triple matching of donations to charities
supporting in Ukraine
Introduction
This Responsible Business
report is a summary of positive
social and environmental
impact. It covers social impact
including approach to diversity
and inclusion, colleague
wellbeing and charitable
giving. It also summarises
climate impact through
reporting in line with the
Taskforce on Climate-related
Financial Disclosures (TCFD).
A reminder about our group and the
legal entities referred to within this
Responsible Business Report.
In this report, the ‘Group’ refers
to Ecclesiastical Insurance Office
plc together with its subsidiaries.
The ‘Benefact Group’ and ‘wider
group’ refers to Benefact Group plc,
the immediate parent company of
Ecclesiastical Insurance Office plc,
together with its subsidiaries. The
‘Benefact Trust’ and ‘the Trust’ refers
to Benefact Trust Limited, the ultimate
parent undertaking of Ecclesiastical
Insurance Office plc.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 20
Giving via
Benefact Trust – ambition to be one of
the UK’s most impactful Christian grant-
making charities.
Benefact Group – Group-led giving
programmes designed to achieve
maximum reach and impact
Businesses – giving led by subsidiary
businesses of the Benefact Group
focused on customers and communities
Colleagues – enabling Benefact Group
colleagues to give to causes they care
about and doubling their efforts
Commentary
The Group’s distinct ownership model
means it can continue to give all its
available profits to Benefact Trust as
its charitable owner. In 2022 the Trust
continued to distribute grants through a
number of programmes supporting church
organisations and Christian charities.
In 2022 the Trust continued its ambition to
address urgent social issues. Its Brighter
Lives programme helped charities address
mental health and wellbeing in the church
and wider community. It responded to the
Ukraine Crisis with a £1m fund distributed
through key partners including the British
Red Cross and Depaul International. Late in
2022 the Trust also launched a £500k fund
to help people struggling with the cost of
living crisis, working with charities including
the Trussell Trust and Warm Welcome
Campaign. Funding was also given for roof
alarms to protect churches against metal
theft and for the preservation of heritage
skills such as stonemasonry for example.
Movement for Good is the Group’s biggest
giving initiative and continues to deliver
huge breadth of reach and depth of impact.
Small donations reach a diversity of
predominantly small charities for whom
£1k can make a massive difference. Large
grants benefit causes close to customers
and communities. Projects supported the
rural community, schools and heritage
properties. In 2022 we also targeted
charities tackling environmental and
climate issues, giving more than £200k
to support our ambition to have a positive
environmental impact.
But our support doesn’t stop there, we
continue to develop the range of services
and support we give to charities including
free fundraising webinars which were
attended by more than 1,700 charities.
The Benefact Group is a growing family of
specialist financial services businesses each
proud of how close it is to customers and
communities. Business giving programmes
give the opportunity to target charities we
really care about.
For example, our Closer to You broker
programme gives brokers working with
Ecclesiastical UK the chance to choose
charities they care about. Our specialist
investment business EdenTree continues
to support causes aligned with our positive
investment themes. Brokers SEIB and
Lycetts are totally connected to their
communities, funding equine charities such
as World Horse Welfare and rural charities
such as the County Trust. Our Irish business
provides a wide range of support to Jigsaw,
the national centre for youth mental health.
In Australia the Community Education
Programme continues to equip Australians
under the age of 25 with the tools to
achieve a higher quality of life. Ansvar
UK launched funds to promote healthy
lifestyles to children and young adults.
Giving our people the opportunity to
support causes they care about continues
to be the foundation of our giving approach.
In 2022 we relaunched our employee
giving scheme ‘MyGiving’ in our new Group
brand. We continue to offer employees
small grants to give to any cause they care
about, flexible volunteering time and 100%
matching of fundraising and payroll giving.
In 2022 our people raised more for good
causes than ever before, supporting
charities with vital funds. Our biggest
fundraisers generated tens of thousands for
charities including Derian House Children’s
Hospice, Prostate Cancer and the World
Land Trust. We launched a special triple
matching opportunity for Ukraine charities.
Volunteering projects were widespread and
diverse including setting up hygiene banks
and river cleans.
Further info
Visit www.benefacttrust.com Visit www.movementforgood.com See Group company websites
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Global trends in financial services Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 21
Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 21
Employees
In 2022 the Benefact brand was launched
which brought the wider Group together. It
recognises the individual strengths of our
businesses whilst making them stronger
together, united by a common purpose. A
new values, culture and behaviour model
was rolled out and the historic change
was celebrated with a range of events and
communications.
Engagement and wellbeing
Post-pandemic and in a new world of
flexible work, the mental health and
wellbeing of employees continued to be a
top priority. A ‘healthy working check-in’
survey was launched in 2022 to understand
and support how well everyone was
working. It generated over 900 responses
with 98% feeling that mental health at work
is well supported. Wellbeing resources
continued to be bolstered, in particular with
several webinars attended by colleagues
from the UK and overseas. Given the
potential impacts of the cost of living crisis a
range of advice and support for employees
was provided should they need it.
Fantastic workplaces to encourage
employees to benefit from being together
continue to be critical. The newly built and
sustainable Gloucester head office was used
for an increasing number of meetings and
team activities as well as external events
welcoming brokers, customers and the
community.
This commitment to creating an outstanding
employee experience was reflected in the
externally assured B-Heard engagement
results which improved and retained ‘2 star,
outstanding’ status. This was a particularly
impressive achievement set against a
challenging external environment with rising
living costs and the uncertainty brought by
several years of pandemic and the situation
in Ukraine. Views on the strength of values
and purpose, making a positive difference in
the world and customer trust scored highest
against benchmarks.
Diversity and inclusion
Diversity and inclusion was supported
with a new campaign ‘We all belong’ which
recognises the broad range of backgrounds,
abilities, perspectives, beliefs and interests
people bring. A diversity and inclusion
working group met to discuss topics
including menopause and disability and
to promote awareness. Internal reporting
of sensitive data was improved; diversity
considered in strategic talent, recruitment
practices and behavioural competencies;
and a range of external initiatives were
supported including Women in Finance and
the Association of British Insurers’ talent
and diversity network and Making Flexible
Work campaign.
Investment business EdenTree welcomed
three interns as part of the 10,000 black
interns initiative and charities Blind in
Business and Read Easy were welcomed
into our offices to raise awareness of
disability and literacy. Funding for the
Black Swimming Association, Breaking
Barriers and The Circle of Women supported
charities fighting for a range of causes
including fair pay for workers in the global
fashion industry and access to swimming
for people of African, Caribbean and Asian
heritage.
Key employee statistics
Gender by level 2022
Male
No.
Female
No.
Total
No.
Group Management
Board
6 2 8
Senior Leader 51 30 81
Manager 231 160 391
Team Member 394 484 878
Grand Total 682 676 1358
Gender pay gap
2022 2021
Fixed pay gap mean/
median
25.2/19.1 27.7/20.4
Bonus pay gap mean/
median
43.7/26.4 51.2/32.9
Ethnicity 2022
White
No.
Prefer not to say
No.
BME
No.
964 331 63
The gender pay gap is calculated as the difference between average hourly earnings (excluding
overtime) of men and women as a proportion of men’s average hourly earnings (excluding overtime).
The table above shows median and mean gender pay gap for fixed pay and bonuses paid to men and
women, in relation to the 2022 performance year. For more detail see our annual Gender Pay Gap
Report available on our website.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Global trends in financial services Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 22Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 22
Leadership and development
We ensured employees completed
regulatory training, committed to our
Code of Conduct and supported a large
number of colleagues to successfully
complete qualification programmes. Our
UKGI Corporate Chartered Status with
the Chartered Insurance Institute was
renewed. We continued to support leaders
to develop their skills and confidence with
our in-house programme alongside Windsor
Leadership Trust and UK Business School
programmes. We ran more than 100 virtual
learning sessions for colleagues across the
UK and Ireland and launched our Learning
Management System into our broking
division and our Canadian general insurance
businesses, providing access to a wide range
of learning to even more of our colleagues.
We launched a performance management
process and a pilot of our Benefact
Emerging Talent Programme, providing
a year-long programme of experiential
learning for colleagues who have shown the
potential to be leaders in the future.
Customers and partners
The launch of the Benefact Group and
Trust brands and achievement of giving
£100m to good causes prompted an historic
celebration in 2022. These momentous
achievements were celebrated with
everyone who had been a part of that
journey – colleagues, customers, partners,
supporters, charities and their beneficiaries.
Over 2,000 people attended the event in
Westminster Abbey, including His Majesty
King Charles III.
Supporting customers and
partners
Growth and success is credited to a
commitment to doing the right thing and
building strong relationships over many
years with customers and a range of
partners. Advice and support for charities
which enables them to be more successful
and sustainable included free webinars
covering topics such as social media,
legacies, events and funding applications
for core costs and capital projects. They
were attended by over 1,700 charities, 96%
of whom would recommend them. We
supported trustee recruitment through a
partnership with charity Getting on Board,
published articles and reports including
insights on corporate partnerships.
Understanding customers’ concerns is a
focus in every part of the Benefact Group.
Regular customer research and insight
programmes on topics such as climate
awareness and risk management enabled
our businesses to build their expert advice
and support.
To deliver on our promise to do the right
thing we’re relying on our employees and
suppliers sharing this commitment. We
recognise the social impact and influence
our business can have on the partners
and suppliers we work with. To ensure we
uphold the highest standards regarding
human rights, anti-corruption and anti-
bribery we have a range of measures
including robust risk management,
employee Code of Conduct and employee
regulatory training on topics such as data
protection and whistleblowing. One hundred
percent of our people complete an annual
Code of Conduct attestation. We continue to
submit our Modern Slavery Act declaration
and we reported a continuing improvement
in the number of suppliers paid within 30
days to 75% under the Payment Practices
and Performance Reporting (2021: 74%).
Awards and recognition
Winning awards is one thing but winning
consistently underlines sustained high
standards. Ecclesiastical’s UK home
insurance has topped the Fairer Finance
table 16 times, achieving top position in
every aspect they assess: trust, customer
happiness, complaint handling and
transparency. EdenTree has won the
Moneyfacts Investment Life and Pensions
Best Ethical Investment Award for the 14th
successive year. Ecclesiastical Canada won
a slew of awards: Toronto’s Top Employer
for the 4th consecutive year; Top Employer
for Young People for the 10th consecutive
year; plus, recognition for claims excellence
and property insurance. Brokers SEIB won
the Marketing and Customer Engagement
Award at the Insurance Age Broker Awards
2022. This recognised their work with
leading vet and Chair of The Showing
Council and British Horse Foundation,
Dr Jane Nixon, to research the future of
horse-riding. Ecclesiastical’s financial
advice business was also successful in the
‘local hero’ mortgage awards, organised by
Natwest for firms who have gone beyond
everyday expectations to put the customer
and local community at the heart of their
firm.
Ecclesiastical UK home insurance
• Fairer Finance Award
– 16th consecutive year
EdenTree
• Moneyfacts Investment Life and
Pensions Best Ethical Investment
Award – 14th consecutive year
Ecclesiastical Canada
• Toronto’s Top Employer
– 4th consecutive year
• Top Employer for Young People
– 10th consecutive year
SEIB
• Insurance Age Broker
Award for Marketing and
Customer Engagement
Ecclesiastical’s Financial
Advice business
• Natwest Local Hero
Mortgage Award
Sports Driving Unlimited
Sports Driving Unlimited gives people of all
ages with a disability a unique chance to learn
the challenging sport of pony carriage driving.
A wonderful confidence-builder, pony carriage
driving provides a great sense of achievement
– especially valuable for those who struggle
to do other sports. Thanks to the money from
the Movement for Good awards, more people
with disabilities will be empowered by this
exhilarating experience.
Forever Angels
Forever Angels provides life-
saving nutrition to orphaned,
abandoned and vulnerable babies
in Tanzania, while empowering
their caregivers through business
creation. As a winner of the 2023
Movement for Good awards the
charity can continue with their
vital work, saving little lives and
helping to keep families together.
SCOTLAND: The Big Picture
SCOTLAND: The Big Picture works to drive the
recovery of nature across Scotland through
rewilding, in response to the growing climate
and biodiversity crises. Their vision is to create
a vast network of rewilded land and water,
where wildlife flourishes and people thrive.
The Movement for Good award provides
a welcome financial boost, helping them
continue with their rewilding projects
and activities.
Governance Financial Statements Other InformationStrategic Report
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Environmentally positive
Governance
Climate risk has strong governance
and oversight and is subject to
effective and robust controls. The
Benefact Group is a member of
ClimateWise a voluntary initiative
to drive climate responsibility and
action. Climate strategy is centred
around the ClimateWise framework
which is aligned to Taskforce on
Climate related Financial Disclosure
(TCFD) principles
1. Be accountable
2. Strategies and
investments
3. Managing
climate risk
4. Our own impact
5. Informing public
policy
6. Customer/client
awareness
7. Enhance
reporting
Our Group
Climate
Response
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TCFD: Disclose the organisation’s governance
around climate-related risks and opportunities
See the Governance section
TCFD: Disclose the actual and potential impacts
of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial
planning where such information is material
See the Strategy section
TCFD: Disclose how the organisation identifies,
assesses and manages climate related risks
See the Risk section
TCFD: Disclose the metrics and targets used
to assess and manage relevant climate-related
risks and opportunities where such information
is material
See the Metrics and Targets sectionClimateWise and TCFD principles
Governance Financial Statements Other InformationStrategic Report
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How the Board oversees
climate response
The Board has overarching responsibility
for strategy and risk. Due to the cross-
cutting nature of climate risk (as identified
by our enterprise-wide risk management
framework) the Board has delegated
responsibility for oversight of climate
risk to the Group Risk Committee (GRC).
Responsibility for overseeing these risks
(primarily physical and transition) is
delegated to the most appropriate Board
committees. Climate strategy and progress
has designated responsibility with a named
Group Management Board member and
Non-Executive Director.
Supporting Boards and
Committees
The Board and GRC are supported by
functions including investment, risk,
underwriting and capital management to
embed commitment to:
• Achieve net zero for direct impacts in 2023
• Be Net Negative for direct impacts by 2025
• Wipe out historic impact (Scopes 1 and 2)
by 2030
• Become a net zero company by 2040
• Manage the risks that are faced by the
Group.
The following table demonstrates
governance in action:
Governance forum Examples of climate topics discussed/
decisions made
Group Board
Training on net zero and offsetting with a third
party, presentation from English Heritage on their
climate strategy to understand a key customer’s
perspective
Briefing on ClimateWise framework and
performance
Group Audit Committee
Training on TCFD reporting and update on Group
position
Group Risk Committee
Reviewed and approved Climate Risk Appetite,
Climate Risk Taxonomy
Group Management Board
Discussed and approved Group offsetting strategy
Climate Strategy Group
Comprising senior representatives from across
business functions, this group developed and
delivered the company sustainability strategy and
targets
Business sustainability groups
Identified and delivered local initiatives, supported
company sustainability reporting
Impact team
This is the Group’s responsible business
team. Activities it led and delivered included
ClimateWise and SECR reporting, company
footprinting and facilitating Board training
Governance Financial Statements Other InformationStrategic Report
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Strategy
Climate related risks and
opportunities
Climate change presents increasing levels
of risk to our businesses and our customers.
It is certain that change will occur. We know
that warming will continue, with consequent
changes to weather patterns, and that
actions will be taken globally to seek to
mitigate and adapt. Risks will crystalise over
a much longer-term horizon than typically
seen for other risk exposures. Whilst the
greatest impacts of these risks are expected
to materialise in the medium to long term,
there will also be shorter term implications
and it is important that actions are taken now
to mitigate and manage risks arising from
climate change.
Opportunities
Opportunities to benefit from the effects of
climate change include greater resource
efficiency, using expertise to help customers
and investing in areas that will profit from
changes as we transition to a low carbon
economy. Each of the Group’s insurance
businesses have a mature risk management
capability to help their customers effectively
manage their risks. There is opportunity
to incorporate the management of climate
change risk within this service so helping
existing customers and provide an added
attraction for new customers.
Risks
Risk Nature of risk Examples of action to understand and mitigate impact on business, strategy and planning
Physical Direct damage to assets both owned and insured and indirect
impacts from supply chain disruption. They can be acute and
event-driven or longer-term and therefore chronic. The Group’s
main physical risk exposures stem from its property underwriting
portfolio and from its investment assets.
• In the UK and Ireland work is in progress, in conjunction with our reinsurance brokers, to use climate conditioned proprietary
models to assess the exposures to increased levels of UK and Ireland flood risk over medium to long-term periods.
• In Canada, mapping of exposures against risk areas, and in the short-term, action is being taken to manage the exposure to
wood-framed buildings that are considered particularly vulnerable to perils such as wildfire.
• The Group works with a leading Geographic Information System (GIS) provider to provide high quality data to inform pricing,
risk selection and strategy. A GIS partnership enables us to provide a tailored service to customers to assess individual risk
to storm, flood and subsidence.
• The Group assesses risks at a granular level, using models supplied by external vendors and those models include expert
assessments of likely impact of current climate change on the risks over the following year.
• Initial work is underway using the methodology developed by the Partnership for Carbon Accounting Financials (PCAF) to
understand the carbon intensity of the Group’s underwriting portfolios.
Insurers, investors and advisors have a responsibility to play a positive role in
tackling, mitigating and seeking opportunity from climate change. Our current
strategy runs to 2026 and ‘sustainability champion’ is a key initiative within it
focusing on climate response and action.
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Risk Nature of risk Examples of action to understand and mitigate impact on business, strategy and planning
Transition Relates to financial risks resulting from transitioning to a low
carbon economy. They arise from two related transformations,
namely in regulatory policy such as carbon taxes and technology
and market disruption that will include innovation in renewable
energy. Additional implications include the subsequent changes
to consumer expectations, demand and behaviour as a result
of these policy and technological transformations. The Group’s
main exposure to transition risks is on the value of its investment
assets through the impact of changes to a low carbon economy on
investee companies.
• The Group’s responsible and sustainable investment policy excludes investment in fossil fuel exploration and production and
thermal coal extraction, and eschews investment in high carbon emitters (automotive, aviation and heavy industry).
• The Group’s investment management business EdenTree employs a positive climate screen to challenge Environmental
Social and Governance (ESG) performance in investee companies. They analyse the implications of climate-related issues,
assessing investees’ governance of climate risk, commitments to phase out any coal, oil and gas, use of renewable energy,
emissions reduction targets and performance, and their decarbonisation strategies.
• EdenTree applies a discretionary thematic strand, ‘Striving for Positive Impact’ that looks to invest in companies providing
solutions that will enable the low-carbon transition, as well as providing a compelling investment case.
• Climate change features as a permanent pillar of EdenTree’s engagement strategy, and they have supported various
initiatives over the years. They have contributed for six consecutive years to the Carbon Disclosure Project non-disclosure
campaign, asking more businesses to report on climate change, and have been actively encouraging companies to set
Science Based Targets via in-house engagement and through ShareAction’s Investor Decarbonisation Initiative. They
supported the Paris Pledge for Action in 2015 and are a signatory to the Montreal Pledge and TCFD Framework. EdenTree
also maintains a number of memberships including the UK Sustainable Investment and Finance Association, UN Principles
for Responsible Investment and the Institutional Investors Group on Climate Change.
• The Group’s investment strategy also includes an allocation to infrastructure assets. These investments can not only
generate attractive returns and offer diversification from other assets but also help enable the transition to a low carbon
economy and help mitigate the impacts of climate change.
Liability Stems from the potential for litigation if entities and boards do not
adequately consider or respond to the impacts of climate change.
This may include the potential breaching of directors’ duties. There
are potential exposures through the Group’s liability underwriting
portfolio.
• Each territory has assessed its exposure to the potential for receiving future liability claims relating to climate related
litigation arising from customers’ activities. The Group will continue to track potential for insured customers to be exposed to
liability risks and the evolving legal environment.
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Insurance risks by territory
Risk exposures vary by territory with
respect to the types of perils and the outlook
for the future. These have been assessed
over short term (up to 5 years) and medium
(5 to 20 years) to long term (20+ years). Our
strategic response focuses on these risks
and their associated opportunities.
• In the UK and Ireland, the key risks
are assessed as being from increased
river flooding arising from changes in
precipitation and coastal flooding/storm
surge driven by increased sea-levels.
Also, more intense rainfall in short periods
gives increased exposure to flash-flooding
events, particularly in urban areas.
• Australia has experienced a significant
and increasing number of weather events
that could be attributed to climate change
and it is expected that their frequency and
severity will continue to develop, though it
is recognised that short term patterns are
also heavily influenced by El Niño and La
Niña conditions.
• Canada has also experienced a significant
number of weather events in recent years
including wildfires, flood and hurricanes.
Although nearly all risk exposure is
located in the southern part of the country
- away from areas that are projected to
experience the greatest change - the
impact of changes in rainfall and increased
heat is expected to have a material impact
on the risks we insure.
How we determine material
risks and opportunities
We use stress testing and scenario analysis
as the key tool to assess principal risks,
with primary focus on our insurance
underwriting businesses and as an
asset owner. Scenarios have been used
aligned to those defined in the Prudential
Regulation Authority’s (PRA) Climate
Biennial Exploratory Scenario (CBES) which
includes three scenarios exploring transition
and physical risks, to different degrees.
A Strategic and Emerging Risk Process
that scans the external environment for
future risks, and developments relating
to climate change are a key component of
that process. As part of business planning
and strategy development process we
assess the potential impacts of climate
change. An assessment is cascaded
down to businesses, and they make local
assessments of how climate change will
affect them, using their local knowledge. In
fulfilling its mandate for the Group, EdenTree
identifies both risks and opportunities
arising from climate change and discusses
these with key decision-makers for invested
assets. As a Group, we leverage EdenTree’s
expertise and thought leadership.
Testing risks through scenarios
Insurance Investment
• Focusing on worst case scenario:
assessment of insurance underwriting risk
has focused on the worst-case scenario of
the three CBES scenarios (the No Additional
Action scenario) because this enables
identification of the most extreme outcomes,
therefore the greatest risks to the business,
particularly over the medium to long-term.
The scenarios have been used primarily in
a qualitative nature to identify the types
of perils that are most likely to affect the
current insured portfolio.
• Considering socioeconomic impacts:
besides considering the direct impact of
weather events, the economic and social
impact on key customers were also
considered, in this case also using the
scenarios whereby Paris-aligned targets
are met, to identify some of the issues they
likely face in the various circumstances. This
analysis is being used to inform customer
propositions and how the Group might work
with and support customers to manage and
mitigate climate risk.
The process has been used to assess the
Group’s insurance footprint in various
geographies, for example assessing wildfires
in Canada, temperature rises in Australia and
windstorm and flood in the UK. For example,
in the UK a tool for flood and storm mapping,
Mapview, is used to manage individual and
accumulated local exposures.
• Assessing beyond equities: in 2022 an initial
wider assessment of the risk and opportunities
of climate change on the Group’s assets (beyond
equities) was completed. This looked at asset
classes including strategic investments, property
investments and gilts/corporate bonds. As our
methodology develops, we will increase the scope
of our carbon footprinting. A desktop carbon study
of property investments has been commissioned.
It uses a Real Estate Environmental Benchmark
(REEB), an Energy Performance Certificate (EPC)
schedule priority, physical and climate risk
assessments, scope 1, 2 and 3 data completion
and setting of carbon targets and decarbonisation
plans.
• Footprinting: the footprinting tools used by the
investment team enable the Group to view its
investments from various perspectives. These
include the portfolio emission pathway vs climate
scenario budgets (and whether it is overshooting),
the associated temperature increase, a transition
climate risk analysis and a physical risk exposure
based on the holdings (high, moderate, light risk).
Based on current targets, the Group’s equity
investments are expected to be aligned with the
Sustainable Development Scenario by 2050,
representing a potential temperature increase of
1.5C by 2050 compared to 3.6C for the benchmark.
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Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 31
Tackling climate alongside
suppliers, colleagues,
communities and customers
Supply chain
Climate change will affect supply chains
now and over the medium to long term.
As part of due diligence, evidence is
collated of any potential business partners’
resilience to climate change risks, and the
actions they are taking to address their
risks, besides their carbon footprints. The
Group is a member of the financial services
purchasing scheme which is designed to
drive up standards in supply chains. Around
60% of the Group’s most material suppliers
are registered with this scheme and are
required to complete an enhanced level of
questioning on social and environmental
impact. Part of the Group’s downstream
footprint is the property restoration work
we fund through our claims. We require our
restoration companies to be certified to ISO
14001.
Colleagues
Engaging our people is a key enabler of our
climate strategy. In 2022 we:
• Launched and announced climate as
central to our next chapter strategy at our
leadership conference event with global
leaders from all parts of the Benefact
Group
• Held climate roadshows for all colleagues
to help everyone understand more about
our climate impact and opportunity as a
Group
• Held management briefings on our direct
impact to help teams understand what it
comprises and what we can do about it
• Tailored team sessions – one example
was a workshop session for our Actuarial
& Reinsurance Team, involving presenters
from within the team to explain our
investment and reinsurance positions
• Through our benefits package we offer
colleagues a personal carbon calculator to
calculate and offset their emissions.
Colleague support for charities and
communities through giving and
volunteering is strong. A number of
projects support charities tackling climate
issues, for example our Compliance team
helped to plant 130 trees for the Stroud
Valleys Project. In 2022 the EdenTree team
brought together its river health research,
partnership with Olympic open water
swimmer Alice Dearing and a river clean
volunteering day. Building on our strong
culture of charitable giving, to celebrate
COP27, we focussed on climate change
and environmental charities through our
charitable giving programme, Movement for
Good.
Communities
The Group’s unique ownership model
enables it to give to good causes every year.
Funding for transition charities, biodiversity
projects and charities helping customers
to reduce their impact has increased over
recent years. In 2022 over £200,000 was
given to climate-related charities including
the InterClimate Network; Heal Rewilding;
Trees for Cities and Earthwatch. These
funds are supporting a wide range of
positive environmental projects including
biodiversity and rewilding and education
programmes with future climate leaders in
schools.
The Group will be investing in highly
assured, transparent and charitable
offsetting projects overseas providing
carbon credits. This will invest in well-
established climate projects which make
both a positive environmental and social
impact. Social impacts include improving
local economies.
Customers
Working with customers across our
insurance, investment and advisory
businesses to help them better understand
and tackle their climate risks is a key part
of our climate strategy. In 2022 some
examples of activity included:
• Commissioning and publishing research
on a wide range of topics including broker
attitudes to net zero, churches’ readiness
for climate change, the environmental
performance of the water industry and just
transition strategy in investments
• Producing guidance for key customers
such as schools covering topics including
adaptation/transition, solar panels, battery
storage and flooding
• Hosting webinars on topics including
contemporary construction risks and
climate reporting
• Working with expert partners to offer
climate-related services including advice
on installation of renewable energy
systems and energy audits and monitoring
• Embedding climate change within our
Enterprise Risk Management service, to
help customers consider transition risks
and opportunities
• Launching new products, namely three
new EdenTree funds designed to benefit
from the opportunities arising from the
climate transition:
• A Green Future Fund, investing globally
in companies which provide sustainable
solutions to some of the world’s
environmental challenges
• A Global Impact Bond Fund that seeks to
deliver measurable positive environmental
and social impact alongside a regular level
of income
• A Green Infrastructure Fund investing in
environmental infrastructure solutions
linked to the energy transition.
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Risk
Risk management framework
The Group’s Enterprise-Wide Risk
Management Framework as illustrated
in the Risk Management Report on page
45, provides the tools, guidance, policies,
standards and defined responsibilities
that enable us to achieve our strategy and
objectives, whilst ensuring that individual
and aggregated risks to our objectives are
identified and managed on a consistent
basis. Our Group Risk Register includes
climate change as one of the key risk
exposures of the Group. In 2022 our
approach to the management of climate
change risks was updated. The Group Risk
Taxonomy was updated to reflect the cross-
cutting nature of climate change acting as a
driver for other risk exposures. A Preference
Statement and Risk Appetite statements
were also developed for specific elements
of climate risk. Recognising the likely
impacts on its customers, the Group seeks to
support them to address these through our
underwriting, claims management and risk
management activities.
Risk management process
The risk management process is a structured,
ongoing method by which the Group, each
business unit and significant business areas
identify and assess the significance of the
risks that it faces in pursuit of its business
objectives. Climate Change risks are managed
according to the four-step cyclical process as
illustrated below:
We accept the presence of climate risk in our property insurance underwriting
portfolio and seek to manage our exposures by geographies. We have
adopted a responsible and sustainable approach to investing that minimises
exposure to both physical and transition risks and seeks opportunities that
allow us to appropriately manage our investments in assets that will benefit
from transition to a low carbon world. We actively seek to limit our exposure
to counterparties with material climate risk exposures.
Identify
Respond
AssessMonitor
Identifying climate risks
In addition to identifying climate change
risk as a Level 1 risk-type in our Group
Risk Taxonomy, under which sit the sub-
risk types of physical risk, transition risk
and litigation risk, we have mapped the
potential impact of climate change on many
of the other risk-types that the Group is
exposed to. The Group’s emerging risk
process includes keeping informed on
evolving knowledge and developments in
the management of climate change risk.
At Group and business unit level we have
undertaken exercises to identify the specific
risks that climate change will bring to
our ability to achieve objectives. Scenario
analysis, including potential pathways and
looking over a range of timescales, is a key
tool employed for this stage.
Assessing climate risk
Having identified the climate risk exposures,
the next step is to assess their potential
impact. This entails gaining a deeper
understanding of the nature and scale
of the risks, and where possible seeking
quantitative measures of the impact that the
risks may have on the financial position of
the group under the different scenarios.
Responding to risks
For climate risks, the potential effects of
identified risk exposures would emerge
in the future, often over much longer
timescales than typically for other risks.
While impacts may emerge far into the
future, sooner actions are often necessary
to mitigate the effects. This is why
responses to climate change risks are
often aimed at making the business more
resilient to the future emergence of adverse
conditions rather than addressing the
immediate potential for loss. Responding to
risks also involves identifying opportunities
that might arise.
Monitoring and reporting risks
All business units are expected to define the
governance mechanisms for managing their
climate risks. These involve the relevant risk
and/or management committees receiving
information relating to climate change risk
exposures and actions. This enables them
to monitor key risk exposures, challenge
and input into decision making relating to
risk assessments and responses, identify
any risks that have not been recognised and
carry out other monitoring responsibilities in
line with their terms of reference.
Risk registers used at Group and business
unit levels are not only used to capture,
assess and respond to risk, but to monitor
and report. Business unit climate risk
reporting is shared with the Group Risk
function which uses this and Group level
information to report to the Group Risk
Committee of the Board. This is done via the
quarterly Chief Risk & Compliance Officer
(CRO) Report which summarises the key
risks across the Group.
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Strategic Report – Responsible Business Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 33
Setting ambitions and targets is an important way to drive and assess climate
progress. In 2022 the Benefact Group set out high level climate commitments
for the short and long term, monitored and set targets for direct emissions,
footprinted investments and expanded measurement and understanding of
Scope 3 emissions. Targets are integrated into remuneration practices.
Metrics and Targets
Net zero targets
2021 2023 2025 2030 2035 2040
NEW
investment
strategy
NET ZERO
for direct impact
(Scopes 1 & 2)
NET NEGATIVE
for direct impact
(Scopes 1 &2)
WIPE OUT
historic
carbon impact
(Scopes 1 &2)
NET ZERO
Group
Net Zero targets
Emissions source 2021 2022
UK Non-
UK
Total tCO
2
/
employee
UK Non-
UK
Total tCO
2
/
employee
Scope 1: fuel,
fluorinated gas losses
and fuel combustion in
premises / vehicles
97 6 103 143 23 166
Scope 2:
location based
eletricity
68 97 165 584 92 677
Scope 2:
market based
electricity
68 97 165 82 92 174
Scope 3: business
travel, waste and
water use
172 22 194 734 217 951
Total CO
2
e 337 125 462 0.23 959 332 1291 0.61
Direct emissions
Scope 1 and 2 footprint (plus Scope 3
business travel, waste and water) is reported
and published here according to greenhouse
gases (GHG) protocols, to Streamlined Energy
and Carbon Reporting (SECR) standards.
• Scope 1: all direct GHG emissions
• Scope 2: indirect GHG emissions from
consumption of purchased electricity,
heat or steam
• Scope 3: other indirect emissions not
covered in Scope 2 that occur in the value
chain of the reporting company, including
both upstream and downstream emissions
and investments where quantifiable
Carbon dioxide is the most significant
contributor to anthropogenic global GHG
emissions (which also include methane,
nitrous oxide and fluorinated gases). To
measure the equivalent warming impact of
GHG emissions, the Group’s GHG emissions
are measured as tonnes of carbon dioxide
equivalent (tCO
2
e).
The following table provides details of the
carbon associated with the direct operation
of businesses part of the Benefact Group. To
support these ambitions, in 2021 the Benefact
Group set a target to reduce direct emissions
by 20%. The reporting period is January to
December.
Governance Financial Statements Other InformationStrategic Report
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Methodology
We have reported on all emission sources
required under the Companies (Directors’
Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations
2018. Our reporting year runs from
January to December 2022. The emissions
reporting boundary is defined as all entities
and facilities either owned by or under
operational control of Benefact Group,
therefore emissions relating to our premises
and associated travel by staff based at those
premises. It includes data covering 89% of
our Group by headcount. We continue to
improve the coverage and quality of data
which informs our report. Scope 1 emissions
from fluorinated gas losses and fuel
combustion in premises / vehicles, Scope
2 emissions from electricity and cooling in
premises, and Scope 3 emissions associated
with business travel, waste and water use
have been calculated using UK government
greenhouse gas reporting emission factors
2022 (Department for Environment, Food
and Rural Affairs).
The Group sources 40% of its electricity
from renewable sources, a slight rise on
2021 (34%). The Group self-generated
92,631 kWh of energy equivalent to 18
tonnes of carbon.
The Group recognises that the pandemic
had a significant impact on direct business
activity resulting in a much lower carbon
footprint in 2021 caused by low or no
occupation of offices and dramatically
reduced business fleet travel.
Scope 3 emissions
Based on current targets the fund
is expected to be aligned with the
Sustainable Development Scenario by
2050, representing a potential temperature
increase of 1.5C by 2050, compared to 3.1C
in the benchmark.
There is huge potential to reduce carbon
impact through Scope 3 emissions.
Accessing accurate data and exerting
influence are complex and challenging
but we are committed to making progress.
The Group’s owned investment assets
are managed by EdenTree Investment
Management. EdenTree has a seven-year
track record of carbon footprinting its equity
funds, and a two-year track record of carbon
footprinting the Group’s General Fund
(which encompasses the Group’s equity
funds and some corporate bond funds).
Commentary on the Group general fund:
• The fund’s carbon footprint is 18.09
tCO₂e/£m invested, 82.95% lower than its
benchmark.
• The weighted average carbon intensity
(WACI) of the fund is 57.18 tCO
2
e/£m
revenue, 68.86% more efficient than its
benchmark.
• 50.95% of the Fund is covered through
this climate analysis, of which 84.4% of
companies disclose their emissions. 61% of
companies have either set a Science Based
Target or have committed to doing so.
Expanding Scope 3 emissions
reporting and influence
In 2022 an initial wider assessment of
the Group’s assets (beyond equities) was
completed. This looked at asset classes
including strategic investments, property
investments and gilts/corporate bonds.
Quantifying the impact of climate change
in investments is an emerging practice,
with inherent uncertainty in the quality of
available data. It is challenging to obtain
consistent asset data across an entire
portfolio, but the Group will extend its
assessment to property. Work has also
started to assess the carbon impact of its
underwriting portfolios. Methodologies to
achieve this are just emerging but the Group
is committed to working to understand
carbon impact of underwriting in order
to influence and support customers and
communities to decarbonise.
Remuneration
Climate-focused performance targets are
part of the Group’s Long Term Incentive
Plan (LTIP). It measures specific climate
progress – targeted improvement in
ClimateWise performance and reduction in
direct emissions. These targets were agreed
following a review of remuneration targets
with an external partner to ensure best
practice.
’Climate-focused
performance
targets are part of
the Group’s Long
Term Incentive
Plan.’
The Beatles Story
Liverpool, England
In the heart of Liverpool’s Royal Albert Docks, The Beatles Story
is an immersive, atmospheric journey through the lives and
times of the Fab Four.
The world’s largest permanent Beatles exhibition, it houses
authentic memorabilia including original instruments such as
Ringo Starr’s drum kit, clothing and rare album sleeves. There’s
a discovery zone for children where they can learn about the
band and its musical legacy using fun, interactive resources. And
along with recreations of key locations and moments from the
band’s career, there’s a rolling programme of special exhibitions.
It’s a privilege for us to be entrusted with insuring such an
important piece of popular culture and a great example of the
breadth of risks and expertise we can provide.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Global trends in financial services Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 36Strategic Report – Key Performance Indicators Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 36
Key Performance Indicators
Financial
Measure Performance
Donations
The amount donated by Ecclesiastical to charities,
including our charitable owner, each year. This is
the main measure of our ambition, which was to
exceed £250m in charitable giving by the end of
2025.
A robust underwriting performance enabled us to maintain the level of
charitable giving to £22.7m. This includes grants of £20.0m to our charitable
owner, Benefact Trust, and a further £2.7m to good causes.
We achieved our £100m target in 2021, set in 2016 and have set a new target
of reaching £250m by the end of 2025.
2021 2022
23.5
22.7
0 -
10 -
20 -
40 -
£m
30 -
2018 2019 2020
32.5
2.7
18.8
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Key Performance Indicators Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 37
Measure Performance
Regulatory capital
1
The Group’s regulatory capital requirements are
defined under the Solvency II directive as issued by
the European Union and adopted by the Prudential
Regulation Authority (PRA).
As the Group assessment is conducted at the level
of Benefact Group plc, the following refers to the
regulatory capital of Ecclesiastical Insurance Office
plc (Ecclesiastical Insurance Office Group’s parent
company).
The Solvency Capital Requirement (SCR) is a
risk-based statistical calculation that quantifies
risks specific to our business. The Group sets a
target level of capital that is in excess of the SCR to
ensure ongoing compliance.
Ecclesiastical’s capital cover under Solvency II has improved.
During 2022, own funds have increased due to a large movement in discount
rates reducing technical provisions. Our Solvency II regulatory capital
position remains above regulatory requirements and risk appetite. The
solvency coverage has decreased due to an increase in the Loss Absorbing
Capacity of Deferred Taxes.
The figures for 2022 are based on the information provided to the Board as
part of its ongoing management of the business and are unaudited
We continue to balance the need to retain profit within the business to
support our strategy for future growth and investment in technology and
innovation, with our aspiration to meet charitable giving targets.
1 Alternative performance measure, refer to note 38 to the financial statements for further explanation
306 256
416
381
264 263
236
214
295
257
(i) the 2018, 2019 and 2020 own funds are audited and reflect figures
from the Company’s published Solvency and Financial Condition Report
which is available via the Company’s website
SCR (£m)
Excess own funds (£m)
Capital cover (%)
0 -
100 -
200 -
300 -
400 -
600 -
700 -
800 -
- 0 %
- 250%
- 300%
- 200%
- 150%
- 100%
- 50%
500 -
£m
Solvency II capital cover
(unaudited)
2018
(i)
2019
(i)
2020
(i)
20222021
%
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Key Performance Indicators Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 38
Measure Performance
Profit or loss before tax
The groups profit or loss before deduction of tax.
Each year, refreshed targets are set in relation to
the Group’s business plans for profit before tax.
Details of the target that was set for 2022 can
be found in the Group Remuneration Report. Our
short-term target is to generate sufficient profit
to enable us to meet our targets for charitable
donations.
The Group reported a loss before tax in 2022 of £4.8m (2021: £79.2m profit)
driven by fair value losses on our investment portfolio.
More information on underwriting performance is given below.
See the Chief Financial Officer’s Report within the Strategic Report for more
details.
Combined operating ratio
1
(COR)
The sum of Ecclesiastical’s general insurance
incurred losses and expenses divided by earned
premiums for each financial year.
Each year, refreshed targets are set in relation
to the Group’s business plans for the Group COR.
Details of the target that was set for 2022 can
be found in the Group Remuneration Report. Our
target over the longer term is to achieve 95%
COR.
Our COR decreased in 2022 despite adverse flooding and freeze events
across territories and some unusually large claims in the UK. Prior year
releases have been modest overall as we have strengthened reserves for
latent claims.
The Group continues to keep underwriting and pricing discipline at the
centre of its strategy, prioritising profit over growth in the competitive
business environment.
For a breakdown of how COR is calculated see note 38 to the financial
statements.
See the Chief Financial Officer’s Report within the Strategic Report for more
details
2021 2022
20 -
0 -
(20) -
60 -
£m
40 -
80 -
79.2
(4.8)
Profit/(loss) before tax
Underwriting profit
2018 2019 2020
73.3
(15.7)
15.4
2021 2022
85 -
105 -
95 -
80 -
%
90 -
100 -
96.8
91.0
Longer-term target
86.4
2018 2019 2020
91.1
95.1
1 Alternative performance measure, refer to note 38 to the financial statements for further explanation.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Key Performance Indicators Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 39
Measure Performance
Net expense ratio
1
(NER)
Total expenses as a proportion of the net
premium earned in the year. These expenses
include acquisition costs, administration costs,
the movement in deferred acquisition costs and
commission paid less commission received.
Our aim is to make year-on-year improvements in
the NER. However, in the short term, we expected
the NER to reflect a planned increase in strategic
investment.
Our NER decreased in 2022 to 52.5% reflecting a 11.3% increase in net
earned premium and 9.2% increase in net expenses.
Expenses include our continuing programme of strategic investment in
technology to support business growth and customers’ needs.
For a breakdown of how NER is calculated, see note 38 to the financial
statements
Key Performance Indicators
Non-Financial
We place equal importance on financial and non-financial key performance indicators. Details of the non-financial
performance indicators can be found within our Strategy in action section and our Responsible Business Report.
2021 2022
20 -
0 -
60 -
100 -
(%)
40 -
80 -
53.5
52.5
2018 2019 2020
54.5
53.0
52.4
1 Alternative performance measure, refer to note 38 to the financial statements for further explanation.
Grand Lodge
Dublin, Ireland
The Grand Lodge of Freemasons is one of Dublin’s most historic buildings.
On New Year’s Eve 2021, the building that had been home to the Grand
Order of Freemasons since the 1860s was almost destroyed in an arson
attack. Besides structural damage caused by the fire itself, including to
the decorative ceilings, ornate covings and other plasterwork, there was
extensive damage to the contents including furniture, paintings, manuscripts
and books.
As specialist heritage insurers, we knew that speed was of the essence in
saving as much of the historic fabric and contents of the building as possible
from the acidic soot residue. Our team were on hand the following day to
begin the recovery and restoration process. Even before the fire, we’d worked
with the Grand Lodge to prepare for such an incident – advance work that
helped mitigate loss and aid a smooth recovery.
The Grand Lodge reopened having been restored to its former glory
by our talented team of experts, and we were delighted that our experience
and expertise were able to bring about the speedy restoration of this
iconic building.
‘We have continued
and will continue
to manage our
businesses with
a long-term view
of risk. As a result
we have a strong
capital position
that can withstand
short-term
volatility.’
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Strategic Report –Chief Financial Officer’s Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 41
There were a number of specific items
affecting the results, both before and after
tax. Before tax, and included within the
net investment return, a credit of £66.9m
(2021: £14.5m) arose from an increase in
the discount on general insurance liabilities.
A fair value gain was also recognised for
£16.8m (2021: £9.3m) on an unlisted equity
investment benefiting from the buoyant
reinsurance market, and fair value losses
of £21.2m (2021: £20.2m gains) were
recognised on investment properties.
During the year, the Group changed its
approach to discounting to include all
general insurance liabilities. This change
in discounting accounting policy ensured
the effects of higher interest rates and
high inflation were being reflected across
both our short and longer term insurance
liabilities and so as to more consistently
match the effects of changes in interest
rates on both insurance liabilities and
the assets held to match them. This
contributed £13.2m towards the total 2022
impact of discounting and £2.6m in the
prior year, which has been restated. More
information on these items is included in the
investments section below.
In December 2022 and January 2023
the Group made a number of structural
changes to support the wider Benefact
Group’s alignment of businesses across its
three main divisions. The impact from these
structural changes, including the results of
these businesses, was a profit of £13.7m and
is presented after tax. Further information
on these changes can be found below.
We have continued and will continue to
manage our businesses with a long-term
view of risk. As a result we have a strong
capital position that can withstand short
term volatility and our excellent and strong
credit ratings with AM Best and S&P were
reaffirmed during the year. Following a
routine review of our credit rating agencies,
we added Moody’s alongside AM Best as
our agencies, who have also affirmed our
excellent credit rating. Given that businesses
of our size and type would typically have
two rating agencies, we agreed with S&P
to exit our relationship with them. S&P
reiterated an exit rating of A- (stable). Our
Solvency II regulatory capital position
remains above regulatory requirements and
risk appetite.
Structural changes
Ecclesiastical is part of the Benefact Group,
a charitably owned financial services group.
Across this wider Benefact Group we have
made a number of changes to the legal
entity structure to better align and optimise
our businesses to the way in which we
manage and achieve our growth ambitions
across our specialist insurance, investment
management and broking and advisory
divisions.
On 30 December 2022, Ecclesiastical
disposed of South Essex Insurance Holdings
Limited and its wholly owned subsidiary
SEIB Insurance Brokers Limited (together
‘SEIB’) to the Lloyd & Whyte Group Limited
(Lloyd & Whyte) for £45.2m, recognising
a gain after tax of £14.3m. Lloyd & Whyte
is an associate of the Benefact Group in
whom we are taking an increased share of
The Group reported a loss before tax of £4.8m (2021: £79.2m profit), largely
due to fair value investment losses resulting from the challenging economic
environment, with the net investment return of £4.1m being £98.8m lower
than in 2021.
Chief Financial Officer’s Report
1
Alternative performance measure, refer to note 38 to
the financial statements for further information.
Governance Financial Statements Other InformationStrategic Report
Strategic Report –Chief Financial Officer’s Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 42
ownership over time, with full ownership
expected to occur in 2026. They provide
a range of expert financial planning and
specialist insurance services. This disposal
took us another step closer to our longer
term growth ambitions for our broking and
advisory division and will provide synergies
and opportunities for closer co-operation in
the areas these businesses operates in.
On 3 January 2023 two wholly-owned
subsidiaries, EdenTree Investment
Management Limited (EdenTree) and
Ecclesiastical Financial Advisory Services
Limited (EFAS) were transferred to the
Benefact Group. The assets and liabilities
of these businesses are presented in the
Group’s balance sheet as amounts held
for distribution and represented net assets
transferred of £4.5m.
The results of SEIB, EdenTree and EFAS
contributed a net loss before tax of £0.2m
(2021: profit £0.5m) and are presented
within the Group’s financial statements as
discontinued operations in the current and
prior year after tax. The gain on disposal of
SEIB is also presented within discontinued
operations.
General insurance
The Group’s underwriting businesses
have performed in line with expectations
in most territories, resulting in a Group
Combined Operating Ratio
1
(COR) of 91.0%
(2021: 96.8%). We have delivered steady
underwriting profits despite adverse
flooding and freeze events across territories,
and some unusually large claims in the
UK. Prior year releases have been modest
overall as we have strengthened reserves
for latent claims. Our strategy to focus
on profitable growth opportunities has
continued to deliver, with new business of
£34.7m contributing to almost half of our
overall GWP growth of 15% to £559m (2021:
£486m). The strong growth also reflects
targeted rate increases as well as strong
retention and excellent service delivered to
brokers and customers.
Our programme of investment has
continued, particularly across our
technology platforms and with our
colleagues. Our investments in these
platforms are an important part in
supporting the growth of our business and
our customers’ needs for the long term.
United Kingdom and Ireland
In the UK and Ireland, underwriting profits
fell slightly to £24.2m (2021: £25.0m)
resulting in a COR of 86.7% (2021: 85.3%).
GWP grew by 16.0% to £344.8m (2021:
£297.2m). The current year performance
was profitable despite a run of weather
events and large claims which affected the
UK and Ireland in 2022.
Heritage, Real Estate and Schemes were
particularly strong growth areas in 2022
as pricing remained robust in these areas,
partly due to reduced insurance capacity
and strong propositions in these markets,
and we continued to focus on consistent
service and delivery of expertise across
the business. We expect trading conditions
to become more competitive in 2023
with the outlook becoming increasingly
unpredictable. Inflationary pressures in
the economy, the Ukrainian war, global
economics, and the potential for more
frequent and intense weather events due
to climate change all contribute to this
uncertainty. However, our Net Promoter
Scores across brokers and customers are
robust and provide resilience enabling
us to carry positive rate change where
appropriate and contribute to the high levels
of retention experienced. GWP in respect
of our Faith business remained in line
with prior year reflecting a good result in
challenging competitive conditions specific
to this market.
Our strategy over the medium term is to
deliver GWP growth, while maintaining
our strong underwriting discipline, as
our philosophy is to seek only profitable
growth. We will continue to deepen our
specialist capabilities through investment
in technology and innovation together with
the propositions, specialism, and excellent
service that our customers value.
Ansvar Australia
Our Australian business reported an
underwriting loss of AUD$5.1m resulting
in a COR of 107.3% (2021: AUD$24.4m
loss, COR of 156.9%). GWP grew by 3.9%
in local currency to AUD$177.8m (2021:
AUD$171.2m) with strong rate increases
combined with moderate new business
growth offset by a lower retention rate. The
performance of the underlying business
in the current year has been good and
continues to improve in light of positive
underwriting actions. The underwriting
result for 2022 was impacted by a very
high level of catastrophe claims and
the strengthening of prior year casualty
reserves. The level of historic physical and
sexual abuse (PSA) claims being notified
stabilised in 2022, following increases
in previous years. This risk is internally
reinsured within the Group (reported on
below). The overall result in the prior year
had been adversely impacted by PSA
reserve strengthening.
The Australia operation contributed an
underwriting loss of £1.0m (2021: £10.0m)
to the Group internal reinsurance portfolio,
with the relative improvement reflecting the
levelling of PSA claims reporting.
Canada
Our Canadian business continued its track
record of delivering double digit premium
growth, reporting GWP of CAD$175.4m
(2021: CAD$158.0m), an 11.0% increase,
which was supported by strong retention
and rate increases as well as new business.
Canada reported an underwriting profit
of CAD$11.3m resulting in a COR of 90.6%
(2021: CAD$12.2m profit, COR of 88.6%).
Despite an increase in the number of large
losses and Hurricane Fiona, the property
book performed well due to lighter than
expected attritional losses. The performance
of the liability book was impacted by
adverse development on prior year claims
and the resultant strengthening of the
reserves provision.
Investments
Our results include fair value losses
of £94.1m (2021: £58.3m gains) on our
investment portfolio, which contributed
to a lower net investment gain of £4.1m
(2021: £102.9m). Investment income of
£32.1m (2021: £30.9m) stood up well and
comparably with prior year.
Investment markets have been impacted by
macroeconomic disruptions, exacerbated by
Governance Financial Statements Other InformationStrategic Report
Strategic Report –Chief Financial Officer’s Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 43
the geopolitical turmoil in Ukraine and the
cost of living crisis shadowing the economic
outlook. Higher food and energy prices are
pushing inflation to a 40 year high in the
UK and other parts of the world, as central
banks respond with tighter monetary policy
in an effort to bring this under control.
Whilst we may have now passed a peak in
inflation, the outlook drove down financial
asset prices compared to last year.
The past three years highlights the impact
economic and political uncertainty can have
on the performance of our investments,
however, we remain confident in our
long-term investment philosophy, and are
well-diversified and relatively defensively
positioned.
Fair value losses on financial instruments
of £72.9m (2021: £38.1m gains) included a
gain on an unlisted equity investment of
£16.8m (2021: £9.3m). We recognised fair
value losses of £21.2m (2021: £20.2m gains)
on our investment properties, driven by a
fall in the value of industrial sector capital
values in the portfolio, as investors continue
to adjust to the new reality of higher interest
rates.
The Group’s investment strategy includes
the objective of matching assets with
insurance liabilities when managing
exposure to interest rate risk. Insurance
liabilities expected future cash flows are
discounted at an interest rate which is
set to reflect the risk free yields available
on a suitable portfolio of illiquid assets.
During the year, an upward movement
in interest rates led to an increase in the
discount applied to insurance liabilities. This
resulted in an overall gain of £66.9m (2021:
£14.5m) which is recognised within the net
investment return. Whilst the majority of
this arose from our longer term liabilities,
£13.2m related to our shorter term liabilities.
We recognise the importance of our role in
tackling climate change and that we have a
duty to invest responsibly. Our responsible
and sustainable investment policy plays an
important part in how we invest responsibly,
informing our investment strategy and
helping understand and mitigate the risks of
climate change. Our strategy includes a focus
on responsible investment and encompasses
action to respond to climate risk and
operations, investing in ways that support
the transition to a low-carbon economy.
The Group is expected to be aligned with
the Sustainable Development Scenario by
2050, representing a temperature increase
of 1.5 degrees by 2050, well ahead of the 3.1
degree benchmark. More information on the
Group’s approach to responsible investment
including actions we take to mitigate the risks
of transitioning to a low carbon economy can
be found in our Responsible Business Report.
Long-term business
Our life business, Ecclesiastical Life
Limited, reopened to business during
2021, launching a new product providing
guaranteed funeral planning products
sold by Ecclesiastical Planning Services, a
business within the wider Benefact group.
The legacy book within our life insurance
business remains closed to new business.
Profit before tax was £3.6m for the year
(2021: £1.1m), driven by a reduction in
liabilities due primarily to an increase
in interest rates. Assets and liabilities in
relation to the life insurance business
remain well matched.
IFRS 17
The new IFRS 17 insurance accounting
standard has been adopted by the
Group and was effective from January
2023. This new accounting standard will
make the financial statements of public
insurance companies more comparable and
transparent. The Group’s first set of results
reported under IFRS 17 will be published
in Autumn within the Group’s 2023 interim
results. Further information about the
application of this new accounting standard
is included within the notes to the financial
statements.
Outlook
Despite the challenges faced during the
year and as inflation accelerates across
many countries, the underlying resilience of
our businesses means we will continue to
grow sustainably and invest for the future.
It also enabled us to give over £22m to
Benefact Trust and other charities in the
year. As part of the Benefact Group, we
have many exciting opportunities ahead
as we look to achieve our ambition of
giving £250m cumulatively since 2014 to
charitable causes by the end of 2025.
Denise Cockrem
Group Chief Financial Officer
’We recognise the
importance of our
role in tackling
climate change
and that we have
a duty to invest
responsibly.’
Church of Ascension
Salford, England
In February 2017, the Grade II listed Church of the
Ascension in Salford was devastated by fire.
The Ecclesiastical claims team supported the restoration
project throughout the five years that followed from the
immediate aftermath, the complex structural process of
strengthening the church’s supporting columns, through
to making the building fit for the needs of the community
today, including some new accessible and sustainable
solutions. The church was rededicated in November
2022 and Ecclesiastical was thrilled to have been
involved in bringing this key inclusive community space
back to the people of Lower Broughton.
‘It has been a long five and a half years since the fire –
we can now look forward to the future with a beautifully
restored church that is fit for the 21st century.’
Shirley Kehoe, PCC Secretary
You can read about the full restoration story and the
part our specialist expertise and support played by
clicking here.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Risk Management Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 45
Risk Management Report
The Risk Management Framework is
integrated into the culture of the Group
and is owned by the Board. Responsibility
for facilitation of the implementation and
oversight is delegated via the Group Chief
Executive to the Group Risk Function, led by
the Group Chief Risk and Compliance Officer.
The Risk Management process demands
accountability and is embedded in
performance measurement and reward,
thus promoting clear ownership for risk
and operational efficiency at all levels. On
an annual basis, the Group Risk Committee
(“GRC”), on behalf of the Board, carries
out a formal review of the key strategic
risks for the Group with input from the
Group Management Board (“GMB”) and
the Strategic Business Units (SBUs). The
GRC allocates responsibility for each of
the risks to individual members of the
Group’s Executive Management team.
Formal monitoring of the key strategic risks
is undertaken quarterly, which includes
progress of Risk Management actions and is
overseen by Executive Risk Committees.
Governance
Values and culture
People, systems and processes
Risk appetite
Internal model
Stress and
scenario
testing
Risk
management
process
Business performance
and capital
management
ORSA
Risk policies and standards
Risk
strategy
Risk reporting and monitoring
Internal control framework and three lines of defence
Strong governance is fundamental to what we do and drives the ongoing
embedding of our Enterprise-Wide Risk Management Framework. This
provides the tools, guidance, policies, standards and defined responsibilities
that enable us to achieve our strategy and objectives, whilst ensuring that
individual and aggregated risks to our objectives are identified and managed
on a consistent basis.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Risk Management Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 46
Ecclesiastical has clearly defined the
accountabilities, roles and responsibilities
of all key stakeholders in implementing and
maintaining its Risk Management Framework.
These are defined, documented and
implemented through the Terms of Reference
of Board Sub Committees, Management
and Executive Forums, Statement of
Responsibilities and Functional Charters.
The Group’s Risk Management Framework is
part of a wider Internal Control Framework.
Systems of internal control are designed
to manage rather than eliminate the risk
of failure to achieve business objectives,
and provide reasonable, but not absolute,
assurance as to the prevention and
detection of financial misstatements, errors,
fraud or violation of law or regulations.
Key to the successful operation of
the internal control framework is the
deployment of a strong Three Lines of
Defence Model whereby:
• 1st Line (Business Management) is
responsible for strategy execution,
performance and identification and
management of risks and application of
appropriate controls;
• 2nd Line (Reporting, Oversight and
Guidance) is responsible for assisting
the Board in formulating risk appetite,
establishing minimum standards,
developing appropriate risk management
tools, providing oversight and challenge
of risk profiles and risk management
activities within each of the business units
and providing risk reporting to Executive
Management and the Board.
• 3rd Line (Assurance) provides independent
and objective assurance of the
effectiveness of the Group’s systems of
internal control. This activity principally
comprises the Internal Audit function,
which is subject to oversight and challenge
by the Group Audit Committee.
We seek to develop and improve our Risk
Management Framework and strategy on an
ongoing basis to ensure it continues to support
the delivery of our strategy and objectives.
The Group Risk Appetite defines the level
of risk-taking that the Board considers to
be appropriate for the Group as we pursue
our business objectives. It is defined in
line with the different categories of risk
that the Group faces, and provides the
backdrop against which the business plan
is developed and validated. This ensures
that the risk profile resulting from the
business plan is in line with the risk-taking
expectations of the Board. Compliance with
the risk appetite is formally monitored every
quarter and reported to GRC at each meeting.
The risk appetite is formally reviewed
annually with approval and sign-off by the
Board and there are ongoing assessments
to ensure its continued appropriateness for
the business.
The Own Risk and Solvency Assessment
(ORSA) process is carried out at least once
a year and is a key part of the business
management and governance structure.
This integrates the risk management,
business planning and capital management
activities and ensures that risk, capital and
solvency considerations are built into the
development and monitoring of the Group’s
business strategy and plans and all key
decision making.
The Group has Regulatory approval for the
use of an Internal Model to determine our
Regulatory Capital requirement. In addition,
the Internal Model’s capability to quantify
material risks and assess the impacts on
Capital requirements across a range of
scenarios allows us to gain a deeper insight
into the relationship between Risk and
Capital Management.
The Internal Model is used extensively to
inform key business decisions across the
Group, including setting business strategies
and objectives, producing risk profiles and
capital requirements for different scenarios,
informing risk taking guidelines, informing
and defining the Group Risk Appetite and
Investment Strategy, determining risk
mitigation mechanisms and responses to
regulatory capital requirements.
Risk environment
The Risk environment is monitored on an
ongoing basis and key areas of concern are
escalated to GRC.
Whilst we felt significant pressure on the
cost and availability of reinsurance, we were
able to complete our placement effectively,
despite this background. Although inflation
predictions have settled more recently, this
will be a continuing area of focus across the
business into 2023.
With market volatility throughout the year,
we maintained our existing investment
approach and made no material changes to
our asset mix, holding a diversified portfolio
of assets including equities and property
held for prospects of long-term returns.
Consequently, we continue to choose to take
a relatively high level of market risk, which
is well understood and closely monitored
and managed.
The profitable management of our insurance
businesses on a portfolio basis in hardening
markets continues to be a key area of focus
for the Group; ensuring that the business
written and retained is profitable and
sustainable. Competitor activity remains
a risk across all our business operations
and chosen niches and 2022 was no
exception. Our strategy remains to achieve
controlled and profitable growth within our
defined specialist markets. During 2022 we
have maintained our strong underwriting
discipline and risk appetite.
The potential for adverse development
of long-tail liability claims, particularly
in respect of PSA claims, remains a key
risk that we continue to actively manage.
A further report was issued in relation to
the Independent Inquiry into Child Sexual
Abuse in the UK in October 2022. Continued
elevated claims volumes in Australia and
a combination of greater frequency and a
higher assumed severity of claims in Canada
has led to increases in levels of reserves
held in both of those territories. We continue
to monitor the experience and claims
environment in all of the territories in which
we operate.
The impact of the Covid-19 pandemic
continued into the start of 2022 and
the wide-ranging impacts, both direct
and indirect, continued on the Group,
and especially in regards the economic
environment in which we operate. Although
there were reduced implications on the
Group’s operations through 2022, there
were continued impacts on the insurance
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Strategic Report – Risk Management Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 47
policies written by Group companies and
on the Group’s investment assets. These
were further impacted by the inflationary
pressures felt across the economy.
The Covid-19 pandemic was the trigger for a
high volume of regulatory guidance issued
in all territories during the prior years, some
other elements of regulatory change had
therefore been delayed. However, focus
in 2022 has been heavily on Consumer
Duty across the group. Management of
change in the regulatory environment will
remain a key focus area to ensure that we
operate within relevant legal, regulatory
and consumer protection requirements and
guidelines and that our people maintain the
highest standards of conduct with continued
commitment to placing customers at the
centre of everything we do.
Cyber risk remains a constantly evolving
threat due to the threat of zero day attack.
We hold customer data, and therefore
any event involving a significant loss of
such data could result in harm to the data
subjects, significant operational disruption
and an impact on our service to customers,
as well as sizeable regulatory fines and
reputational damage. The increased societal
focus on data security and appropriateness
of use, together with regulations such as
GDPR, results in increased scrutiny and
prominence. Hybrid working continues, and
this is seen as an exploitable opportunity for
external attackers, and there continues to
be a general increase in social engineering
and phishing attacks across the financial
sector. Employee awareness and vigilance
is therefore highly important at this time, and
the Group operates an ongoing programme of
training and awareness exercises for its staff.
The Group aims to be the most trusted,
specialist insurer and therefore maintaining
a positive reputation is critical. Our
reputation could potentially be damaged
as a result of a range of factors including
poor business practices and behaviours.
High standards of conduct are a core part of
the Group’s brand, values and culture and
there is an ongoing focus on ensuring this is
maintained.
Climate change presents increasing levels
of risk to our businesses and our customers.
Whilst the greatest impacts of these risks
are expected to materialise in the medium
to long-term, it is important that we take
actions to mitigate and manage these risks
now. Our exposures to climate change risk
include transition risk, primarily related to
our investment portfolio, and physical risk
that additionally affects the insurance risks
that we cover.
’High standards of
conduct are a core
part of the Group’s
brand, values and
culture and there
is an ongoing
focus on ensuring
this is maintained.’
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Principal risks
1 Link to viability statement – risk included in stress and scenario analysis
There is an ongoing risk assessment process which has identified
the current principal risks for the Group as follows:
Insurance risk
The risk that arises from the fluctuation in the timing, frequency and severity
of insured events relative to the expectations of the firm at the time
of underwriting.
Risk detail Key mitigants Change from last year
Underwriting risk1
The risk of failure to price insurance
products adequately and failure to
establish appropriate underwriting
disciplines. The premium charged must
be appropriate for the nature of the cover
provided and the risk presented to the
Group. Disciplined underwriting is vital
to ensure that only business within the
Company’s risk appetite and desired
niches is written.
• A robust pricing process is in place
• The Underwriting Licencing process has been refreshed
• A documented underwriting strategy and risk appetite is in place
together with standards and guidance and monitored by SBUs
• This is supported by formally documented authority levels for all
underwriters which must be adhered to. Local checking procedures
ensure compliance
• Monitoring of rate strength compared with technical rate is undertaken
on a regular basis within SBUs
• There are ongoing targeted underwriting training programmes in place
• A portfolio management framework is in place to ensure clear
understanding and allow targeted actions to be taken
There have not been material changes to this risk during the year, with soft
market conditions continuing in all territories, though the impact of increased
claims inflation has needed careful management.
Reserving risk1
Reserving risk is the risk of actual claims
payments exceeding the amounts we
are holding in reserves. This arises
primarily from our long-tail liability
business. Failure to interpret emerging
experience or fully understand the
risks written could result in the Group
holding insufficient reserves to meet our
obligations.
• Claims development and reserving levels are closely monitored by the
Group Reserving team
• For statutory and financial reporting purposes, prudential margins are
added to a best estimate outcome to allow for uncertainties
• Claims reserves are reviewed and signed-off by the Board acting on
the advice and recommendations of the Group Chief Actuary following
review by the Reserving Committee
• An independent review is also conducted by the Actuarial Function
Director with reporting to the Board
This risk is not considered to have changed materially during the year, with
inflationary impacts being a key consideration in the reserving process during
2022. A rise in numbers of Physical and Sexual Abuse claims in the Australian
and Canadian businesses over the past year has led to an increase in reserves.
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Risk detail Key mitigants Change from last year
Catastrophe risk1
The risk of large scale extreme events
giving rise to significant insured losses.
Through our general insurance business
we are exposed to significant natural
catastrophes in the territories in which
we do business.
• Modelling is undertaken to understand the risk profile and inform the
purchase of reinsurance
• There is a comprehensive reinsurance programme in place to protect
against extreme events. All placements are reviewed and approved by
the Group Reinsurance Board
• Exposure monitoring is undertaken on a regular basis
• A Catastrophe Risk Management Group provides oversight and sign off
of reinsurance modelling
• The Group Risk Appetite specifies the reinsurance purchase levels and
retention levels for such events
• Local risk appetite limits have been established to manage
concentrations of risk and these are monitored by SBUs
There have been no material changes to this risk. We continue to monitor our
aggregations and exposures to such events and ensure careful management
utilising appropriate protections.
Reinsurance risk
The risk of failing to access and manage
reinsurance capacity at a reasonable
price. Reinsurance is a central
component of our business model,
enabling us to insure a portfolio of large
risks in proportion to our capital base.
• We take a long-term view of reinsurance relationships to deliver
sustainable capacity
• A well-diversified panel of reinsurers is maintained for each element of
the programme
• A Group Reinsurance Board approves all strategic reinsurance decisions
The level of this risk has not materially changed, however reinsurance markets
have experienced increasing challenges in recent years due to the impact of
Covid-19 claims and global catastrophe events, as well as the volatile economic
challenges in 2022. This has resulted in tightening of criteria and capacity in
certain areas. We continue to take a long-term approach to our reinsurance
relationships.
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Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 50
Other financial risks
The risk that proceeds from financial assets are not sufficient to fund the obligations arising from insurance contracts.
Risk detail Key mitigants Change from last year
Market and investment risk
The risk of adverse movements in net
asset values arising from a change
in interest rates, equity and property
prices, credit spreads and foreign
exchange rates. This principally arises
from investments held by the Group.
We actively take such risks to seek
enhanced returns on these investments.
The Group’s balance sheet is also
exposed to market risk within the
defined benefit pension fund.
• An investment strategy is in place which is reviewed at least annually
and signed off by the Finance and Investment Committee (F&I). This
includes consideration of the Group’s liabilities and capital requirements
• A Market and Investment Risk Committee is in place and provides
oversight and challenge of these risks and the agreed actions. There is a
formalised escalation process to GMB and F&I in place
• There are risk appetite metrics in place which are agreed by the Board
and include limits on Asset / Liability Matching and the management of
investment assets
• Derivative instruments are used to hedge elements of market risk,
notably equity and currency. Their use is monitored to ensure effective
management of risk
• There is tracking of risk metrics to provide early warning indicators of
changes in the market environment
The Pension Scheme Trustee Board has an Investment Committee
that oversees the market risks in the pension fund. The company, as
employer sponsor of the fund maintains regular communication with this
committee.
Further information on this risk is given in note 4 to the financial
statements on page 135.
Overall the market risk profile has not materially changed and we remain
invested for the long term. We continue to monitor market conditions and the
socio-political environment.
1 Link to viability statement – risk included in stress and scenario analysis
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 51
Risk detail Key mitigants Change from last year
Credit risk
The risk that a counterparty, for
example a reinsurer, fails to perform its
financial obligations to the company
or does not perform them in a timely
manner resulting in a loss for the Group.
The principal exposure to credit risk
arises from reinsurance, which is central
to our business model. Other elements
are our investment in debt securities,
cash deposits and amounts owed to us
by intermediaries and policyholders.
• Strict ratings criteria are in place for the reinsurers that we contract with
and a Reinsurance Security Committee approves all of our reinsurance
partners
• Group Reinsurance monitors the market to identify changes in the credit
standing of reinsurers
• There are risk appetite limits in place in respect of reinsurance
counterparties which are agreed by the Board
• Strong credit control processes are in place to manage broker and
policyholder exposures
Further information on this risk is given in note 4 to the financial
statements on page 135.
The level of this risk has remained broadly similar to the previous year,
although we are cognisant to the challenges of the current cost of living crisis,
and the potential knock-on impacts.
Liquidity risk
The risk that the Group, although
solvent, either does not have sufficient
financial resources available to enable it
to meet its obligations as they fall due,
or can secure them only at excessive
cost. We may need to pay significant
amounts of claims at short notice if
there is a natural catastrophe or other
large event in order to deliver on our
promise to our customers.
• We hold a high proportion of our assets in readily realisable investments
to ensure we could respond to such a scenario
• We maintain cash balances that are spread over several banks
• We have arrangements within our reinsurance contracts for reinsurers to
pay recoverables on claims in advance of the claim settlement
There have been no material changes to this risk since last year.
1 Link to viability statement – risk included in stress and scenario analysis
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 52
Risk detail Key mitigants Change from last year
Climate change
The financial risks arising through climate
change.
The key impacts for the Company are
physical risks (event driven or longer term
shifts), the transition risks of moving towards
a lower carbon economy and liability risks
associated with the potential for litigation
arising from an inadequate response.
• Catastrophe risk is managed through reinsurance models
• We consider flood risk and other weather-related risk factors in
insurance risk selection
• There is an ESG overlay on the Investment Strategy
A programme of work continues to fully analyse the impact on the Group and
to develop appropriate risk management responses.
The Group has effected changes to its investment policy to:
• exclude investment in companies that are wholly or mainly involved in fossil
fuel exploration and production and thermal coal
• Monitor the overall carbon profile and intensity of companies and, through
its Fund Manager, engage with the highest emitters, and urge the setting of
science-based targets aligned with the Paris Agreement
• Seek opportunities to invest in areas that are leading the transition to a low
carbon economy, where these also meet robust investment criteria
1 Link to viability statement – risk included in stress and scenario analysis
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 53
Operational risk
The risk of loss arising from inadequate or failed internal processes,
people and systems, or from external events.
Risk detail Key mitigants Change from last year
Systems risk
The risk of inadequate, ageing or
unsupported systems and infrastructure
and system failure preventing processing
efficiency. Systems are critical to enable us
to provide excellent service to our customers.
• A defined IT Strategy is in place
• Systems monitoring is in place together with regular systems and data
backups
• A strategic systems programme is underway to deliver improved systems,
processes and data
• Business recovery plans are in place for all critical systems and are tested
according to risk appetite
This level of risk remains stable, as the Group continues to invest in IT
infrastructure to maintain and improve future stability.
Cyber risk
The risk of criminal or unauthorised use of
electronic information, either belonging to
the Group or its stakeholders e.g. customers,
employees etc. Cyber security threats from
malicious parties continue to increase in both
number and sophistication across all industries.
• A number of security measures are deployed to ensure protected system
access
• Security reviews and assessments are performed on an ongoing basis
• There is ongoing maintenance and monitoring of our systems and
infrastructure in order to prevent and detect cyber security attacks
• There is an ongoing Information Security training and awareness programme
Cyber risk remains a constantly evolving threat, with malicious threat attackers
continuing to seek to exploit businesses returning from the Covid-19 related
business disruption, including a more hybrid approach to working. Employee
awareness and vigilance is therefore highly important at this time, which is
continuing to be proactively managed.
Change risk
The risk of failing to manage the change
needed to transform the business.
A number of strategic initiatives are underway
under three themes, Support and protect,
Innovate and grow and Transform and thrive.
These include a transformation of our core
system and key processes, which will deliver
significant change for the company over the
next few years. There are a number of material
risks associated with major transformation,
not only on the risks to project delivery itself,
but the potential disruption to business as
usual, or delays to planned benefits.
• We have a clearly articulated Group Strategic Programme, identifying areas of
priority across the Group
• We ensure that there is adequate resourcing for change projects using
internal and external skills where appropriate
• A Change Board and change governance processes are in place and operate
on an ongoing basis
• The GMB undertakes close monitoring and oversight of the delivery of the
strategic initiatives and key Group change programmes
The level of this risk has not materially changed. There continues to be a
significant volume of change within the business, which is monitored closely,
relating to both IT systems and to meet the ever changing Regulatory
landscape, including the successful implementation of the required changes
from IFRS 17.
Appropriate strengthening of expertise has continued in the year to reflect and
meet this volume of change.
1 Link to viability statement – risk included in stress and scenario analysis
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Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 54
Risk detail Key mitigants Change from last year
Operational resilience
The risk that the Group does not prevent,
respond to, recover and learn from
operational disruptions.
The Group provides a wide range of services
to a diverse customer base and has a
reputation for delivering excellent service.
Therefore, we seek to minimise the potential
for any such disruption that would impact on
the service provided to our customers.
• A recovery and resilience framework is in place aligned to the delivery of
customer services
• Recovery exercises including IT systems are regularly performed across the
company with actions identified addressed within an agreed timescale
• All suppliers are subject to ongoing due diligence
• There is ongoing maintenance and monitoring of our systems and
infrastructure in order to prevent and detect issues
Operational resilience continues to have been successfully tested during the
year, with the continued need to meet the needs of our customers, alongside
working in a new hybrid environment. Focus in 2022, and into the coming
couple of years, remains on meeting the enhanced Regulatory requirements
around resilience.
Data management and governance
The risk that the confidentiality, integrity
and/or availability of data held across the
Group is compromised, or data is misused.
The Group holds significant amounts of
customer and financial data and there
could be significant implications if this is
compromised or is found to be inaccurate.
• A Group Data Governance and Management Committee is in place
• Group Data Governance and Group Data Management and Information
Security Policies are in place
• A Group Data Optimisation Programme is in place which is responsible for
ensuring the delivery of the data strategy and all aspects relating to the
governance, management, use and control of the Group’s data in line with
regulatory requirements
Enhancements continue to be made to the governance, management, use and
control of data, in order to meet the evolving requirements. It continues to be
monitored and managed within the context of major change programmes.
1 Link to viability statement – risk included in stress and scenario analysis
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 55
Regulatory and conduct risk
The risk of regulatory sanction, operational disruption or reputational damage
from non-compliance with legal and regulatory requirements or the risk that
Ecclesiastical’s behaviour may result in poor outcomes for the customer.
Risk detail Key mitigants Change from last year
Regulatory risk
The risk of regulatory sanction, operational
disruption or reputational damage from
non-compliance with legal and regulatory
requirements. We operate in a highly
regulated environment which is experiencing
a period of significant change.
• We undertake close monitoring of regulatory developments and use dedicated
project teams supported by in-house and external legal experts to ensure
appropriate actions to achieve compliance
• An ongoing compliance monitoring programme is in place across all our SBUs
• Regular reporting to the Board of regulatory compliance issues and key
developments is undertaken
There continues to be a significant volume of regulatory change. We remain
focused on the management of regulatory change and therefore the overall
risk level is unchanged.
Conduct risk
The risk of unfair outcomes arising from
the Group’s conduct in the relationship with
customers, or in performing our duties and
obligations to our customers.
We place customers at the centre of the
business, aiming to treat them fairly and
ethically, while safeguarding the interests of
all other key stakeholders.
• There is ongoing staff training to ensure that customer outcomes are fully
considered in all business decisions
• Customer charters have been implemented in all SBUs
• Conduct Risk Reporting to relevant governing bodies is undertaken on a
regular basis
• Customer and conduct measures are used to assess remuneration
The probability of such risks crystallising increased during the Covid-19
pandemic, which continued into the start of the financial year. However, we
remain committed to placing customers at the centre of our practices and
decision making, governed by our internal Conduct & Compliance Committees,
and demonstrated by our wide-ranging industry awards and customer
satisfaction scores. Overall the level of this risk is unchanged from last year.
1 Link to viability statement – risk included in stress and scenario analysis
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Principal risks Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 56
Reputational risk
The risk that our actions lead to reputational damage in
the eyes of customers, brokers or other key stakeholders.
Risk detail Key mitigants Change from last year
Brand and reputation risk
The Group aims to be the most trusted
specialist insurer and as a consequence
this brings with it high expectations from
all of our stakeholders, be they consumers,
regulators or the wider industry.
Whilst we aim to consistently meet and
where possible exceed these expectations,
increasing consumer awareness and
increased regulatory scrutiny across the
sector exposes the Group to an increased
risk of reputational damage should we fail to
meet them, for example as a consequence of
poor business practices and behaviours.
• There is ongoing training of core customer facing staff to ensure high skill
levels in handling sensitive claims
• We adopt a values led approach to ensure customer-centric outcomes
• There is a dedicated Marketing and PR function responsible for the
implementation of the marketing and communication strategy
• Ongoing monitoring of various media is in place to ensure appropriate
responses
Maintaining a positive reputation is critical to the Group’s vision of being the
most trusted and ethical specialist financial services group.
Risks to our brand and reputation are inherently high in an increasingly
interconnected environment, with the risks of external threats such as cyber
security attacks, and viral campaigns through social media always present.
The external environment continues to drive a high inherent probability of
reputational issues across all financial services companies. We continued
to focus on serving our customers and ensuring fair treatment and clear
communication, and are proud of the volume of Industry Awards we continue
to win, and of the successful Benefact brand launch in 2022.
1 Link to viability statement – risk included in stress and scenario analysis
Royal Ballet School
London, England
The official school of The Royal Ballet, The
Royal Ballet School is a world-renowned centre
of excellence. Founded in 1926, the school has
contributed immeasurably to our rich dance heritage,
with famous names such as Margot Fonteyn and
Darcey Bussell among its former students.
Admission is based purely on talent and potential,
regardless of academic ability or personal
circumstances. Providing an eight-year dance course
alongside an extensive academic, pastoral and
healthcare programme, the school equips students
to flourish in their future careers within and beyond
the world of classical ballet.
The Royal Ballet School is just one of the prestigious
academic institutions we insure and provide with
risk management support. And in recognition of
our specialist expertise in insuring schools and
charities, we are delighted to have remained
their insurer of choice for many years.
©2019 The Royal Ballet School. Photographed by Rachel Cherry
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Going Concern and Viability Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 58
The Financial Performance section on page 41 and Risk Management section
of the Strategic Report starting on page 45 provide a review of the Group’s
business activities and disclose the Group’s principal risks and uncertainties,
including exposures to insurance, financial, operational and strategic risk.
Going Concern and Viability Statement
The Group has considerable financial
resources: financial investments of £870.7m,
84% of which are liquid (2021: financial
investments of £883.8m, 90% liquid) and
cash and cash equivalents of £104.7m (2021:
£114.0m) to withstand economic pressures.
Liquid financial investments consist of
listed equities and open-ended investment
companies, government bonds and listed
debt.
The Group has a strong risk management
framework and solvency position, is well
placed to withstand significant market
disruption and has proved resilient to
stress testing. The Group has considered
its capital position, liquidity and expected
performance. The Group and its businesses
have sufficient levels of cash and other
liquid resources and has expectations it can
meet its cash commitments over its planning
horizon. The Group and its businesses
expect to continue to meet regulatory
requirements.
Despite the continuing and expected
economic pressures and challenges, given
the Group’s operations, robust capital
strength, liquidity and in conjunction with
forecast projections and stress testing,
which were considered severe but plausible
downside scenarios, the directors have
a reasonable expectation that the Group
has adequate resources and is well placed
to manage its risks successfully and
continue in operational existence for at
least 12 months from the date of this report.
Accordingly, they continue to adopt the
going concern basis in preparing the Annual
Report and Accounts.
Strategic Report – Going Concern and Viability Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 59
Quote
Governance Financial Statements Other InformationStrategic Report
’The Group has
a strong risk
management
framework and
solvency position,
is well placed
to withstand
significant market
disruption and has
proved resilient to
stress testing.’
Longer-term viability
statement
The directors have assessed the prospects
of the Group in accordance with Provision 31
of the 2018 UK Corporate Governance Code.
Although the prospects and business plans
of the Group are considered over a longer
period, the assessment by the directors
covers three years.
In making its assessment the directors
considered:
• The Group’s current position and
prospects, risk appetite, and the potential
impact of the principal risks and how these
are managed;
• The Group’s long-term business plans and
strategy, and the costs associated with its
delivery;
• The Group’s current capital, liquidity and
solvency position and projections;
• The political, economic and regulatory
environment, including uncertainties on
the geopolitical outlook and potential for a
prolonged recession.
While the directors have no reason to
believe the Group will not be viable over
a longer period, a three-year outlook
period has been selected. In determining
this assessment period, consideration has
been given to the nature of the Group and
its businesses, its stage of development,
strategy and business model. Given the
rate of change in the markets in which the
Group operates, three years provides an
appropriate balance between the period of
outlook and degree of clarity over specific,
foreseeable risk events that could impact
on the viability of the Group. The directors
will continue to monitor and consider the
suitability of this period.
The Group uses varying stress scenarios
with reference to the principal risks,
which are documented on pages [x] to [x].
Scenarios are designed to be severe, but
plausible, and assess the impact of certain
events on the Group’s profitability and
capital strength. Reverse stress testing
is also used to assess what could make
the Group’s business model unviable. The
outcome of testing was discussed by the
Board during the year and consideration
was given to the current environment on the
Group’s viability.
Among the considerations and scenarios
were further investment market
volatility, claims experience and business
deterioration.
The solvency position of the Group has
been projected as part of the Own Risk
and Solvency Assessment (ORSA), which
is a private, internal, forward-looking
assessment of own risk, required as part
of the Solvency II regime. The forward
looking emphasis of the ORSA ensures that
business strategy and plans are formulated
with full recognition of the risk profile and
future capital needs.
Analysis confirms that the Group has
sufficient capital resources to cover its
capital requirements and is operationally
resilient.
The directors have also considered the
Group’s ability to service its preference
shares, subordinated liabilities, and the
expectations of its ultimate charitable owner,
Benefact Trust Limited. The Group has fixed
annual dividend payments of £9.2m in
respect of its non-cumulative irredeemable
preference shares. The Group makes regular
grants to its ultimate charitable owner,
Benefact Trust Limited.
Confirmation of viability
Based on the Group’s strong capital position,
the strong risk management framework
in place and the Group’s resilience to
the variety of adverse circumstances as
demonstrated in the results of the stress
testing and potential mitigating actions,
the directors confirm that they have a
reasonable expectation that the Group will
continue in operation and be able to meet its
liabilities over the three year period of the
viability assessment.
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Strategic Report – Non-Financial Information Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 60
Non-financial information
The Non-Financial Reporting requirements
contained in sections 414CA and 414CB of
the Companies Act 2006 are addressed
below:
Non-financial information Disclosure Section Pages
Business model Our business model and
information on how we do
business differently
Strategic report
– Our Business
model and
strategy
13
Key performance indicators
(KPIs)
Our KPIs set out how we are
doing against our strategic goal
Strategic report
– Key
performance
indicators
36
Principal risks Our key risks and their
management
Strategic report
– Principal risks
48
Our policies We have a range of policies
and guidance in place to
support the key outcomes for
our stakeholders. These also
ensure consistent governance
on environmental matters, our
employees, social matters,
human rights and anti-bribery
and corruption
See below
Non-Financial
Information Statement
Our key policies / statements
of intent
Environmental matters
• We are committed to running the business
in a sustainable way to tackle climate
change and encourage others to do more.
• We assess performance against
ClimateWise reporting which is aligned
to Taskforce on Climate-related Financial
Disclosures (TFCD) reporting.
• We aim to reduce our direct impact on the
environment and seek to use renewable
sources of energy.
• Other information on environmental
matters is included within the Responsible
Business Report.
Employees
• Our Code of Conduct policy is centred
on ‘Doing the right thing’ and sets the
standards of conduct and behaviour
expected from employees.
• The Board aims to ensure it is comprised
of persons who are fit and proper to direct
the business. The Board’s diversity policy
sets out the approach to diversity in the
leadership population.
• Other information on our commitments to
supporting diversity and development is
included in the socially-positive section
of the Responsible Business Report. Also
included within the Corporate Governance
report is information about the composition
and diversity of the Board.
Social matters
• We were founded over 135 years ago with
a charitable purpose and this remains
what motivates us today. We believe
business has a social responsibility and
should give more to support charities and
communities. More information about how
we support our communities can be found
in the Responsible Business Report.
• The Group does not make political
donations.
• Our tax strategy supports our Group
strategy and the ethical way we do
business. We are committed to managing
all aspects of tax transparently and in
accordance with current legislation. We
work to achieve the spirit of legislation and
not just the letter of the law in each tax
jurisdiction. Our tax strategy is available on
www.ecclesiastical.com
Human rights, anti-bribery and anti-
corruption
• The Board is committed to operating with
honesty and integrity in all of our business
activities and promoting an anti-bribery
and corruption culture across the Group.
• We have established and uphold good
practices regarding human rights, anti-
corruption and anti-bribery through a
range of measures including robust risk
management, employee Code of Conduct
and employee training on topics such
as data protection, whistleblowing and
vulnerable customers.
• We comply with relevant legislation
concerning our supply chain – the Modern
Slavery Act 2015 and the Payment
Practices and Performance regulations –
to drive good practice and transparency.
• The Responsible Business Report
contains more information including our
commitment to putting customers and
partners at the heart of everything we do,
focusing on good governance, service and
support.
Governance Financial Statements Other InformationStrategic Report
Strategic Report – Section 172 Statement Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 61
Section 172 Statement
This section describes how the directors have had regard to those
matters when performing their duties.
Our Approach to the Long Term Success of the Company
The Directors recognise that the long-term success of the Company,
and therefore our ability to continue to help people, charities and
good causes is dependent on having regard to the interests of its
stakeholders at its heart. In order to achieve our strategic ambitions
the Board understands how important it is to listen and and respond
to the needs of our stakeholders.
As a global financial services Group driven by the ambition of
transforming lives and communities, we are continually striving to do
the right thing at all times. However there are occasions where the
needs of different stakeholder groups may not always be aligned.
On these occasions, the Board attempts to balance the conflicting
interests and impacts of our stakeholders in their decision-making.
Stakeholder engagement
Examples of the way in which the Board has engaged with key
stakeholder groups is provided in the Corporate Governance
Statement on page 74.
The Directors confirm that during 2022 and to the date of this Report, they have acted to
promote the success of the Company for the benefit of its members as a whole and considered
the matters as set out in section 172(1)(a) to (f) of the Companies Act 2006.
Matter Disclosed in
(a) the likely consequences of any decision in the
long term
Our Business Model and Strategy page 13
Strategy in action page 14
Board Activities during 2022 page 80
Board Leadership and Company Purpose page 72
(b) the interests of the company’s employees Employee Engagement and Wellbeing page 21
Our Culture page 74
Diversity and Inclusion page 21
Board Diversity Policy page 89
(c ) the need to foster the company’s business
relationships with suppliers, customers and
others
Customers and Partners part of the Reponsible
Business Report page 22
(d) the impact of the company’s operations on the
community and the environment
Charitable Giving page 20
Environmentally positive page 26
Beneficiaries Stories
(e) the desirability of the company maintaining
a reputation for high standards of business
conduct
Risk Management Report page 45
Internal Controls page 84
Whistleblowing page 101
Modern Slavery Act declaration page 22
(f) the need to act fairly as between members
of the company
Annual General Meeting information page 165
Stakeholder Engagement page 75
Governance Financial Statements Other InformationStrategic Report
Section Two
Governance
Board of Directors 63
Directors’ Report 68
Corporate Governance 71
Finance & Investment Committee Report 85
Group Nominations Committee Report 87
Risk Committee Report 92
Group Audit Committee Report 94
Group Remuneration Report 103
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
Governance – Board of Directors Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 63
David Henderson (a) (b) (e)
Chair, Independent Non-Executive Director
David Henderson was appointed to the
Board in April 2016. David began his career
specialising in personal tax and UK trusts.
He spent ten years as a banker with Morgan
Grenfell and, following that, 11 years in
financial services executive recruitment
with Russell Reynolds Associates. He joined
the Board of Kleinwort Benson Group plc
as Personnel Director in 1995. He was
appointed Chief Executive of Kleinwort
Benson Private Bank Ltd (now Kleinwort
Benson) in June 1997. He was Chairman of
Kleinwort Benson from 2004 to 2008 and
a Senior Adviser to the Bank until 2019.
He holds several external Non-Executive
Directorships.
Board of Directors
Mark Hews
Group Chief Executive
Mark Hews was appointed Group
Chief Executive in May 2013 and was
previously Group Chief Financial Officer.
He was appointed to the Board in June
2009 and appointed to the Board of
MAPFRE RE in December 2013. He
also became a Trustee of The Windsor
Leadership Trust in November 2017. He
was formerly a Director of HSBC Life
and Chief Executive of M&S Life. Prior to
this he was Finance Director at Norwich
Union Healthcare. He started his financial
career at Deloitte (formerly Bacon and
Woodrow) as a consultant and actuary.
Denise Cockrem
Group Chief Financial Officer
Denise Cockrem was appointed Group Chief
Financial Officer in December 2018 and joined the
Board in September 2019. Denise is a Chartered
Accountant with significant industry experience,
predominantly in financial services. She spent
her early career in corporate finance and banking
roles for EY, Barclays, RBS and Direct Line. She
then joined RSA as Group Financial Controller,
spending nine years with them in various roles
culminating in UK & Western Europe Finance
Director. Denise most recently held the position
of Chief Financial Officer at Good Energy Group
plc, an AIM-listed renewable energy company
who provide 100% renewable electricity and
carbon neutral gas. In July 2022 Denise was
appointed as a Non Executive Director of ITM
Power plc, an AIM-listed company which designs
and manufactures hydrogen energy solutions
to enhance the use of renewable energy. She is
also a Trustee of MacIntyre Academy Trust, which
provides special schools and specialist alternative
provision for children and young people. Denise
was a Non-Executive Director of the Skipton
Building Society from 2015 to 2021.
S. Jacinta Whyte
Deputy Group Chief Executive
Jacinta Whyte was appointed Deputy
Group Chief Executive and joined the
Board in July 2013 with responsibility for
the Group’s General Insurance business
globally. She was also appointed to the
Ansvar Australia Board during 2013.
Jacinta joined Ecclesiastical in 2003 as
the General Manager and Chief Agent
of the Group’s Canadian business, a
role that she continues to hold. Having
commenced her career as an underwriter
for RSA in Dublin in 1974, she moved
with them to Canada in 1988, holding a
number of senior executive positions in
both Ireland and Canada.
Key to membership of Group Board Committees
(a) Group Finance and Investment
(b) Group Nominations
(c ) Group Risk
(d) Group Audit
(e) Group Remuneration
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
Governance – Board of Directors Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 64
Chris Moulder (b) (c ) (d)
Senior Independent Non-Executive Director
Chris Moulder was appointed to the Board
in September 2017. Chris is also a Director
of the Company’s ultimate parent, Benefact
Trust, as well as the Insurance Board of
Lloyds Banking Group and Tokio Marine
Kiln. Chris retired in 2017 after five years at
the Bank of England as Director of General
Insurance at the Prudential Regulation
Authority. Prior to this he had spent 26
years with KPMG as a partner in its Financial
Sector practice.
Francois-Xavier Boisseau (a) (c ) (d)
Independent Non-Executive Director
Francois-Xavier Boisseau was appointed to
the Board in March 2019. Francois-Xavier
has more than 30 years’ experience working
in the insurance industry, 25 years in the
UK. He was CEO of Insurance Ageas (UK)
until December 2018. Prior to that Francois-
Xavier was CEO of Groupama and CEO of
GUK Broking Services as well as being Non-
Executive Chairman of Lark, Bollington and
Carole Nash. In addition to his board position
at Benefact Group, Francois-Xavier is also
Chairman of IQUW Syndicate Managing
Agency Ltd.
Rita Bajaj (a)
Independent Non-Executive Director
Rita was appointed to the Board in July
2021. She is a Non-Executive Director,
Board, and IGC member with over 30 years’
broad investment markets experience.
Previously, she held senior investment
positions at Global and UK Asset Managers,
heading US investment teams at Royal
London and Invesco Perpetual. She was
EMEA Chief Administrative Officer at
custodian, State Street and she is also a
former FCA regulator. Currently, Rita is
a Board and Investment Panel member
for the London Pension Fund Authority
(LPFA), Non-Executive Director on
Columbia Threadneedle OEIC Boards and
an Independent Governance Member for
Hargreaves Lansdown’s workplace SIPP
Independent Governance Committee and a
Non-executive Board, Audit and Investment
Commmittee member and Consumber Duty
Champion of Wesleyan Assurance.
Sir Stephen Lamport (c ) (e)
Independent Non-Executive Director
Sir Stephen was appointed to the Board
in March 2020. He is the Vice Lord-
Lieutenant of Surrey and a Senior Adviser
at Sanctuary Counsel. He is a Director
of Benefact Trust; Vice-President of the
Community Foundation for Surrey; and
Chair of the Painshill Park Trust. He is Chair
of the British Red Cross UK Solidarity Fund
Committee; and is the Deputy High Bailiff
of Westminster Abbey. He has now retired
as a Court member of the St Katharine’s
Foundation. Sir Stephen was the Receiver
General of Westminster Abbey from 2008
to 2018, and previously a Group Director of
the Royal Bank of Scotland for five years. He
was Deputy Private Secretary to The Prince
of Wales from 1993, and Private Secretary
and Treasurer from 1996 to 2002. From 1994
to 2002 he was a member of HM Diplomatic
Service, with overseas postings in New York,
Tehran and Rome.
Key to membership of Group Board Committees
(a) Group Finance and Investment
(b) Group Nominations
(c ) Group Risk
(d) Group Audit
(e) Group Remuneration
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
Governance – Board of Directors Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 65
Neil Maidment (c ) (d) (e)
Independent Non-Executive Director
Neil Maidment was appointed to the Board
in January 2020. Neil is an Independent
Non-Executive Director at Lloyd’s of London
and a member of the Council of Christ’s
Hospital. He has over 35 years’ experience
in the insurance market. He was previously
a Director of Beazley plc and was Chief
Underwriting Officer of the company and
Active Underwriter of its Lloyd’s syndicates
from 2008 to 2018. He was Chairman of
the Lloyd’s Market Association from 2016
to 2018 and served as an elected working
member of the Council of Lloyd’s during the
same period.
Angus Winther (a) (b) (e)
Independent Non-Executive Director
Angus Winther was appointed to the Board
in March 2019. Angus co-founded Lexicon
Partners, a London-based investment
banking advisory firm, where he specialised
in advising clients in the insurance and
financial services sectors. He was closely
involved in Lexicon Partners’ leadership
until it was acquired by Evercore in 2011
and served as a senior Adviser at Evercore
until October 2016. He is currently a
Non-Executive Director and Chair of the
Audit Committee at Trinity Exploration
& Production plc and a Non-Executive
Director of Lloyd’s managing agent,
Hiscox Syndicates Limited. Angus is also
Churchwarden of Holy Trinity Brompton,
Deputy Chair of the Church Revitalisation
Trust and a trustee of St Mellitus College
Trust and St Paul’s Theological Centre.
Andrew McIntyre (c ) (d)
Independent Non-Executive Director
Andrew McIntyre was appointed to
the Board in April 2017. Andrew is the
Senior Independent Director of C. Hoare
& Co where he chairs the Audit, Risk and
Compliance Committee, and an independent
Non-Executive Director of Lloyds Bank
Corporate Markets plc and of Target
Group Limited, where he also chairs the
Audit Committee. He is a trustee of the
Foundling Museum. Previously, Andrew
was for 28 years a partner in EY, and was
for nine years Chairman of the Board of
Southern Housing Group, one of the largest
housing associations in the UK. He was an
Independent Non-Executive Director of
National Bank of Greece S.A. and chaired its
Audit Committee.
‘As a Board,
we are committed
to applying
the highest
standards of
corporate
governance.’
Key to membership of Group Board Committees
(a) Group Finance and Investment
(b) Group Nominations
(c ) Group Risk
(d) Group Audit
(e) Group Remuneration
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
Governance – Board of Directors Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 66
Board composition as at 16 March 2023
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups
): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
●
Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
●
White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
Governance – Board of Directors Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 67
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
2022
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Balance of Non-Executive Directors and Executive Directors
2022
2021
● Non-Executive Directors:8
● Executive Directors:3
Gender Balance
2022
2021
● Male: 8
● Female: 3
Ethnicity
2022
2021
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
● Non-Executive Directors:8
● Executive Directors:3
● Male: 8
● Female: 3
● White British or other White
(including minority-white groups): 10
● Mixed/Multiple Ethnic Groups: 0
● Asian/Asian British: 1
● Black/African/Caribbean/
Black British: 0
● Other ethnic group,
including Arab: 0
Length of Tenure (Chairman and non-executive directors)
2022
2021
● 0 – 3 years: 3
● 3 – 6 years: 4
● 6 – 9 years :1
● 10 years+: 0
Geographical Mix
2022
2021
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
Age
2022
2021
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
● 0 – 3 years: 5
● 3 – 6 years: 3
● 6 – 9 years :0
● 10 years+: 0
● United Kingdom: 9
● Rest of Europe: 1
● North America:1
● Rest of World: 0
● 35-45: 0
● 45-55: 2
● 55-65: 5
● 65+: 4
Board composition as at 16 March 2023
Governance Financial Statements Other InformationStrategic Report
’The Group operates
principally as a
provider of general
insurance in
addition to offering
a range of financial
services.’
Governance Financial Statements Other InformationStrategic Report
Information incorporated by reference
The Directors’ Report required under Companies Act 2006 comprises this
report and other disclosures contained in the Strategic and Governance
Reports and the Notes to the consolidated financial statements which
are incorporated by reference and include the following information:
Information Reported in
Business Model Our business model and strategy
Corporate Governance Statement Corporate Governance Report
Financial instruments Note 22
Important events since
31 December 2022
Strategic Report and Note 39
Future developments Strategic Report
Research and development Strategic Report
Employee engagement and in-
volvement
Responsible Business Report
Stakeholder engagement Strategic Report
Corporate Governance Report
Greenhouse gas emissions
and energy consumption
Responsible Business Report
Going Concern and Viability State-
ment
Page 58
Diversity and Inclusion Responsible Business Report
Section 172 Statement Page 61
Principal risks and uncertainties Risk Management Report
Company status and branches
Ecclesiastical Insurance Office plc is incorporated and domiciled in
England and Wales (registration number 00024869). The registered
address of the Company is Benefact House, 2000 Pioneer Avenue,
Gloucester Business Park, Brockworth, Gloucester GL3 4AW. The
Company has branches in Canada and Ireland.
Principal activities
The Group operates principally as a provider of general insurance
in addition to offering a range of financial services. Details of the
subsidiary undertakings of the Company are shown in note 36 to the
financial statements.
Ownership
At the date of this report, the entire issued Ordinary share capital
of the Company and 4.35% of the issued 8.625% Non-Cumulative
Irredeemable Preference Shares of £1 each (‘Preference shares’)
were owned by Benefact Group plc. In turn, the entire issued Ordinary
share capital of Benefact Group plc was owned by Benefact Trust
Limited, the ultimate parent of the Group.
Directors and their interests
The Directors of the Company during the year and up to the date of
this report are set out on pages 63 to 65 alongside the biographies of
those Directors currently serving on the Board.
The Directors present their report and the audited consolidated financial
statements for the year ending 31 December 2022.
Directors’ Report
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Governance Financial Statements Other InformationStrategic Report
Governance – Directors’ Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 69
Governance Financial Statements Other InformationStrategic Report
As set out in the Notice of Meeting, all Directors who have served since
the last annual general meeting (AGM) will be proposed for re-election
except for Andrew McIntyre who will retire at the AGM. All Directors
seeking re-election were subject to a formal and rigorous performance
evaluation, further details of which can be found in the Group
Nominations Committee Report. Details of Directors’ service contracts
are set out in the Directors’ Remuneration Report.
Neither the Directors nor their connected persons held any beneficial
interest in any Ordinary shares of the Company during the year
ended 31 December 2022 and to the date of this report.
The interests of the Directors and their connected persons in the
preference share capital of the Company as at 31 December 2022 and
to the date of this report are shown below:
Director Nature of interest Number of Non-
Cumulative Irredeemable
Preference Shares held
Mark Hews Connected person 75,342
Denise Cockrem Connected person 32,020
The Board has a documented process in place in respect of conflicts.
Indemnities and Insurance
In accordance with the Company’s Articles and to the extent
permitted by law the Company indemnifies each of its Directors and
Directors of any associated company against certain liabilities that
may be incurred because of their positions. In addition, the Company
maintains Directors’ and Officers’ liability insurance. Neither our
indemnity nor the insurance provides cover in the event that a
Director is proven to have acted dishonestly or fraudulently.
Employees
The Group is committed to nurturing a culture and work environment
in which all colleagues can fulfil their potential. Our Equality and
Diversity Standard and Guidance sets our expectations for an open
and inclusive workplace and we place the care and wellbeing of all
our colleagues at the heart of our employment policies.
Throughout the employee lifecycle from recruitment onwards, we
carefully consider adjustments to our processes and practices and
look for solutions to remove barriers for those employees with
disabilities.
When needed, we engage with third-party and Occupational Health
specialists who provide us with expert advice and ensure we are
offering the best support we can. Through our adjusted work
approach we provide an environment in which disabled colleagues
can fully participate in all opportunities provided by the Group from
continued employment to training, job moves and promotions.
We offer a range of support for colleagues to help them maintain
a healthy work and home life including; flexible working practices,
virtual GP service, Employee Assistance Programme, Flu Vaccinations
and Eye tests as well as a wide variety of flexible benefits such as
dental care and critical illness insurance.
Information on employee engagement and well-being is provided in
the Responsible Business Report.
Dividends
Dividends paid on the Preference shares were £9,181,000 (2021:
£9,181,000).
The Directors do not recommend a final dividend on the Ordinary
shares (2021: £nil), and no interim dividends were paid in 2022 and
2021. An interim dividend in specie of the entire issued share capital
of EdenTree Investment Management Limited of £4,651,000 and
Ecclesiastical Financial Advisory Services Limited of £572,000 was
made on 3 January 2023.
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Governance Financial Statements Other InformationStrategic Report
Political Donations
The Group policy is that no political donations be made or expenditure
incurred. No political donations were made in the year (2021: £nil).
External Auditor
The Group Audit Committee reviews the appointment of the auditor,
including the auditor’s effectiveness and independence, and
recommends the auditor’s reappointment and remuneration to the
Board.
Having reviewed the effectiveness of the External Auditor, the
Group Audit Committee recommended the reappointment of
PricewaterhouseCoopers LLP to the Board. Further details are
disclosed in the Group Audit Committee Report.
In accordance with Section 489 of the Companies Act 2006,
a resolution proposing that PricewaterhouseCoopers LLP be
reappointed as auditor of the Group will be put to the forthcoming
AGM.
Disclosure of information to the Auditor
So far as each person who was a Director at the date of approving this
report is aware, there is no relevant audit information that the auditor
is unaware, that could be needed by the auditor in order to prepare
their report.
Having made enquiries of fellow Directors and the Group’ auditor,
each Director has taken all the steps that they ought to have taken
as a Director, in order to make themselves aware of any relevant
audit information, and to establish that the auditor is aware of that
information.
This confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
Annual General Meeting
A copy of the Notice for the 2023 AGM is available on page 203.
Statement of Directors’ Responsibilities for the
Annual Report and the financial statements
The Directors are responsible for preparing the 2022 Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared
the Group and the Company financial statements in accordance with
UK-adopted international accounting standards.
Directors’ confirmations
The Directors consider that the 2022 Annual Report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s and
Company’s position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages
63 and 65 confirm that, to the best of their knowledge:
• the Group and Company financial statements, which have been
prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities and
financial position of the Group and Company, and of the loss before
tax of the Group in the year; and
• the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that it faces.
By order of the Board
David Henderson
Chair
16 March 2023
Mark Hews
Group Chief Executive
16 March 2023
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Corporate Governance Report
Our approach to governance
As a Board, we are committed to applying
the highest standards of corporate
governance and believe that the affairs
of the Company should be conducted in
accordance with best business practice.
Consequently, although the Company does
not have shares with a premium listing on
the London Stock Exchange we have chosen
to voluntarily comply with the Principles
and Provisions of the 2018 UK Corporate
Governance Code (the Code) where possible.
A copy of the Code can be found on the
FRC’s website.
I am pleased to report that from 1 April 2022,
we are fully compliant with the principles
and provisions of good governance
contained in the Code where possible.
Further information on our Code compliance
is provided in the following table:
Provision Current Status / Explanation
4: When 20 per cent or more of votes have been cast against the
board recommendation for a resolution, the company should
explain, when announcing voting results, what actions it intends
to take to consult shareholders in order to understand the
reasons behind the result.
Given the Company’s entire issued Ordinary share capital is owned by
Benefact Group plc whose directors mirror those of the Company, it is
deemed inappropriate to comply with the provisions relating to outcomes
from shareholder votes.
36: Remuneration schemes should promote long-term
shareholdings by executive directors that support alignment with
long-term shareholder interests.
Given the Company does not have listed equity shares we are unable to
comply with the shareholding requirements for Executive Directors
38: The pension contribution rates for executive directors, or
payments in lieu, should be aligned with those available to the
workforce.
From 1 April 2022, we were fully compliant with this provision as the Group
Chief Executive pension contribution rate was aligned to that of the wider
workforce. Further information is contained in the Directors’ Remuneration
Report.
Introduction from the Chair
Dear Stakeholder
I am delighted to introduce the Corporate Governance Report. I believe that
good corporate governance is important and even more so during these
challenging economic times.
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Governance – Corporate Governance Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 72
Areas of Board and Committee
focus
2022 proved to be another busy year for the
Board and its Committees which culminated
in the corporate re-structure of the Group.
We have also overseen the business plans
and strategic initiatives for the Group and
a variety of other activities as set out on
page
79 and in the committee reports.
In particular, the year saw the completion
of the strategic remuneration review,
development of the climate change strategy
and Consumer Duty Implementation Plan.
2023 will be focused on realising the
growth ambitions of the Group. In addition,
the Board will look to implement actions in
response to the externally facilitated Board
Effectiveness Review and ensure a smooth
handover of responsibilities to the new
Group Audit Committee Chair when Andrew
McIntyre steps down from the Board. As
noted in the Group Nominations Committee
Report, we will continue the search for a
new Non-Executive Director.
AGM and re-election of
Directors
This year our AGM will be taking place on 22
June 2023. A copy of the Notice for the
AGM is available on page 203
.
In accordance with the Code and as set
out in the Notice of Meeting, all Directors
who have served since the last AGM will be
proposed for re-election (except for Andrew
McIntyre). I can confirm that all Directors
seeking re-election were subject to a formal
and rigorous performance evaluation,
further details of which can be found in the
Group Nominations Committee Report.
David Henderson
Chair
16 March 2023
Board leadership and
Company Purpose
Role of the Board
The Board is responsible to the Group’s
shareholders for the long-term success
of the Group, its purpose, values, strategy,
culture and its governance. Great
importance is placed on a well-informed
and decisive Board, and Board meetings are
scheduled and held regularly throughout
the year.
The Board sets annual objectives for each
year in addition to setting the Group’s
strategic direction. These are implemented
through approval and regular assessment
of the business plan and strategy process.
It is the Board’s policy to record any
unresolved concerns about the running of
the Company or any proposed action in the
Board minutes. During 2022, no Director had
any such concerns.
Purpose, values and strategy
The Group’s purpose is to contribute to
the greater good of society. In particular,
the Group strives to improve the lives of
customers, beneficiaries and society as
a whole. This is achieved by managing a
portfolio of businesses that operates on
the highest ethical principles. It seeks to
diversify and bring an ethical dimension
to more aspects of society; and all of its
businesses need to set a high bar, putting its
customers first and setting an example to
others.
As a unique company, with a unique
purpose, we know that our success is not
just about what we do, it’s how we do it that
makes the real difference. The way that we
work is based upon our Group Values. They
underpin our vision, ambition and strategy
and they are the common thread that binds
our family of businesses together.
Our business model and strategy provides
more details.
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Culture
The Board is responsible for setting the right
values and culture within the Group and
ensuring the fair treatment of customers,
which is outlined in the table.
Every colleague contributes to building
and sustaining our culture through the
way we behave with each other, our
business partners, clients, customers and
communities.
Our values are embedded across the Group’s
employee lifecycle, from recruitment
through to performance management, our
behaviour model, personal development and
communications. The culture of the Group
is monitored and assessed through the
employee survey results and individually
through the assessment of performance
which also informs reward outcomes.
We are a group that CARES
Collaborating
and welcoming
• We’re a family of diverse businesses united in a common purpose sharing our vision,
values, culture and behaviours
• We all belong – welcome and inclusion run through everything we do
• Our diversity makes us stronger, more connected with each other, our customers and
communities
• We’re willing to listen, we trust our colleagues and value their perspectives and
experience
• We break down barriers where we spot them to engage with each other and work
together to get the job done
Ambitious and
pioneering
• We’re driven to outperform our ambitious business goals by being bold, brave, agile and
innovative
• We’re competitive and commercial with exceptionally high standards of customer service
• We nurture new ideas and innovation – listening, learning, adapting and leading the way
• We have high expectations of each colleague’s performance, supported by a clear sense
of direction and coaching
• We take personal responsibility for the way we act and for delivering our commitments
• We celebrate every kind of success and reward people for positive results
Responsible and
sustainable
• We’re building a long-term, sustainable legacy
• We maintain the highest ethical principles that we apply to all aspects of our business
• We actively manage our impacts on the environment, locally and globally
• We embrace our responsibilities to our colleagues, customers, charities and communities
• We can be trusted to do the right thing
Expert and
specialist
• We nurture specialist expertise across the Group
• We seek to really understand our customers and their needs so we can find the right
solutions for them
• We invest in our colleagues’ personal growth to enable them to reach their potential
• We understand and fully utilise our individual strengths, skills and knowledge
• We get out of each other’s way and trust our specialists to deliver
Supporting
and Caring
• We grow our business so we can give our profits to good causes
• We’re proud to be a commercial company with a charitable purpose
• We’re caring, kind, empathetic people
• We all passionately believe in improving the lives of people in our communities
• Our culture of giving (money, time and kindness) makes a difference, locally and globally
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Stakeholder Engagement
Below is an overview of our approach to stakeholder engagement:
Why are our stakeholders
so important to us?
What matters
to them?
What engagement has taken place and outcomes? What are the 2022
highlights?
Where can more
information be found?
Colleagues
The Board recognises
that employees are the
Group’s greatest asset given
their specialist skills and
knowledge and propensity to
go above and beyond.
- Fair pay and reward
- Health and wellbeing
- Flexible working
practices
- Diverse and inclusive
workplace
- Opportunities for
training, development
and progression
- Making a positive
impact on society
Members of the management team and subject matter experts are invited to Board
and Committee meetings to present on items and input into discussion.
Directors also visit subsidiaries and other SBUs and project teams to gain a good
understanding of colleagues’ views.
In order to engage, involve and inform colleagues, a range of methods as set out
below are used:
- Sir Stephen Lamport, as the designated Non-Executive Director for employee
engagement, is briefed on associated survey results and findings are reported to the
Board;
- A variety of communication channels including intranet, all colleague emails
(including weekly news, results, achievements and changes), briefings, conferences,
publishing financial reports and feedback and discussion is adopted (including to
make colleagues aware of financial and economic factors affecting the performance
of the Company);
- Colleague engagement surveys adopting the B-Heard Survey provided by an
external partner, Best Companies;
- During the year colleagues undertake training to support the accessibility and
understanding of our whistleblowing policy, procedure and approach to ensure they
feel safe to speak up and challenge when needed;
- Direct engagement and consultation through colleague representative forums
including the Group’s recognised Union and Employee Working Groups such as the
Diversity and Inclusion working group;
- ‘Town Hall’ meetings are hosted virtually by senior management where colleagues
can ask questions and provide feedback;
- A performance-related bonus scheme is operated, which directly links individual
objectives and business performance to encourage employees to participate in the
overall financial success of the Group; and
- A range of training, development and volunteering activities are available to
colleagues, including technical courses, mentoring, coaching and community
opportunities.
- Feedback from
employee surveys
- Review of workforce
policies and practices
- Code of Conduct
- Group wide performance
management process
launched
- Health and Safety
Report
- Service of Thanksgiving
- 2022 Leadership
Conference
- Leadership update and
showcase sessions
- Twice yearly manager
briefings
- Brand launch
celebration
- CEO presentations in
Australia, Canada and
Lycetts
- Video collateral
including brand launch,
leadership conference
speakers, “The Time is
Now”
- Benefact Family
company fact sheets
- Living Wage Employer
- Financial Wellbeing
Award
- NED visits
Responsible
Business Report
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Why are our stakeholders
so important to us?
What matters
to them?
What engagement has taken place and outcomes? What are the 2022
highlights?
Where can more
information be found?
Suppliers (including
brokers)
The Board recognises the
importance of the role that
suppliers play in ensuring a
reliable service is delivered
to customers and the need
to have a strong working
relationship.
- Collaborative
approach
- Open terms of
business
- Fair payment terms
- Responsible supply
chain
- Communication
The Board supported by the Group Risk Committee approved the refreshed
Outsourcing and Procurement Policies. In addition, the Responsible Business
Overarching Policy which covers all aspects of behaviour and conduct and sets out
our approach which is designed to deliver a positive social and environmental impact
was developed.
Awareness sessions have been provided to colleagues managing supplier
relationships on their responsibilities under the Outsourcing Policy including
consideration of associated regulatory requirements.
- Average payment term
was 29 days
- Responsible Business
Overarching Policy
- Published our Modern
Slavery Statement
- Service of
Thanksgiving
Responsible
Business Report
Regulators and
Government
The Board recognises
the importance of open
and honest dialogue with
Regulators (including
those in the UK, Australia,
Canada and the Republic of
Ireland) and is committed to
complying with applicable
legislation and regulation in
order to maintain standards
of business conduct.
- Outcomes for
customers
- Operational and
financial resilience
- Openness and
transparency
- Compliance with
legislation and
regulation
The Board (via its Committees) receives regular reports detailing the Group’s
regulatory interactions. Regular reports are also received on the evolving legal and
regulatory landscape incorporating a detailed impact and progress assessment.
- Legal and Regulatory
Report
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Why are our stakeholders
so important to us?
What matters
to them?
What engagement has taken place and outcomes? What are the 2022
highlights?
Where can more
information be found?
Shareholder and investors
The Board understands the
need to maintain a close
and open relationship
with shareholder and
investors characterised by
transparency and mutual
understanding.
- Financial performance
and returns
- Strategy and business
model
- Environmental, Social
and Governance (ESG)
performance
- Reputation
- Strong leadership
Benefact Group plc owns the entire issued Ordinary share capital of Ecclesiastical
Insurance Office plc. The directors of the Boards of both companies are identical.
Benefact Group plc in turn is wholly owned by Benefact Trust Limited with whom the
Board has an open and constructive relationship.
Protocols for the exchange of information between Benefact Trust Limited and
Benefact Group plc and its subsidiaries (including Ecclesiastical Insurance Office plc)
are in place and cover performance, operations and financial position. There is at least
one ‘Common Director’ (i.e. a Director who is a member of the Boards of Benefact
Trust Limited, Benefact Group plc and Ecclesiastical Insurance Office plc) who is
expected to attend every Board meeting.
The Common Directors present a summary of highlights from Benefact Trust Limited
Board meetings to the Directors. There is also engagement between respective Board
and Committee Chairs and the Group Chief Executive Officer. Regular dialogue takes
place on Benefact Trust Limited’s expectations of the Group and strategy for the
development of the business. This ensures that the views of Benefact Trust Limited
are communicated to the Board as a whole. In turn, the Common Directors are able
to support the Directors of Benefact Trust Limited to understand the performance
and strategic issues faced by the Company. A conflict of interest policy which sets
out how actual and perceived conflicts of interest between the two companies are
managed is in place.
When determining if it is appropriate to make a distribution in the form of a grant
to the Company’s ultimate parent undertaking, Benefact Trust Limited, the Board
considers advice from the Group Chief Financial Officer. A key area for the Board’s
deliberation is the Company’s capital position and the affordability of the grant based
on a range of stressed circumstances as well as the views of the Chair of Benefact
Trust Limited.
- Grants amounting to
£20m were paid to
Benefact Trust Limited
- Dividends
- Annual General Meeting
- Revised protocols for the
exchange of information
agreed
- Annual Report and
Accounts
- Full and half year results
announcements
- RNS Announcements
- Service of Thanksgiving
Our business model
and strategy
Strategy in action
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Why are our stakeholders
so important to us?
What matters
to them?
What engagement has taken place and outcomes? What are the 2022
highlights?
Where can more
information be found?
Communities (and
environment)
The Board is committed to
doing business differently
and building a movement
for good across society,
transforming lives and
communities.
- Charitable giving
- Health and Safety
- Employment,
economic and societal
contribution
- Environmental impact
of operations
The Board oversaw arrangements for the Service of Thanksgiving held at
Westminster Abbey to celebrate the giving of over £100 million to good causes and
considered feedback from the event. It was attended by a range of our stakeholders
including beneficiaries of our charitable giving. The service offered an uplifting
opportunity for stakeholders to meet and engage. Further information on the Service
of Thanksgiving can be found in the Strategic Report.
During the year, the Board has received regular updates on our charitable giving
and areas of focus. In addition, the Directors have also had the opportunity to visit
beneficiaries of the Group’s charitable giving to see first hand their work which has
enabled the Board to better understand their needs.
- Charitable donation
made during the year of
£22.7m (2021: £23.5m)
- Service of Thanksgiving
- Movement for Good
Awards
- MyGiving
- 3rd largest corporate
donor in the UK
- Charity visits
- Produced full carbon
footprint and externally
shared net zero
ambitions
Chair’s Statement
Responsible
Business Report
Customers
The Board considers that
customers should be at
the heart of everything
we do, treating them fairly
and ethically and ensuring
any actions or decisions
demonstrate our passion
for customers and make us
first choice for customers
both today and in the
future.
- Customer experience
- Specialist expertise
and guidance
- Products which
represent fair value
and are clear and easy
to understand
- Fair pricing
During the year, the Board received updates on customer matters via the Group
Chief Executive’s Report and business updates. In particular, the Board considered
challenges faced by customers in these uncertain times and whether the Company
could provide any additional support given the Group’s purpose.
The Group has regular engagement with customers (including conducting listening
exercises, surveys, holding focus or consultative groups, monitoring customer
complaints and satisfaction data) and key outcomes are shared with the Board.
Our commitment to customers and clients is further demonstrated by the tailored
Customer Promises that have been developed for key SBUs.
- External recognition
- Francois-Xavier
Boisseau appointed
as Consumer Duty
Champion
- Consumer Duty
Implementation Plan
- Service of
Thanksgiving
Chief Executive’s
Report
Responsible
Business Report
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Stakeholder engagement in decision
making
The Board adopts a range of approaches to
engage with stakeholders and recognises
that the importance of a stakeholder group
may differ depending on the matter being
considered. Given the nature of the business,
the Board sometimes engages directly with
stakeholders and also understands that it
may be more appropriate for engagement to
be undertaken at an operational level.
The Board considers a variety of information
to understand the impact of the Company’s
operations and the interests and views
of key stakeholders. A one-year rolling
plan of business for discussion is agreed
annually to ensure that the Board is focused
on the right issues at the right time and
sufficient time is allowed for appropriate
consideration and debate. Information is
provided to Directors in papers in advance of
each meeting. People from the business are
invited to attend meetings to provide insight
into key matters and developments. At
each Board meeting, the Directors discuss
strategic and business matters, financial,
operational and governance issues and
other relevant issues that arise. In addition,
the Chair of each Committee provides a
verbal report to the Board on proceedings of
those meetings including areas of discussion
and any recommendations. Because of
this, the Board has an appreciation of
engagement with stakeholders and other
relevant matters, which enables the
Directors to comply with their legal duties.
Engage and input
Test and/or
deploy
Build and focus
(including
identifying themes
and workstreams)
Concept
development
(including identifying
priorities)
Stakeholders in action
Approval of the Group
restructure
How did the Board consider stakeholders?
A range of perspectives were sought
including from the ordinary shareholder
and colleagues. Discussion focused on
capital, tax, regulatory, governance and
oversight matters. The Board determined
that reflecting the divisional structure
comprising investment, insurance, and
broking and advisory was deemed the most
suitable for all stakeholders.
How does this link to the business model,
strategy and the long-term success of the
Company?
This links to our “energise” strategic theme
to create an environment where everyone
has the space to grow and perform to
fulfil their potential. We believe the new
corporate structure will provide greater
clarity of focus and increase business agility
through streamlined governance. It will
also enable us to deliver on our purpose
so that we can give more to charities and
communities across all our markets and
allow us to make a difference to the lives of
so many.
Approval of the Consumer
Duty Implementation Plan and
Champion
How did the Board consider stakeholders?
The Board reflected on the FCA’s strategy to
reduce customer harm in financial services
which created obligations on the firm and
its employees to ensure customers receive
good outcomes. Areas of consideration
included product governance, service
governance, communications, monitoring
and training and conduct. Discussion
focused on the needs of customers and
regulatory expectations in the context of the
Group’s culture, governance and controls.
How does this link to the business model,
strategy and the long-term success of the
Company?
This links to our “invest” strategic theme by
investing in our specialist capabilities for the
benefit of our customers and to deliver value
for the Group. It will also support our desire
to be the most trusted specialists.
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Board activities in 2022
The key activities considered by the Board during the year
are set out below.
Key Stakeholders
Customers
Communities
Colleagues
Shareholders and investors
Suppliers (including brokers)
Regulators and Government
Sustainability and the environment
Strategy and Performance
Group Chief Executive’s Report
The CEO led discussions on general business
performance, key strategic initiatives
Benefact Trust Updates
Received regular reports from the Shareholder
Ukraine Crisis
Discussed implications of the war
Business updates
Received business and performance updates
from business area including Canada, Ireland
and Churches
Strategic Reviews
At each meeting, the Board had focused discussion on matters of strategic significance to evaluate
progress, provide insight and where necessary take appropriate action as shown below:
Ansvar Australia
Discussed the assessment of Ansvar
Australia’s performance, its strategic outlook
and future opportunities and challenges
UKGI Systems
Considered and challenged progress made
in implementing the combined policy
administration, reinsurance and claims
platform
Group corporate re-structure
Approved changes to the Group legal structure
Climate change
Received regular sustainability champion
updates
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Financial
Group Chief Financial Officer’s Report
• The CFO led discussions on financial
performance across the Group including
rating agency considerations, IFRS 17 and
the tax strategy
Results and Regulatory Disclosures
• On recommendation of the Group Audit
Committee, reviewed and approved the
Annual Report and Accounts and the half
and full year results announcements
• Reviewed and approved the Solvency and
Financial Condition Report (SFCR)
Cash flow and dividends
• Considered the dividends to be paid to the
holders of the 8.625% Non-Cumulative
Irredemable Preference Shares of £1 each
• Considered making distributions in the form
of a grant to the Company’s ultimate parent
Benefact Trust Limited
Capital, costs and budget
Agreed the Group Corporate Strategy and
Business Plans 2023-25
Group reinsurance arrangements
• Received an update on the renewal season
including market conditions and reinsurance
arrangements put in place
Financial resilience
• Reviewed the going concern assessment
and viability statement
• Considered the GI Claims Reserve Adequacy
General Insurance underwriting
• Received reports from the Chief
Underwriting Officer on the performance
and health of the general insurance
underwriting portfolios
Investment Strategy Update
• Received updates on the review of the
investment strategy
Governance, legal and regulatory
Board succession and diversity
• On recommendation from the
Group Nominations Committee,
assessed the independence of
the Non-Executive Directors
• Approved changes to
Committee composition
including Chairs of the Group
Risk and Audit Committees
• Approved the refreshed Board
Diversity Policy
Board Effectiveness
• Approved objectives for 2022 and monitored
progress during the year
• Approved changes to Committee terms of
reference
Governance, legal and regulatory
• Approved the resolutions to be put to the
Shareholder at the AGM
• Considered Directors’ Conflicts of Interest
• Determined Non-Executive Directors’ Fees
• Considered operational resilience
• Considered reports from the Actuarial Function
Director
• Approved the Consumer Duty Implementation
Plan and Champion
Policies
• Supported by its Committees, the Board
reviewed a range of policies including those
linked to HR, Outsourcing, Dividend and the
Internal Model
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Colleagues, culture and values
Culture
• Considered updates on people, engagement
and performance
• Reviewed the annual Health and Safety
report
We All belong – Integrated Diversity &
Inclusion
• Considered the update on the approach,
activities and data in relation to Diversity
and Inclusion and associated strategic
initiative
Thanksgiving service
• Oversaw arrangement for the Service of
Thanksgiving and reviewed feedback from a
range of stakeholders.
Charitable purpose
• Considered regular updates on the
charitable purpose and mission (including
consideration of the Grant Policy in Canada
and Australia)
Risk Management
Group ORSA
• Approved the Own Risk and
Solvency Assessment
Effectiveness of Internal Controls
• Reviewed the internal controls in place across
the Group and determined its effectiveness
Group Risk Framework and Appetite
• Approved the Group Risk Framework and Group
Risk Appetite
Continuous Professional Development, training and site visits
Board CPD Sessions
During the year the Board received dedicated sessions on IFRS 17; the Internal Model and
climate change
Site visits
In 2022, Directors resumed site visits to enable them to deepen their knowledge and
understanding of the Group. Sites visited during the year included Australia; Canada and Ireland
Whistleblowing
The Board (via the Group Audit Committee)
is responsible for reviewing the Group’s
Whistleblowing Policy and Procedures and
receives regular updates from the Chair of
that Committee. More information is contained
within the Group Audit Committee Report.
Conflicts of Interest
A Register of Directors’ Conflicts is maintained
by the Group Company Secretary to monitor
and manage any potential conflicts of interest.
Training on the Companies Act 2006 has
been given to all Directors and Directors are
regularly reminded of their duties.
Any conflicts are declared at the first Board
meeting at which the director becomes aware
of a potential conflict and then recorded in
the Conflicts Register. The Board considers
all conflicts in line with the provisions set out
in the Company’s Articles. The Directors are
required to review their interests recorded in
the Conflicts Register on a biannual basis.
In addition, the Board oversees the procedure
for managing actual and potential conflicts
of interest in the trading relationship with
brokers and the general insurance business.
It is underpinned by the desire to put the
customer interest at the forefront of their
dealings and seek to deliver the best
customer outcome.
It is the Board’s policy to record any
unresolved concerns about the running of
the Company or any proposed action in the
Board minutes. During 2022, no Director had
any such concerns.
Division of responsibilities
There is a division of responsibilities
between non-executive and executive
roles to ensure appropriate oversight
and accountability. These roles and
responsibilities are clearly defined, set out
in writing, and reviewed by the Board. The
roles of the Chair and Group Chief Executive
are undertaken by separate individuals
as set out in the Governance Structure
Chart. In addition, the Board has designated
Non-Executive Directors as Champions for
Workforce Engagement, Climate Change
and Consumer Duty.
David Henderson met with the Non-
Executive Directors without the Executive
Directors present on a number of occasions
throughout the year. Mark Hews regularly
meets with the Group Management Board
to attend to the operational management of
the Group. Any matters of significance are
communicated to Directors outside of the
Board meeting schedule.
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Governance Structure
Documents available at https://www.ecclesiastical.com/
Articles of Association Matters Reserved to the Board Committee Terms of Reference
The Board
The Board’s role is to provide entrepreneurial leadership of the Group within a framework of prudent and effective controls which enables the risks that the Group faces to be assessed and
managed. The Board sets the Group’s high level strategic aims, ensures that the necessary financial and human resources are in place for it to meet its objectives and reviews management
performance. The Board sets the Group’s values and standards and ensures that its obligations to its customers, its shareholders and other stakeholders are understood and met.
Chair, David Henderson
The Chair is responsible for the active leadership of the Board,
ensuring its effectiveness in all aspects of its role. The Chair
is pivotal in creating the conditions for overall Board and
individual director effectiveness, setting clear expectations
concerning the style and tone of Board discussions, ensuring
the Board has effective decision-making processes and
applies sufficient challenge to major proposals.
Senior Independent Director, Chris Moulder
The Senior Independent Director supports and acts as a
sounding board for the Chair and is responsible for overseeing
the governance practices of the Company and leading the
Directors in their appraisal of the Chair. Along with the Chair,
the Senior Independent Director is the primary contact for the
shareholder and they meet regularly with the shareholder to
share and understand views.
Non-executive Directors, Rita Bajaj, Francois-Xavier
Boisseau, Sir Stephen Lamport, Neil Maidment, Andrew
McIntyre, Angus Winther
Non-Executive Directors have a responsibility to uphold high
standards of integrity and probity including acting as both
internal and external ambassadors of the Company. As part
of their role as members of a unitary board, Non-Executive
Directors should constructively challenge and help develop
proposals on strategy.
The Board delegates certain matters to its five principal committees, which report to the Board after each meeting
Group Audit Committee
Oversees financial, climate, non-
financial and regulatory reporting
processes; internal controls;
whistleblowing arrangements;
tax strategy and policies; internal
audit function; and manages the
relationship with the External
Auditor.
Group Finance and Investment
Committee
Oversees the management of
certain of the Company’s financial
assets (including its investment
portfolio) to ensure it is properly
governed, controlled and
performing as expected within
agreed risk parameters. It also
reviews and advises on any major
financial decisions on behalf of the
Board.
Group Risk Committee
Oversees the Risk Management
Framework including risk appetite
and tolerance; the risk and
compliance functions; and
reviews prudential risk (including
overseeing the Internal Model,
conduct risk and climate change
risk.
Group Nominations Committee
Ensures that there is an appropriate
balance of skills, knowledge
and experience on the Board, its
Committees and within the Group’s
subsidiary companies.
Group Remuneration Committee
Determines the Group’s
Remuneration Policy and ensures
there is alignment between
performance and reward.
Report page 94 Report page 85 Report page 92 Report page 87 Report page 103
Group Chief Executive, Mark Hews
The Board delegates the execution of the Company’s strategy and day-to-day management of the business to the Chief Executive, assisted by members of the Group Management Board (GMB).
Deputy Group Chief Executive, Jacinta Whyte
The Deputy Group Chief Executive is accountable to the Group
Chief Executive for leading the general insurance businesses.
Group Chief Financial Officer, Denise Cockrem
The Group Chief Financial Officer is accountable to the Group
Chief Executive for the financial management of the Group and
for ensuring that it complies with its statutory and regulatory
reporting requirements.
Group Company Secretary, Rachael Hall
The Company Secretary is responsible for compliance with
board procedures, advising the Board on all governance
matters, supporting the Chair and helping the Board and its
Committees to function efficiently. All directors have access to
the advice of the Company Secretary.
Reporting
Informing
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Attendance at meetings
Directors are expected to attend all Board
meetings and strategy days as well as
Committee meetings where they are
members. However it is recognised that
sometimes this may not be possible in
exceptional circumstances. Where this is
the case, Directors receive the papers and
provide comments to the relevant meeting.
In 2022, the Board held five scheduled
meetings and a strategy day. In addition,
the Board participated in regular training
sessions.
The following is a record of the directors’
attendance for Board and Committee
meetings during 2022:
Director since Board Group
Audit
Committee
Group Finance
and Investment
Committee
Group
Nominations
Committee
Group
Remuneration
Committee
Group Risk
Committee
Executive
Directors
Mark Hews June 2009 6/6 - - - - -
S. Jacinta Whyte July 2013 6/6 - - - - -
Denise Cockrem September 2019 6/6 - - - - -
Non-Executive
Directors
David
Henderson
April 2016 6/6 - 5/5 3/3 5/5 -
Rita Bajaj
1
July 2021 6/6 - 4/5 - - -
Francois-Xavier
Boisseau
2
March 2019 6/6 5/7 5/5 - - 4/4
Sir Stephen
Lamport
March 2020 6/6 - - - 5/5 4/4
Neil Maidment
3
January 2020 6/6 7/7 - - 4/5 4/4
Andrew
McIntyre
April 2017 6/6 7/7 - - - 4/4
Chris Moulder
4
September 2017 4/6 6/7 - 3/3 - 4/4
Angus Winther March 2019 6/6 - 5/5 3/3 5/5 -
1 Rita Bajaj was unable to attend a Group Finance and Investment Committee due to a personal commitment arranged before the meeting was confirmed.
2 Francois -Xavier Boisseau was unable to attend two meetings of the Group Audit Committee due to prior professional commitments.
3 Neil Maidment was unable to attend a Group Remuneration Committee meeting due to a family matter.
4 Chris Moulder was unable to attend two Board meetings and a Group Audit Committee meeting due to prior business commitments arranged before the
meetings were confirmed.
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‘The Board views
the management
of risk as a key
accountability
and is the
responsibility of
all management.’
Governance – Corporate Governance Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 84
Internal Controls
The Board is ultimately responsible for
the systems of risk management and
internal control maintained by the Group
and reviews their appropriateness and
effectiveness annually. The Board views the
management of risk as a key accountability
and is the responsibility of all management
and believes that, for the period in question,
the Group has maintained an adequate
and effective system of risk management
and internal control that complies with the
Code. Further details are set out in the Risk
Management Report.
The Group embeds risk management into
its strategic and business planning activities
whereby major risks that could affect the
business in the short and long term are
identified by the relevant management
together with the assessment of the
effectiveness of the processes and controls
in place to manage and mitigate these risks.
The Group’s internal control framework
is vital in setting the tone for the Group
and in creating a high degree of control
consciousness in all employees.
A Code of Conduct and a Code of Ethics are
embedded into the culture of the Group and
are accessible to all staff via the intranet.
Assurance on the adequacy and
effectiveness of internal control systems
is obtained through management reviews,
control self-assessment and internal audits.
Systems of internal control are designed
to manage rather than eliminate the risk of
failure to achieve business objectives, and
can provide reasonable, but not absolute
assurance as to the prevention and
detection of financial misstatements, errors,
fraud or violation of law or regulations.
Further information on internal controls is
set out in the Group
Audit Committee Report.
By order of the Board
Mrs. R. J. Hall
Group Company Secretary
16 March 2023
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Governance – Group Finance and Investment Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 85
Group Finance and Investment
Committee Report
Dear Stakeholder
I am pleased to present the Group Finance and Investment Committee Report
reflecting on the work carried out by the Committee during the past year.
‘Our main
responsibility is to
ensure the Group’s
financial assets are
properly managed,
governed and
controlled (within
financial limits
delegated by the
Board) and that
performance is as
expected.’
Our main responsibility is to ensure the
Group’s financial assets are properly
managed, governed and controlled (within
financial limits delegated by the Board)
and that performance is as expected. On
behalf of the Board, we also consider
major financial decisions such as raising
capital, acquisitions and disposals. The
Committee is constituted as a committee of
the Company’s immediate parent Benefact
Group plc, for which it provides the same
functions.
We were supported by the Group Chief
Executive, Group Chief Financial Officer
and other subject matter experts (including
the Group Chief Actuary) who attended
meetings to provide insight on key matters
and developments.
Committee member Member since Meetings attended
Angus Winther (Chair) April 2019 5/5
Rita Bajaj
1
July 2021 4/5
Francois-Xavier Boisseau July 2021 5/5
David Henderson June 2016 5/5
1 Rita Bajaj was unable to attend a meeting given a personal commitment agreed prior to the scheduling of an ad hoc meeting.
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
’We reflected
on both the
benefits and costs
of the Group’s
responsible
and sustainable
investment
approach on
current and
likely future
performance.’
Governance – Group Finance and Investment Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 86
Areas of focus during 2022
Volatility and uncertainty
We considered the market implications of
the war in Ukraine, and the consequent
humanitarian crisis, as well as changes in
economic conditions, most notably central
banks acting to increase interest rates to
reduce inflation, and the consequent impact
on economic growth prospects.
Climate Change
We
reflected on both the benefits and costs
of the Group’s responsible and sustainable
investment approach on current and
likely future performance (especially as
we hold no energy stocks). We monitored
the Group’s carbon footprint within its
investment portfolio focusing on Scope 1
and 2 emissions. We also considered the
challenges associated with identifying and
measuring Scope 3 emissions (given reliance
on suppliers and the quality of publicly
available data). Notwithstanding this, we have
an expectation that a significant proportion
of our investment portfolio’s carbon footprint
will be measurable by the end of 2023
including in relation to the property portfolio.
Simplifying the Group
We discussed updates on the Group’s legal
entity restructure which took effect on 3
January 2023. Discussion focused on the
complexities, practicalities and merits of
potential corporate structural changes
including the sale of South Essex Insurance
Holdings Limited and SEIB Insurance
Brokers Limited on 30 December 2022
to the Lloyd & Whyte Group as well as
financial and resource aspects. Further
information is provided on page 6.
Finance
We monitored acquisition and disposal
activity, outcomes and performance across
the Group. The need to extend support to
some of the businesses within the Group
to enable them to realise local strategic
ambitions was also considered.
During the year, Benefact Group plc had
a non-controlling equity interest in the
speciality insurance broking group, Lloyd
& Whyte. We have monitored various
matters relating to that acquisition, including
associated structural changes, Lloyd &
Whyte’s acquisition pipeline, associated
loan exposure and performance. In addition,
Lloyd & Whyte’s Group Manging Director
and Chief Operating Officer attended a
Committee meeting to present a deep dive
on acquisition integration including the
acquisition selection process and outcomes.
Investments
During the year, we reviewed the investment
mandate with EdenTree to ensure that it was
fit for purpose and compliant with legal and
regulatory requirements. The performance
of the Group’s investment portfolios and
outlook for the financial markets was also
considered.
Additionally, the Committee reviewed in
detail the Group’s investments in property
and an unlisted equity investment.
Investment Strategy and Risk Tolerances
The Group’s business plan investment
assumptions and the overall investment
strategy were reviewed. This included
consideration of asset allocation and
exposure (to equities, bonds, infrastructure,
property and cash) and associated risk.
In particular, we considered proposals
to refine the Group’s exposure to growth
assets and protections that could be put in
place.
Governance
We also reviewed the Committee’s
performance and set objectives focusing
on optimising the Group’s legal entity and
governance structure and the Investment
Strategy.
Angus Winther
Group Finance and Investment
Committee Chair
16 March 2023
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Governance – Group Nominations Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 87
Group Nominations
Committee Report
Dear Stakeholder
I am pleased to present the Group Nominations Committee’s Report reflecting
on the work we carried out during the past year. The Group has set itself
an ambitious growth strategy and the Committee’s role is to support that
strategy by ensuring that there is a diverse and inclusive, future proof
pipeline of talent across the Board, its committees and senior management.
Committee member Member since Meetings attended
Chris Moulder (Chair) November 2019 3/3
David Henderson January 2019 3/3
Angus Winther May 2021 3/3
Diversity and Inclusion
The Committee has continued to support the
Group’s refreshed Diversity and Inclusion
Strategy (more information on the Group’s
‘We all Belong’ can be found on page 21
).
Additionally, the Committee has reviewed
the Board Diversity Policy and Senior
Management succession plans in the
context of the FCA’s published policy
statement PS22/3: Diversity and inclusion
on company boards and executive
management (“PS22/3”). The Board
understands the benefits that diversity
in its widest sense can bring and has set
itself clear medium to long term objectives,
acknowledging that there is work to be done
to achieve these. The Committee remains
committed to supporting the Board and the
Group Diversity and Inclusion Strategy, and
diversity and inclusion will remain a key
focus of the Committee moving forward.
Non-executive Director
Recruitment
In light of the anticipated retirement of
Andrew McIntyre, NED and Group Audit
Committee Chair, the Committee have been
focussed on identifying a suitable successor.
Following an external search which did
not find a suitable successor and given the
current needs of the Board and the imminent
introduction of IFRS17 Accounting Standard,
it was agreed that I should replace Andrew
as the Group Audit Committee Chair (effective
June 2023). Neil Maidment will then succeed
me as the Group Risk Committee Chair.
The search for new NEDs and, in particular,
female candidates will continue during 2023.
External Board and Committee
Evaluation
Another key area of focus for the Committee
has been the externally facilitated Board
effectiveness review. More details are
outlined later in this Report.
Chris Moulder
Group Nominations Committee Chair
16 March 2023
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Governance – Group Nominations Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 88
Areas of focus during 2022
Composition of the Board and Senior
Management
The Committee considered the composition
of the Board and its Committees. This
included consideration of skills, knowledge,
experience, length of tenure, independence,
and diversity in the context of the Group’s
long term strategic priorities.
The Committee is conscious that the
diversity of the Board and its Committees
should be improved particularly in terms of
female representation and has been actively
trying to rectify the position. In line with
the expectations of the FCA, the Committee
has also committed to making this a
consideration when recruiting in the future.
In addition to gender balance, it is noted
that there is a need to strengthen ethnic
minority representation amongst the Senior
Management. In recognition of this, diversity
in its fullest sense will be a consideration
in terms of ensuring that there is a diverse
pipeline of talent and opportunities at this
level.
Succession Planning and Talent
Development
The composition of the Board and Senior
Management is informed by plans for
orderly, rigorous and a phased approach
to succession and to reflect the Group’s
strategic ambitions, opportunities and
challenges faced.
In respect of each leadership role,
emergency, short-term and long-term
succession plans are considered and
challenged by the Committee to ensure
that appropriate skills are in place to
support the Group’s strategy and ensure a
diverse pipeline of talent is in place. This is
supported by robust skills analysis which is
conducted for all Directors annually. During
2022, the assessment demonstrated that all
Directors had the required skills, expertise
and knowledge the Board believes are
necessary to drive the Group forward.
In support of the Group’s strategy to build a
world class team, the Committee reviewed
the refreshed talent, succession, and
leadership activities across the Group.
Induction and Training
All Directors undertake a formal,
comprehensive and tailored induction upon
joining the Board. This includes sessions with
key subject matter experts across the Group.
In addition, the annual training schedule of
the Board is developed in consultation with
the Committee, the GMB and key subject
matter experts around the Group before
being approved by the Board. It is dynamic
and can change to reflect the needs of the
Board. Any Director may request further
training to support their individual or
collective needs. During the year, the Board
received training on IFRS 17, Internal Model
and TCFD Disclosure (externally facilitated
by Grant Thornton LLP) and Climate Change.
The Group Company Secretary maintains
annual CPD records for all Directors, which
the Chair reviews as part of their annual
appraisal.
As the effects of Covid-19 prevented the
Directors from travelling in previous years,
the Directors have been keen to resume
meeting key employees across the Group.
The Committee has developed a schedule
of site visits for each director which
commenced in 2022.
Board Diversity and Inclusion Policy,
application and progress against objectives
During the year, the Committee has
continued to oversee the development and
implementation of the Board’s Diversity
Policy (the Policy). The Policy has been
updated in line with PS22/3 and the Group’s
recently refreshed “We All Belong” Diversity
and Inclusion Strategy. The Policy was last
reviewed by the Committee in October 2022
and approved by the Board in November
2022.
Ecclesiastical recognises the benefits of
having a diverse Board and is committed
to improving diversity on the Board in the
broadest sense. It believes that diversity
both improves performance of the Board
and strengthens the business. In doing so,
the Board has set itself objectives as set out
on the following page.
‘In support of the
Group’s strategy
to build a world
class team,
the Committee
reviewed the
refreshed talent,
succession,
and leadership
activities across
the Group.’
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Board Policy medium to long term
objectives
Implementation and progress
Ecclesiastical will seek to:
Achieve a level of at least 40% female
directors over the medium term on the
Board of Ecclesiastical Insurance Office
plc or explain if this is not the case;
The Board includes three female Directors (including two Executive Directors) in a membership of eleven
(27%). In recognition of the progress required to meet its own medium-term objective, the Committee will
continue to support the Board to achieve this objective.
Ensure that at least one of the senior
positions on the Board (defined as Chair,
Chief Executive, Senior Independent
Director and Chief Financial Officer) is
held by a female director or explain if
this is not the case;
The positions of Deputy Chief Executive Officer and Group Chief Financial Officer are held by women.
Together with a number of other senior leaders, Mrs Whyte and Mrs Cockrem took part in a Group
communication campaign outlining the story of their careers, challenges, and successes as part of the
Group’s International Women’s Day celebrations to inspire future leaders.
Ensure that the Board composition
comprises of at least one director
from a minority ethnic background or
explain if this is not the case;
The Board is pleased to have met this objective. As an ethical business, the Board values equality highly and
continues to work towards broadening the ethnic mix of the Board as and when appropriate.
Engage solely with executive search
firms who have signed up to the
Voluntary Code of Conduct on both
gender and ethnic diversity and practice;
The Company engages with executive search firms that have signed up to the Voluntary Code of Conduct for
Executive Search Firms.
Ensure that the recruitment process and
the development of ‘long-lists’ reflect
the Board’s diversity commitments to
both gender and ethnic diversity and
that candidates are presented from all
backgrounds, and with diverse skills
and personal qualities;
An overview of the recruitment process is set out later in this Report.
Report annually on its diversity
objectives and other initiatives
undertaken by the Company, which
promote gender, social and ethnic
diversity or explain why not met.
This Report of the Committee is open and transparent and demonstrates that there are improvements to be
made in relation to the Board becoming more diverse and inclusive. The Board will take opportunities, as
and when appropriate, to further improve diversity in its broadest sense (including ethnicity, skills, regional
and industry experience, background, age, gender and other distinctions). However, the Board believes the
approach to diversity and inclusion should not be a “tick box exercise” but an opportunity to continue to
build a cohesive future proof leadership and that ultimately all appointments should be made on merit.
The Board encourages Executive Management to ensure appropriate diversity at senior levels within the
organisation. Further information including key employee statistics on gender and ethnicity is provided in
the Responsible Business Report on page 21.
The Board remains committed to documenting its journey via the annual reports of the Committee.
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Governance – Board of Directors Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 90Governance – Group Nominations Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 90
NED Recruitment
It is the Committee’s responsibility to ensure that the composition and pipeline of talent for
the Board and senior management supports the future direction of the Group. Accordingly,
following a review of the Board’s composition and succession plans, the Committee agreed to
prioritise appointing a suitable successor to the role of Group Audit Committee Chair.
Appointment Process:
Stage one: Objective Criteria
A Selection Panel comprising
Chris Moulder, David
Henderson, Angus Winther
and Rachael Hall was formed
to commence the recruitment
of a Chair for the Group Audit
Committee.
The Panel developed a Position
Specification for the role
based on objective criteria and
having regard to the outcome
of the Board skills analysis.
The candidate was expected to
have extensive experience in
financial services focusing on
finance, accounting or actuarial.
Stage two: Candidate Lists
compiled reviewed
Following a tender process
Per Ardua Associates Limited
was engaged to support the
recruitment process. Per Ardua
do not have any connection to
the Group beyond supporting
the recruitment of non-
executive and executive roles.
Having due regard to the
Board’s diversity and inclusion
ambitions, the skills and
competences outlined in the
specification, and the Group’s
ethics, culture and values, Per
Ardua drew up a list of potential
candidates for consideration by
the Panel.
Stage three: Candidate
Identified
Following a rigorous search
process, a suitable external
candidate could not be found
within the timeframe specified.
Balancing the requirements
of the Board in leading the
Group at this pivotal strategic
point and given the imminent
introduction of IFRS 17, the
decision was taken to appoint
the successor to the role of
Group Audit Committee Chair
from within the Board in the
short-term.
Stage four: Recommendation
and Appointment
It was agreed that as Chris
Moulder possessed the
required leadership qualities,
skills and experience
required for this role, he
would be appointed Group
Audit Committee Chair at the
conclusion of the AGM subject
to regulatory approval.
In recognition of the time
commitment of the role, Chris
will step down as Group Risk
Committee Chair and will be
replaced by Neil Maidment
subject to regulatory approval.
will step down as Group Risk
Committee Chair and will be
replaced by Neil Maidment
subject to regulatory approval.
The search for a long-term successor to the
role of Group Audit Committee Chair will re-
commence in 2023.
Directors’ Length of Service
The Committee monitors the length of
tenure of all Directors as shown in the table
on Board diversity.
Director’s Independence and time
commitments
The Board believes that all the Non-
Executive Directors were independent
throughout 2022. Independence is reviewed
as part of each Director’s annual appraisal,
considered by the Committee and agreed
by the Board annually. The Committee
has considered the circumstances
and relationships of all Non-Executive
Directors and, following rigorous review,
the Committee confirmed to the Board
that all Non-Executive Directors remained
independent in character and judgement.
No individual participated in the discussions
relating to their own independence.
Chris Moulder and Sir Stephen Lamport
are Directors on the Boards of Benefact
Trust Limited and the Company (‘common
directors’). The common directorship model
is regarded as good practice with a charity
that owns a trading subsidiary and these
common Directors enable the Trust to gain
a thorough understanding of its subsidiary
company’s performance and the strategic
issues it faces, and for the subsidiary to
understand the expectations of its parent
company. A joint Company and Benefact
Trust Limited Nominations Committee
Meeting is held annually, amongst other
things to consider the appointment of
common Directors.
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The Committee evaluates the time Non-
Executive Directors spend on the Company’s
business annually and is satisfied that,
in 2022, the Non-Executive Directors
continued to be effective and fulfilled their
time commitment as stated in their letters of
appointment.
External directorships are considered to
be valuable in terms of broadening the
experience and knowledge of Executive
Directors, provided there is no actual
or potential conflict of interest, and the
commitment required is not excessive.
All appointments are subject to approval
by the Board, and the Conflicts Register
maintained by the Group Company
Secretary is used to monitor external
interests. Any monetary payments received
by Executive Directors from outside
directorships are paid over to and retained
by the Group.
Board Evaluation
All Directors receive an annual appraisal
from the Chair. The Chair is appraised by
the Board, in his absence led by the Senior
Independent Director.
In line with the Code, the Board undergoes
an externally facilitated performance
review every three years. An overview of
the process which commenced in 2022 is
outlined below:
Stage 1: Proposals and
Requirements
It was agreed that the
evaluation would include a
review into: the effectiveness
of the Board in terms of its
processes, people, team work
and behaviours; the value it
delivers to its shareholder; how
it engages with its Committees;
how it sets the ‘tone from
the top’; and how it provides
effective oversight of the
setting and execution of the
strategy of the Company and its
subsidiaries, and the operating
performance of Executive
Management.
Stage 2: Selection of an
Independent Evaluator
Three firms were asked to
submit proposals and following
subsequent presentations
Stephenson Executive Search
was appointed to undertake
the external Evaluation.
Stephenson Executive Search
has no connection to the
Group or its Directors beyond
Tim Stephenson, Stephenson
Executive Search’s Chair
supporting David Henderson
in relation to Non-Executive
Director assignments. The
Board is content that Mr
Stephenson provided an
independent view on the
performance of the Board, its
Committees and individual
Directors.
Stage 3: Review process
As part of the review, the
Evaluator conducted a series
of one-to-one interviews with
each member of the Board, the
Group Company Secretary,
the Group Chief Actuary and
the Group Chief Risk and
Compliance Officer. In addition,
the Evaluator observed Board
and Committee meetings.
Stage 4: Review of Report,
discuss and agree action plans
for 2023
The outcome of the evaluation
will be considered by the
Board at its meeting on 16
March 2023 and an action plan
agreed. The Committee will
monitor the implementation
of all the recommendations
arising from the review.
Details on the above actions
will be reported in the 2023
Annual Report.
Governance Financial Statements Other InformationStrategic Report
‘Throughout 2022,
the Committee
monitored the
Group’s risk
management
framework, capital
management
and operational
resilience, paying
close attention to
impacts from the
internal and external
environments.
Governance Financial Statements Other InformationStrategic Report
Group Risk Committee Report
Dear Stakeholder
I am pleased to present this report describing the work
undertaken by the Group Risk Committee during the
past year.
Governance – Group Risk Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 92
The Committee’s key roles are to oversee the Group’s risk
management framework and culture (including risk strategy, appetite
and tolerance); the Group’s risk and compliance monitoring functions;
and to monitor prudential risk (including overseeing the Internal
Model), conduct risk and climate change risk.
Throughout 2022, the Committee monitored the Group’s risk
management framework, capital management and operational
resilience, paying close attention to impacts from the internal and
external environments. The Committee monitored the material risks
of the Group and reviewed Internal Model scope, use, governance and
validation.
The Group has voluntarily chosen to include this report in addition
to the disclosures in the Risk Management Report and Principal
Risks sections. The latter sets out the Group’s principal risks and
uncertainties which the Committee has reviewed in detail and is
comfortable that the business has addressed them appropriately
within its ongoing operating model and strategic priorities.
Committee member Member since Meetings attended
Chris Moulder (Chair) September 2017 4/4
Andrew McIntyre August 2017 4/4
Francois-Xavier Boisseau April 2019 4/4
Neil Maidment March 2020 4/4
Sir Stephen Lamport November 2020 4/4
Governance Financial Statements Other InformationStrategic Report Governance Financial Statements Other InformationStrategic Report
’During the year,
the Committee
oversaw
management’s
work to embed
key elements of
climate change
risk into the
Group’s Risk
Management
Framework.’
Governance – Group Risk Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 93
Committee meetings were attended by the
Group Chair, Deputy Group Chief Executive,
Group Chief Risk and Compliance Officer,
Group Chief Financial Officer, Group
Underwriting Director, Group Chief Actuary
and Group Chief Internal Auditor.
Areas of focus during 2022
During 2022, the Committee continued to
monitor the Group’s ongoing operational
and financial resilience and its capital and
solvency positions, receiving updates from
management particularly in light of direct
and indirect impacts from the external
environment. These impacts included
adverse weather events in all territories
in which the Group operates; volatility in
global investment markets; inflationary
pressures; and the war in Ukraine. Although
the Group was not directly exposed to risks
arising from the war, the Committee kept
indirect exposures under review, including
cyber and credit risks.
The Committee also monitored the ongoing
development, governance, methodology and
calibration of the Internal Model; overseeing
independent validation; reviewing profit and
loss attribution; and recommending Model
changes and management actions to the
Board.
During the year, the Committee oversaw
management’s work to embed key elements
of climate change risk into the Group’s
Risk Management Framework, including
the development of a Board level risk
appetite statement and key risk metrics.
The Committee also received updates
from projects to develop the Group’s
data management model and operational
resilience programme.
Additionally, the Committee received reports
on risk and compliance monitoring and
breaches; underwriting and insurance risk;
market and investment risk; reinsurance;
outsourcing and supplier risk; and business
continuity. The Committee reviewed the
Own Risk and Solvency Assessment,
recommending it to the Board, and oversaw
the risk oversight and assurance plan,
including work ongoing to embed the risk
taxonomy and further develop an emerging
risk register. The Committee also received
the Money Laundering Reporting Officer’s
Report and monitored sanctions screening
and financial crime controls.
The Group Chief Risk and Compliance Officer
reports to the Committee and has direct
access to the Committee Chair and the Non-
Executive Directors. The Committee ensures
that it meets with the Group Chief Risk and
Compliance Officer at least annually without
other management present.
By order of the Board
Chris Moulder
Group Risk Committee Chair
16 March 2023
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’The role of the
Committee in the
Group’s governance
framework is
vital, providing
independent
challenge and
oversight across
financial reporting
and internal control
procedures.’
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 94
Group Audit Committee Report
Dear Stakeholder
As Chair of the Group Audit Committee, I am pleased to present the
Committee’s report for the year ended 31 December 2022. This report outlines
the work undertaken by the Committee to safeguard Ecclesiastical for the
benefit of its shareholders. The Committee plays a crucial role in oversight
and scrutiny of the Group’s financial and regulatory reporting, internal and
external audit arrangements, internal control environment and the processes
for compliance with laws, regulation and ethical codes of practice. The
Committee also remains alert to the external risks facing Ecclesiastical and
features these in its work.
The Committee’s duties over the last year
have been expanded to include oversight
of climate and non-financial reporting as
part of the Group’s overall climate change
governance strategy. The Group continues
to closely monitor and deal with the
evolution of the pandemic, however as this
eased across the globe, 2022 has presented
further challenges including inflationary
pressures, and interest rate risk, all further
intensified by the war in Ukraine. The
Committee has remained vigilant to these
developments and expects to keep these
under close scrutiny.
The Committee has reviewed the Group’s
financial reporting, ensuring that this year’s
Annual Report and Accounts are prepared
using appropriate judgements and are a
fair reflection of the Group’s performance
and position. The significant accounting and
reporting issues considered in detail by the
Committee are set out on pages 97 to 99.
The new insurance accounting standard
IFRS 17 became effective for the Group
from January 2023 and continued to be
an important part of the Committee’s 2022
agenda. The Committee has also monitored
internal and external audit arrangements
and the effectiveness of internal controls.
Additionally, the Committee has monitored
the external environment to ensure that
reporting and controls have continued to
adapt and respond to developments.
The role of the Committee in the Group’s
governance framework is vital, providing
independent challenge and oversight
across financial reporting and internal
control procedures. The Committee
ensures the interests of our shareholders
are protected by providing independent
scrutiny and challenge to ensure the Group
always presents a true and fair view of its
performance, with a focus on the accuracy,
integrity and communication of its financial
reporting. The Committee also examines
the group’s control environment and
strategies for risk management , providing
assurance these are managed appropriately.
We remain satisfied that the business has
maintained a robust risk management and
internal controls culture, supported by
strong overall governance processes.
Andrew McIntyre
Chair of the Group Audit Committee
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 95
Members of the Committee
Committee members are independent
Non-Executive Directors and have been
selected with the aim of providing the
wide range of financial, risk, control and
commercial expertise necessary to fulfil
the Committee’s duties. The Committee is
also then able to challenge and scrutinise
management’s work. Further information
about the experience of each member of the
Committee can be found on page 63. The
Board considers that Andrew McIntyre has
recent and relevant financial experience
and accounting competence and that the
Committee as a whole is appropriately
competent in the sectors within which the
Group operates.
The members of the Group Audit Committee
who were appointed by the Board and their
attendance at the seven meetings held
during the year are shown below.
Committee meetings
In addition to the members of the
Committee, the Chairman of the Board,
the Group Chief Executive, the Group Chief
Financial Officer, the Deputy Group Chief
Executive and the Group Chief Internal
Auditor attend meetings by invitation.
Other relevant people from the business
are invited to attend certain meetings in
order to provide insight into key issues and
developments.
The Group’s external auditor is invited
to attend meetings. During the year,
PricewaterhouseCoopers (PwC) attended
seven of the Committee’s meetings. During
the year, the Committee met privately
with the Group’s external auditors without
management present.
The Committee’s key responsibilities
include:
• monitoring the integrity of the financial
statements;
• challenging the Group’s financial reporting,
and reporting upon anything that it is not
satisfied with;
• reviewing regulatory reports;
• reviewing climate and non-financial
metrics reporting;
• reviewing tax strategy and policies;
• reviewing the Group’s whistleblowing
arrangements;
• reviewing the Group’s audit arrangements,
both externally and internally; and
• reviewing the effectiveness of the Group’s
systems of internal controls and the
management of financial risks.
When the Committee discharges its
responsibilities these are extended to
include Ecclesiastical Insurance Office
plc’s immediate parent Benefact Group
plc (formerly Ecclesiastical Insurance
Group plc) and matters related to its own
subsidiary undertakings and interests.
Committee member Member since Meetings
attended
Andrew McIntyre (Chair) April 2017 7
Francois-Xavier Boisseau March 2019 5*
Neil Maidment March 2020 7
Chris Moulder September 2017 6**
* committee member was unable to attend two Committee meetings due to prior professional
commitments.
**committee member was unable to attend one Committee meeting as a result of a late change to
the schedule of Committee meetings.
’The Committee
ensures the
interests of our
shareholders
are protected
by providing
independent
scrutiny and
challenge.’
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 96
A summary of the main activities of the
Committee during the year is set out below:
Auditor appointment and
tenure, independence and
non-audit services
The Committee has primary responsibility
for overseeing the relationship with and
performance of the external auditor. This
includes making the recommendation on the
appointment, reappointment and removal
of the external auditor, assessing their
independence on an ongoing basis and for
agreeing the audit fee.
PwC has acted as the Group’s external
statutory auditor following appointment at
the Annual General Meeting in June 2020.
The Group’s policy for auditor rotation
follows regulatory requirements and PwC
will be required to be rotated after no more
than 20 years, and an audit tender held after
no more than 10 years.
Sue Morling of PwC became the Group’s
Senior Statutory Auditor for the financial year
2020 after PwC’s appointment. Her term as
Senior Statutory Auditor is due to conclude
upon the completion of the 2024 audit.
The Company confirms that it complied
with the provisions of the Competition and
Markets Authority’s Order for the financial
year under review. Both the Board and the
external auditor have safeguards in place to
protect the independence and objectivity of
the external auditor.
The Committee is responsible for the
development, implementation and monitoring
of the Group’s policy on the provision of
non-audit services by the external auditor.
The policy is reviewed annually by the
Committee. The purpose of the policy is to
safeguard the independence and objectivity
of the external auditor and to comply with the
ethical standards of the Financial Reporting
Council (FRC).
The Committee oversees the plan for the
external audit to ensure it is comprehensive,
risk-based and cost-effective. The plan
described the proposed scope of the work
and the approach to be taken, and also
proposed the materiality levels to be used
which are described on page 120. In order to
focus the audit work on the right areas, the
auditors identify particular risk issues based
on various factors, including their knowledge
of the business and operating environment
and discussions with management.
For the year ended 31 December 2022, the
Group was charged £1,032,000 (ex VAT) by
PwC for audit services. Non-audit fees for
audit-related assurance services required
by legislation and/or regulation amounted
to £270,000, making total fees from PwC of
£1,302,000. There were no other non-audit
services provided by PwC during the financial
year. More detail can be found in note 12 to
the financial statements.
External audit effectiveness
The Committee assesses the effectiveness
of the external auditor annually against
several criteria including, but not limited to,
accessibility and knowledgeability of audit
team members, the efficiency of the audit
process including the effectiveness of the
audit plan, and the quality of improvements
recommended.
The Committee reviewed a report based
on questionnaires completed by senior
management, business unit leaders and
those members of staff most involved
in the external audit process, regarding
the PwC 2021 statutory audit and audit-
related assurance services. The Committee
recognised the strengths of the external
auditor and that duties were performed
independently and effectively, scoring
particularly highly in technical knowledge
and expertise.
Appropriateness of the Group’s
external financial reporting
The primary role of the Committee in relation
to financial reporting is to review, challenge
and agree the appropriateness of the half-
year and annual financial statements and
annual regulatory reporting under Solvency
II, concentrating on, amongst other matters:
• the quality and acceptability of the Group’s
accounting policies and practices;
• the clarity of the disclosures and
compliance with financial and regulatory
reporting standards, and relevant financial
and governance reporting requirements;
• material areas in which significant
judgements have been made by the Group
or there has been discussion with the
external auditor;
• whether the Group’s Annual Report and
Accounts, taken as a whole, are fair,
balanced and understandable and provide
the information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy;
• any correspondence from regulators in
relation to financial reporting.
In respect of these annual financial
statements the Committee paid particular
attention to the significant judgements set
out below, including a review of the corporate
governance disclosures, monitoring of the
external audit process and statements about
going concern and viability.
The Committee concluded that it remained
appropriate to prepare the financial
statements on a going concern basis and
recommended the viability statement to the
Board for approval.
The Committee reviewed and challenged the
Group’s annual regulatory submissions under
Solvency II. The Committee focused on the
requirements of the publicly and privately
filed regulatory reporting.
The significant areas of focus considered
by the Committee in relation to the 2022
accounts, and how these were addressed, are
outlined below. These were discussed and
agreed with management during the course
of the year, and also discussed with PwC.
The nature of these issues and how they are
mitigated is explained in more detail in the
Risk Management Report on page 45, and
also note 2 to the financial statements.
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 97
Matter considered Action
General insurance reserves
The estimation of the ultimate liability
arising from claims under general business
insurance contracts is a critical accounting
estimate. There is uncertainty as to the total
number of claims on each class of business,
the amounts that such claims will be settled
for and the timings of any payments.
The Committee considered detailed reports provided by the Group’s Reserving Actuary on the adequacy of the Group’s general insurance reserves
at both the half year and the full year and discussed and challenged management across a wide range of assumptions and key judgements,
including the application of a change in the Group’s accounting policy for discounting.
This is a major area of audit focus and PwC also provided detailed reporting on these matters to the Committee.
The Committee challenged management on whether the reserving methodologies and level of reserves held had adequately taken into account
changes in the economic environment that had been emerging over the year. The Committee gained confidence that additional focus had been
given within the calibration exercise to the use of explicit modelling of future cashflows by period, taking account of claims inflation projections and
discounting of the reserves in order to provide accurate representation in the best estimate of the latest economic position.
The Committee requested a walkthrough of the key drivers of management’s selected uncertainty margin loading in order to gain comfort that
the unique reserving risks facing the Group had been appropriately allowed for. The Committee was satisfied that management and the Group
Reserving Actuary have carried out a thorough review of the drivers of uncertainty, including inflation on all components, and have arrived at a
prudent recommendation for the level of booked reserves, which provides a high degree of confidence in the resultant level of sufficiency.
Following all of our reviews and discussions, the Committee’s opinion was that the reserving process and outcomes were robust and well managed
and that the overall reserves set were reasonable as disclosed in notes 9 and 28 of the financial statements.
Life insurance reserves
The calculation of the Group’s life insurance
reserves requires management to make
significant judgements about bond yields,
discount rates, credit risk, mortality rates
and current expectations of future expense
levels.
The Committee considered a report from the Chief Actuary of Ecclesiastical Life Limited (ELL) (the Group’s life business) which sets out
recommendations for the basis and methodology to apply for:
• valuation of policy liabilities for inclusion in the report and accounts for ELL at 31 December 2022, and
• the calculation of technical provisions in accordance with Solvency II regulations at 31 December 2022.
The Committee reviewed the work done by the Chief Actuary to assess whether changes to methodology were appropriate, with a particular focus
on fixed expenses and a change in approach to reserve on a per policy basis, mortality assumptions (including any impacts from Covid-19), interest
and inflation rate assumptions.
Following its review, and after consideration of PwC’s report, the Committee was satisfied that the assumptions proposed were appropriate and
overall the judgements made in respect of the reserves were reasonable. The assumptions are disclosed in note 28(b) of the financial statements.
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 98
Matter considered Action
Carrying value of goodwill
This is an area of focus for the Committee
given the materiality of the Benefact Group’s
goodwill balances (£23.8m at 31 December
2022 of which £2.1m relates to the Group) and
the inherent subjectivity in impairment testing.
The judgements in relation to goodwill
impairment continue to relate primarily to
the assumptions underlying the calculation
of the value in use of the business, being
the achievability of the business plans and
the macroeconomic and related modelling
assumptions underlying the valuation process.
The Committee received detailed reporting from management and challenged the appropriateness of the assumptions made, including:
• the consistent application of management’s methodology;
• the achievability of the business plans;
• assumptions in relation to long-term growth in the businesses at the end of the plan period; and
• the determination of a discount rate.
The Committee paid particular attention to the business plans and management’s proposed cashflows attributable to each Cash Generating Unit,
and the determination of the discount rate used in the calculation. Detailed support for these assumptions was provided by management.
The Committee considered the proposal and provided robust challenge to the assumptions, notably the evidence to support the discount rate and
the appropriateness of the future cashflow assumptions. After its reviews, the Committee concluded that the assumptions were reasonable.
Valuation of defined benefit pension
obligation and recognition of surplus
The valuation of the defined benefit
pension obligation requires many actuarial
assumptions, including judgements in
relation to long-term interest rates, inflation,
longevity and investment returns.
Judgement is applied in determining the
extent to which a surplus in the Group’s
defined benefit scheme can be recognised as
an asset.
During 2022, the Committee received reports from management on the proposed approach to the valuation of the pension scheme. As the pension
scheme is sensitive to changes in key assumptions, management completed an assessment as to the appropriateness of the assumptions used,
taking advice from independent actuarial experts and including, where appropriate, benchmark data, and reported its findings to the Committee.
Improvements in the pension actuary’s models increased the accuracy, and also dynamically captured changes in the scheme’s liability profile.
Following the review, management concluded that no allowance would be made for 2020 and 2021 mortality experience within future life
expectancy calculations due to the continuing uncertainty over the long-term impacts of Covid-19 on mortality.
Following consideration, the Committee concluded that the assumptions proposed were appropriate and in line with normal market practice.
The impact of updating assumptions to reflect those in force at the balance sheet date on the valuation at 31 December 2022 is explained in note 19
to the financial statements.
Change of accounting policy and other
accounting disclosures
A number of changes made during the year
impacted the Group and its results, including
a change in accounting policy used to
discount general insurance liabilities, a legal
restructure of the Group and wider Benefact
Group, along with other matters set out
within this report.
As well as considering the accounting
treatment and judgements used by
management, the way in which these
changes were disclosed is particularly
important for a user’s understanding of their
bearing on the Group and its results.
The Committee considered management’s recommendations for the change in accounting policy used to discount general insurance liabilities.
Consideration was given to the impact of market during 2022 on assets used by the Group to match general insurance liabilities and whether a
change in accounting policy provided users with more relevant and useful information.
The Committee also considered the previous accounting policy against the changes recommended by management, and concluded with
management that this was a change in accounting policy to be applied retrospectively.
Consideration was given by the Committee to how the impact of this change and other items affecting the Group and its results were disclosed
throughout the Annual Report and Accounts. Specific consideration was given to disclosures made throughout the Strategic Report and within the
financial statements including consideration of their compliance with accounting standards.
The Committee made a number of recommendations to the disclosures to ensure specific items, when taken individually and together in the context
of their impact on the Group, were transparent. The Committee concluded that disclosures made throughout the Annual Report and Accounts for
these specific items was fair, balanced and understandable.
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 99
Matter considered Action
Valuation of unlisted equity
This is an area of focus for the Committee
given the materiality and the subjectivity in
deriving fair value.
The judgements and estimates used
to determine the value of the Group’s
interest in unlisted equity follow industry
recognised fair value model techniques
and the principles of IFRS 13 Fair Value
Measurement. Judgements and estimates
include the selection of the most appropriate
valuation approach, the set of comparable
companies, choice of valuation multiples and
the setting of an illiquidity discount.
The Committee received information from management on Group’s unlisted equity investments and the model used to determine fair value of these
investments. The Committee paid particular attention to the application of industry recognised valuation techniques and areas of the portfolio more
susceptible to valuation uncertainty.
When considering management’s assessment of the fair value of unlisted equities, the Committee considered the fair value model and inputs used.
Particular consideration was given to management’s recommended valuation multiple, the impact on market multiples from increses in interest rates
during 2022, the discount applied for illiquidity and both the suitability and number of comparable companies used within the model.
Following consideration, the Committee concluded that the assumptions proposed were appropriate.
Legal entity reorganisation
The Group has made a number of legal entity
structural changes during the year and
after the balance sheet date. These included
disposals to related parties of Ecclesiastical
Insurance Office plc and Benefact Group plc.
Judgements were required, in particular over
control conclusions as well as accounting
and disclosure.
The Committee considered management’s recommendations on the application of accounting and disclosures requirements across a number of
accounting standards including those dealing with discontinued operations, segmental reporting, control and business combinations.
The Committee considered in particular the impact on disclosures within 2022 for transactions before and after the balance sheet date and their
impact on discontinued operations and comparative information. Consideration was also given to the specific circumstances of control over related
undertakings within the Benefact Group plc.
The Committee’s opinion was that the accounting application and disclosures made within the financial statements were appropriate and provided
users of the accounting with useful information.
Disposal of a subsidiary to a related party
During the financial year, the Group
disposed of its entire interest in South Essex
Insurance Holdings Limited and its wholly
owned subsidiary SEIB Insurance Brokers
Limited, (together ‘SEIB’). This was acquired
by a broker group that the Benefact Group
plc has an existing non-controlling interest
in.
Management applied judgement when
determining if this transaction with a related
party was in the best interests of the Group.
The Committee considered the terms of the disposal and the basis used to determine a suitable consideration. The Committee considered both the
substance and legal form of the Group’s relationship with the related party.
Particular consideration was given to the following:
• The typical commercial terms used by businesses in this industry when entering into the sale and purchase of UK broker businesses and whether
this transaction was consistent.
• The legal form and substance of the existing and future expected relationship the Group has with the related party and whether this influenced the
commercial terms of the transaction.
• The disclosure requirements of IAS 24 Related Party Disclosures and how management applies these within the financial statements. Consideration
was also given to other disclosures within the Strategic Report of this Annual Report & Accounts.
The Committee’s opinion was that the transaction was carried out under commercial terms which are characteristic of the broking industry and in the
best interests of the Group and its stakeholders. The Committee made additional disclosure recommendations to provide more transparency of the
transaction and the true and fair view of the financial statements.
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Governance – Group Audit Committee Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 100
The Committee is constituted as a
committee of the Board of Directors of both
Ecclesiastical Insurance Office plc and its
immediate parent, Benefact Group plc. As
a result, the Committee will also consider
matters that are specific to the Group,
Benefact Group plc and therefore items
that are not included within Ecclesiastical
Insurance Office plc’s financial statements
within this Annual Report and Accounts.
The Committee considered a number of
accounting judgements and reporting
matters in the preparation of Benefact
Group’s financial results in a manner
consistent with that set out within this
report. This included the carrying value of
goodwill and the accounting treatment and
control of business combinations related to
insurance broker businesses of that Group.
Implementation of IFRS 17
Insurance contracts
IFRS 17 is a new insurance accounting
standard, issued by the International
Accounting Standards Board (IASB). IFRS
17 became effective for the Group from 1
January 2023 and will impact the Group’s
financial reporting. The Group will issue
results under IFRS 17 in its 2023 Interim
Results expected to be published in
September 2023.
During the year, the Committee monitored
preparedness of the implementation of IFRS
17 as well as assessed the impact of the new
standard on the calculation of insurance
liabilities and financial reporting processes,
as management finalised the ‘dry runs’
before the effective date.
Climate change risk and
related disclosures
During the year the Committee continued
to strengthen its understanding of the
developments of disclosures regarding
climate change and its impacts. This
included the Committee receiving training
from external and internal experts. The
Committee discussed with management
the continued development of the Group’s
disclosures regarding climate change
risks and impacts which are included
principally within the Responsible Business
Report in the Annual Report and Accounts.
The Committee’s review paid particular
attention to the transparency of disclosure
and alignment to Task Force on Climate-
Related Financial Disclosures along with
the challenges in working towards net-
zero. As the Group develops its response
to the risks and impacts of climate change
the Committee expects to consider
management’s evaluation of the potential
impact on the financial statements and the
evolution of disclosure.
Fair, balanced and
understandable
The Committee considered whether
in its opinion, the 2022 Annual Report
and Accounts were fair, balanced and
understandable and provided the
information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy.
The Committee has reviewed and provided
feedback on early drafts of the Annual
Report and Accounts, highlighting any areas
where further clarity was required in the
final version.
When forming its opinion, the Committee
reflected on information it had received and
discussions throughout the year as well
as its knowledge of the business and its
performance. When forming its opinion, in
particular, the Committee considered:
Is the report fair?
• Does the financial reporting reflect the key
messages within narrative statements?
• Is the story complete and is there any
sensitive material that has been omitted
that should have been included?
• Does the Group that is portrayed in the
Annual Report and Accounts reflect the
Group discussed by the Committee and the
Board?
Is the report balanced?
• Are the key areas of judgement included
within any narrative reporting and
significant matters discussed within
this Committee report consistent with
the disclosures within the financial
statements?
• Are the significant and higher risk areas
identified within the Annual Report and
Accounts also those risks identified and
reported by PwC.
Is the report understandable?
• Does the reporting focus on the more
significant items and not become obscured
with immaterial detail?
• Are the important messages highlighted
up front?
• Does the report use clear and concise
language and provide simple explanations
of topics?
’The Committee
continued to
strengthen its
understanding of
the developments
of disclosures
regarding climate
change and its
impacts.’
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The Committee was satisfied that the
disclosures in the Annual Report and
Accounts, taken as a whole, are fair,
balanced and understandable and
represented the results and business
performance for the year ended 31
December 2022.
Oversight of the Group’s
systems of internal control
including the internal audit
function
Assessment of internal controls
The Group’s approach to internal control and
risk management is set out in the Corporate
Governance Report on page [104].
In reviewing the effectiveness of the system
of internal control and risk management
during 2022, the Committee has:
• reviewed the findings and agreed
management actions arising from both
external and internal audit reports issued
during the year;
• monitored management’s responsiveness
to the findings and recommendations of
the Group Chief Internal Auditor;
• met with the Group Chief Internal Auditor
once during the year without management
being present to discuss any issues arising
from internal audits carried out; and
• considered a report prepared by the
Group Chief Internal Auditor giving his
assessment of the strength of the Group’s
internal controls based on internal audit
activity during the year.
Internal control over financial reporting
Internal control over financial reporting is
a process designed to provide reasonable,
but not absolute, assurance regarding the
reliability of management and financial
reporting in accordance with generally
accepted accounting principles. Controls
over financial reporting policies and
procedures include controls to ensure that:
• through clearly defined role profiles and
financial mandates, there is effective
delegation of authority;
• there is adequate segregation of duties in
respect of all financial transactions;
• commitments and expenditure are
appropriately authorised by management;
• records are maintained which accurately
and fairly reflect transactions;
• any unauthorised acquisition, use or
disposal of the Group’s assets that could
have a material effect on the financial
statements should be detected on a timely
basis;
• transactions are recorded as required
to permit the preparation of financial
statements; and
• the Group is able to report its financial
statements in compliance with IFRS.
Due to inherent limitations, internal control
over financial reporting may not prevent or
detect misstatements. Risk management
and control systems provide reasonable
assurance that the financial reporting does
not contain any material inaccuracies.
Through its review of reports received from
management, along with those from internal
and external auditors, the Committee did not
identify any material weaknesses in internal
controls over financial reporting during the
year. The financial systems are deemed to
have functioned properly during the year
under review, and there are no current
indications they will not continue to do so in
the forthcoming period.
Group Internal Audit (GIA)
GIA is monitored by the Committee and
provides independent, objective assurance
to the Board that the governance processes,
management of risk and systems of
internal control are adequate and effective
to mitigate the most significant risks to
the Group. GIA operate a co-sourcing
arrangement in the UK and Ireland
where specialist resource is required to
supplement existing resources. In addition,
GIA oversees and monitors the outsourced
internal audit arrangements in Australia and
Canada.
The Committee has oversight responsibility
for GIA and is satisfied that GIA has
appropriate resources. The Group Chief
Internal Auditor is accountable to the
Committee Chair, reports administratively
to the Group Chief Financial Officer and has
access to the Group Chief Executive and
the Chair of the Board. The function also
has an extensive stakeholder management
programme across the whole of the Group.
GIA’s annual programme of work is risk
based and designed to cover areas of higher
risk or specific focus across the Group. The
plan is approved annually in advance by
the Committee and is regularly reviewed
throughout the year to ensure that it
continues to reflect areas of higher priority.
Where necessary, changes to the agreed
plan are identified as a consequence of the
Group’s changing risk profile.
Throughout the year, GIA submitted
quarterly reports to the Committee
summarising findings from audit activity
undertaken and the responses and action
plans agreed with management. During the
year, the Committee monitored progress
of the most significant management action
plans to ensure that these were completed
in a timely manner and to a satisfactory
standard.
Whistleblowing
During the year, the Committee continued
to perform regular oversight of the Group’s
whistleblowing arrangements, which are
the responsibility of the Board and overseen
by Group HR. Actions have focussed
on ensuring an environment in which
whistleblowing is well understood, openly
communicated and that a positive culture
for raising concerns is promoted across the
Benefact Group.
The Group has an established annual
Whistleblowing activity cycle encompassing
training, communication and monitoring.
Online training modules for all colleagues
and managers in both Whistleblowing and
Code of Conduct increase and maintain
awareness and emphasise an open and
positive culture with 80% of colleagues
agreeing that they feel the Benefact group
is an environment in which they feel safe
to speak up and challenge if they need
to. Individual attestation and quarterly
reporting ensure the continued close
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’In 2023, the
Committee will
continue to
provide oversight
of financial
reporting and
internal controls
of the Group.’
monitoring of whistleblowing activity and
understanding across the Group. These
annual actions are reinforced by regular
colleague communications and awareness
raising activities
Our whistleblowing procedures, polices
and guides are also reviewed and updated
annually to ensure that, in line with
best practice, they are accessible, easily
understood and are aimed to encourage and
give confidence to potential whistleblowers.
More information about the Group’s
whistleblowing policy and arrangements is
included within the Corporate Governance
Report.
Legal and regulatory
developments
The Committee receives regular reports and
considers the impact of legal and regulatory
developments on the UK Group to control
legal and regulatory risk. It monitors the
application and impact of any actions
required by the business or organisation
through to completion. Reports are shared
with relevant business areas, and with
relevant subsidiary Boards and Board
Committees.
The year ahead
In 2023, the Committee will continue to
provide oversight of financial reporting
and internal controls of the Group. Key
areas of focus for the Committee will be
the Group’s reporting under IFRS 17, which
became effective from 1 January 2023,
and the increasing maturity of the control
environment, the resourcing and scope
of work of GIA as the Group continues to
expand, and continued close attention to
geopolitical events which might impact on
the Group’s operations and stakeholder
reporting.
The Committee remains committed to its
role in overseeing the integrity of financial
reporting and effectiveness of controls.
Andrew McIntyre
Chair of the Group Audit Committee
16 March 2023
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’2022 was an
important year for
the Group, with the
launch of a new and
ambitious Group
strategy which aims
to raise £250m for
good causes by the
end of 2025.’
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Group Remuneration Report
Group Remuneration Committee Chair’s statement
As Chair of the Group Remuneration Committee (the Committee), I am pleased
to introduce the Group Remuneration Report for 2022 and to highlight some
of the key aspects of the Committee’s work during the year. The Committee’s
principal aim remains to ensure that all colleagues are rewarded fairly
according to their contribution to the success of the Group and the quality
of their individual performance, keeping carefully in mind the relationship
between reward, recruitment and retention.
2022 performance and incentive outcomes
The EIO Group reported a statutory loss
before tax of £4.8m in 2022 (2021: profit
before tax £79.2m). This result was driven
largely by fair value investment losses
resulting from the challenging economic
environment. The Group delivered Gross
Written Premium (GWP) growth of 15% to
£559m (2021: £486m) reflecting targeted
rate increases as well as strong retention
and excellent service delivered to brokers
and customers. The broking businesses
performed well, with SEIB reporting a profit
before tax of £2.9m and Lycetts, owned by
Benefact Group, reporting a profit before tax
of £3.4m. Our award-winning investment
management business, EdenTree also had
a good year, achieving record net inflows.
These results enabled the Group to award a
grant of £20m to our owner Benefact Trust
alongside £2.7m through our direct giving
programmes.
2022 continued, however, to be a
challenging year for customers, brokers,
business partners and colleagues alike.
The Committee note with thanks the efforts
of all our colleagues across the Group in
continuing to deliver what matters most
to the business, supporting our customers
and delivering on the Group’s next chapter
in our strategy and continued ambition
for the future. Our colleagues’ dedication
to providing excellent customer service is
borne out by 98% of customers who report
they are satisfied with the service they
receive.
2022 was an important year for the Group,
with the launch of a new and ambitious
Group strategy which aims to raise £250m
for good causes by the end of 2025.
The integration of our environmental
commitments was introduced into our
remuneration schemes for 2022 and beyond
as we set out in the report last year.
During the year the Group also provided
additional support to employees in the
context of the cost-of-living crisis and
current rate of inflation. For EIO employees,
a one-off Financial Wellbeing Award was
made of £1,000 (paid in two instalments) to
employees who earned £50,000 or less to
ensure that support was targeted to those
who needed it most.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 104
As noted in the 2021 Directors’
Remuneration Report, a strategic review of
the Group’s incentive arrangements was
carried out, including engagement with our
shareholder, and a number of changes were
made including incorporating a ‘Greater
Good’ measure supporting the Group’s
ambition to build a Movement for Good,
incentivising delivery of its charitable giving
programme, and reinforcing its commitment
to deliver exceptional customer service
and the highest standards of conduct and
governance. In considering the annual
bonus outcomes for Executive Directors
the Committee paid careful attention to
the financial performance of the Group
and its significant business units, to the
strategic and ’Greater Good’ performance
of the Group, to its solid performance
against underwriting targets, and to its
continuing strong delivery against the
Group’s strategic change programme
and customer and conduct targets. In its
assessment of individual performance
during the year, the Committee recognised
the strong performance against Executive
Directors’ personal financial, strategic and
wider objectives. The Committee considered
that the annual bonus outcomes were a
fair reflection of the overall performance
achieved by both the Group and the
individuals.
The annual bonus awards for 2022 of 78.3%
of maximum (which is 100% of salary) for the
Group Chief Executive; 72.9% for the Deputy
Group Chief Executive; and 64.8% for the
Group Chief Financial Officer reflected the
performance of the Group during the year.
Further details of performance against the
targets set for 2022 are disclosed in the
Annual Report on Remuneration section
of this report. In line with evolving market
practice, and as set out in the 2021 Directors’
Remuneration Report, deferral of the bonus
has been increased and one-third of the
total bonus award will be deferred for three
years.
The long-term incentive plan (LTIP) granted
in 2020 vested at 35.2%, reflecting the
Group’s performance against the financial,
strategic, customer and conduct targets
over the 2020-2022 period. The Committee
considered that the LTIP vesting levels were
a fair reflection of the overall performance
achieved.
In line with the Committee’s established
practice, the Committee, supported by the
Group Chief Risk and Compliance Officer,
considered risk management outcomes
across the Group as part of its deliberations,
including how these had impacted individual
performance assessments where relevant.
Following this review, the Committee did
not consider further risk adjustment of the
awards to be necessary.
Base salary
The level of salary increases for UK
Ecclesiastical employees is a key
consideration in setting the level of any
salary increase for Executive Directors. On
this basis, the Committee determined that
the base salaries of Executive Directors
would be increased by 5% (effective 1
April 2023), which is lower than the wider
workforce of 6.15%.
Key Committee activities during the year
As reported last year, during 2021 the
Committee undertook a strategic review
of the Group’s remuneration policy and
incentive design, including the applicable
performance measures and targets, to
ensure these continue to drive the Group’s
strategy and long-term performance.
These targets now include ESG and climate
change considerations. The review was
underpinned by the following principles:
fair reward; simplification of the Group’s
incentive arrangements; compliance
with evolving regulatory and corporate
governance requirements; linking pay and
performance; alignment of incentive designs
with the Group’s strategy and shareholder
expectations; and consideration of the
reputational impact of any changes. This
is the first year of implementation of the
changes and the Committee is of the view
that the current structure and performance
measures are bedding in well for the
business and are aligned to the Group’s
forward-looking strategy.
There are no major changes to the
remuneration structure for 2023. During the
year the Committee, alongside management,
reviewed the approach to target setting and
developed a set of guiding principles for
future years.
The Committee determined that the
remuneration packages of Executive
Directors should remain aligned with the
Group’s strategic objectives and reflect
both the experience and track record of
the Executive Directors and comparative
benchmarking. No changes were proposed
to the annual bonus opportunity and LTIP
award levels. There are also no changes
proposed to the performance measures
and weightings. Full details of the revised
incentive arrangements applicable to
Executive Directors and the Group’s senior
leaders are set out in the ‘At a Glance’
section of this report.
The pension contribution rate for the Group
Chief Executive was reviewed in 2021 and
aligned with the wider workforce rate of 12%
of salary with effect from 1 April 2022.
The Committee considered the Chair’s fees
as part of its regular review of NEDs’ fees.
Historically this has been done every two
years. Fees were due to be reviewed as at
1 January 2022 but this was delayed as a
result of the 2021 pay freeze. The UK has
since experienced significant increases in
inflation. Consequently, an interim review
was undertaken and it was agreed that the
approach should be aligned to the total
pay settlement for colleagues. Fees were
thus increased by 5% with effect from 1
April 2022. It has been agreed that the NED
fee review process (including those of the
Chair) should be aligned to the employee
annual pay review process, and further fee
increases have been agreed with effect
from 1 April 2023 as set out later in this
report. David Henderson took no part in the
discussions on his fees, nor the NEDs in
discussion of theirs.
The Group’s gender pay report for 2022
showed a continuing improvement in
the Group’s gender pay gap, driven by
improvements in the gender representation
of those in the lowest pay quartile. This
has contributed to our median gender pay
gap reducing for a sixth consecutive year
to 19.1%, from 20.4% in 2021. The Group
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’The Group
continues to
be committed
to promoting
inclusion and
diversity through
our business.’
Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 105
continues to be committed to promoting
inclusion and diversity through our business
and to ensuring that all employees have a
fair and equal pay opportunity appropriate
to their role.
The regulatory and corporate governance
environment in which the Group operates
continues to evolve. During 2022, the
Investment Firms Prudential Regime (IFPR)
on remuneration policy applicable to
EdenTree became effective and we therefore
reviewed the EdenTree remuneration
arrangements against this.
Conclusion
I value the continued support and counsel
of our charitable owner and ultimate
shareholder, Benefact Trust Limited, and
reaffirm our responsibility to drive sustained
and improved performance over the long-
term through our remuneration strategy,
policy and principles.
Sir Stephen Lamport
Chair of the Group Remuneration Committee
16 March 2023
Committee member Member since Meetings attended
Sir Stephen Lamport (Chair) June 2020 5/5
David Henderson September 2016 5/5
Neil Maidment March 2020 4/5
Angus Winther April 2019 5/5
Neil Maidment was unable to attend a Group Remuneration Committee meeting due to a family matter.
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Group Remuneration
Committee
Purpose and membership
The Committee is responsible for
recommending to the Board the
Remuneration Policy for Executive Directors
and for setting the remuneration packages
for each Executive Director, members of the
Group Management Board (GMB), Material
Risk Takers and heads of strategic business
units. None of the Executive Directors were
involved in discussions relating to their
own remuneration. The Committee also has
overarching responsibility for the Group-
wide Remuneration Policy.
During 2022, the Committee held five
meetings in total. The Group Remuneration
Committee members and their attendance at
meetings during the year are set out in the
table above. All members are independent
Non-Executive Directors (NED) and have
the necessary experience and expertise
to meet the Committee’s responsibilities.
There was cross-membership of the Group
Risk Committee and the Committee to
promote alignment of the Group’s Risks and
Remuneration Policies and consideration of
Risk management and outcomes in setting
reward.
Remuneration Committee timetable
The table below sets out the key agenda items discussed at each Committee meeting during
2022.
Meeting Key discussion points
February 2022 • Strategic review of remuneration
• 2022 annual bonus and 2022-2024 LTIP design and targets
• 2021 Directors’ Remuneration Report
• Impact of new IFPR regulations
• Material Risk Taker list
• Evaluation of Committee performance
March 2022 • 2021 annual bonus and 2019-2021 LTIP outcomes
• Review of 2022 salary proposals
• 2022 annual bonus and 2022-2024 LTIP design and targets
• 2021 Directors’ Remuneration Report
• 2022 Committee objectives
July 2022 • Strategic review of remuneration
• Review of executive remuneration trends
• Wider employee trends and policies
• Remuneration Policy review and Remuneration Policy Statements
• Annual review of Material Risk Taker list
October 2022 • Strategic review of remuneration
• Material Risk Taker list
• Financial Wellbeing Award
December 2022 • Strategic review of remuneration
• Update on 2022 GMB pay outturns
• Wider employee remuneration trends and pay
• 2022 Directors’ Remuneration Report
• Material Risk Taker list
• Gender pay gap reporting
• Annual audit of EdenTree remuneration policy
• Annual review of Remuneration Committee Terms of Reference
Advisers to the Committee
Having stepped down as Chair and member
of the Committee in September 2021,
Caroline Taylor acted as an advisor to the
Committee for the period October 2021 to
February 2022 to support the strategic
review of the Group’s remuneration policy.
During the year, the Committee received
external advice from Deloitte in relation to
the strategic review of remuneration; the
determination of appropriate remuneration
packages for Executive Directors, members
of the GMB and heads of strategic business
units; and remuneration market trends and
regulation. The Committee also had access
to benchmarking reports from Willis Towers
Watson and McLagan, which provided
additional data to support the determination
of pay and conditions throughout the Group.
Fees for professional advice to the
Committee paid to Deloitte were £97,650
(2021: £137,250). The Committee is satisfied
that the advice it received during 2022 from
Deloitte was impartial.
To assist its work, during the year the
Committee received input from the Group
Chief Executive, Group Chief Financial
Officer, Group HR Director, Deputy Group
HR Director, Group Chief Actuary, Group
Chief Risk and Compliance Officer and Group
Reward Director. Such input, however, did
not relate to their own remuneration.
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Remuneration ‘At a Glance’ –
Remuneration Policy summary
and implementation for 2023
The table opposite sets out the
key features of the remuneration
policy and how it will be
implemented in 2023. The full
Remuneration Policy can be
found in the 2021 Directors’
Remuneration Report. The
principles which underpin the
Group’s reward structures for all
Group employees are summarised
in the Remuneration Committee
Chair’s Statement. The full
description of the principles,
including detail on how the
Committee has addressed the
principles in the UK Corporate
Governance Code of: i) clarity; ii)
simplicity; iii) risk; iv) predictability;
v) proportionality; and vi)
alignment to culture, were set out
in last year’s Policy Report.
Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 107
Element of pay Operation Implementation for 2023
Base Salary
Reviewed annually with any increases normally taking effect in April. • CEO: £523,700
• Deputy CEO: £457,579
• Group Chief Financial Officer: £339,000
Benefits
Benefits normally comprise a car allowance, a private healthcare scheme, income
protection, life assurance, medical assessments, and other benefits cover on the
same basis as the wider employee population.
No change for 2023
Pension
For 2022, the employer contribution rate to the UK Defined Contribution Scheme
for Executive Directors is 12% of salary, in line with the wider employee population.
A cash allowance can be paid where pension contributions would be in excess of
the HMRC annual and/or lifetime allowance.
The employer contribution rate to the Canada Defined Contribution Pension plan
is 12% of salary subject to the government’s annual contribution limits. Amounts in
excess are contributed to a SERP.
No change for 2023
Annual Bonus
Maximum opportunity of 100% of salary of which 50% is payable for a target level
of performance.
Targets are set annually and award levels are determined based on one-year
performance against these targets.
For 2022, these were:
i) Benefact Group PBT (including fair value investment gains/losses);
ii) Benefact Group PBT (excluding fair value investment gains/losses);
iii) Underwriting balanced scorecard;
iv) Gross New Money;
v) Broking and Advisory turnover;
vi) Strategic targets;
vii) Greater Good targets; and
viii) Personal performance targets.
One third of total bonus earned is deferred over three years. Malus and clawback
provisions apply.
The maximum and target opportunities are unchanged for 2023, with
targets for 2023 being:
i) Benefact Group PBT (including fair value investment gains/losses);
ii) Benefact Group PBT (excluding fair value investment gains/losses);
iii) Underwriting balanced scorecard;
iv) Gross New Money;
v) Broking and Advisory turnover;
vi) Strategic targets;
vii) Greater Good targets; and
viii) Personal performance targets.
One third of total bonus earned is deferred over three years. Malus and
clawback provisions apply.
Long-term
incentive plan
The awards are granted annually and operate in three-year periods.
Under the rules of the LTIP applicable in 2022, awards can be made of up to 180%
of salary in the case of the Group Chief Executive and of up to 120% of salary in the
case of other Executive Directors.
Targets are set annually for each successive three-year LTIP period. The
measures applicable to the 2022-2024 LTIP period were:
i) Benefact Group PBT (including fair value investment gains/losses);
ii) Return on Capital;
iii) Underwriting profit;
iv) EdenTree revenue;
v) Broking and Advisory turnover;
vi) Grant to Benefact Trust Limited; and
vii) Environmental targets.
Malus and clawback provisions apply.
No change to the award levels.
The measures applicable to the 2023-2025 LTIP period are:
i) Benefact Group PBT (including fair value investment gains/losses);
ii) Return on Capital;
iii) Underwriting profit;
iv) EdenTree revenue;
v) Broking and Advisory turnover;
vi) Grant to Benefact Trust Limited; and
vii) Environmental targets.
Malus and clawback provisions apply.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 108
Remuneration ‘At a Glance’ – variable pay outturns
Annual bonus outturn for the year ending 31 December 2022
Further details including information on the performance assessment of the underwriting
balanced scorecard, strategic and greater good metrics are set out in the Annual Report on
remuneration section of this report.
Unaudited Threshold (0.5x) Target (1.0x) Maximum (1.5x) Weighted
multiplier
Benefact Group PBT
(including fair value investment
gains/losses)
1
£10.0m £44.6m £75.1m 0.16
Benefact Group PBT
(excluding fair value investment
gains/losses)
1
£14.1m £38.7m £49.2m 0.31
Underwriting balanced
scorecard
50% 75% 100% 0.12
EdenTree: Gross New Money
£412m £700m £988m 0.08
Broking: Turnover
£45m £47m £49m 0.05
Strategic targets
50% 75% 100% 0.20
Greater good
85% 90% 100% 0.16
Total 1.08
1
For consistency, amended for prior year adjustments arising from changes to accounting policy and Benefact Group plc
consolidation adjustments.
2020-2022 LTIP Outturns
Further details including information on the performance assessment of the metrics are set out
in the Annual Report on Remuneration section of this report.
Unaudited Threshold (20%
vesting)
Target (50%
vesting)
Maximum
(100% vesting)
Percentage
vesting
Benefact Group PBT
1
(including fair value investment
gains/losses)
£79.5m £139.5m £198.8m 22%
Benefact Group PBT
1
(excluding fair value
investment gains/losses)
£88.9m £133.9m £163.2m -
Group COR
96.6% 92.3% 89.3% 37%
Strategic Targets
50% 75% 100% 83%
Customer and Conduct
85% 90% 100% 81%
Total 35.2%
1
For consistency, amended for prior year adjustments arising from changes to accounting policy and Benefact Group plc
consolidation adjustments.
Actual £18.6m
Actual £44.1m
Actual 87.1%
Actual £1,175.0m
Actual £47.1m
Actual 90.2%
Actual 91.3%
Actual £82.6m
Actual £75.0m
Actual 94.2%
Actual 91.7%
Actual 96.1%
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 109
Annual Report on Remuneration
This section of the Directors’ Remuneration
Report sets out how the above
Remuneration Policy was implemented
in 2022 and the resulting payments each
Executive Director received. The financial
information contained in this report has been
audited where indicated.
Single total figure of remuneration for
Executive Directors (audited)
The table below shows a single total figure
of remuneration received in respect of
qualifying services for the 2022 financial
year for each Executive Director, together
with comparative figures for 2021.
£000 Fixed remuneration Variable remuneration Total
remuneration
Salary Benefits
1
Pension benefit
2
Total Annual bonus
3
LTIP
4
Total Total
Executive Director 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Mark Hews 493 475 14 14 53 61 560 550 391 416 245 319 636 735 1,196 1,285
S. Jacinta Whyte
5 6
431 415 25 39 78 74 534 528 318 350 143 185 461 535 995 1,063
Denise Cockrem 319 308 13 13 33 32 365 353 209 221 106 108 315 329 680 682
Total 1,243 1,198 52 66 164 167 1,459 1,431 918 987 494 612 1,412 1,599 2,871 3,030
1) Benefits include car allowance and private medical insurance which are valued at their taxable value. Provision of benefits during 2022 was in line with the Directors’ Remuneration Policy. The Deputy Group Chief Executive received £15k in 2021 in
respect of outstanding annual leave.
2) The Group Chief Executive and Group Chief Financial Officer received a cash allowance in lieu of pension, in line with Company policy that a cash allowance of 15% (Group Chief Executive), reducing to 12% from 1 April 2022 or 12% (Group Chief Financial
Officer) of salary (net of national insurance contributions) can be paid to UK-based Executive Directors where pension contributions would be in excess of the HMRC annual and/or lifetime allowance.
3) In line with the deferral policy, annual bonus earned in respect of 2021 which is in excess of 75% of the maximum bonus opportunity is deferred over a period of three years. For the annual bonus earned in respect of 2022, one-third of the total bonus
is deferred over a period of three years. The value of Executive Directors’ 2022 annual bonuses that are deferred is: £130k (Group Chief Executive), £106k (Deputy Group Chief Executive) and £70k (Group Chief Financial Officer).
4) LTIP represents the amount payable in respect of the three-year LTIP performance period 2020-2022 for 2022 and 2019-2021 for 2021, as disclosed in the 2021 Directors’ Remuneration Report. The Group operates a cash LTIP scheme, therefore no
part of the award was attributable to share price appreciation. All Executive Directors hold unvested LTIP awards in accordance with the rules of the LTIP plan.
5) An average 2022 exchange rate of 1.6124 Canadian dollars to 1 GBP has been used in respect of both 2021 and 2022.
6) Contributions to the Canadian pension plan that are above the Canadian Revenue Agency’s prescribed limit are paid into a SERP. These contributions for the Deputy Group Chief Executive and interest accruing to the SERP are included in the figures
shown.
Mark Hews is a NED for MAPFRE RE and was appointed to their Board in December 2013. The fee of £33k (2021: £30k) that Mark Hews earns in respect of this role is paid directly to the Group by
MAPFRE RE and is not received by Mark Hews.
Denise Cockrem is a NED for ITM Power plc and was appointed to their Board in July 2022. The fee of £25.5k that Denise Cockrem earns in respect of this role is paid directly to the Group by ITM
Power plc and is not received by Denise Cockrem.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 110
Performance
Condition
(unaudited)
Weighting Threshold
(0.5x)
Target
(1.0x)
Maximum
(1.5x)
Actual
performance
Weighted
multiplier
Benefact Group PBT
(including fair value
investment gains/
losses)
1
25% £10.0m £44.6m £75.1m £18.6m 0.16
Benefact Group PBT
(excluding fair value
investment gains/
losses)
1
25% £14.1m £38.7m £49.2m £44.1m 0.31
Underwriting
balanced scorecard
10% 50% 75% 100% 87.1% 0.12
EdenTree: Gross new
money
5% £412m £700m £988m £1,175m 0.08
Broking:
Turnover
5% £45m £47m £49m £47.1m 0.05
Strategic targets 15% 50% 75% 100% 90.2% 0.20
Greater good
measures
15% 85% 90% 100% 91.3% 0.16
Aggregate business performance multiplier 1.08
Additional requirements in respect of the
single total figure table
Annual bonus outcomes for 2022 (audited)
The annual bonus awards for 2022 were
78.3% of maximum (with the maximum
award level being 100% of salary) for the
Group Chief Executive; 72.9% for the Deputy
Group Chief Executive; and 64.8% for the
Group Chief Financial Officer.
The annual bonus outturns were determined
taking into account both Group and
individual performance.
Individual performance is subject to delivery
of personal performance objectives and
performance in line with the Group’s
behavioural competency framework for
strategic leaders. A personal performance
multiplier of between 0 and 1.5 may be
awarded in respect of this element of the
annual bonus. The personal performance
multiplier is reviewed and agreed by the
Committee.
Group performance is subject to the seven
performance conditions which together
form the business performance multiplier.
For 2022 these were Benefact Group PBT
(including fair value investment gains
and losses) (25%); Benefact Group PBT
(excluding fair value investment gains
and losses) (25%); Underwriting balanced
scorecard (10%); EdenTree: Gross new
money (5%); Broking: Turnover (5%);
delivery of Group strategic initiatives in line
with the Group’s strategic plan (15%); and
Greater Good measures (15%).
Results in respect of each performance
condition are assessed against the required
performance levels set at threshold, target
and maximum, in order to calculate the
aggregate Group business performance
multiplier as shown in the table below.
Performance targets for 2022 were
not adjusted and remain as originally
determined.
The overall bonus outcome at the end of
the performance year for each Executive
Director is:
Target bonus % X business performance
multiplier X personal performance
multiplier
The targets relating to the GMB annual
bonus and actual performance against those
targets for the financial year 2022 were:
1
For consistency, amended for prior year adjustments
arising from changes to accounting policy and
Benefact Group plc consolidation adjustments.
The underwriting balanced scorecard was
based on 4 targets relating to rate change,
retention, new business and rate strength
change. There was strong performance
across the scorecard which resulted in
combined outturn of 87.1% being achieved
under this measure for 2022.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 111
The assessment of personal performance for 2022 is set out below.
Mark Hews
Provided outstanding leadership during 2022 across the Group during a year
in which the Group successfully launched new brands for the Benefact Group
culminating in the Service of Thanksgiving at Westminster Abbey.
The Group’s reported profit before tax decreased, due largely to fair value
investment losses resulting from the challenging economic environment.
Underlying business performance was strong, and the Group remains
financially resilient.
The Group continued to deliver and act as a trusted partner looking after a wide
range of customers and business partners. This is reflected in strong retention
and satisfaction levels and growth across all divisions in the Group.
During 2022 Mark Hews additionally oversaw the delivery of genuinely
transformational Group-wide change including the roll out and embedding
of the next chapter of the Group’s strategy which includes ambitious
sustainability goals, further investment in new systems and a new legal
structure for Benefact Group. Employee engagement levels remained high,
with the Group retaining a two-star ‘outstanding’ accreditation by Best
Companies reflecting the Group’s commitment to supporting colleagues and
positive progress towards the Group’s goal of being an employer of choice.
S. Jacinta Whyte
Continued to provide strong and consistent leadership across the Group’s
General Insurance portfolio of businesses. The Group’s insurance businesses
performed strongly with excellent growth in gross written premiums driven by
new business wins and supported by rate strengthening. Jacinta Whyte played
a central leadership role in the Group’s growth strategy ensuring that the
Group’s general insurance businesses continued to drive improvement across
the core disciplines of underwriting, claims management, risk management and
business development.
Denise Cockrem
Maintained the financial strength of the Group positioning the business to
enable future aspirations for growth. Oversaw several key programmes
including IFRS17, operational resilience and business optimisation.
Denise Cockrem additionally assumed responsibility for the oversight of
a programme of work to reinforce and further develop the Group’s overall
approach to and management of data, enabling the Group to be increasingly
strategic in its use of data as an asset.
The Strategic Targets performance condition
measures delivery of the Group’s change
programme. As set out in more detail in
the Strategic Report, 2022 saw significant
progress on the Group’s strategic initiatives.
During the year, the Group delivered
transformational Group-wide change. The
level and impact of strategic change across
the Group is increasing year-on-year with
2022 representing the most material level of
change to date. This resulted in an outturn of
90.2% being achieved against the strategic
targets measure for 2022.
The Greater Good performance condition
measures are aligned to the Group’s
ambition to build a Movement for Good in
order to incentivise delivery of both the
Group’s charitable giving and colleagues’
engagement with the Group’s MyGiving
programme; and to their commitment to
delivering exceptional customer service
and the highest standards of conduct and
governance. The Customer and Conduct
and Governance performance conditions
measure delivery across a range of
customer and conduct metrics. Customer
satisfaction continued to be high through
2022, with customers and brokers reporting
that they were satisfied with the service
they received from Ecclesiastical. Targets
in respect of compliance with the Group’s
risk appetite; regulatory feedback; the
Group’s rolling programme of product
reviews; complaints handling; data security;
and timely resolution of internal audit and
compliance findings were met in full. Overall
in 2022, this resulted in an overall outturn
of 91.3% being achieved against the Greater
Good measures.
Personal performance
Personal performance was assessed taking
into consideration delivery against the
Group’s business plans for 2022, personal
objectives and performance in line with
the Group’s behavioural competency
framework for strategic leaders. The table
below provides an overview of the personal
performance achieved by each Executive
Director based on their objectives.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 112
Bonuses are earned in respect of the
financial year and are paid in March
following the end of the financial year. One-
third of the total annual bonus is deferred
over three years, in cash, and all annual
bonus outcomes are subject to malus
and clawback as set out in full in the 2021
Directors’ Remuneration Report.
LTIP outcomes in 2022 (audited)
The LTIP amount included in the single total
figure of remuneration is the cash award
resulting from the Group LTIP grant for the
period 2020-2022, which vested at 35.2%.
Vesting was dependent on performance
over the three financial years ending on 31
December 2022.
The 2020-2022 Group LTIP is subject to five
performance conditions: Benefact Group
PBT (excluding fair value investment gains
and losses) (25%); Benefact Group PBT
(including fair value investment gains and
losses) (25%); Group COR (25%); delivery
of Group strategic initiatives in line with the
Group’s strategic plan (15%); and Customer
and Conduct performance (10%). Results in
respect of each performance condition are
assessed against the required performance
levels set at threshold, target and maximum
as shown below. Performance targets
were not adjusted and remain as originally
determined.
Performance condition
(unaudited)
Weighting Threshold –
20% vesting
Target –
50% vesting
Maximum –
100% vesting
Actual Vesting (% of
maximum for
performance
condition)
Benefact Group PBT
(excluding fair value
investment gains and
losses)
1
25% £88.9m £133.9m £163.2m £75.0m -
Benefact Group PBT
(including fair value
investment gains and
losses)
1
25% £79.5m £139.5m £198.8m £82.6m 22%
Group COR 25% 96.6% 92.3% 89.3% 94.2% 37%
Strategic Targets 15% 50% 75% 100% 91.7% 83%
Customer and Conduct 10% 85% 90% 100% 96.1% 81%
Total 35.2%
1
For consistency, amended for prior year adjustments arising from changes to accounting policy and Benefact Group plc consolidation adjustments.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 113
The Strategic Targets performance condition
measures delivery of the Group’s change
programme over the period 2020–2022.
During the performance period, the Group
surpassed its target of delivering £100m
to good causes. Other key achievements
include the implementation of enhanced
systems and technology across the
Group’s businesses; welcoming new
brokers into the Group’s expanding broking
business; investment in people and
expertise; launching the new Ecclesiastical
and Benefact Group brands; further
strengthening the Group’s award winning
EdenTree business; adoption of a climate
change strategy for the Group; and the
launch of an ambitious new strategy for
the Group. Overall, substantial progress
has been made on the Group’s change
programme, resulting in an outturn of 91.7%
being achieved against the strategic targets
measure for 2020-2022.
The Customer and Conduct performance
condition measures delivery against the
Group’s customer and conduct metrics.
Targets in respect of compliance with the
Group’s risk appetite; regulatory feedback;
complaints handling; data security; and
timely resolution of internal audit and
compliance findings were met in full
throughout the period. Claims service
outturns were slightly below target in
2020, reflecting the challenges of Covid-19,
but met in full in 2021. Targets relating to
the Group’s rolling programme of product
reviews were met in full in 2021 and 2020.
An overall outturn of 96.1% was achieved
over the period.
Combining the financial and non-financial
performance results in an overall vesting
level of 35.2%.
The Group LTIP outcome that vests in
respect of each Executive Director in respect
of 2020-2022 is shown below.
LTIP grant Total LTIP vesting
% of salary £000 % of maximum
Mark Hews 150% 245 35.2%
S. Jacinta Whyte
1
100% 143 35.2%
Denise Cockrem 100% 106 35.2%
1
An average 2022 exchange rate of 1.6124 Canadian dollars to 1 GBP has been used in respect of 2022.
Scheme interests awarded during 2022 (audited)
During 2022, awards comprising of a cash sum were granted under the 2022-2024 Group
LTIP to each Executive Director as set out below. These awards will vest, and the cash sum
will be transferred to the award holder, in March 2025, to the extent that the applicable
performance targets are met. The vesting date for these awards is the date on which the
Group’s 2024 results are announced, anticipated to be during March 2025.
Executive
Director
Award
date
Maximum
cash sum
subject to
the award
(% base
salary)
Face
value of
award
at grant
£000s
Cash award
if threshold
performance
achieved
(% base
salary)
End of the
period over
which the
performance
targets have
to be fulfilled
Performance
measures
1
2022-2024 Group LTIP
Mark
Hews
5 July
2022
180% 855 20% 31 December
2024
• Benefact Group PBT
(including fair value
investment gains/
losses) 30%;
• Return on Capital
30%;
• GI Underwriting Profit
10%;
• EdenTree Revenue
5%;
• Broking and Advisory
Turnover 5%;
• Grant to Benefact
Trust Limited 10%;
and
• Environmental
targets 10%
S. Jacinta
Whyte
2
5 July
2022
120% 498 20% 31 December
2024
Denise
Cockrem
5 July
2022
120% 369 20% 31 December
2024
1.
Vesting occurs on a straight line basis between pre-determined milestones set in relation to threshold, target and
maximum performance. These will be disclosed on a retrospective basis in the Directors’ Remuneration Report for the
year for which the Group LTIP awards vest.
2.
An average 2022 exchange rate of 1.6124 Canadian dollars to 1 GBP has been used.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 114
The information provided in this part of the Annual Report on Remuneration is not subject to
audit
Chief Executive pay ratio
The Group structure means that it does not have to comply with the regulations governing the
disclosure of executive remuneration to which quoted companies are subject. The Group has
nonetheless chosen to disclose the ratio of the Group Chief Executive’s pay to that of other UK
employees
1
in the Group in order to provide greater transparency.
Year Method 25th percentile
pay ratio
Median pay ratio 75th percentile
pay ratio
2022 Option A
2
28:1 21:1 15:1
2021 Option A
2
32:1 23:1 17:1
2020 Option A
2
30:1 23:1 16:1
2019 Option A
2
40:1 29:1 21:1
The total remuneration and salary values for the 25th, median and 75th percentile employees
for 2022 were:
25th percentile Median 75th percentile
Total remuneration
3
£42,587 £57,136 £81,029
Salary £35,716 £46,314 £63,847
1
The table sets out the ratio between the Group Chief Executive’s total remuneration and that of the 25th percentile,
median and 75th percentile UK-based employees of Ecclesiastical Insurance Office plc (excluding SEIB), which
constitute the large majority of the UK employee population. The Committee is satisfied that the individuals identified
appropriately reflect the employee remuneration profile at the lower, median and upper quartile and that the overall
picture presented by the ratios is consistent with the Group’s wider policies pay, reward and progression policies for the
Group’s UK-based employees.
2
The calculation is based on Option A as set out in the regulations for listed companies, as this is considered to be the
most accurate way of identifying employees at the 25th percentile, median and 75th percentile.
3
Total remuneration reflects all remuneration received by the individual in the relevant year, including base salary,
benefits, pension, annual bonus and, where relevant, the long-term incentive that vests, but excludes taxable company
car benefits and taxable travel and accommodation expenses for administrative reasons. Calculations have been carried
out on a full-time equivalent basis as at 31 December 2022.
The Group Chief Executive was paid 21 times the median employee in 2022, with the CEO pay
ratios being broadly consistent with the prior year. The pay ratio is considered appropriate as a
large proportion of the Group Chief Executive’s pay is based on the performance of the Group,
business units, and individual on both short-term and long-term time horizons. 2022 awards
under both the Group’s GMB and employee annual bonus schemes were lower in comparison
to the prior year, in line with 2022 performance. Vesting of the 2020-2022 Group LTIP was
lower than the prior year. The salary increase for the CEO in April 2022 was in line with the
wider workforce.
Percentage change in remuneration of all Directors and UK-based employees
The table below shows the percentage year-on-year change in salary, benefits and annual
bonus (from 2021 to 2022) for the Board Directors compared with UK-based employees1. The
Committee has selected this comparator group as being the most appropriate because the
composition and structure of remuneration for this group most closely reflect that of the Board.
Salary Taxable benefits
2
Annual bonus
Executive Directors
Mark Hews 3.8% 0.1% -6.0%
Jacinta Whyte 3.8% -35.2% -9.3%
Denise Cockrem 3.8% 0% -5.3%
UK-based employees
Average UK-based
employees
1
6.6% 5.6% -8.5%
1
UK-based employees of Ecclesiastical Insurance Office plc; excluding employees in SEIB; matched sample basis.
2
Based on contractual P11D taxable benefits for the tax year ending 5 April in the relevant year. Taxable benefits
include car allowance and private medical insurance for Executive Directors and private medical insurance for
UK-based employees (taxable company car benefits and taxable travel and accommodation expenses are excluded
for administrative reasons). The decrease for the Deputy Group Chief Executive in 2022 is due to a payment of £15k
received in 2021 in respect of outstanding annual leave.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 115
Relative importance of spend on pay
The table below sets out for 2022 and 2021, the actual costs of employee remuneration; grants
paid to Benefact Trust Limited; and dividends paid to Preference shareholders. Benefact Group
PBT in each year is provided for context.
£000 2022 2021
1
% change
Remuneration paid to all Group employees
2
92,834 84,463 9.9%
Gross charitable grants to the ultimate
parent company, Benefact Trust Limited
20,000 21,000 -4.8%
Non-Cumulative Irredeemable Preference
share dividend
9,181 9,181 Nil
(Loss)/profit before tax
2
(4,773) 79,178 n/a
1
To ensure comparability between years, the comparatives have been re-presented for changes in accounting policy,
discontinued operations and the amounts recharged to related undertakings not within the Group.
2
Ecclesiastical Insurance Office plc (EIO) Group.
Group Chief Executive pay for performance comparison
The table below shows the single figure of total remuneration for the incumbent, Mark Hews,
and prior Group Chief Executive, Michael Tripp, for the ten years to 31 December 2022.
Financial year ending 31 December
Financial year Group Chief
Executive
1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total
remuneration
(single figure)
£000
Mark Hews 569 907 1,089 1,370 1,212 1,240 1,489 1,116 1,285 1,196
Michael Tripp 330 162 N/A N/A N/A N/A N/A N/A N/A N/A
Annual bonus
received (% of
maximum)
Mark Hews 45% 78% 88% 97% 99% 84% 96% 45% 88% 78%
Michael Tripp
2
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Long-term
incentive
vesting (% of
maximum)
Mark Hews
3
4% 60% 70% 88% 75% 88% 86% 54% 47% 35%
Michael Tripp
4
4% 47% N/A N/A N/A N/A N/A N/A N/A N/A
1
Michael Tripp resigned from the Board on 21 May 2013 and Mark Hews was appointed Group Chief Executive on 1 May
2013, having previously held the position of Group Chief Financial Officer. The total remuneration single figure value for
both Michael Tripp and Mark Hews is shown for 2013.
2
Michael Tripp received no payment under the annual bonus or the Executive Director’s LTIP for performance in 2013. He
did, however, receive a payment (£100k) under the terms of a discretionary arrangement put in place to incentivise the
delivery of a smooth transition of the management to the successor in the role of Group Chief Executive. The maximum
opportunity was capped at three months’ salary.
3
The LTIP vesting relevant to Mark Hews represents the amount vesting in respect of the three-year LTIP performance
period 2012-2014 for 2014; 2013-2015 for 2015 and 2014-2016 for 2016, together with the amounts vesting in respect of
the Group Chief Executive’s three-year incentive plan in 2014, 2015 and 2016 respectively. The Group Chief Executive’s
three-year incentive plan concluded at the end of 2016. LTIP vesting in 2017 and subsequent years represent the
amounts vesting in respect of the relevant three-year LTIP performance period only.
4
Michael Tripp received a 2013 LTIP payment in respect of performance in the years 2011 and 2012 (only) under the 2011-
2013 LTIP. He received a 2014 LTIP payment in respect of performance in 2012 (only) under the 2012-2014 LTIP.
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Directors’ service agreements
Mark Hews has a service contract which
provides for a notice period of 12 months by
the Company. S. Jacinta Whyte and Denise
Cockrem have service contracts which
provides for a notice period of 6 months
by the Company. No NED has a service
contract.
Payments for loss of office (audited)
No termination payments were made to
Executive Directors in 2022.
Wider employee engagement
The Group consults with its recognised
Union, Unite, regarding remuneration for
employees within relevant UK businesses.
Additionally, employees can provide
feedback via the Group’s employee
engagement survey and to their managers
or HR. The Group HR Director attends
the Committee meetings and advises the
Committee on HR strategy, including the
effectiveness of the Group’s remuneration
policies and how they are viewed by
employees.
Single total figure of remuneration for NEDs
(audited)
NEDs do not participate in any of the
Group’s incentive arrangements.
The Board believes that it is appropriate
that the level of fees paid to NEDs should
reflect equivalent fees paid by organisations
of similar size and complexity whilst being
mindful that the Group is owned by a
charity. This will enable the Group to attract
NEDs of the calibre required to help the
Group to implement its future strategy.
NED fees were last reviewed by the Board
in November 2022 with increased fees
becoming effective from 1 April 2023. Prior
to that, fees were increased on 1 April 2022,
and it is planned that fees will now be
reviewed annually. The fees set out below
are commensurate with the demands and
responsibilities of the NED roles.
£ Fees Taxable Benefits
1
Non-Executive Directors 2022 2021 2022 2021
David Henderson 150,437 145,000 636 182
Chris Moulder 77,813 75,000 802 -
Rita Bajaj
2
57,062 25,417 829 -
Francois-Xavier Boisseau
3
70,550 61,500 - -
Sir Stephen Lamport
4
70,550 59,087 1,127 385
Neil Maidment 57,062 55,000 - -
Andrew McIntyre 70,550 68,000 - -
Angus Winther 68,475 66,000 - -
Caroline Taylor
5
- 46,879 - 222
Total 622,499 601,883 3,394 789
1
Benefits are travel and accommodation expenses only, valued at their grossed up tax and NI value, in accordance with
Group’s travel and expenses policy.
2
Rita Bajaj was appointed as a NED on 15 July 2021.
3
Francois-Xavier Boisseau was appointed as the Consumer Duty Champion on 27 September 2022. He also undertakes
a Broker Oversight role having been appointed on 1 July 2021.
4
Sir Stephen Lamport was appointed as the Chair of the Group Remuneration Committee on 8 September 2021.
5
Caroline Taylor was retired from the Board and as Chair of the Group Remuneration Committee on 8 September 2021.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 117
The information provided in this part of
the Annual Report on Remuneration is not
subject to audit.
Statement of implementation of
Remuneration Policy in 2023
The implementation of the remuneration
policy will be consistent with that outlined
in the Directors’ Remuneration Policy ‘At
a Glance’ section. The full Remuneration
Policy can be found in the 2021 Directors’
Remuneration Report. Details of how this
policy will apply in 2023 are set out below.
Salary (Executive Directors)
Executive Directors’ salaries are reviewed
annually in line with the Directors’
Remuneration Policy. The level of salary
increases for UK Ecclesiastical employees
is a key consideration in setting the level of
any salary increase for Executive Directors.
After careful consideration the Committee
determined that the salaries of Executive
Directors would be increased by 5%, which
is lower than the wider workforce of 6.15%.
The following salaries will apply from 1 April
2023:
£000 Salary Salary Percentage
increase
1 April
2023
1 April
2022
Mark Hews 524 499 5.0%
S. Jacinta
Whyte
1
458 436 5.0%
Denise
Cockrem
339 323 5.0%
1
An average 2022 exchange rate of 1.6124 Canadian
dollars to 1 GBP has been used.
Annual bonus for 2023
The annual bonus performance conditions
and targets have been set in accordance
with the Directors’ Remuneration Policy.
As set out above, a strategic review of the
Group’s incentive arrangements was carried
out in 2021, with the resulting revised
arrangements below applying from 2022.
The annual bonuses payable to Executive
Directors in respect of 2023 will be assessed
based on both Group and individual
performance. Individual performance
continues to be subject to delivery of
personal performance objectives and
performance in line with the Group’s culture
and behaviours framework, expressed
as a personal performance multiplier.
Group performance is subject to seven
performance conditions which together form
the Group performance multiplier. For 2023,
these will be unchanged as follows:
Group performance measures Percentage weighting
Benefact Group PBT (including fair value investment gains and losses) 25%
Benefact Group PBT (excluding fair value investment gains and
losses)
25%
Underwriting balanced scorecard 10%
Gross New Money 5%
Broking and Advisory Turnover 5%
Delivery of Group strategic initiatives in line with the Group’s strategic
plan
15%
Greater Good (including charitable giving; employee engagement
with MyGiving programme; customer, and conduct and governance)
15%
The overall bonus outcome at the end of the performance year for each Executive Director is:
Target bonus % X business performance multiplier X personal performance multiplier
The maximum opportunity under the annual bonus plan in 2023 is 100% of salary. Annual
bonuses in respect of 2023 will be subject to deferral over a period of three years, of one third
of the total annual bonus awarded.
(£000) Salary Salary Percentage increase
1 April
2022
1 April
2021
Mark Hews 499 4754 5.0%
S. Jacinta Whyte
1
407 388 5.0%
Denise Cockrem 323 308 5.0%
1 An average 2021 exchange rate of 1.7247 Canadian dollars to 1 GBP has been used.
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Governance – Group Remuneration Report Ecclesiastical Insurance Office plc Annual Report & Accounts 2022 118
LTIP for 2023-2025
The 2023-2025 LTIP performance conditions and targets have been set in accordance with
the Directors’ Remuneration Policy above. The performance conditions below applying for the
2023-2025 Group LTIP:
Group performance measures Percentage weighting
Benefact Group PBT (including fair value investment gains and losses) 30%
Return on Capital 30%
General Insurance Underwriting Profit 10%
EdenTree Revenue 5%
Broking and Advisory Turnover 5%
Grant to Benefact Trust Limited 10%
Environmental targets 10%
Awards under the 2023-2025 Group LTIP will be up to 180% of salary in the case of the Group
Chief Executive and up to 120% of salary in the case of the Deputy Group Chief Executive and
Group Chief Financial Officer.
Fees (Non-Executive Directors)
The following table sets out the current and future fee structure which will apply
from 1 April 2023.
£000 Fees (effective 1
April 2022)
Fees (effective 1
April 2023)
All-inclusive fee for the Group Chair 152 160
All-inclusive fee for the Senior Independent Director 79 83
Basic fee for a NED (including Committee Membership) 58 61
Fee for chairing the Group Audit Committee 14 15
Fee for chairing the Group Remuneration Committee 14 15
Fee for chairing the Group Risk Committee 14 15
Fee for Broker Oversight Role 14 15
Fee for chairing the Group Finance and Investment
Committee
12 12
Fee for chairing the Group Nominations Committee
1
12 12
Fee for workforce engagement NED - 4
Fee for Consumer Duty Champions (two years only) - 5
1
The fee for chairing the Group Nominations Committee is included within the all-inclusive fee for the Senior
Independent Director.
By order of the Board
Sir Stephen Lamport
Chair of the Group Remuneration Committee
16 March 2023
Governance Financial Statements Other InformationStrategic Report
Section Three
Financial Statements
Independent auditors’ report to the members 120
of Ecclesiastical Insurance Office plc
Consolidated statement of profit or loss 125
Consolidated and parent statement of comprehensive income 125
Consolidated and parent statement of changes in equity 126
Consolidated and parent statement of financial position 126
Consolidated and parent statement of cash flows 127
Notes to the financial statements 127
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Governance Financial Statements Other InformationStrategic Report
Independent auditors’ report to the members
of Ecclesiastical Insurance Office plc
Report on the audit of
the financial statements
Opinion
In our opinion, Ecclesiastical Insurance
Office plc’s group financial statements and
parent company financial statements (the
“financial statements”):
• give a true and fair view of the state of the
group’s and of the parent company’s affairs
as at 31 December 2022 and of the group’s
loss and the group’s and parent company’s
cash flows for the year then ended;
• have been properly prepared in
accordance with UK-adopted international
accounting standards as applied in
accordance with the provisions of the
Companies Act 2006; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements,
included within the Annual Report and
Accounts 2022 (the “Annual Report”),
which comprise: Consolidated and parent
statements of financial position as at 31
December 2022; Consolidated statement
of profit or loss, Consolidated and parent
statements of comprehensive income,
Consolidated and parent statements of
cash flows and Consolidated and parent
statements of changes in equity for the year
then ended; and the notes to the financial
statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting
to the Group Audit Committee.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities
for the audit of the financial statements
section of our report. We believe that the
audit evidence we have obtained is sufficient
and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the group in
accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have
fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we
declare that non-audit services prohibited
by the FRC’s Ethical Standard were not
provided.
Other than those disclosed in Note 12,
we have provided no non-audit services
to the parent company or its controlled
undertakings in the period under audit.
Our audit approach
Context
The company is a UK headquartered general
insurer. The majority of business is written
in the UK however it also has branches
in Ireland and Canada and subsidiaries in
Australia. The group of companies headed/
owned by Ecclesiastical Insurance Office
includes subsidiaries that carry out life
insurance, investment management and
financial advisory business. The company
also owned an insurance broking business
which was sold in the year to a related party.
Overview
Audit scope
• We have scoped the audit based on the
financially significant components and
material account balances within the
group, which are described below.
Key audit matters
• Assumptions used in calculating Physical
and Sexual Abuse “PSA” reserves (group
and parent)
Materiality
• Overall group materiality: £10,000,000 (2021:
£11,382,000) based on 1.6% of Net assets.
• Overall parent company materiality:
£9,500,000 (2021: £10,813,000) based on
1.7% of Net assets.
• Performance materiality: £7,500,000
(2021: £8,536,000) (group) and £7,125,000
(2021: £8,109,000) (parent company).
The scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that,
in the auditors’ professional judgement,
were of most significance in the audit of the
financial statements of the current period
and include the most significant assessed
risks of material misstatement (whether or
not due to fraud) identified by the auditors,
including those which had the greatest
effect on: the overall audit strategy; the
allocation of resources in the audit; and
directing the efforts of the engagement
team. These matters, and any comments
we make on the results of our procedures
thereon, were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion on
these matters.
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This is not a complete list of all risks
identified by our audit.
The appropriateness of the assumptions
used to value the Asbestos reserves, which
was part of the key audit matters in relation
to general insurance reserves last year, is
no longer included because of the level of
subjectivity in relation to the assumptions
decreasing. Otherwise, the key audit matters
below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Assumptions used in calculating Physical
and Sexual Abuse “PSA” reserves (group and
parent)
As disclosed in the Group Audit Committee
Report and notes 2, 3 and 28. The valuation of
the general insurance liabilities is a complex
process involving inherent uncertainty
and is one of the most significant areas of
management judgement within the financial
statements of the group and parent company.
We consider the area of significant
judgement to be specific to assumptions
used in calculating the reserves for PSA
exposures, which contribute to the
liability
reserves held as at the balance sheet date
described in note 3. Specifically, the
assumptions requiring significant judgement
and estimation are claims frequency, claim
severity, the discount rate, future inflation,
and the reserve margin.
The uncertainty around claims frequency,
claims severity, discount rate, future inflation
and reserve margin require significant
management judgement and estimation in
setting the reserves.
With involvement from our Actuarial
specialists we have performed the following
procedures:
• Observed the Reserving Committee control
which reviews, challenges and approves the
assumptions used within the calculation of
the reserves;
• Challenged the assumptions used by
management and considered reasonable
alternative assumptions and the impact
on the level of reserves calculated. This
includes consideration of the historic claim
numbers, average claims cost, the current
regulatory environment and IICSA review (in
the UK), discount rate, future claims inflation
and level of margin.
• We have assessed the appropriateness
of the resulting reserves based on the
assumptions selected.
Based on the work performed and evidence
obtained, we consider the assumptions used
in the calculation of the PSA reserves to be
appropriate.
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work to
be able to give an opinion on the financial
statements as a whole, taking into account
the structure of the group and the parent
company, the accounting processes and
controls, and the industry in which they
operate.
The group operates a general insurance
business in the United Kingdom, Ireland,
Canada and Australia. It also operates a
life insurance business, an investment
management business and up until
December 2022 an insurance broking
business all within the United Kingdom.
The group includes certain non-insurance
entities within the United Kingdom and
Australia which are smaller and do not form
part of our in-scope components.
We consider the general insurance business
in the United Kingdom and the consolidation
adjustments to be financially significant
reporting components. We have performed
a full scope audit of these components.
The general insurance business in Canada
and Australia as well as the life insurance
business, an investment management
business and an insurance broking business
within the United Kingdom were noted to
include specific large balances. These large
balances have then been brought into the
scope of our audit.
The result of the above scoping was that
we achieved greater than 96% coverage of
gross written premiums and 95% coverage
of insurance contract liabilities.
The impact of climate risk on our audit
As part of our audit we made enquiries of
management to understand the process
that has been adopted to assess the extent
of the potential impact of climate risk on the
Group’s and Parent’s financial statements
and to support disclosures made. We
remained alert when performing our audit
procedures for any indicators of the impact
of climate risk, including in our testing of
going concern, valuation of investment
property and valuation of reserves which
have been identified as the areas of higher
risk of impact. We also considered the
consistency of the disclosures in relation to
climate change between the Annual Report
and the financial statements based on the
knowledge obtained from our audit.
Materiality
The scope of our audit was influenced
by our application of materiality. We
set certain quantitative thresholds for
materiality. These, together with qualitative
considerations, helped us to determine the
scope of our audit and the nature, timing
and extent of our audit procedures on the
individual financial statement line items
and disclosures and in evaluating the effect
of misstatements, both individually and in
aggregate on the financial statements as a
whole.
Based on our professional judgement, we
determined materiality for the financial
statements as a whole as follows:
Based on our professional judgement, we
determined materiality for the financial
statements as a whole as follows:
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Financial statements
– group
Financial statements
– parent company
Overall
materiality
£10,000,000 (2021: £11,382,000). £9,500,000 (2021: £10,813,000).
How we
determined it
1.6% of Net assets 1.7% of Net assets
Rationale for
benchmark
applied
The engagement team concluded
that a net assets benchmark is the
most appropriate when setting an
overall materiality on the 2022
audit engagement. In our view,
we consider net assets to be the
appropriate benchmark as it best
aligns with the underlying interest
of the stakeholders. The quantum
of materiality was determined by
considering the various benchmarks
available to us as auditors, our
experience of auditing other insurance
groups and the business performance
during 2022.
The engagement team concluded
that a net assets benchmark is the
most appropriate when setting an
overall materiality on the 2022
audit engagement. In our view,
we consider net assets to be the
appropriate benchmark as it best
aligns with the underlying interest
of the stakeholders. The quantum
of materiality was determined by
considering the various benchmarks
available to us as auditors, our
experience of auditing other insurance
groups and the business performance
during 2022.
For each component in the scope of our
group audit, we allocated a materiality that
is less than our overall group materiality.
The range of materiality allocated across
components was between £2.0 million
and £9.5 million. Certain components were
audited to a local statutory audit materiality
that was also less than our overall group
materiality.
We use performance materiality to reduce
to an appropriately low level the probability
that the aggregate of uncorrected and
undetected misstatements exceeds
overall materiality. Specifically, we use
performance materiality in determining
the scope of our audit and the nature and
extent of our testing of account balances,
classes of transactions and disclosures, for
example in determining sample sizes. Our
performance materiality was 75% (2021:
75%) of overall materiality, amounting to
£7,500,000 (2021: £8,536,000) for the
group financial statements and £7,125,000
(2021: £8,109,000) for the parent company
financial statements.
In determining the performance materiality,
we considered a number of factors - the
history of misstatements, risk assessment
and aggregation risk and the effectiveness
of controls - and concluded that an amount
at the upper end of our normal range was
appropriate.
We agreed with the Group Audit Committee
that we would report to them misstatements
identified during our audit above £500,000
(group audit) (2021: £560,000) and
£475,000 (parent company audit) (2021:
£540,000) as well as misstatements below
those amounts that, in our view, warranted
reporting for qualitative reasons.group
financial statements and £8,109,000
(2020: £7,100,000) for the parent company
financial statements.
In determining the performance materiality,
we considered a number of factors – the
history of misstatements, risk assessment
and aggregation risk and the effectiveness
of controls – and concluded that an amount
at the upper end of our normal range was
appropriate.
We agreed with the Group Audit Committee
that we would report to them misstatements
identified during our audit above £560,000
(group audit) (2020: £500,000) and
£540,000 (parent company audit) (2020:
£475,000) as well as misstatements below
those amounts that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going
concern
Our evaluation of the directors’ assessment
of the group’s and the parent company’s
ability to continue to adopt the going
concern basis of accounting included:
• Obtained and reviewed management’s
going concern assessment which included
the board approved income statement,
balance sheet, cash flow and solvency
forecasts, along with stressed and
downside scenarios;
• Considered the forward looking
assumptions and assessed the
reasonableness of these based on recent
historic performance;
• Considered information obtained during
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Governance Financial Statements Other InformationStrategic Report
the course of the audit and publicly
available market information to identify
any evidence that would contradict
management’s assessment; and
• Considered our own independent
alternative downside scenarios and
whether these could impact the going
concern assessment.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the group’s and the
parent company’s ability to continue as a
going concern for a period of at least twelve
months from when the financial statements
are authorised for issue.
In auditing the financial statements, we
have concluded that the directors’ use of
the going concern basis of accounting in the
preparation of the financial statements is
appropriate.
However, because not all future events or
conditions can be predicted, this conclusion
is not a guarantee as to the group’s and the
parent company’s ability to continue as a
going concern.
Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the
information in the Annual Report other
than the financial statements and our
auditors’ report thereon. The directors
are responsible for the other information.
Our opinion on the financial statements
does not cover the other information and,
accordingly, we do not express an audit
opinion or, except to the extent otherwise
explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the audit, or otherwise appears to be
materially misstated. If we identify an
apparent material inconsistency or material
misstatement, we are required to perform
procedures to conclude whether there is
a material misstatement of the financial
statements or a material misstatement of
the other information. If, based on the work
we have performed, we conclude that there
is a material misstatement of this other
information, we are required to report that
fact. We have nothing to report based on
these responsibilities.
With respect to the Strategic report and
Directors’ Report, we also considered
whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course
of the audit, the Companies Act 2006
requires us also to report certain opinions
and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work
undertaken in the course of the audit, the
information given in the Strategic report
and Directors’ Report for the year ended
31 December 2022 is consistent with the
financial statements and has been prepared
in accordance with applicable legal
requirements.
In light of the knowledge and understanding
of the group and parent company and their
environment obtained in the course of
the audit, we did not identify any material
misstatements in the Strategic report and
Directors’ Report.
Responsibilities for the
financial statements and the
audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Directors’
responsibilities, the directors are responsible
for the preparation of the financial
statements in accordance with the applicable
framework and for being satisfied that they
give a true and fair view. The directors are
also responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
group’s and the parent company’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the group or the parent
company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable
assurance is a high level of assurance, but
is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always
detect a material misstatement when it
exists. Misstatements can arise from fraud
or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are
instances of non-compliance with laws and
regulations. We design procedures in line
with our responsibilities, outlined above, to
detect material misstatements in respect
of irregularities, including fraud. The extent
to which our procedures are capable of
detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the group
and industry, we identified that the
principal risks of non-compliance with
laws and regulations related to breaches
of UK regulation, such as those governed
by the Prudential Regulation Authority
and the Financial Conduct Authority, and
we considered the extent to which non-
compliance might have a material effect on
the financial statements. We also considered
those laws and regulations that have a
direct impact on the financial statements
such as the Companies Act 2006. We
evaluated management’s incentives and
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opportunities for fraudulent manipulation of
the financial statements (including the risk
of override of controls), and determined that
the principal risks were related to posting
inappropriate journal entries to manipulate
the financial statements and management
bias in accounting estimates specifically
the valuation of specific general insurance
reserves including Physical and Sexual
Abuse (“PSA”) reserves (see Key Audit
Matters section). The group engagement
team shared this risk assessment with the
component auditors so that they could
include appropriate audit procedures
in response to such risks in their work.
Audit procedures performed by the group
engagement team and/or component
auditors included:
• Enquired of compliance, risk, internal audit,
and the Group’s legal function, including
consideration of known or suspected
instances of non-compliance with laws
and regulation and fraud;
• Read key correspondence with the
Prudential Regulation Authority and the
Financial Conduct Authority in relation to
compliance with laws and regulations;
• Reviewed relevant meeting minutes
including those of the Group Board,
Group Audit Committee and Group Risk
Committee;
• Procedures related to the valuation of
specific general insurance reserves such
as PSA reserves described in the related
key audit matter;
• Risk based target testing of journal
entries, in particular any journal entries
which include characteristics which were
identified as potentially being indicative of
a fraudulent journal; and
• Procedures to incorporate unpredictability
around the nature, timing or extent of our
testing.
There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events and
transactions reflected in the financial
statements. Also, the risk of not detecting a
material misstatement due to fraud is higher
than the risk of not detecting one resulting
from error, as fraud may involve deliberate
concealment by, for example, forgery or
intentional misrepresentations, or through
collusion.
Our audit testing might include testing
complete populations of certain transactions
and balances, possibly using data auditing
techniques. However, it typically involves
selecting a limited number of items for
testing, rather than testing complete
populations. We will often seek to target
particular items for testing based on their
size or risk characteristics. In other cases,
we will use audit sampling to enable us to
draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities
for the audit of the financial statements
is located on the FRC’s website at: www.
frc.org.uk/auditorsresponsibilities. This
description forms part of our auditors’
report.
Use of this report
This report, including the opinions,
has been prepared for and only for the
parent company’s members as a body in
accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions,
accept or assume responsibility for any
other purpose or to any other person to
whom this report is shown or into whose
hands it may come save where expressly
agreed by our prior consent in writing.
Other required reporting
Companies Act 2006
exception reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
• we have not obtained all the information
and explanations we require for our audit;
or
• adequate accounting records have not
been kept by the parent company, or
returns adequate for our audit have not
been received from branches not visited
by us; or
• certain disclosures of directors’
remuneration specified by law are not
made; or
• the parent company financial statements
are not in agreement with the accounting
records and returns.
We have no exceptions to report arising
from this responsibility.
Appointment
Following the recommendation of the Group
Audit Committee, we were appointed by
the members on 18 June 2020 to audit the
financial statements for the year ended 31
December 2020 and subsequent financial
periods. The period of total uninterrupted
engagement is 3 years, covering the years
ended 31 December 2020 to 31 December
2022.
Sue Morling (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditors
Bristol
16 March 2023
Consolidated statement of profit or loss
for the year ended 31 December 2022
Notes
Restated*
2022
2021
£000
£000
Revenue
Gross written premiums
5, 6
558,551
486,211
Outward reinsurance premiums
6
(238,069)
(198,601)
Net change in provision for unearned premiums
6
(16,505)
(14,620)
Net earned premiums
303,977
272,990
Fee and commission income
7
63,533
55,417
Other operating income
2,020
1,136
Net investment return
8
4,058
102,897
Total revenue
373,588
432,440
Expenses
Claims and change in insurance liabilities
9
(285,680)
(269,633)
Reinsurance recoveries
9
136,507
123,822
Fees, commissions and other acquisition costs
10
(108,696)
(95,649)
Other operating and administrative expenses
(118,036)
(109,514)
Total operating expenses
(375,905)
(350,974)
Operating (loss)/profit
(2,317)
81,466
Finance costs
(2,456)
(2,288)
(Loss)/profit before tax from continuing operations
5
(4,773)
79,178
Tax credit/(expense)
14
3,015
(18,021)
(Loss)/profit for the year from continuing operations
11
(1,758)
61,157
Net profit attributable to discontinued operations
16
13,696
338
Profit for the year (attributable to equity holders of the Parent)
11,938
61,495
*The comparative financial statements have been restated as detailed in note 40.
Page 125
Consolidated and parent statements of comprehensive income
for the year ended 31 December 2022
Restated*
Notes
2022
2021
Group
Parent
Group
Parent
£000
£000
£000
£000
Profit for the year
11,938
23,572
61,495
66,335
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss:
Actuarial (losses)/gains on retirement benefit plans
19
(10,171)
(10,171)
38,660
38,660
Attributable tax
2,543
2,543
(8,098)
(8,098)
(7,628)
(7,628)
30,562
30,562
Items that may be reclassified subsequently to profit or loss:
Gains/(losses) on currency translation differences
27
5,392
2,470
(2,356)
551
(Losses)/gains on net investment hedges
27
(4,514)
(1,938)
1,912
(713)
Attributable tax
27
825
485
(183)
131
1,703
1,017
(627)
(31)
Net other comprehensive (expense)/income
(5,925)
(6,611)
29,935
30,531
Total comprehensive income (attributable to equity
6,013
16,961 91,430 96,866
holders of the Parent)
*The comparative financial statements have been restated as detailed in note 40.
Page 126
Consolidated and parent statements of changes in equity
for the year ended 31 December 2022
Translation
Share
Share
Revaluation
and hedging
Retained
capital
premium
reserve
reserve
earnings
Total
Group
Notes
£000
£000
£000
£000
£000
£000
At 1 January 2022
120,477
4,632
268
17,603
491,981
634,961
Profit for the year
-
-
-
-
11,938
11,938
Other net income/(expense)
-
-
-
1,703
(7,628)
(5,925)
Total comprehensive income
-
-
-
1,703
4,310
6,013
Dividends
15
-
-
-
-
(9,181)
(9,181)
Gross charitable grant
15
-
-
-
-
(20,000)
(20,000)
Tax relief on charitable grant
15
-
-
-
-
3,800
3,800
Reserve transfers
-
-
(46)
-
46
-
At 31 December 2022
120,477
4,632
222
19,306
470,956
615,593
At 31 December 2020 (as reported)
120,477
4,632
599
18,230
425,290
569,228
Restatement*
-
-
-
-
494
494
At 1 January 2021 (as restated*)
120,477
4,632
599
18,230
425,784
569,722
Profit for the year
-
-
-
-
61,495
61,495
Other net (expense)/income
-
-
(18)
(627)
30,580
29,935
Total comprehensive (expense)/income
-
-
(18)
(627)
92,075
91,430
Dividends
15
-
-
-
-
(9,181)
(9,181)
Gross charitable grant
15
-
-
-
-
(21,000)
(21,000)
Tax relief on charitable grant
15
-
-
-
-
3,990
3,990
Reserve transfers
-
-
(313)
-
313
-
At 31 December 2021 (as restated*)
120,477
4,632
268
17,603
491,981
634,961
Parent
At 1 January 2022
120,477
4,632
269
7,036
420,088
552,502
Profit for the year
-
-
-
-
23,572
23,572
Other net income/(expense)
-
-
-
1,017
(7,628)
(6,611)
Total comprehensive income
-
-
-
1,017
15,944
16,961
Dividends
-
-
-
-
(9,181)
(9,181)
Gross charitable grant
-
-
-
-
(20,000)
(20,000)
Tax relief on charitable grant
-
-
-
-
3,800
3,800
Group tax relief in excess of standard
-
-
-
-
(105)
(105)
Reserve transfers
-
-
(359)
-
359
-
At 31 December 2022
120,477
4,632
(90)
8,053
410,905
543,977
At 31 December 2020 (as reported)
120,477
4,632
600
7,067
348,644
481,420
Restatement*
-
-
-
-
494
494
At 1 January 2021 (as restated*)
120,477
4,632
600
7,067
349,138
481,914
Profit for the year
-
-
-
-
66,335
66,335
Other net (expense)/income
-
-
(18)
(31)
30,580
30,531
Total comprehensive (expense)/income
-
-
(18)
(31)
96,915
96,866
Dividends
-
-
-
-
(9,181)
(9,181)
Gross charitable grant
-
-
-
-
(21,000)
(21,000)
Tax relief on charitable grant
-
-
-
-
3,990
3,990
Group tax relief in excess of standard
-
-
-
-
(87)
(87)
Reserve transfers
-
-
(313)
-
313
-
At 31 December 2021 (as restated*)
120,477
4,632
269
7,036
420,088
552,502
*The comparative financial statements have been restated as detailed in note 40.
The revaluation reserve represents cumulative net fair value gains on owner-occupied property. Further details of the translation and hedging
reserve are included in note 27.
Page 127
Consolidated and parent statements of financial position
at 31 December 2022
Restated*
Restated*
Notes
31 December 2022
31 December 2021
1 January 2021
Group
Parent
Group
Parent
Group
Parent
£000
£000
£000
£000
£000
£000
Assets
Goodwill and other intangible assets
17
30,255
28,158
52,512
27,501
54,353
24,265
Deferred acquisition costs
18
52,526
42,130
46,027
36,740
41,989
33,472
Deferred tax assets
30
8,565
31
8,480
-
1,078
-
Pension surplus
19
15,338
15,338
28,304
28,304
1,053
1,053
Property, plant and equipment
20
31,405
30,906
35,245
32,771
38,316
34,726
Investment property
21
140,846
140,846
163,355
162,822
142,142
142,142
Financial investments
22
870,749
636,637
883,770
707,106
820,777
650,787
Reinsurers' share of contract liabilities
28
306,962
201,246
253,436
170,909
208,677
134,516
Current tax recoverable
4,212
4,212
5
5
7,986
5,497
Other assets
24
310,788
269,017
240,910
194,808
216,570
161,114
Cash and cash equivalents
25
104,664
66,569
114,036
48,437
104,429
59,466
Assets classified as held for distribution
16
14,999
3,722
-
-
-
-
Total assets
1,891,309
1,438,812
1,826,080
1,409,403
1,637,370
1,247,038
Equity
Share capital
26
120,477
120,477
120,477
120,477
120,477
120,477
Share premium account
4,632
4,632
4,632
4,632
4,632
4,632
Retained earnings and other reserves
490,484
418,868
509,852
427,393
444,613
356,805
Total shareholders' equity
615,593
543,977
634,961
552,502
569,722
481,914
Liabilities
Insurance contract liabilities
28
979,300
696,024
939,069
669,375
868,155
615,708
Investment contract liabilities
33
58,479
-
15,519
-
-
-
Lease obligations
34
19,062
18,712
22,738
20,806
25,450
22,838
Provisions for other liabilities
29
5,961
5,870
6,373
6,068
6,499
5,842
Retirement benefit obligations
19
4,960
4,960
7,058
7,058
6,530
6,530
Deferred tax liabilities
30
36,723
35,905
48,965
46,733
29,846
28,562
Current tax liabilities
308
228
1,232
819
1,293
1,293
Deferred income
31
33,167
26,929
28,385
21,951
25,908
18,858
Subordinated liabilities
32
25,818
25,818
24,433
24,433
-
-
Other liabilities
31
101,443
80,389
97,347
59,658
93,561
55,087
Liabilities classified as held for distribution
16
10,495
-
-
-
-
-
Total liabilities
1,275,716
894,835
1,191,11 9
856,901
1,067,648
765,124
Total shareholders' equity and liabilities
1,891,309
1,438,812
1,826,080
1,409,403
1,637,370
1,247,038
*The comparative financial statements have been restated as detailed in note 40.
The financial statements of Ecclesiastical Insurance Office plc, registered number 24869, on pages 125 to 201 were approved and authorised for
issue by the Board of Directors on 16 March 2023 and signed on its behalf by:
David Henderson
Mark Hews
Chair
Group Chief Executive
Page 128
Consolidated and parent statements of cash flows
for the year ended 31 December 2022
Restated*
Notes
2022
2021
Group
Parent
Group
Parent
£000
£000
£000
£000
(Loss)/profit before tax from continuing operations
(4,773)
21,030
79,178
90,319
Profit before tax from discontinued operations
14,115
-
459
-
Adjustments for:
Depreciation of property, plant and equipment
6,261
5,373
6,155
5,285
(Profit)/loss on disposal of property, plant and equipment
(9)
-
24
11
Amortisation and impairment of intangible assets
3,558
3,351
856
622
Loss on disposal of intangible assets
-
-
4,765
87
Impairment of shares in subsidiary undertakings
-
(161)
-
-
Profit on disposal of subsidiary
(14,293)
(20,146)
-
(5)
Net fair value losses/(gains) on financial instruments and investment
property
94,121
66,658
(58,340)
(58,384)
Dividend and interest income
(22,906)
(20,075)
(21,802)
(18,822)
Finance costs
2,528
2,456
2,364
2,276
Adjustment for pension funding
695
695
1,646
1,646
Changes in operating assets and liabilities:
Net increase in insurance contract liabilities
21,449
17,835
81,352
54,839
Net increase in investment contract liabilities
42,961
-
15,519
-
Net increase in reinsurers' share of contract liabilities
(47,597)
(28,660)
(49,513)
(37,260)
Net increase in deferred acquisition costs
(5,349)
(4,710)
(4,376)
(3,169)
Net increase in other assets
(84,292)
(73,573)
(25,891)
(33,049)
Net increase in operating liabilities
21,944
22,214
8,472
8,544
Net (decrease)/increase in other liabilities
(159)
(205)
(234)
114
Cash generated/(used) by operations
28,254
(7,918)
40,634
13,054
Purchases of financial instruments and investment property
(208,588)
(109,878)
(186,514)
(117,611)
Sale of financial instruments and investment property
156,110
115,561
157,614
103,706
Dividends received
7,177
10,795
7,427
9,547
Interest received
17,022
10,732
14,068
8,830
Tax paid
(6,487)
(6,324)
(3,142)
(4,912)
Net cash (used by)/from operating activities
(6,512)
12,968
30,087
12,614
Cash flows from investing activities
Purchases of property, plant and equipment
(3,234)
(2,934)
(3,634)
(3,451)
Proceeds from the sale of property, plant and equipment
28
-
48
19
Purchases of intangible assets
(3,900)
(3,900)
(3,914)
(3,914)
Disposal of subsidiary, net of cash disposed
36,355
45,197
-
5
Net cash from/(used by) investing activities
29,249
38,363
(7,500)
(7,341)
Cash flows from financing activities
Interest paid
(2,528)
(2,456)
(2,364)
(2,276)
Payment of lease liabilities
(3,267)
(2,605)
(3,209)
(2,512)
Change in interest in subsidiary
22
-
(5,157)
-
(5,406)
Proceeds from issue of subordinate debt, net of expenses
-
-
25,014
25,014
Dividends paid to Company's shareholders
(9,181)
(9,181)
(9,181)
(9,181)
Charitable grant paid to ultimate parent undertaking
(15,000)
(15,000)
(21,000)
(21,000)
Net cash used by financing activities
(29,976)
(34,399)
(10,740)
(15,361)
Net (decrease)/increase in cash and cash equivalents
(7,239)
16,932
11,847
(10,088)
Cash and cash equivalents at beginning of year
114,036
48,437
104,429
59,466
Cash classified as held for distribution
(5,177)
-
-
-
Exchange gains/(losses) on cash and cash equivalents
3,044
1,200
(2,240)
(941)
Cash and cash equivalents at end of year
25
104,664
66,569
114,036
48,437
*The comparative financial statements have been restated as detailed in note 40.
Page 129
Effective date
Annual periods beginning on or after 1 January 2018. Although can be deferred until 2023 for insurers in line with the effective date of IFRS 17.
New and revised standard s
A number of amendments and improvements to accounting standards have been issued by the International Accounting Standards Board (IASB),
and endorsed by the UK, with an effective date of on or after 1 January 2022, and are therefore applicable for the 31 December 2022 financial
statements. None had a significant impact on the Group.
As permitted by Section 408 of the Companies Act 2006, a separate profit and loss account for the Company is not presented.
The Group’s consolidated and Parent's financial statements have been prepared using the following accounting policies, which are in accordance
with UK adopted IAS applicable at 31 December 2022. The financial statements have been prepared on the historical cost basis, except for certain
financial assets and derivatives measured at fair value through profit and loss (FVTPL), and the revaluation of properties and certain derivatives
measured at fair value through other comprehensive income (FVOCI).
In accordance with IFRS 4, Insurance Contracts, on initial application of UK adopted IAS, the Group applied existing accounting practices for
insurance and participating investment contracts, modified as appropriate to comply with the IFRS framework and applicable standards,
introducing changes only where they provide more reliable and relevant information.
Basis of preparation
Ecclesiastical Insurance Office plc (hereafter referred to as the ‘Company’, or ‘Parent’), a public limited company incorporated and domiciled in
England, together with its subsidiaries (collectively, the ‘Group’) operates principally as a provider of general insurance and in addition offers a
range of financial services, with offices in the UK & Ireland, Australia and Canada. The principal accounting policies adopted in preparing the
International Financial Reporting Standards (IFRS) financial statements of the Group and Parent are set out below.
Items included in the financial statements of each of the Group’s entities are measured in the currency of the primary economic environment in
which that entity operates (the 'functional currency'). The consolidated financial statements are stated in sterling, which is the Company's
functional currency and the Group’s presentational currency.
As stated in the Directors' Report, the directors consider that it is appropriate to continue to adopt the going concern basis in preparing the financial
statements.
Notes to the financial statements
1 Accounting policies
The following standards were in issue but were either not yet effective or have been deferred and therefore have not been applied in these
financial statements.
IFRS 9, Financial Instrument s
Provides a new model for the classification and measurement of financial instruments, a single, forward-looking ‘expected loss’ impairment model
and a reformed approach to hedge accounting.
Within the Group, Ecclesiastical Insurance Office plc and Ansvar Insurance Limited qualify for the temporary exemption from the requirements of
IFRS 9. Within the Group, Ecclesiastical Life Limited previously qualified for the temporary exemption, however policies issued by Ecclesiastical Life
Limited from 1 August 2021 do not give rise to liabilities within the scope of IFRS 4. Following this change in operations, Ecclesiastical Life Limited is
still able to defer application of IFRS 9 for a further year, until 1 January 2023.
IFRS 9, Financial Instruments , is effective for periods beginning on or after 1 January 2018. However, the Group has taken the option available to
insurers to defer the application of IFRS 9 as permitted by IFRS 4, Insurance Contracts . The Group qualifies for the temporary exemption, which is
available until annual periods beginning on or after 1 January 2023, since at 31 December 2015 greater than 90% of its liabilities were within the
scope of IFRS 4. The Parent qualifies for the temporary exemption since at 31 December 2015 greater than 80% of its liabilities were within the
scope of IFRS 4 and it does not engage in significant activities unconnected with insurance. Other liabilities of the Parent include employment
benefit and tax liabilities which arise solely because the Parent insures, or fulfils obligations arising from insurance contracts. The Group's disposal
of a subsidiary on the 30 December 2022, as detailed in note 16 to the financial statements, had no impact on the Group's ability to defer the
application of IFRS 9, and as a result, the Group and Parent continue to apply IAS 39, Financial Instruments.
Key requirement s
Page 130
IFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure.
Key relevant concepts for the Group are:
Key item
Applicable to annual reporting periods beginning on or after 1 January 2023.
Transitional Fair Value of
Whole of Life insurance
policies
IFRS 17, Insurance Contract s
Key requirement s
Within the general insurance business, the Group has identified seven portfolios of insurance contracts and five
portfolios of reinsurance contracts as at the effective transition date. For the majority of product lines, the Group
issues packaged policies incorporating a range of lines of business within a single contract. Accounting policy
development has focussed on applying the IASB’s Transition Resource Group’s guidance to identify when it is
appropriate to unbundle individual components and treat as separate contracts. In the majority of cases, the Group’s
contracts should not be unbundled below the legal contract level. The most material determinant of portfolios of
significant risks that are managed together is the geographic territories in which the Group underwrites its core
general insurance products. An outcome from this is instances of up front recognition of losses on groups of onerous
contracts within a portfolio will be triggered at a more granular level than previously, although the transitional
impact is not expected to be significantly different from applying the current Liability Adequacy Test under IFRS 4.
The Group expects to use the premium allocation approach for the majority of its general business insurance
contracts. Definitions of what constitutes reasonably expected assumption changes on future profitability, and
measuring the differences between the general measurement model and the premium allocation approach as a
proportion of exposure, indicates that all of the Group’s core insurance products and associated reinsurance is
currently eligible.
Eligibility for applying the
premium allocation
approach
Level of aggregation for
portfolios and groups of
insurance and reinsurance
contracts
Where contracts are serviced over a long coverage period, such as for life insurance, the impact of this conceptual change is potentially significant,
requiring new valuation models. Applying IFRS 17 to shorter duration insurance coverage (such as annual general insurance policies, which make
up the vast majority of the Group’s insurance contracts), does not lead to conceptual change to the basis, because previous practices allowed for
the deferral of expected future profits and initial recognition of losses. However, the changes in presentation and disclosure are significant, leading
to more aggregated line items in the financial statements, and changes which impact key performance indicators (for example Gross Written
Premium is no longer an accounting line).
It is not yet practicable to quantify the overall additional impact on the Group’s financial statements expected at transition, however a number of
individual decisions that will impact the net assets quantum are well progressed, with the following being the most important areas:
Effective date
Expected impact on financial statement s
1 Accounting policies (continued)
Notes to the financial statements
Requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach
for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance
contracts.
There will be no change in the way debt and equity instruments are classified and measured in the financial statements, which will continue to be
measured at fair value through profit or loss. The Group expects to recognise expected credit losses (ECLs) on certain financial assets classified and
measured at amortised cost. No changes are expected from the more principles-based hedge accounting requirements. In accordance with the
transition requirements of IFRS 9, the comparative period is not currently expected to be restated and any differences in carrying amounts will be
reported in opening retained earnings as at 1 January 2023.
Expected impact on financial statement s
Expected profits (represented by the contractual service margin, “CSM”) are explicitly spread over the lifetime of the contract in a formulaic
manner matched to the provision of current and future coverage, rather than for example embedded within ongoing releases from a prudent
reserving basis.
-
Expected losses (arising on onerous contracts) are recognised up front and as and when identified .
-
Impact
The Group has a portfolio of life insurance contracts supporting pre-paid funeral plans, which ceased to be written
from 2013. An assessment has been carried out regarding the availability of suitable data to enable a full
retrospective calculation, concluding that this would be impracticable.
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Operating profit or loss
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities,
and the disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management’s
best knowledge of current events and actions, actual results ultimately may differ from those estimates. Those estimates which have the most
material impact on the financial statements are disclosed in note 2.
Use of estimate s
The Group uses the acquisition method of accounting to account for business combinations. The cost of an acquisition is measured as the fair value
of the assets given, equity instruments issued and liabilities incurred or assumed at the acquisition date. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Non-controlling
interests are measured either at fair value or at a proportionate share of the identifiable net assets of the acquiree. Goodwill is measured as the
excess of the aggregate of the consideration transferred, the fair value of contingent consideration, the amount of non-controlling interests and, for
an acquisition achieved in stages, the fair value of previously held equity interest over the fair value of the identifiable net assets acquired. If the
cost of acquisition is less than the fair value of the net assets acquired, the difference is recognised directly through profit or loss.
Subsidiaries are those entities over which the Company, directly or indirectly, has control, with control being achieved when the Company has
power over the investee, is exposed to variable return from its involvement with the investee and has the ability to use its power to affect its
returns. The results and cash flows relating to subsidiaries acquired or disposed of in the year are included in the consolidated statement of profit
or loss, and the consolidated statement of cash flows, up to the date of disposal, and are included within discontinued operations where
appropriate. All inter-company transactions, balances and cash flows are eliminated, with the exception of those between continuing and
discontinued operations.
Basis of consolidatio n
Operating profit or loss is stated before finance costs.
For business combinations involving entities or businesses under common control, the cost of the acquisition equals the value of net assets
transferred, as recognised by the transferor at the date of the transaction. No goodwill arises on such transactions.
Subsidiarie s
In the Parent statement of financial position, subsidiaries are accounted for within financial investments at cost less impairment, in accordance with
International Accounting Standard (IAS) 27, Separate Financial Statements.
Notes to the financial statements
1 Accounting policies (continued)
Risk adjustment
The risk adjustment is defined as the compensation required by the entity for bearing non-financial risks. For
products applying the premium allocation approach, the Group’s reserves for incurred claims are currently
measured using best estimate plus an explicit risk margin quantified using confidence level techniques, also allowing
special uncertainties relating to events not in the data. The Group reviews and refines the approach that it uses to
calibrate risks and uncertainties on an ongoing basis, and in relation to IFRS 17 is aligning the distribution
measurement approaches, and allowance for diversification between risk types, to risk management and appetite in
order to reflect each entity’s compensation required. The Group is reviewing and quantifying what the resulting
confidence level to be disclosed in the 2023 annual accounts will be.
Discounting of the claims
reserves
The Group already incorporates discounting into its measurement techniques and the discount rates have been
reviewed to ensure they are compatible with IFRS 17 principles. The Group’s adoption of IFRS 17 and the discounting
requirements is not expected to be significantly different to the Group’s application of existing accounting policies.
Expenses allocation
A new policy has been developed defining directly attributable expenses as those which are required in order to
obtain and fulfil contracts, with other expenses being reported outside of insurance services. Under the premium
allocation approach, the Group expects to continue deferring acquisition costs.
Amendments to other standards in issue but not yet effective are not expected to materially impact the Group.
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Other operating income
Other operating income consists of the return of surplus reserves from a government-backed reinsurance scheme. It is recognised when the
distribution is declared.
Discontinued operations and operations held for sale or distributio n
Assets and liabilities for a disposal group which are held for sale outside the Group or distribution within the Group are reported as assets or
liabilities held for sale or distribution and shown separately in the consolidated statement of financial position and carried at the lower of their
carrying amount and fair value less estimated selling costs. Discontinued operations comprise activities either disposed of or classified as held for
sale or distribution. The results of discontinued operations and profit or loss on disposal of discontinued operations are presented separately in the
consolidated statement of profit or loss. Comparatives are restated where applicable.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of the transactions. Exchange
gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in
foreign currencies, are recognised through profit or loss.
1 Accounting policies (continued)
Contracts under which the Group accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the
policyholder or other beneficiary if a specified uncertain future event (the insured event) adversely affects the policyholder are classified as
insurance contracts. Contracts that do not transfer significant insurance risk are classified as investment or service contracts. All of the Group's life
business contracts written up to April 2013 are classified as insurance contracts and those written from August 2021 are classified as investment
contracts.
The assets and liabilities of foreign operations are translated from their functional currencies into the Group's presentation currency using year-
end exchange rates, and their income and expenses using average exchange rates for the year. Exchange differences arising from the translation
of the net investment in foreign operations are taken to the currency translation reserve within equity. On disposal of a foreign operation, such
exchange differences are transferred out of this reserve, along with the corresponding movement on net investment hedges, and are recognised in
the statement of profit or loss as part of the gain or loss on sale.
Foreign currency translation
Life insurance business
Contracts may contain a discretionary participating feature, which is defined as a contractual right to receive additional benefits as a supplement to
guaranteed benefits. The Group does not have any such participating contracts (referred to as with-profit contracts). The Group's long-term
business contracts are referred to as non-profit contracts in the financial statements.
Fee and commission incom e
Premiums written include adjustments to premiums written in prior periods and estimates for pipeline premiums and are shown net of insurance
premium taxes.
Premium income
Premiums are shown gross of commission paid to intermediaries and accounted for in the period in which the risk commences. Estimates are
included for premiums not notified by the year end ('pipeline premiums') and provision is made for the anticipated lapse of renewals not yet
confirmed. Those proportions of premiums written in a year which relate to periods of risk extending beyond the end of the year are carried
forward as unearned premiums.
General insurance business
Fee and commission income consists primarily of reinsurance commissions and reinsurance profit commissions which are accounted for in
accordance with IFRS 4, Insurance contracts . It also includes distribution fees from mutual funds and commission revenue from the sale of mutual
fund shares which are accounted for in accordance with IFRS 15, Revenue from contracts with customers .
As with general insurance premiums, reinsurance commissions are accounted for in the period in which the risk commences. Those proportions of
reinsurance commissions written in a year which relate to periods of risk extending beyond the end of the year, are carried forward as deferred
income. Reinsurance profit commissions are recognised at the point in time when the amount of commission can be accurately estimated.
Insurance contract premiums are recognised as income when receivable, at which date the liabilities arising from them are also recognised.
Notes to the financial statements
Product classification
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Life insurance provision s
The life insurance provision is held in respect of certain funeral plans and is based on an estimate of the discounted future cash flows expected to
arise from contracts in-force at the year-end date. The methods and assumptions used in calculating the provision are approved by the directors
based on advice from the Chief Actuary, including assumptions relating to future interest rates, inflation, mortality, expenses and investment return .
Changes in the life business provision are recognised in the statement of profit or loss.
Surpluses and deficits are offset where business classes are considered to be managed together and a provision is held for any net deficit .
Under current UK adopted IAS requirements, insurance contract liabilities are measured using accounting policies consistent with those adopted
previously.
1 Accounting policies (continued)
The impact of discount rate changes on insurance contract liabilities is also presented within net investment return in order to match with the
corresponding movements of assets backing the liabilities.
At each reporting date, the Group reviews its unexpired risks and carries out a liability adequacy test for any overall excess of expected claims and
deferred acquisition costs over unearned premiums, using the current estimates of future cash flows under its contracts. Unexpired risks are
assessed separately for each class of business.
Claims
General insurance claims incurred include all losses occurring during the year, whether reported or not, related handling costs, a reduction for the
value of salvage and other recoveries, and any adjustments to claims outstanding from previous years.
Life business claims and death claims are accounted for when notified.
General insurance provision s
Claims handling costs include all internal and external costs incurred in connection with the negotiation and settlement of claims.
Net investment return consists of dividends, interest and rents receivable for the year, realised gains and losses, unrealised gains and losses on
financial investments and investment properties. Dividends on equity securities are recorded as revenue on the ex-dividend date. Interest and rental
income is recognised as it accrues.
Notes to the financial statements
(ii) Provision for unearned premium s
The Group’s accounting policy for general insurance outstanding claims provisions has previously been to apply discounting only to certain longer
term liabilities. The accounting policy has been changed to discount general insurance liabilities that have not previously been discounted. This
change in accounting policy resulted in a credit of £13.2m recognised in this financial year and a credit of £2.6m in the prior year, both within net
investment return. For further information on the prior year restatement, see note 40.
The Group considers this change in accounting policy provides more reliable and relevant information. This is because, if the impact of discounting
were not more widely applied during a period of higher interest rates (as in 2022), it would create excessive prudence in the implied claim reserves.
Furthermore, this change to accounting policy better reflects the impact of the Group’s objective of matching assets with insurance liabilities when
managing exposure to interest rate risk.
The proportion of written premiums, gross of commission payable to intermediaries, attributable to subsequent periods is deferred as a provision
for unearned premiums. The change in this provision is taken to profit or loss in order that revenue is recognised over the period of risk.
Insurance contract liabilities
Net investment return
(i) Outstanding claims provision s
Unrealised gains and losses are calculated as the difference between carrying value and original cost, and the movement during the year is
recognised through profit or loss. The value of realised gains and losses includes an adjustment for previously recognised unrealised gains or
losses on investments disposed of in the accounting period.
(iii) Liability adequacy
General insurance outstanding claims provisions are based on the estimated ultimate cost of all claims incurred but not settled at the year-end
date, whether reported or not, together with related claims handling costs. Significant delays are experienced in the notification and settlement of
certain types of general insurance claims, particularly in respect of liability business, the ultimate cost of which cannot be known with certainty at
the year-end date. An estimate is made representing the best estimate plus an uncertainty margin within a range of possible outcomes. Insurance
liabilities are remeasured to reflect current market interest rates.
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Where the fair value of an individual property is below original cost, any revaluation movement arising during the year is recognised within net
investment return in the statement of profit or loss. Valuations are carried out at least every three years by external qualified surveyors. All other
items classed as property, plant and equipment within the statement of financial position are carried at historical cost less accumulated
depreciation and impairment.
Property, plant and equipmen t
Owner-occupied properties are stated at fair value and movements are taken to the revaluation reserve within equity, net of deferred tax. When
such properties are sold, the accumulated revaluation surpluses are transferred from this reserve to retained earnings.
Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable assets and liabilities acquired at the date of
acquisition. Goodwill on acquisitions prior to 1 January 2004 (the date of transition to IFRS) is carried at book value (original cost less amortisation)
on that date, less any subsequent impairment. Where it is considered more relevant, the Group uses the option to measure goodwill initially at fair
value, less any subsequent impairment.
Other intangible assets
Goodwill
Notes to the financial statements
1 Accounting policies (continued)
Reinsurance
The Group assumes and cedes reinsurance in the normal course of business, with retention limits varying by line of business. Premiums on
reinsurance assumed are recognised as revenue in the same manner as direct business. Outwards reinsurance premiums are accounted for in the
same accounting period as the related premiums for the direct or inwards reinsurance business being reinsured. Estimates are included for
premiums not notified by the year end and provision is made for the anticipated lapse of renewals not yet confirmed. The proportion of premiums
ceded in a year which relates to periods of risk extending beyond the current year is carried forward as unearned. The Group does not reinsure its
life business.
Computer software is carried at historical cost less accumulated amortisation and impairment, and amortised over a useful life of between three
and ten years, using the straight-line method. Amortisation and impairment charges incurred for the period are included in the statements of profi t
or loss within other operating and administrative expenses.
Investment contract liabilities
For products that have no significant insurance risk and therefore classified as investment contracts, the Group recognises a liability measured at
fair value. The fair value of these liabilities is estimated based on an arms-length transaction between willing market participants with consideration
given to the cost of the minimum repayment guarantee to the policyholders. The cost of the guarantee is determined using risk free rates of return,
with the associated volatility assumption and allowing for the costs of administration associated with this low risk investment strategy.
Intangible assets
Other intangible assets consist of acquired brand, customer and distribution relationships, and are carried at cost at acquisition less accumulated
amortisation and impairment after acquisition. Amortisation is on a straight-line basis over the weighted average estimated useful life of intangible
assets acquired. Amortisation and impairment charges incurred for the period are included in the statement of profit or loss within other operating
and administrative expenses.
Computer software
Software costs that cannot be classified as intangible assets are charged to profit or loss during the period in which they are incurred.
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units
for the purpose of impairment testing. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity
sold.
Reinsurance assets primarily include balances due from both insurance and reinsurance companies for ceded insurance liabilities. Amounts
recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provisions or the settled claims associated with the
reinsured policies and in accordance with the relevant reinsurance contract.
Further details on insurance contract liabilities are included in note 28.
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Financial assets and liabilities are offset, and the net amount reported in the statement of financial position, when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
-
All other financial assets and liabilities are measured at amortised cost, using the effective interest method (except for short-term receivables
and payables when the recognition of interest would be immaterial).
Offset of financial assets and financial liabilities
The classification depends on the nature and purpose of the financial assets and liabilities, and is determined at the time of initial recognition.
Assets and liabilities held at fair value are disclosed according to a hierarchy that reflects the significance of observable market inputs in
calculating those fair values. The three levels of the fair value hierarchy are included within note 4. Financial instruments are initially measured at
fair value. Their subsequent measurement depends on their classification:
Notes to the financial statements
1 Accounting policies (continued)
Financial instruments
IAS 39,
Financial Instruments: Recognition and Measurement
requires the classification of certain financial assets and liabilities into separate
categories for which the accounting requirements differ.
Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Where the carrying amount of an item carried at historical cost less accumulated depreciation is greater than its estimated recoverable amount, it is
written down to its recoverable amount by way of an impairment charge to profit or loss.
Computer equipmen t
Financial investments are classified into this category if they are managed, and their performance evaluated, on a fair value basis. Purchases and
sales of these investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the assets, at their fair
value adjusted for transaction costs. Financial investments within this category are classified as held for trading if they are derivatives that are not
accounted for as a net investment hedge or are acquired principally for the purpose of selling in the near term.
The fair values of investments are based on quoted bid prices. Where there is no active market, fair value is established using a valuation technique
based on observable market data where available.
Financial investment s
The Group accounts for financial assets under IAS 39 and classifies its financial investments as either financial assets at fair value through profit or
loss (designated as such or held for trading), as financial assets at fair value through other comprehensive income or as loans and receivables.
(a) Financial assets at fair value through profit or los s
Investment propert y
Investment property comprises land and buildings which are held for long-term rental yields. It is carried at fair value with changes in fair value
recognised in the statement of profit or loss within net investment return. Investment property is valued annually by external qualified surveyors at
open market value. Investment properties are derecognised when they have been disposed of. Where the Group disposes of a property, the
carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in profit or loss within net
investment return.
4 years straight line
-
Financial instruments designated as fair value through profit or loss, those held for trading, and hedge accounted derivatives under IFRIC 16,
Hedges of a Net Investment in a Foreign Operation, are subsequently carried at fair value. To the extent to which they are effective, changes to
the fair value of hedging instruments are recognised in other comprehensive income, with all other fair value changes recognised through profit
or loss in the period in which they arise.
Land is not depreciated. No depreciation is provided on owner-occupied properties since such depreciation would be immaterial. Depreciation is
calculated to write down the cost of other assets to their residual values over their estimated useful lives as follows:
3 - 5 years straight lin e
3 - 10 years or length of lease straight lin e
Right-of-use asset s
Over the term of the lease
Fixtures, fittings and office equipmen t
Motor vehicles
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For general insurance business, a proportion of commission and other acquisition costs relating to unearned premiums is carried forward as
deferred acquisition costs or, with regard to reinsurance outwards, as deferred income. Deferred acquisition costs are amortised over the period in
which the related revenues are earned. The reinsurers’ share of deferred acquisition costs is amortised in the same manner as the underlying
asset.
Life insurance busines s
For life insurance contracts, acquisition costs comprise direct costs such as initial commission and the indirect costs of obtaining and processing
new business. Acquisition costs which are incurred during a financial year can be deferred and amortised over the period during which the costs
are expected to be recoverable. No acquisition costs have been deferred on the Group's existing long-term business.
General insurance business
Subordinated liabilities
Subordinated liabilities are recognised initially at fair value, being the issue proceeds net of premiums, discounts and transaction costs incurred. All
borrowings are subsequently measured at amortised cost using the effective interest rate method. The amortisation is recognised as an interest
expense using the effective interest rate method.
Loans and receivables, comprising loans and cash held on deposit for more than three months, are carried at amortised cost using the effective
interest method. Loans are recognised when cash is advanced to borrowers. To the extent that a loan or receivable is uncollectable, it is written off
as impaired. Subsequent recoveries are credited to profit or loss.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated in the foreign currency translation reserve
are reclassified to profit or loss on disposal of the related investment.
(c) Loans and receivables
Deferred acquisition costs
1 Accounting policies (continued)
Gains and losses on the hedging instrument, relating to the effective portion of the net investment hedge, are recognised in other comprehensive
income and accumulated in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is
included in net investment return.
Derivative instruments for hedging of net investments in foreign operation s
On the date a foreign exchange contract is entered into, the Group designates certain contracts as a hedge of a net investment in a foreign
operation (net investment hedge) and hedges the forward foreign currency rate.
(b) Financial assets at fair value through other comprehensive incom e
Certain Group derivative transactions, while providing effective economic hedges under the Group’s risk management positions, do not qualify for
hedge accounting under the specific IFRS rules and are therefore treated as derivatives held for trading. Their fair value gains and losses are
recognised immediately in net investment return. The fair value gains and losses for derivatives which are hedge accounted in line with IFRIC 16 are
recognised in other comprehensive income.
Hedge accounting is used for derivatives designated in this way, provided certain criteria are met. At the inception of the transaction, the Group
documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and the strategy for
undertaking the hedge transaction. The Group also documents its assessment of whether the hedge is expected to be, and has been, highly
effective in offsetting the risk in the hedged item, both at inception and on an ongoing basis.
Notes to the financial statements
The notional or contractual amounts associated with derivative financial instruments are not recorded as assets or liabilities in the statement of
financial position as they do not represent the fair value of these transactions. Collateral pledged by way of cash margins on futures contracts is
recognised as an asset in the statement of financial position within cash and cash equivalents.
Derivative financial instruments and hedging
Derivative financial instruments include foreign exchange contracts and other financial instruments that derive their value from underlying equity
instruments.
All derivatives are initially recognised in the statement of financial position at their fair value, which usually represents their cost, including any
premium paid. They are subsequently remeasured at their fair value, with the method for recognising changes in the fair value depending on
whether they are designated as hedges of net investments in foreign operations. All derivatives are carried as assets when the fair values are
positive and as liabilities when the fair values are negative.
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Provisions and contingent liabilities
The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable
costs of meeting the obligations under the contract.
Provisions are recognised when the Group has a present legal or constructive obligation, as a result of past events, and it is probable that an
outflow of resources, embodying economic benefits, will be required to settle the obligation, and a reliable estimate of the amount of the obligation
can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when it is
virtually certain that the reimbursement will be received.
Contingent liabilities are disclosed if there is a possible future obligation as a result of a past event, or if there is a present obligation but either an
outflow of resources is not probable or the amount cannot be reliably estimated.
1 Accounting policies (continued)
-
Restoration costs.
Right-of-use assets are initially measured at cost and subsequently measured as cost less accumulated depreciation and comprises:
The amount of the initial measurement of lease liability;
Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases
with a lease term of 12 months or less.
The Group enters into lease agreements as a lessor with respect to some of its investment properties. The Group also sublets property no longer
occupied by the Group.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance
lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in
respect of the leases.
Group as a lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease .
When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a
finance or operating lease by reference to the right-of-use asset arising from the head lease.
-
Payments and penalties from terminating the lease, if the lease term reflects the lessee exercising that option.
The exercise price of an option if the lessee is reasonably certain to exercise that option; and
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
Notes to the financial statements
Right-of-use assets are presented within property, plant and equipment in the statement of financial position.
Any lease payment made at or before the commencement date, less any lease incentives received ;
-
-
Any initial direct costs; and
-
Lease liabilities are determined using the net present value of the payments over the lease term with the rate used to discount payments reflecting
the rate implicit in the lease or, if it not readily determinable, the Group's incremental borrowing rate, and include:
-
-
Variable lease payments that are based on an index or rate;
-
Amounts expected to be payable by the lessee under residual value guarantees ;
-
Fixed payments less any lease incentives receivable ;
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities
of three months or less and bank overdrafts.
Cash and cash equivalents
Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the lease asset is available for use by the
Group. Each lease payment is deducted from the lease liability. Finance costs are charged to the profit and loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the
shorter of the asset’s useful life and the lease term on a straight-line basis.
Lease s
Group as a lessee
Page 138
Use of Alternative Performance Measures (APM)
As detailed in the Strategic Report, the Group uses certain key performance indicators which, although not defined under IFRS, provide useful
information and aim to enhance understanding of the Group's performance. The key performance indicators should be considered complementary
to, rather than a substitute for, financial measures defined under IFRS. Note 38 provides details of how these key performance indicators reconcile
to the results reported under IFRS.
Appropriations
Dividend s
Dividends on Ordinary shares are recognised in equity in the period in which they are declared and, for the final dividend, approved by
shareholders. Dividends on Non-Cumulative Irredeemable Preference shares are recognised in the period in which they are declared and
appropriately approved.
Charitable donation to ultimate parent undertaking
Payments are made via Gift Aid to the ultimate parent company, Benefact Trust Limited, a registered charity. The Group does not regard these
payments as being expenses of the business and, as such, recognises these net of tax in equity in the period in which they are approved.
Other benefit s
Taxation
Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the
estimated liability for annual leave and long service leave as a result of services rendered by employees up to the year-end date.
Contributions in respect of defined contribution plans are recognised as a charge to profit or loss as incurred.
Other post-employment obligation s
Some Group companies provide post-employment medical benefits to their retirees. The expected costs of these benefits are accrued over the
period of employment using an accounting methodology similar to that for defined benefit pension plans. Interest expense (calculated by applying
a discount rate to the net obligations) is recognised through profit or loss. Actuarial gains and losses are recognised immediately in other
comprehensive income. Independent actuarial valuations are carried out at the end of each reporting period.
In accordance with IAS 19, Employee Benefits, current and past service costs, gains and losses on curtailments and settlements and net interest
expense or income (calculated by applying a discount rate to the net defined benefit liability or asset) are recognised through profit or loss.
Actuarial gains or losses are recognised in full in the period in which they occur in other comprehensive income.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Notes to the financial statements
1 Accounting policies (continued)
Income tax comprises current and deferred tax. Income tax is recognised in the statement of profit or loss except to the extent that it relates to
items recognised in other comprehensive income, in which case it is recognised in the statement of comprehensive income.
Current tax is the expected tax payable on the taxable result for the period, after any adjustment in respect of prior periods.
Deferred tax is provided in full on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes an d
the amounts used for tax purposes. Deferred tax is measured using tax rates expected to apply when the related deferred tax asset is realised, or
the deferred tax liability is settled, based on tax rates and laws which have been enacted or substantively enacted at the year-end date.
Employee benefit s
The Group operates defined benefit and defined contribution pension plans, the assets of which are held in separate trustee-administered funds.
Pension obligation s
For defined benefit plans, the pension costs are assessed using the projected unit credit method. Under this method, the cost of providing pension s
is charged to profit or loss so as to spread the regular cost over the service lives of employees. The pension obligation is measured as the present
value of the estimated future cash outflows using a discount rate based on market yields for high-quality corporate bonds. The resulting pension
plan surplus or deficit appears as an asset or obligation in the statement of financial position. Any asset resulting from this calculation is limited to
the present value of economic benefits available in the form of refunds from the plan or reductions in future employer contributions to the plan.
Independent actuarial valuations are carried out at the end of each reporting period.
Page 139
Notes to the financial statements
1 Accounting policies (continued)
Accounting policies applicable to discontinued operation s
Revenue from discontinued operations consists of income from the Group's insurance broking activities and investment fund management fees and
are accounted for in accordance with IFRS 15, Revenue from contracts with customers.
Discontinued operations comprise of the Group’s broking and advisory and investment management businesses. Further details are included in
note 16 to the financial statements. The following accounting policies are applicable only to the results of discontinued operations or balances
related to the businesses sold in the year or held for sale or distribution.
Revenue
Insurance broking debtors and creditors
Fees charged for investment management services are variable based on funds under management and are recognised over time as the services
are provided, once it is reasonably certain that no significant reversal of the amount recognised would occur. Fees charged for investment
management services for institutional and retail fund management are also recognised on this basis.
Income generated from the Group's insurance broking activities is recognised at the point at which the performance obligation is satisfied, being the
inception date of the insurance cover, or, where this income is variable, the point at which it is reasonably certain that no significant reversal of the
amount recognised would occur. An estimate is made for the amount of fees and commission that may be clawed back as a result of policy
cancellations or amendments in relation to performance obligations satisfied in the year. This is deducted from fee and commission income and
recognised in provisions. Where commission or fees are received in advance of the inception date of cover, deferred income is recognised.
Receivables are recognised in other debtors on inception date of cover in respect of fees or commissions that the Group has an unconditional right
to receive.
Where the Group acts as an agent in placing the insurable risks of clients with insurers, debtors arising from such transactions are not included in
the Group's assets. When the Group receives cash in respect of resultant premiums or claims, a corresponding liability is established in other
creditors in favour of the insurer or client. Where the Group provides premium finance facilities to clients, amounts due are included in other
debtors, with the amount owing for onward transmission included in other creditors.
Page 140
The ultimate liability arising from claims made under general business insurance contract s
Notes to the financial statements
Pension and other post-employment benefit s
(a) Critical judgements in applying the Group’s accounting policie s
The Group makes estimates and judgements that affect the reported amounts of assets and liabilities. Estimates and judgements are regularly
reviewed and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. Management have considered the current economic environment in their estimates and judgements.
2 Critical accounting estimates and judgements in applying accounting policies
The following are the critical judgements, apart from those involving estimations which are dealt with separately below, that the directors have
made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial
statements:
Significant insurance risk
Whole-of-life policies issued by the Group where significant insurance risk has been accepted from a policyholder are accounted for as insurance
contracts. Whole-of-life policies where the Group has not accepted significant insurance risk from a policyholder are accounted for as financial
instruments. Contracts can have features of, or appear to have features of, an insurance contract and therefore judgement is required on whether
there is insurance risk and then whether that insurance risk is significant. Policies are considered to be insurance contracts where future benefits
are linked to inflation as there is uncertainty over the timing and amount of a resulting claim. Policies that provide a policyholder with a guarantee
to return the original premium have not transferred insurance risk and are considered financial instruments.
(b) Key sources of estimation uncertaint y
In applying the Group’s accounting policies various transactions and balances are valued using estimates or assumptions. All estimates are based
on management’s knowledge of current facts and circumstances, assumptions based on that knowledge and their predictions of future events and
actions.
The following items are considered key estimates and assumptions which, if actual results differ from those predicted, may have significant impact
on the following year’s financial statements:
The estimation of the ultimate liability arising from claims made under general business insurance contracts is a critical accounting estimate. There
is uncertainty as to the total number of claims made on each business class, the amounts that such claims will be settled for and the timing of any
such payments. There are various sources of estimation uncertainty as to how much the Group will ultimately pay with respect to such contracts.
Such uncertainty includes:
The Group's pension and other post-employment benefit obligations are discounted at a rate set by reference to market yields at the end of the
reporting period on high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to
maturity approximating the terms of the related pension liability. Judgement is required when setting the criteria for bonds to be included in the
population from which the yield curve is derived. The most significant criteria considered for the selection of bonds includes the nature and quality
of the corporate bonds and the identification of outliers which are excluded.
The Group also applies judgement in determining the extent to which a surplus in the defined benefit plan can be recognised in the statement of
financial position. In accordance with IAS 19, Employee benefits, the recognisable surplus is limited to the lower of the surplus in the plan and the
asset ceiling. The asset ceiling is the present value of future economic benefits available in the form of a refund or as a reduction in future
contributions. The Group applies judgement in determining the asset ceiling in accordance with IFRS Interpretations Committee Interpretation 14
(IFRIC 14).
Unlisted equity securitie s
The value of unlisted equity securities, where there is no active market and therefore no observable market price, are classified as level 3 financial
assets. This requires the Group to make judgements in respect of the most appropriate valuation technique to apply. Further details, including the
amounts recognised within the financial statements which are impacted by these judgements are shown in note 4(b).
Page 141
-
whether a claim event has occurred or not and how much it will ultimately settle for;
-
variability in the speed with which claims are notified and in the time taken to settle them, especially complex cases resolved through the courts ;
-
changes in the business portfolio affecting factors such as the number of claims and their typical settlement costs, which may differ significantly
from past patterns;
-
new types of claim, including latent claims, which arise from time to time;
-
changes in legislation and court attitudes to compensation, including the discount rate applied in assessing lump sums, which may apply
retrospectively;
Notes to the financial statements
Future benefit payments arising from life insurance contract s
The determination of the liabilities under life insurance contracts is dependent on estimates made by the Group.
Estimates are made as to the expected number of deaths for each of the years in which the Group is exposed to risk. The Group bases these
estimates on standard industry and national mortality tables, adjusted to reflect recent historical mortality experience of the Group's portfolio, with
allowance also being made for expected future mortality improvements where prudent. The estimated mortality rates are used to determine
forecast benefit payments net of forecast premium receipts.
2 Critical accounting estimates and judgements in applying accounting policies (continued)
The uncertainties surrounding the estimates of claims payments for the various classes of business are discussed further in note 3. General
business insurance liabilities include a margin for risk and uncertainty in addition to the best estimates for future claims. The sensitivity of profit or
loss to changes in the ultimate settlement cost of claims reserves is presented in note 28(a).
Pension and other post-employment benefit s
The cost of these benefits and the present value of the pension and other post-employment benefit liabilities depend on factors that are
determined on an actuarial basis using a number of assumptions. Any change in these assumptions may affect planned funding of the pension
plans.
The discount rate assumption is a component in determining the charge to profit or loss. The effect of movements in the actuarial assumptions
during the year, including discount rate, mortality, inflation, salary and medical expense inflation assumptions, on the pension and other post-
employment liabilities are recognised in other comprehensive income. An explanation of the actuarial gains recognised in the current year is
included in note 19.
The Group determines an appropriate discount rate at the end of each year, to be used to determine the present value of estimated future cash
outflows expected to be required to settle the pension and other post-employment benefit obligations.
Estimates are also made as to future investment returns arising from the assets backing life insurance contracts. These estimates are based on
current market returns as well as expectations about future economic and financial developments.
In addition to the best estimates of future deaths, inflation, investment returns and administration expenses, margins for risk and uncertainty are
added to these assumptions in calculating the liabilities of life insurance contracts. The sensitivity of profit or loss to changes in the assumptions is
presented in note 28(b)(iii).
The expected rate of medical expense inflation is determined by comparing the historical relationship of medical expense increases over a portfolio
of UK-based post-retirement medical plans with the rate of inflation, making an allowance for the size of the plan and actual medical expense
experience.
Other key assumptions for the pension and post-employment benefit costs and credits are based in part on current market conditions. Additional
information including the sensitivity of pension and post-employment medical benefit scheme liabilities to changes in the key assumptions is
disclosed in note 19.
Unlisted equity securitie s
The valuation of unlisted equity securities requires estimates to be made for the illiquidity discount and credit rating discount. Further details,
including the sensitivity of the valuation to these inputs, are shown in note 4(b).
Page 142
79,249
101
-
-
7
-
-
198,341
Notes to the financial statements
3 Insurance risk
(a) Risk mitigation
Through its general and life insurance operations, the Group is exposed to a number of risks, as summarised in the Risk Management section of the
Strategic Report. The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount and
timing of the resulting claim. Factors such as the business and product mix, the external environment including market competition and reinsurance
capacity all may vary from year to year, along with the actual frequency, severity and ultimate cost of claims and benefits. This subjects the Group
to underwriting and pricing risk (the risk of failing to ensure disciplined risk selection and to obtain the appropriate premium), claims reserving risk
(the risk of actual claims payments exceeding the amount we are holding in reserves) and reinsurance risk (the risk of failing to access and manage
reinsurance capacity at a reasonable price).
Catastrophe protection is purchased following an extensive annual modelling exercise of gross and net (of proportional reinsurance) exposures. In
conjunction with reinsurance brokers the Group utilises the full range of proprietary catastrophe models and continues to develop bespoke
modelling options that better reflect the specialist nature of the portfolio. Reinsurance is purchased in line with the Group's risk appetite.
The core business of the Group is general insurance, with the principal classes of business written being property and liability. The miscellaneous
financial loss class of business covers personal accident, fidelity guarantee and loss of money, income and licence. The other class of business
includes cover of legal expenses and also a small portfolio of motor policies, but this has been in run-off in the United Kingdom since November
2012. The Group's whole-of-life insurance policies support funeral planning products.
(b) Concentrations of risk
£000
£000
Life insurance
£000
The table below summarises written premiums for the financial year, before and after reinsurance, by territory and by class of business:
General insurance
Total
-
3,622
558,551
350,092
99,698
42,892
108,761
Territory
Gross
119,847
68,128
10,259
55,266
42,978
918
United Kingdom and Ireland
Australia
Canada
Parent
Statistics demonstrate that the larger and more diversified the portfolio of insurance contracts, the smaller the relative variability in the expected
outcome will be. The Group’s underwriting strategy is designed to ensure that the underwritten risks are well diversified in terms of type and
amount of risk and geographical spread. In all operations pricing controls are in place, underpinned by sound statistical analysis, market expertise
and appropriate external consultant advice. Gross and net underwriting exposure is protected through the use of a comprehensive programme of
reinsurance using both proportional and non-proportional reinsurance, supported by proactive claims handling. The overall reinsurance structure
is regularly reviewed and modelled to ensure that it remains optimum to the Group's needs. The optimal reinsurance structure provides the Group
with sustainable, long-term capacity to support its specialist business strategy, with effective balance sheet and profit and loss protection at a
reasonable cost.
Property
Liability
Other
Whole of life
Total
£000
100
536
2022
Group
Net
£000
£000
loss
financial
Miscellaneous
Net
255,418
71,575
20,006
3,086
Gross
Net
Gross
Net
Gross
-
-
201
7
868
73,779
34,982
173,068
136,079
11,127
5,886
36,037
167,182
100,042
10,259
2,847
47,335
20,006
31,914
-
384,463
149,535
20,924
7
5,833
255,418
71,575
Net
329,197
106,557
20,006
5,833
Gross
Net
Gross
Net
119,847
68,128
10,259
2,847
47,335
31,914
-
-
-
-
-
461,593
-
Territory
United Kingdom and Ireland
Canada
Total
352,832
201,081
108,761
-
Gross
73,779
34,982
-
-
-
280,330
7
320,482
79,249
Page 143
3 Insurance risk (continued)
Total
Parent
Territory
(c) General insurance risks
Property classes
Property cover mainly compensates the policyholder for damage suffered to their property or for the value of property lost. Property insurance
may also include cover for pecuniary loss through the inability to use damaged insured commercial properties (business interruption).
For property insurance contracts, there can be variability in the nature, number and size of claims made in each period.
Other
Whole of life
Total
10,121
£000
£000
8,883
376
Notes to the financial statements
2021
Group
Property
Liability
loss
Territory
United Kingdom and Ireland
£000
Miscellaneous
£000
£000
£000
General insurance
Life insurance
financial
(9)
178,552
Net
109,242
60,060
Gross
(9)
301,236
217,961
62,949
16,941
3,394
Net
5,891
31,733
1,290
740
-
93,365
Australia
Gross
64,086
27,524
1,238
140
-
39,002
Gross
54,229
37,106
Net
44,750
25,306
-
-
-
91,610
Canada
Gross
336,276
127,579
-
-
-
70,056
18,231
4,134
(9)
486,211
287,610
Net
159,883
117,099
516
(9)
Net
44,750
25,306
-
-
-
91,610
Gross
64,086
27,524
-
-
Individual claims can vary in amount since the risks insured are diverse in both size and nature. The cost of repairing property varies according to
the extent of damage, cost of materials and labour charges.
16,941
16,425
Gross
217,961
62,949
60,060
Canada
Net
109,242
70,056
Contracts are underwritten on a reinstatement basis or repair and restoration basis as appropriate. Costs of rebuilding properties, of replacement
or indemnity for contents and time taken to bring business operations back to pre-loss levels for business interruption are the key factors that
influence the cost of claims. Individual large claims are more likely to arise from fire, storm or flood damage. The greatest likelihood of an
aggregation of claims arises from earthquake, weather or major spreading fire events.
8,883
13,407
-
191,592
Total
282,047
90,473
-
Claims payment, on average, occurs within a year of the event that gives rise to the claim. However, there is variability around this average with
larger claims typically taking longer to settle and business interruption claims taking much longer depending on the length of the indemnity period
involved.
The nature of claims may include fire, weather damage, escape of water, explosion (after fire), riot and malicious damage, subsidence, accidental
damage, theft and earthquake. Subsidence claims are particularly difficult to predict because the damage is often not apparent for some time. The
ultimate settlements can be small or large with a risk of a settled claim being reopened at a later date.
The number of claims made can be affected in particular by weather events, changes in climate, economic environment, and crime rates. Climate
change may give rise to more frequent and extreme weather events, such as river flooding, hurricanes and drought, and their consequences, for
example, subsidence claims. If a weather event happens near the end of the financial year, the uncertainty about ultimate claims cost in the
financial statements is much higher because there is insufficient time for adequate data to be received to assess the final cost of claims.
13,407
Net
153,992
85,366
-
261,648
8,883
Gross
-
405,886
16,941
16,425
-
314,276
United Kingdom and Ireland
Page 144
3 Insurance risk (continued)
Claims payment, on average, occurs about three to four years after the event that gives rise to the claim. However, there is significant variability
around this average.
Claims that may arise from the liability portfolios include damage to property, physical injury, disease and psychological trauma. The Group has a
different exposure profile to most other commercial lines insurance companies as it has lower exposure to industrial risks. Therefore, claims for
industrial diseases are less common for the Group than injury claims such as slips, trips and back injuries.
Uncertainty in the estimation of the timing of future claims arises from the unpredictability of long-term changes in overall levels of mortality. The
Group bases these estimates on standard industry and national mortality tables and its own experience. The most significant factors that could
alter the expected mortality rates profile are epidemics, widespread changes in lifestyle and continued improvement in medical science and social
conditions. This small mortality risk is retained by the Group. The Group holds a reserve to meet the costs of future expenses in running the life
business and administration of the policies. There is a risk that this is insufficient to meet the expenses incurred in future periods.
(d) Life insurance risks
The Group provides whole-of-life insurance policies to support funeral planning products, for most of which the future benefits are linked to
inflation and backed by index-linked assets. None of the risks arising from this business are amongst the Group's principal risks and no new policies
with insurance risk have been written in the life fund since 2013.
The public and employers’ liability classes can give rise to very late reported claims, which are often referred to as latent claims. These can vary in
nature and are difficult to predict. They typically emerge slowly over many years, during which time there can be particular uncertainty as to the
number of future potential claims and their cost. The Group has reflected this uncertainty and believes that it holds adequate reserves for latent
claims that may result from exposure periods up to the reporting date.
Notes to the financial statements
Liability classes
The primary risk on these contracts is the level of future investment returns on the assets backing the liabilities over the life of the policyholders is
insufficient to meet future claims payments, particularly if the timing of claims is different from that assumed. The interest rate and inflation risk
within this has been largely mitigated by holding index-linked assets of a similar term to the expected liabilities profile. The main residual risk is the
spread risk attached to corporate bonds held to match the liabilities.
The main exposures are in respect of liability insurance contracts which protect policyholders from the liability to compensate injured employees
(employers' liability) and third parties (public liability).
The frequency and severity of claims arising on liability insurance contracts can be affected by several factors. Most significant are the increasing
level of awards for damages suffered, legal costs and the potential for periodic payment awards.
The severity of bodily injury claims can be influenced particularly by the value of loss of earnings and the future cost of care. The settlement value
of claims arising under public and employers' liability is particularly difficult to predict. There is often uncertainty as to the extent and type of injury,
whether any payments will be made and, if they are, the amount and timing of the payments, including the discount rate applied for assessing
lump sums. Key factors driving the high levels of uncertainty include the late notification of possible claim events and the legal process.
Note 28 presents the development of the estimate of ultimate claim cost for public and employers' liability claims occurring in a given year. This
gives an indication of the accuracy of the estimation technique for incurred claims.
Provisions for latent claims
Late notification of possible claims necessitates the holding of provisions for incurred claims that may only emerge some years into the future. In
particular, the effect of inflation over such a long period can be considerable and is uncertain. A lack of comparable past experience may make it
difficult to quantify the number of claims and, for certain types of claims, the amounts for which they will ultimately settle. The legal and legislative
framework continues to evolve, which has a consequent impact on the uncertainty as to the length of the claims settlement process and the
ultimate settlement amounts.
Page 145
Assets and liabilities classified as held for distribution (see note 16) are included within net other in the table above .
639,52 3
Other liabilities
Tota l
(292,952 )
481
-
-
190,478
-
-
-
Subordinated liabilities
-
-
-
-
-
42,707
-
Tota l
-
-
481
-
10 0
869,88 0
Other assets
Cash and cash equivalents
-
Net other
At 31 December 2021 (restated*)
-
-
-
-
At 31 December 2021 (restated*)
-
347,259
-
-
-
-
-
414
-
Other assets
882,350
Tota l
Lease obligation s
Cash and cash equivalents
Other liabilities
Net other
-
-
-
-
114,036
-
655
-
-
Lease obligations
-
Lease obligations
-
-
-
Hedge
Net other
Total
-
-
10 0
114
-
263,972
-
-
330,655
-
-
66,56 9
655
-
-
-
33 6
Other liabilities
Subordinated liabilitie s
Paren t
Financial investment s
593,06 1
At 31 December 2022
-
-
-
-
-
(465,806)
-
(759 )
(25,818)
-
(84,618)
(13,591)
-
-
-
-
-
(129,498)
-
-
-
-
-
-
-
10 0
receivable s
accounte d
£000
-
-
-
derivatives
-
accounted
-
-
£00 0
value
869,88 0
The Group is exposed to financial risk through its financial assets, financial liabilities, reinsurance assets and insurance liabilities. In particular, the key financial risk
is that the proceeds from its financial assets are not sufficient to fund the obligations arising from its insurance contracts. The most important components of
financial risk are interest rate risk, credit risk, equity price and currency risk.
There has been no change from the prior period in the nature of the financial risks to which the Group is exposed. The continued conflict in Ukraine and the cos t of
living crisis means there is continued uncertainty in relation to the economic risks to which the Group is exposed. This includes equity price volatility, movemen ts in
exchange rates and long-term UK growth prospects. The Group's management and measurement of financial risks is informed by either stochastic modelling o r
stress testing techniques.
4 Financial risk and capital management
Notes to the financial statements
-
-
-
(759)
-
(19,062 )
(101,4 43)
(465,8 06)
(25,81 8)
(2,475)
-
-
-
(19,062)
-
(i) Categories applying IAS 39
-
11 4
liabilities ¹
and liabilities
-
£00 0
£00 0
£00 0
Designate d
Financial investment s
870,7 49
£00 0
(a) Categories of financial instruments
-
-
at fai r
value
derivative s
tradin g
Held fo r
Loans an d
tradin g
Designate d
655
-
-
-
-
£00 0
Held fo r
at fai r
Tot al
Other assets
-
-
-
Financial assets
Financial liabilities
Cash and cash equivalents
Hedge
£00 0
£00 0
£00 0
Group
Financia l
At 31 December 2022
Subordinated liabilitie s
Inv't contract liabilities
Other liabilities
-
Financial investment s
-
-
-
-
882,350
-
Inv't contract liabilities
232,55 3
33 6
-
414
-
670
-
-
104,66 4
655
-
-
-
-
-
-
-
302,685
-
-
-
-
-
-
-
-
-
(58,479)
Other assets
(15,519 )
269,0 17
(22,738)
-
-
-
-
-
-
-
-
-
(13,394)
48,4 37
66,56 9
636,6 37
543,9 77
(80,38 9)
5,045
-
(18,7 12)
(10,774 )
66,16 3
-
-
-
-
(292,9 52)
(20,8 06)
(20,806)
-
552,5 02
(331)
(93,810)
-
(233,215 )
-
(48,571)
(10,756 )
(331)
-
48,437
-
-
239,58 5
-
-
-
-
(24,4 33)
-
-
26 9
-
-
-
-
-
¹ Financial liabilities are held at amortised cost.
-
-
(59,6 58)
-
-
-
-
-
-
-
-
(24,433)
-
-
-
-
-
Subordinated liabilitie s
-
Financial investment s
Other assets
Cash and cash equivalents
Net other
Lease obligation s
-
639,52 3
-
-
-
-
-
4,330
-
-
-
10 0
593,06 1
194,8 08
707,1 06
-
26 9
670
(18,712)
-
-
-
-
(25,818)
-
-
(66,381)
-
-
-
-
(3,234 )
(266,349 )
(110,911 )
(3,234 )
(303,327)
-
(303,327)
-
-
-
-
-
-
(471,294)
-
(24,433)
-
-
-
(24,4 33)
-
(15,5 19)
-
114,0 36
(22,73 8)
(443,718)
(130,793)
-
(331)
634,9 61
-
-
*The comparative financial statements have been restated as detailed in note 40 and the tables above have been re-presented for the split between financial liabillities and other
The carrying value of those financial assets and liabilities not carried at fair value in the financial statements is considered to approximate to their fair value.
-
-
-
-
(15,519 )
-
-
(83,622)
-
-
(2,475)
407,46 3
-
-
-
(97,3 47)
883,77 0
240,9 10
(331)
-
-
(58,479)
-
-
(443,7 18)
615,5 93
310,78 8
(448,755)
-
-
8,357
8,10 3
104,6 64
(58,47 9)
(25,818)
-
Page 146
Total
2022
Group
Paren t
2022
Cash and cash equivalent s
Other financial assets
302,685
114
870,635
870,749
financial
asset s
SPP I
Othe r
Total
670
Notes to the financial statements
£00 0
£00 0
£00 0
Financial investment s
4 Financial risk and capital management (continued)
2021
SPP I
Othe r
(ii) Categories of financial assets applying IFRS 9
-
232,553
232,553
-
114,036
£000
£000
£000
As disclosed in note 1, the Group has chosen to defer application of IFRS 9 and classifies and measures financial instruments using IAS 39. To
facilitate comparison with entities applying IFRS 9, the table below sets out the Group's financial assets at the balance sheet date, split between
those which have contractual cash flows that are solely payments of principal and interest on the principal outstanding (SPPI), other than those
which are held for trading or whose performance is evaluated on a fair value basis, and all other financial assets.
114,036
883,770
assets
104,664
-
104,664
883,100
66,569
£00 0
£00 0
£000
-
66,569
48,437
-
48,437
1,230,359
-
302,685
407,463
870,635
1,278,098
Other financial assets
263,972
-
263,972
190,478
-
190,47 8
Total
330,655
883,100
347,259
593,81 6
924,471
239,585
640,273
879,858
593,816
2021
670
640,273
593,930
Cash and cash equivalent s
financial
financial
financial
financia l
financia l
financia l
asset s
asset s
asset s
asset s
asset s
assets
640,943
£000
£000
£000
Financial investments
114
Total
SPP I
Othe r
Total
SPP I
Othe r
Total
financial
asset s
financial
asset s
financia l
financia l
financia l
asset s
asset s
Page 147
£00 0
Total
Level 3
Level 2
4 Financial risk and capital management (continued)
-
There have been no transfers between investment categories in the current year.
Financial investment s
Group
-
The fair value measurement basis used to value those financial assets and financial liabilities held at fair value is categorised into a fair value
hierarchy as follows:
Level 1: fair values measured using quoted bid prices (unadjusted) in active markets for identical assets or liabilities. This category includes listed
equities in active markets, listed debt securities in active markets and exchange-traded derivatives.
Level 1
Level 2: fair values measured using 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). This category includes listed debt or equity securities in a market that is not active and
derivatives that are not exchange-traded.
459,71 9
268,297
458,420
726,717
85,726
354,023
Structured notes
-
56,13 8
57,537
Financial assets at fair value through other comprehensive incom e
85,726
3 4
85,726
58,192
515,953
1,412
870,635
68,94 7
350,302
Financial investment s
At 31 December 202 1
Financial assets at fair value through profit or los s
Total financial assets at fair valu e
883,100
68,98 1
16,997
797,122
-
Financial investment s
Financial assets at fair value through other comprehensive income
Hedged accounted derivative s
414
-
41 4
797,122
16,583
68,98 1
882,686
Equity securities
Debt securitie s
281,169
186
Structured notes
-
14,649
-
14,649
Derivative s
336
Fair value measurement at th e
Analysis of fair value measurement base s
Level 3: fair values measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs). This
category includes unlisted debt and equities, including investments in venture capital, and suspended securities. Where a look-through valuation
approach is applied, underlying net asset values are sourced from the investee, translated into the Group's functional currency and adjusted to
reflect illiquidity where appropriate, with the fair values disclosed being directly sensitive to this input.
Notes to the financial statements
(b) Fair value hierarch y
end of the reporting period based on
Derivative s
Total financial assets at fair valu e
Financial investment s
At 31 December 2022
Debt securitie s
Financial assets at fair value through profit or loss
Hedged accounted derivative s
65 5
726,717
-
-
10 0
869,980
Equity securitie s
517,399
-
336
-
£00 0
£00 0
£00 0
-
10 0
1,29 9
-
65 5
-
56,13 8
Page 148
Financial investment s
569,410
Financial investment s
4 Financial risk and capital management (continued)
£00 0
Financial investment s
506,456
1,12 5
-
65 5
85,580
-
593,16 1
-
-
10 0
Fair value measurement at th e
end of the reporting period based on
85,580
333,54 9
85,580
Derivative s
Notes to the financial statements
Paren t
At 31 December 2022
£00 0
Level 1
Level 2
Level 3
Total
593,81 6
1,02 5
Financial assets at fair value through profit or los s
£00 0
£00 0
-
259,512
Equity securities
Debt securities
Derivative s
Financial investment s
10 0
247,969
-
258,487
-
481
-
48 1
316,161
1,094
3 4
315,033
Financial assets at fair value through profit or los s
1,780
68,79 9
323,362
254,377
186
Equity securitie s
Financial assets at fair value through other comprehensive incom e
65 5
506,456
Total financial assets at fair value
Debt securitie s
At 31 December 2021
Hedged accounted derivative s
640,273
2,030
In the current year derivative liabilities of the Group were measured at fair value through other comprehensive income if they were hedge
accounted and at fair value through profit or loss otherwise. The derivative liabilities of the Parent were measured at fair value through profit or
loss. In the prior year the derivative liabilities of the Group and Parent were measured at fair value through profit or loss. Derivative liabilities are
categorised as level 2 (see note 23).
Total gains/(losses) recognised in profit or loss
34
securities
securitie s
Fair value measurements based on level 3
Fair value measurements in level 3 for both the Group and Parent consist of financial assets, analysed as follows:
Financial assets at fair valu e
Total
68,981
(34)
held at the end of the reporting perio d
Closing balance
Total gains/(losses) for the period included in profit or loss for asset s
9,259
(517)
8,74 2
68,947 34 68,981
9,259
59,68 8
(517)
8,74 2
16,746
55 1
85,726
16,78 0
(34)
Opening balance
60,239
Total gains/(losses) recognised in profit or loss
held at the end of the reporting perio d
At 31 December 202 1
85,726
-
Closing balance
Total gains/(losses) for the period included in profit or loss for asset s
269
16,745
At 31 December 2022
1,761
through profit and los s
16,77 9
Opening balance
68,947
-
-
Hedged accounted derivative s
Total financial assets at fair valu e
269
640,004
68,833
68,833
Financial assets at fair value through other comprehensive incom e
£00 0
£00 0
£00 0
Deb t
Equit y
Group
569,410
Page 149
4 Financial risk and capital management (continued)
68,800
3 3
68,833
£00 0
At 31 December 2022
Opening balance
16,78 1
-
85,580
Closing balance
Total gains/(losses) for the period included in profit or loss for asset s
85,580
held at the end of the reporting perio d
Notes to the financial statements
Financial assets at fair valu e
through profit and los s
Paren t
£00 0
£00 0
Equit y
Deb t
securities
securitie s
Total
(33)
16,748
Closing balance
held at the end of the reporting perio d
Total gains/(losses) for the period included in profit or loss for asset s
Opening balance
60,059
9,292
59,50 8
55 1
Total gains/(losses) recognised in profit or loss
33
9,292
At 31 December 202 1
(33)
16,747
16,78 0
Total gains/(losses) recognised in profit or loss
68,833
8,77 4
(518)
These
financial
assets
are
valued
using
third-party
pricing
information
that
is
regularly
reviewed
and
internally
calibrated
based
on
management' s
knowledge of the markets.
These
financial
assets
are
not
traded
on
active
markets.
Their
fair
value
is
linked
to
an
index
that
reflects
the
performance
of
an
underlying
baske t
of observable securities, including derivatives, provided by an independent calculation agent.
These financial assets are valued using observable net asset data, adjusted for unobservable inputs including comparable price-to-book ratios
based on similar listed companies, normalised for performance measures where appropriate, and management's consideration of constituents as
to what exit price might be obtainable.
The valuation techniques used for instruments categorised in levels 2 and 3 are described below.
Listed debt and equity securities not in active market (level 2 )
All
the
above
gains
or
losses
included
in
profit
or
loss
for
the
period
(for
both
the
Group
and
Parent)
are
presented
in
net
investment
return
withi n
the statement of profit or loss.
(518)
8,77 4
68,800
Unlisted debt is valued using an adjusted net asset method whereby management uses a look-through approach to the underlying assets
supporting the loan, discounted using observable market interest rates of similar loans with similar risk, and allowing for unobservable future
transaction costs.
The valuation is most sensitive to the level of underlying net assets, but it is also sensitive to the interest rate used for discounting and the
projected date of disposal of the asset, with the exit costs sensitive to an expected return on capital of any purchaser and estimated transaction
costs. Reasonably likely changes in unobservable inputs used in the valuation would not have a significant impact on shareholders' equity or the
net result.
The valuation is sensitive to the level of underlying net assets, the Euro exchange rate, the price-to-tangible book ratio, an illiquidity discount and a
credit rating discount applied to the valuation to account for the risks associated with holding the asset. If the illiquidity discount or credit rating
discount applied changes by +/-10%, the value of unlisted equity securities could move by +/-£9m (2021: +/-£8m).
The Group's derivative contracts are not traded in active markets. Foreign currency forward contracts are valued using observable forward
exchange rates corresponding to the maturity of the contract and the contract forward rate. Over-the-counter equity or index options and futures
are valued by reference to observable index prices.
Unlisted debt (level 3 )
Unlisted equity securities (level 3)
Structured notes (level 2 )
Non-exchange-traded derivative contracts (level 2 )
Page 150
Asset s
£00 0
£00 0
£00 0
£00 0
45,678
74,984
At 31 December 2022
4,78 7
Within
Betwee n
Afte r
16,686
Group financial investments with variable interest rates, including cash and cash equivalents, and insurance instalment receivables are subject to
cash flow interest rate risk. This risk is not significant to the Group.
Debt securities
Cash and cash equivalent s
6,49 1
22,815
11,854
18,345
22,815
45,678
86,838
11,854
-
-
Liabilities (discounted)
Life insurance business provision
26,768
-
4,856
Notes to the financial statements
1 yea r
1 and 5 year s
5 year s
Interest rate risk concentration is reduced by adopting asset-liability duration matching principles where appropriate. Excluding assets held to bac k
the life business, the average duration of the Group’s fixed income portfolio is three years (2021: three years), reflecting the relatively short-term
average duration of its general insurance liabilities. The mean term of discounted general insurance liabilities is disclosed in note 28(a)(iv).
4 Financial risk and capital management (continued)
Total
Group life busines s
For the Group’s life insurance business, consisting of policies to support funeral planning products, benefits payable to policyholders are
independent of the returns generated by interest-bearing assets. Therefore, the interest rate risk on the invested assets supporting these liabilities
is borne by the Group. This risk is mitigated by purchasing fixed interest investments with durations that match the profile of the liabilities. For
funeral plan insurance policies, benefits are linked to the Retail Prices Index (RPI). Assets backing these liabilities are also linked to the RPI, and
include index-linked gilts and corporate bonds. For practical purposes it is not possible to exactly match the durations due to the uncertain profile
of liabilities (for example mortality risk) and the availability of suitable assets, therefore some interest rate risk will persist. The Group monitors its
exposure by comparing projected cash flows for these assets and liabilities and making appropriate adjustments to its investment portfolio.
The table below summarises the maturities of life insurance business assets and liabilities that are exposed to interest rate risk.
(c) Interest rate risk
The Group’s exposure to interest rate risk arises primarily from movements on financial investments that are measured at fair value and have fixed
interest rates, which represent a significant proportion of the Group’s assets, subordinated debt which has a fixed interest rate until 2030, and fro m
insurance liabilities discounted at a market interest rate. The Group's investment strategy is set in order to control the impact of interest rate risk o n
anticipated cash flows and asset and liability values. The fair value of the Group's investment portfolio of fixed income securities reduces as market
interest rates rise as does the present value of discounted insurance liabilities, and vice versa.
52,436
73,909
63,819
5,269
101,976
Liabilities (discounted)
33,29 3
53,90 5
Life insurance business provision
15,75 6
Maturit y
6,120
26,768
63,819
96,707
5,269
At 31 December 202 1
Asset s
Debt securities
Cash and cash equivalent s
11,389
-
Page 151
£00 0
£00 0
£00 0
£00 0
£00 0
Cash
equivalents ¹
182,348
-
-
46,224
Group
42,719
2,651
-
45,370
-
171,502
-
28,767
91,35 5
43,93 0
-
-
A
BB B
459,71 9
-
-
Notes to the financial statements
4 Financial risk and capital management (continued)
¹ Cash includes amounts held on deposit classified within financial investments and disclosed in note 22. Cash balances which are not rated relate to cash amounts in
hand.
-
8,143
-
104,664
121,06 5
114,036
12,583
220,640
347,259
517,399
A
19,946
9,424
-
29,370
At 31 December 202 1
AA A
SPP I
Non-SPP I
-
-
4,857
Not rated
A A
At 31 December 2022
AA A
A A
-
-
Below BBB
-
-
129,795
18,11 4
10,65 3
4
1,00 9
287,529
288,542
-
-
122,895
43,93 0
51,95 1
12,659
Below BBB
BB B
51,365
3
-
51,368
72,653
-
-
-
-
7,89 5
-
15,27 0
287,529
407,463
-
3,608
Not rated
6
50 5
220,640
221,151
42,616
securitie s
and cash
Reinsurance
financial
Deb t
debtor s
Othe r
asset s
Total SPP I
The Group is exposed to minimal credit risk in relation to all other financial assets .
The carrying amount of financial and reinsurance assets represents the Group's maximum exposure to credit risk. The Group structures the levels
of credit risk it accepts by placing limits on its exposure to a single counterparty. Limits on the level of credit risk are regularly reviewed. Where
available the Group also manages its exposure to credit risk in relation to credit risk ratings. Investment grade financial assets are classified within
the range of AAA to BBB ratings, where AAA is the highest possible rating. Financial assets which fall outside this range are classified as sub-
investment grade. ‘Not rated’ assets capture assets not rated by external ratings agencies.
The following table provides information regarding the credit risk exposure of financial assets with external credit ratings from Standard & Poors or
an equivalent rating from a similar agency. This includes financial assets that meet the definition of 'solely payments of principal and interest'
(SPPI), as detailed in note 4(a)(ii).
(d) Credit ris k
The Group has exposure to credit risk, which is the risk of non-payment of their obligations by counterparties and financial markets borrowers.
Areas where the Group is exposed to credit risk are:
Counterparty default on loans and debt securities ;
Deposits held with banks ;
Amounts due from insurance intermediaries and policyholders .
Reinsurers’ share of insurance liabilities (excluding provision for unearned premiums) and amounts due from reinsurers in respect of
claims already paid; and
Page 152
176,749
26,51 3
125,225
Total
2022
Group
The debt securities portfolio consists of a range of mainly fixed interest instruments including government securities, local authority issues,
corporate loans and bonds, overseas bonds, preference shares and other interest-bearing securities. Limits are imposed on the credit ratings of the
corporate bond portfolio and exposures regularly monitored. Group investments in unlisted securities represent 0% of this category in the current
year and less than 1% prior year.
459,71 9
£00 0
Paren t
Notes to the financial statements
Reinsurance is used to manage insurance risk. This does not, however, discharge the Group's liability as primary insurer. If a reinsurer fails to pay a
claim for any reason, the Group remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on a regular
basis through the year by reviewing their financial strength. The Group Reinsurance Security Committee assesses, monitors and approves the
creditworthiness of all reinsurers, reviewing relevant credit ratings provided by the recognised credit rating agencies, as well as other publicly
available data and market information. The Group Reinsurance Security Committee also monitors the balances outstanding from reinsurers and
maintains an approved list of reinsurers.
4 Financial risk and capital management (continued)
For financial assets meeting the SPPI test that do not have low credit risk, the carrying amount disclosed above is an approximation of their fair
value.
The Group’s exposure to counterparty default on debt securities is spread across a variety of geographical and economic territories, as follows:
SPP I
At 31 December 2022
AA A
-
-
-
-
96,66 6
A A
16,60 5
2,96 1
-
19,56 6
46,836
A
7,328
5,71 0
-
13,03 8
74,668
-
2,753
BB B
42,632
-
-
42,632
31,68 0
Below BBB
-
-
-
6,90 9
66,56 9
9,429
254,657
330,65 5
259,512
At 31 December 202 1
Below BBB
-
AAA
-
-
-
-
89,099
A A
7,018
1,828
-
8,84 6
61,199
-
-
-
4,379
¹ Cash includes amounts held on deposit classified within financial investments and disclosed in note 22. Cash balances which are not rated relate to cash amounts in
hand.
Not rated
5
58 5
183,147
183,737
8,44 3
The Group's credit risk policy details prescriptive methods for the collection of premiums and control of intermediary and policyholder debtor
balances. The level and age of debtor balances are regularly assessed via monthly credit management reports. These reports are scrutinised to
assess exposure by geographical region and counterparty of aged or outstanding balances. Any such balances are likely to be major international
brokers that are in turn monitored via credit reference agencies and considered to pose minimal risk of default. The Group has no material
concentration of credit risk in respect of amounts due from insurance intermediaries and policyholders.
Group cash balances are regularly reviewed to identify the quality of the counterparty bank and to monitor and limit concentrations of risk .
A
10,896
5,585
-
16,481
108,443
Cash
Othe r
and cash
Reinsurance
financial
Deb t
equivalents ¹
debtor s
Non-SPP I
asset s
Total SPPI
securitie s
£00 0
UK
Canada
Australi a
Europ e
£00 0
£00 0
£00 0
£00 0
48,43 7
8,001
183,147
239,585
BB B
30,518
3
-
30,521
Not rated
4
758
254,657
255,419
27,741
101,76 7
131,23 2
-
26,51 3
259,512
316,161
131,23 2
316,161
44,59 8
Paren t
£00 0
2021
UK
Canada
Australi a
Europ e
Total
Paren t
£000
168,79 8
119,622
-
Grou p
265,506
119,622
104,530
27,741
517,399
£000
Page 153
(e) Equity price ris k
The Group is exposed to equity price risk because of financial investments held by the Group which are stated at fair value through profit or loss.
The Group mitigates this risk by holding a diversified portfolio across geographical regions and market sectors, and through the use of derivative
contracts from time to time which would limit losses in the event of a fall in equity markets.
2022
2021
The concentration of equity price risk by geographical listing, before the mitigating effect of derivatives, to which the Group and Parent are exposed
is as follows:
Group
Paren t
Grou p
UK
268,623
248,149
UK
281,497
Europ e
186
£000
£000
68,619
The Group operates internationally and its main exposures to foreign exchange risk are noted below. The Group's foreign operations generally
invest in assets and purchase reinsurance denominated in the same currencies as their insurance liabilities, which mitigates the foreign currency
exchange rate risk for these operations. As a result, foreign exchange risk arises from recognised assets and liabilities denominated in other
currencies and net investments in foreign operations. The Group mitigates this risk through the use of derivatives when considered necessary.
The forward foreign currency risk arising on translation of these foreign operations is hedged by the derivatives which are detailed in note 23. The
Group has designated certain derivatives as a hedge of its net investments in Canada and Australia, which have Canadian and Australian dollars
respectively as their functional currency.
The Group's foreign operations create two sources of foreign currency risk :
The figures in the table above, for the current and prior years, do not include currency risk that the Group and Parent are exposed to on a ‘look
through’ basis in respect of collective investment schemes denominated in sterling. The Group and Parent enter into derivatives to hedge currency
exposure, including exposures on a ‘look through’ basis. The open derivatives held by the Group and Parent at the year end to hedge currency
exposure are detailed in note 23.
Aus $
61,768
4,09 1
£00 0
£00 0
254,55 7
Paren t
(f) Currency ris k
350,302
323,362
Total
354,023
333,54 9
-
-
HKD $
1 5
1 5
Eur o
25,287
25,287
-
-
Notes to the financial statements
Total
68,619
The largest currency exposures, before the mitigating effect of derivatives, with reference to net assets/liabilities are shown below, representing
effective diversification of resources.
The Group exposure to foreign currency risk within the investment portfolios arises from purchased investments that are denominated in
currencies other than sterling.
Hong Kong
Hong Kong
186
Europ e
85,400
85,400
The
operating
results
of
the
Group's
foreign
branches
and
subsidiaries
in
the
Group
financial
statements
are
translated
at
the
average
exchang e
rates prevailing during the period; and
The equity investment in foreign branches and subsidiaries is translated into sterling using the exchange rate at the year-end date.
2022
2021
£00 0
£00 0
£000
£000
Can $
46,08 7
46,08 7
Group
Paren t
Grou p
Paren t
Aus $
64,005
14,131
4 Financial risk and capital management (continued)
HKD $
172
172
Eur o
11,054
11,054
Can $
57,71 0
57,71 0
USD $
2,653
2,653
USD $
2,345
2,345
Page 154
*The comparative financial statements have been restated as detailed in note 40.
Restated*
-
Equity price ris k
-10%
-
Currency ris k
(9,966)
4
10
Restated*
-100 basis points
(2,936)
-
28,375
variabl e
£000
Variabl e
Change in
2022
Paren t
Potential increase /
(decrease) in
-
5,303
27,017
26,192
2022
2021
4,118
6,71 5
-
£00 0
£000
£00 0
4,118
10,84 5
5 4
-100 basis points
(4,618)
(11,765)
(48 )
7
9,47 5
5,648
+100 basis points
(4)
+/-10%
The following assumptions have been made in preparing the above sensitivity analysis :
Potential increase /
Variabl e
2021
2022
Change in
2022
2021
+100 basis points
4,218
7,119
2,154
+10%
(1,763)
-
-
-
-
Change in profit is stated net of tax at the standard rate applicable in each of the Group's territories .
The value of fixed income investments will vary inversely with changes in interest rates, and all territories experience the same intere st
rate movement;
(decrease) in profi t
other equity reserve s
(decrease) in
Group
Notes to the financial statements
4 Financial risk and capital management (continued)
(g) Liquidity risk
Liquidity risk is the risk that funds may not be available to pay obligations when due. The Group is exposed to daily calls on its available cash
resources mainly from claims arising from insurance contracts. An estimate of the timing of the net cash outflows resulting from insurance
contracts is provided in note 28. The Group has robust processes in place to manage liquidity risk and has available cash balances, other readily
marketable assets and access to funding in case of exceptional need. This is not considered to be a significant risk to the Group.
Non-derivative financial liabilities consist of lease liabilities, for which a maturity analysis is included in note 34, and other liabilities for which a
maturity analysis is included in note 31, and subordinated debt for which a maturity analysis is included in note 32.
The sensitivity of profit and other equity reserves to movements on market risk variables (comprising interest rate, currency and equity price risk),
each considered in isolation and before the mitigating effect of derivatives, is shown in the table below. This table does not include the impact of
variables on retirement benefit schemes. Financial risk sensitivities for retirement benefit schemes are disclosed separately in note 19.
(h) Market risk sensitivity analysis
Equity prices will move by the same percentage across all territories; an d
Potential increase /
+/-10%
£00 0
28,676
Equity price ris k
£000
(decrease) in profi t
£00 0
(3,369)
Interest rate ris k
(8,873)
+10%
(1,763)
(10,737)
£000
(8)
variabl e
Currency ris k
-10 %
2,154
13,12 3
Currency gains and losses will arise from a change in the value of sterling against all other currencies moving in parallel ;
other equity reserve s
Potential increase /
2021
Interest rate ris k
(3,369)
(5,494)
(4,339)
Page 155
Safeguard the Group's ability to continue to meet stakeholders' expectations in accordance with its corporate mission, vision and
values.
Life Limite d
£00 0
Paren t
Economic capital is the Group’s own internal view of the level of capital required, and this measure is an integral part of the Own Risk and Solvency
Assessment Report (ORSA) which is a private, internal forward-looking assessment of own risk, as required as part of the Solvency II regime. Risk
appetite is set such that the target level of economic capital is always higher than the regulatory SCR.
Solvency II Own Funds (unaudited )
630,05 8
54,172
£00 0
Ecclesiastica l
Office plc
Ecclesiastica l
Paren t
Life Limite d
£000
616,905
55,235
£000
Insuranc e
Office pl c
2022
Ecclesiastica l
Ecclesiastica l
Insuranc e
4 Financial risk and capital management (continued)
-
-
EIO’s Solvency II Own Funds will be subject to a separate independent audit, as part of the Group's process for Solvency II reporting to the PRA.
The Group's regulated entities, EIO and ELL, expect to meet the deadline for submission to the PRA of 6 April 2023 and their respective SFCRs will
be made available on the Group's website shortly thereafter. Benefact Group is also expected to meet its deadline for submission to the PRA of 20
May 2023, with its SFCR also being made available on the Group’s website shortly after.
2021
Notes to the financial statements
Comply with the regulators' capital requirements of the markets in which the Group operates; and
(i) Capital management
The Group's primary objectives when managing capital are to:
The Group is subject to insurance solvency regulations in all the territories in which it issues insurance and investment contracts, and capital is
managed and evaluated on the basis of both regulatory and economic capital, at a group and parent entity level.
In the UK, the Group and its UK regulated entities are required to comply with rules issued by the Financial Conduct Authority (FCA) and the
Prudential Regulation Authority (PRA).
The PRA expects a firm, at all times, to hold Solvency II Own Funds in excess of its calculated Solvency Capital Requirement (SCR). Group solvency
is assessed at the level of Ecclesiastical Insurance Office plc (EIO)’s parent, Benefact Group plc. Consequently, there is no directly comparable
solvency measure for EIO group. Quantitative returns are submitted to the PRA, in addition to an annual narrative report, the Solvency and
Financial Condition Report (SFCR) which is also published on the company's website. A further report, the Regular Supervisory Report (RSR) is
periodically submitted to the PRA.
Page 156
Canada
Other insurance operation s
- Life busines s
This includes costs associated with Group management activities .
- Corporate cost s
Ecclesiastical Life Limited provides long-term policies to support funeral planning products. The business reopened in the year but
remains closed to new insurance business.
The Group operates a general insurance Ecclesiastical branch in Canada.
This includes the Group's internal reinsurance function, adverse development cover and operations that are in run-off or not reportabl e
due to their immateriality.
The Group has a wholly-owned subsidiary in Australia underwriting general insurance business under the Ansvar brand .
The Group's principal general insurance business operation is in the UK, where it operates under the Ecclesiastical and Ansvar brands.
The Group also operates an Ecclesiastical branch in the Republic of Ireland underwriting general business across the whole of Ireland .
Australi a
United Kingdom and Ireland
- General busines s
As part of the streamlining of the Benefact Group, on 30 December 2022, the Group disposed of South Essex Insurance Holdings Limited and its
wholly owned subsidiary, SEIB Insurance Brokers Limited. On 3 January 2023, the shares of EdenTree Investment Management Limited and
Ecclesiastical Financial Advisory Services Limited were distributed to the Group's immediate parent company, Benefact Group plc. Discontinued
operations are disclosed separately in note 16 and excluded from the segmental analysis. The prior period has been re-presented in line with the
current year basis.
Inter-segment and inter-territory transfers or transactions are entered into under normal commercial terms and conditions that would also be
available to unrelated third parties.
The accounting policies of the operating segments are the same as the Group's accounting policies described in note 1.
The Group segments its business activities on the underwriting territory. Expenses relating to Group management activities are included within
'Corporate costs'. This reflects the management and internal Group reporting structure.
Notes to the financial statements
(a) Operating segment s
5 Segment informatio n
The activities of each operating segment are described below.
Page 157
presented*
Continuing operation s
£00 0
2022
Combined
£00 0
ratio
£00 0
4,010
558,544
3,66 7
(235)
568
General busines s
(2,075)
The life business segment result comprises the profit or loss on insurance contracts (including return on assets backing insurance liabilities in the
long-term fund), shareholder investment return and other expenses.
Segment result
Canada
Other insurance operation s
14,438
107.3 %
(2,864)
486,220
7
General business segment results comprise the insurance underwriting profit or loss, investment activities and other expenses of each
underwriting territory. The Group uses the industry standard net combined operating ratio (COR) as a measure of underwriting efficiency. The CO R
expresses the total of net claims costs, commission and underwriting expenses as a percentage of net earned premiums. Further details on the
underwriting profit or loss and COR, which are alternative performance measures that are not defined under IFRS, are detailed in note 38.
*The prior year has been re-presented for discontinued operations as detailed in note 16 to the financial statements .
86.7 %
(981)
13 5
-
(846)
90.6%
7,025
3,57 0
(146)
24,239
(7,726)
-
-
(25,743)
Corporate costs
(25,743)
24,609
3,552
(7,191)
-
558,551
486,211
344,788
297,235
Segment revenu e
(354)
(2,456)
United Kingdom and Ireland
Australia
10,449
The Group uses gross written premiums as the measure for turnover of the general and life insurance business segments. Segment revenues do
not include net investment return or general business fee and commission income, which are reported within revenue in the consolidated
statement of profit or loss.
Revenue is attributed to the geographical region in which the customer is based.
Notes to the financial statements
5 Segment information (continued)
£00 0
operating
Insurance
Investment s
Othe r
Total
(4,773)
30,97 1
(7,545)
(28,199)
Profit/(loss) before tax
Life busines s
(3,639)
91.0%
27,419
Group revenues are not materially concentrated on any single external customer.
2022
£000
£00 0
99,69 8
93,365
5,297
2021
(9)
108,76 1
91,610
Re-
Continuing operation s
General business
United Kingdom and Ireland
Australia
Canada
Other insurance operation s
Total
Life busines s
Group revenu e
Page 158
£00 0
£000
301,236
6,227
108,76 1
5,60 1
91,610
293,726
£00 0
£00 0
Genera l
Total
United Kingdom and Ireland
Australia
Canada
Other insurance operation s
Life busines s
Continuing operation s
General busines s
96.8 %
8,75 9
91,743
(2,288)
98,214
(9,952)
(133)
-
(10,085)
85.3 %
24,952
88,95 3
(2,098)
111,807
(11,416)
1,924
(34)
ratio
£00 0
£00 0
£00 0
£00 0
Notes to the financial statements
5 Segment information (continued)
2021 (restated* )
1,117
3,981
-
Combined
operating
Insurance
Investment s
Othe r
Total
asset s
premium s
asset s
88.6%
7,065
99 9
(156)
7,90 8
156.9 %
(24,134)
9,87 6
95,72 4
(26,422)
(b) Geographical information
Corporate costs
Profit/(loss) before tax
-
(24,134)
Gross written premiums from external customers and non-current assets, as attributed to individual countries in which the Group operates, are as
follows:
*The comparative financial statements have been restated as detailed in note 40.
5,09 8
(13,306)
-
79,17 8
302,878
Gross written premiums are allocated based on the country in which the insurance contracts are issued. Non-current assets exclude rights arising
under insurance contracts, deferred tax assets, pension assets and financial instruments and are allocated based on where the assets are located.
328,138
486,211
Net written premium s
558,551
6 Net insurance premium revenu e
busines s
£00 0
£00 0
2022
2021
premium s
Change in the gross provision for unearned premiums
303,97 7
287,610
303,97 0
7
For the year ended 31 December 2021
-
(198,601)
287,619
(9)
Outward reinsurance premiums
Net written premium s
(24,504)
-
Non-curren t
99,69 8
3,052
350,09 2
319,485
93,365
2,925
United Kingdom and Ireland
Australi a
Canada
busines s
written
Non-curren t
writte n
£000
Change in the provision for unearned premiums, reinsurers' shar e
Change in the net provision for unearned premium s
(14,620)
-
(14,620)
(16,505)
(16,505)
-
-
(238,069)
9,884
-
9,88 4
272,999
(9)
272,990
Change in the gross provision for unearned premiums
Change in the provision for unearned premiums, reinsurers' shar e
Change in the net provision for unearned premium s
Earned premiums, net of reinsurance
486,220
(9)
486,211
Gross written premium s
Earned premiums, net of reinsurance
14,11 4
(24,504)
(198,601)
320,475
7
320,482
(30,619)
(30,619)
-
-
14,11 4
`
Outward reinsurance premiums
558,544
7
558,551
For the year ended 31 December 202 2
Gross written premium s
(238,069)
Life
Gros s
Gross
Page 159
(21,209)
Fair value movements on financial instruments at fair value through profit or loss
- structured note income
Income from financial assets at fair value through profit or loss
- equity income
8,837
3,011
346
6,780
Income from financial assets calculated using the effective interest rate method
- exchange movements
20,238
30
12,123
£000
7,482
1,999
(24)
2021
7 Fee and commission income
8 Net investment return
Restated*
During the year, in respect of continuing operations, the Group recognised £63,297,000 (2021: £55,019,000) fee and commission income in
accordance with IFRS 4, Insurance Contracts and £236,000 (2021: £398,000) in accordance with IFRS 15, Revenue from contracts with customers.
Fee and commission income from contracts with customers was recognised at a point in time rather than over time.
Notes to the financial statements
8,648
605
32,134
30,863
(72,912)
38,102
Fair value movements on investment property
Impact of discount rate change on insurance contract liabilities
Net investment return
Included within fair value movements on financial instruments at fair value through profit or loss are gains of £3,733,000 (2021: £3,504,000 gains)
in respect of derivative instruments.
66,857
(1,416)
11,074
Investment income
- debt income
Other income/(expense)
- rental income
- other income received
2022
3,502
£000
103,667
- cash and cash equivalents income
14,464
Less: discontinued operations
Net investment return of continuing operations
(812)
(770)
4,058
102,897
*The comparative financial statements have been restated as detailed in note 40.
4,870
Page 160
*The prior year has been re-presented for discontinued operations as detailed in note 16 to the financial statements.
2021
10 Fees, commissions and other acquisition costs
2022
Re-
Commission paid
£000
21
Fees paid
75,601
(4,376)
Change in deferred acquisition costs
£000
115
95,649
Fees, commissions and other acquisition costs of continuing operations
(2,402)
26,805
Other acquisition costs
Less: discontinued operations
Fees, commissions and other acquisition costs
98,051
(2,191)
108,696
Reinsurers' share of claims paid
Reinsurers' share of change in the provision for claims
Reinsurance recoverie s
Claims and change in insurance liabilities, net of reinsuranc e
(123,822)
-
(123,822)
(40,587 )
(83,235)
143,468
2,343
145,811
-
(40,587 )
For the year ended 31 December 202 1
Gross claims pai d
Gross change in the provision for claims
-
(3,095)
191,685
5,43 8
197,123
Gross change in life business provisio n
Claims and change in insurance liabilitie s
75,605
-
Claims and change in insurance liabilities, net of reinsuranc e
(136,507)
-
(136,507)
Reinsurance recoverie s
144,842
4,33 1
149,17 3
Gross change in life business provisio n
Claims and change in insurance liabilitie s
Reinsurers' share of claims paid
Reinsurers' share of change in the provision for claims
(43,435)
-
281,349
(93,072)
Notes to the financial statements
9 Claims and change in insurance liabilities and reinsurance recoverie s
Gross claims pai d
Gross change in the provision for claim s
£00 0
For the year ended 31 December 202 2
214,032
busines s
Total
£00 0
£00 0
busines s
Genera l
Lif e
5,074
219,10 6
(743)
(743)
(83,235)
-
4,331
285,680
(43,435)
-
(93,072)
-
267,290
2,343
67,31 7
-
67,31 7
87,695
(5,349)
28,426
110,887
presented*
75,60 5
(3,095)
269,633
Page 161
59 9
270
214
87
214
946
-
Fees payable to the Company's auditor and its associates for the audit of the Company's annual
accounts
- Audit-related assurance service s
18 3
Total non-audit fees
- Other assurance service s
Total audit fees
2022
323
34 7
70 9
£00 0
Fees payable to the Company’s auditor and its associates for other services :
- The audit of the Company's subsidiarie s
Net foreign exchange losses/(gains )
1,03 2
Total auditor's remuneration
Amounts disclosed are net of services taxes, where applicable. Audit-related assurance services include Prudential Regulatory Authority (PRA) and
other regulatory audit work.
1,30 2
1,160
Auditor's remuneration of £143,000 relates to discontinued operations (2021: £153,000).
11 (Loss)/profit for the yea r
622
83,291
Decrease/(increase) in fair value of investment propert y
Continuing operation s
(Loss)/profit for the year has been arrived at after charging/(crediting)
£000
2021
2 4
£00 0
£000
2022
2021
(9)
presented
Re-
21,20 9
(20,238)
6,26 1
5,833
1,374
(601)
92,50 3
Depreciation of property, plant and equipment
(Profit)/loss on disposal of property, plant and equipment
Amortisation of intangible asset s
3,558
Notes to the financial statements
Employee benefits expense including termination benefits, net of recharges
12 Auditor's remuneration
Page 162
*The prior year has been re-presented for discontinued operations as detailed in note 16 to the financial statements .
Paren t
Re-presented*
13 2
8 3
7,046
6,207
1,646
8 3
Social security cost s
£00 0
79,383
83,017
73,338
6,13 4
(502)
(502)
(1,446)
(1,446)
(12,251)
(12,260)
(14,509)
(14,671)
Pension costs - defined contribution plan s
87,04 4
695
-
-
1
1
11 2
980
79,03 3
8,562
Continuing operation s
2022
£000
£000
Wages and salarie s
Grou p
Paren t
8,562
7,592
£00 0
Genera l
Lif e
Genera l
Lif e
11 2
86 0
busines s
Othe r
7 8
107
busines s
No .
No .
No .
No.
90 1
1
1
1,646
69 5
13 2
94,556
Pension costs - defined benefit plan s
Other post-employment benefit s
Total staff cost s
107,34 3
96,714
92,332
The above Group figures do not include termination benefits of £248,000 (2021: £274,000) of which £77,000 (2021: £nil) was recharged to related
undertakings of the Group. The above Parent figures do not include termination benefits of £248,000 (2021: £274,000), of which £77,000 (2021:
£10,000) was recharged to related undertakings of the Parent.
Capitalised staff costs
938
79
-
-
107
2021
72,207
7,592
5,516
Group
Average numbers of full-time equivalent employees have been quoted rather than average numbers of employees to give a better reflection of the
split between business areas, as some employees' work is divided between more than one business area.
90,90 8
81,186
Staff costs recharged to related undertakings of the Group
1,11 7
1
13 1
1,048
1
107
Re-presented*Parent
No.
No.
2022
2021
business
busines s
Othe r
13 7
-
-
110
-
-
-
-
79
-
-
7 8
90 1
1
13 1
86 0
1
107
No .
No .
No.
No.
No.
Lif e
business
busines s
Othe r
busines s
busines s
Genera l
Lif e
Genera l
Re-presented*
2022
Notes to the financial statements
The average monthly number of full-time equivalent employees of the Group and Parent, including executive directors, during the year by
geographical location was:
13 Employee informatio n
Group
United Kingdom and Ireland
Canada
Australi a
Canada
United Kingdom and Ireland
2021
Othe r
No.
Page 163
(2,543)
9,665
Fair value movements on hedge derivative s
(485)
Impact of change in deferred tax rate
-
(1,519)
(b) Tax charged/(credited) to other comprehensive income
*The comparative financial statements have been restated as detailed in note 40.
14 Tax expens e
2022
2021
(2,596)
£00 0
£000
(379)
£00 0
£000
Non-taxable incom e
Total tax (credited)/charged to other comprehensive incom e
(3,368)
8,281
Current tax (credited)/charged on:
Deferred tax (credited)/charged on :
-
Tax relief on charitable grants of £3,800,000 (2021: £3,990,000) has been taken directly to equity.
(Loss)/profit before tax
Tax calculated at the UK standard rate of tax of 19% (2021: 19% )
-
A change in the UK standard rate of corporation tax from 19% to 25% will become effective from 1 April 2023. Deferred tax has been provided at an
average rate of 24% (2021: 24%).
Actuarial movements on retirement benefit plans
(178)
Fair value movements on hedge derivative s
313
(340)
Impact of change in deferred tax rate
Adjustments to tax charge in respect of prior period s
(2,596)
1 3
Deferred tax asset for tax losses not previously recognise d
-
(2,565)
Tax losses utilised for which no deferred tax asset was recognised
Impact of differential between current and deferred tax rate
(460)
9,029
Total tax (credit)/expense
18,142
Life insurance and other tax paid at non-UK rate s
Notes to the financial statements
Tax on the Group’s result before tax differs from the United Kingdom standard rate of corporation tax for the reasons set out in the following
reconciliation:
- prior year adjustment s
Current tax
Deferred ta x
Total tax (credit)/expense
2022
2021
(a) Tax charged/(credited) to the statement of profit or los s
- temporary difference s
(9,052)
(4,646 )
(3,015)
18,142
£00 0
£000
Restated*
- prior year adjustment s
(21)
(419)
(314)
58 0
805
45 9
(293)
1,46 8
- Impact of change in deferred tax rate
-
9,029
(887 )
18,021
(121)
Less: tax expense of discontinued operation s
Total tax (credit)/expense of continuing operation s
Restated*
- current yea r
6,770
13,178
70 7
(1,862)
(1,265)
(1,234)
79,637
15,131
2022
2021
(4,773)
(4,415)
Expenses not deductible for tax purpose s
9,342
Factors affecting (credit)/charge for the year :
Profit/(loss) before tax (discontinued operations )
Total pre-tax profi t
14,11 5
1,775
79,178
Page 164
2021
£000
-
(a) Disposal of subsidiarie s
2022
£00 0
8,842
£00 0
Goodwill and other intangible asset s
22,707
Property, plant and equipmen t
1,666
-
-
-
Consideration received or receivabl e
45,197
16 Disposal of subsidiaries and discontinued operation s
On 30 December 2022 the Group disposed of South Essex Insurance Holdings Limited and its wholly owned subsidiary, SEIB Insurance Brokers
Limited, to a related party. The related party is an associate of the Company's immediate parent company, Benefact Group plc. The results of the
disposed subsidiaries are reported in the current and prior year as discontinued operations.
Dividends
Charitable grants
9,18 1
9,181
17,010
20,000
(3,990)
2022
2021
£000
£000
Amounts paid directly from equity in the period:
(3,800)
21,000
16,200
Notes to the financial statements
Non-Cumulative Irredeemable Preference share dividend (8.625 pence per share)
Gross charitable grants to the ultimate parent company, Benefact Trust Limited
Tax relief
Net appropriation for the year
15 Appropriations
Net assets
30,90 4
Total asset s
40,681
The gain on disposal has been presented within profit attributable to discontinued operations in the consolidated statement of profit or loss.
2022
Cash and cash equivalent s
7,466
Other assets
-
-
-
-
2021
Other liabilitie s
(6,777)
Total liabilitie s
(9,777)
-
-
-
(263)
Current tax liabilitie s
(1,010 )
Lease obligation s
(1,215)
Provisions for other liabilities
-
-
-
-
Deferred incom e
(512)
Carrying amount of net assets sold
(30,904)
Gain on disposal before and after tax
14,293
£000
The carrying amounts of assets and liabilities as at the date of disposal were:
Page 165
Notes to the financial statements
16 Disposal of subsidiaries and discontinued operations (continued)
On 3 January 2023 the Company approved a dividend in specie and distributed its entire holdings in EdenTree Investment Management Limited
and Ecclesiastical Financial Advisory Services Limited to the Group's immediate parent company, Benefact Group plc. The results of these
subsidiaries are reported in the current and prior year as a discontinued operations and associated assets and liabilities are presented as held for
distribution in the current year statement of financial position.
Total assets of disposal groups held for distributio n
Cash and cash equivalent s
5,177
14,999
-
-
(b) Assets and liabilities of disposal group classified as held for distributio n
Other asset s
9,822
£00 0
2022
The following assets and liabilities were classified as held for distribution in relation to the discontinued operation at 31 December 2022:
2021
£000
-
2022
2021
(c) Financial performance of discontinued operations
Discontinued operations includes both the subsidiaries sold in the year and the assets held for distribution at the balance sheet date.
Tax expense
(419)
(121)
Net cash (outflow)/inflow from operating activities
(397)
2,718
Net cash outflow from investing activitie s
(8,987)
(104)
Profit from discontinued operation s
£00 0
£000
13,69 6
Net cash outflow from financing activitie s
(239)
(268)
Net (decrease)/increase in cash generated by discontinued operation s
(9,623)
2,346
Net cash outflow from investing activities includes an outflow of £8,842,000 (2021: £nil) from the disposal of South Essex Insurance Holdings
Limited.
Total liabilities of disposal groups held for distributio n
Deferred income
-
-
261
-
(23,801)
(30,750)
£00 0
£000
Revenu e
23,695
31,286
10,49 5
Other liabilitie s
10,23 4
2022
2021
14,293
-
Gain on disposal of subsidiaries after tax
338
Finance cost s
(72)
(77 )
(d) Cash flow information for discontinued operation s
(597)
338
(Loss)/profit after tax of discontinued operation s
(Loss)/profit before tax of discontinued operation s
(178)
45 9
Expenses
Page 166
During the year the Group disposed of its interest in South Essex Insurance Holdings Limited resulting in the disposal of goodwill of £22,195,000
and intangible assets of £512,000. See note 16 for further information.
Net book value at 31 December 202 1
24,291
27,40 4
81 7
52,512
At 31 December 2021
40 6
17,931
5,15 8
23,495
Exchange differences
-
53
(4 )
4 9
Disposals
-
(1,876)
-
(1,876)
Impairment losses for the yea r
27
-
-
27
Amortisation charge for the year
-
57 5
25 4
829
At 1 January 2021
379
19,179
4,90 8
24,46 6
Accumulated impairment losses and amortisatio n
At 31 December 2021
24,697
45,335
5,97 5
76,007
Exchange differences
-
(73)
(12)
(85 )
Disposals
-
(6,641)
-
(6,641)
Additions
-
3,914
-
3,914
At 1 January 2021
24,697
48,135
5,98 7
78,81 9
Cos t
Net book value at 31 December 202 2
2,097
28,105
5 3
30,255
At 31 December 2022
-
21,385
14 3
21,528
Exchange differences
-
15 0
7
15 7
Disposal s
(406)
-
(5,276)
(5,682)
Impairment losses for the yea r
-
-
-
-
Amortisation charge for the year
-
3,30 4
254
3,558
At 1 January 2022
406
17,93 1
5,158
23,495
Accumulated impairment losses and amortisatio n
At 31 December 2022
2,097
49,490
19 6
51,783
Exchange difference s
-
255
1 0
265
Disposal s
(22,600)
-
(5,789)
(28,389)
Cos t
Group
Othe r
Goodwil l
softwar e
asset s
Computer
intangible
£00 0
£00 0
£00 0
Notes to the financial statements
17 Goodwill and other intangible asset s
Total
£00 0
Addition s
-
3,90 0
-
3,90 0
At 1 January 2022
24,697
45,335
5,975
76,00 7
Page 167
At 31 December
16,05 6
Cos t
softwar e
asset s
£00 0
£00 0
At 1 January
Addition s
Disposal s
255
1 0
47,527
18 5
19,426
13 8
Amortisatio n
3,35 1
Charge for the year
Disposal s
Exchange differences
47
-
-
15 0
7
At 1 January
15,97 2
Exchange difference s
At 31 December
-
43,55 7
2022
2021
Computer
intangible
Computer
intangibl e
19 5
185
19,56 4
84
3,30 4
Othe r
Othe r
£000
-
-
43,557
41,330
198
41,528
43,372
16,056
41
3,90 0
Notes to the financial statements
17 Goodwill and other intangible assets (continued)
Paren t
Other intangible assets consist of acquired brand, customer and distribution relationships, which have an overall remaining useful life of three
years on a weighted average basis (2021: one year).
28,10 1
Net book value at 31 December
18 Deferred acquisition costs
17,263
17,222
15,972
8 4
265
92
47,722
(1,876)
-
43,372
15 7
52
(5)
47
-
3,914
-
(1,964)
-
(1,964)
57 4
4 8
622
(13)
7 9
(1,876)
-
2022
2021
£00 0
£00 0
£000
£000
Group
Paren t
Grou p
Paren t
36,740
41,98 9
33,472
At 1 January
Increase in the perio d
Release in the perio d
Exchange differences
At 31 Decembe r
42,13 0
46,027
36,740
1,15 0
680
(338)
9 9
All balances are current.
52,526
(47,190)
(33,520)
Total
softwar e
asset s
Total
£00 0
£000
£000
3,90 0
3,914
28,158
27,400
101
27,501
57
(41,746)
(37,491)
52,539
42,201
46,122
36,689
46,027
Page 168
Notes to the financial statements
19 Retirement benefit scheme s
Defined contribution pension plan s
The Group operates a number of defined contribution pension plans, for which contributions by the Group are disclosed in note 13.
Defined benefit pension plan s
The Group's defined benefit plan is operated by the Parent in the UK. The plan closed to new entrants on 5 April 2006. The terms of the plan for
future service changed in August 2011 from a non-contributory final salary scheme to a contributory scheme in which benefits are based on career
average revalued earnings. The scheme closed to future accrual on 30 June 2019. Active members in employment at this date retained certain
enhanced benefits after the plan closed to future accrual, including benefits in relation to death in service and ill health retirement. They also retai n
the link to final salary whilst they remain employed by the Parent. From 1 July 2019, active members in employment joined one of the Group’s
defined contribution plans. The scheme previously had two discrete sections: the EIO Section and the Ansvar Section. With effect from 1 January
2021, the two discrete sections of the scheme have been combined.
The assets of the defined benefit plan are held separately from those of the Group by the Trustee of the Ecclesiastical Insurance Office plc Staff
Retirement Benefit Fund (the 'Fund'). The Fund is subject to the Statutory Funding Objective under the Pensions Act 2004. An independent qualifie d
actuary appointed by the Trustee is responsible for undertaking triennial valuations to determine whether the Statutory Funding Objective is met.
Pension costs for the plan are determined by the Trustee, having considered the advice of the actuary and having consulted with the employer.
The most recent triennial valuation was at 31 December 2019. No contribution is expected to be paid by the Group in 2023.
Actuarial valuations were reviewed and updated by an actuary at 31 December 2021 for IAS 19 purposes. As the Parent does not have an
unconditional right to a refund of the surplus attributable to the former EIO Section of the scheme, it has been assessed against the economic
benefit available to the Parent as a reduction in future contributions in accordance with IFRIC 14. This has resulted in the recognisable surplus bein g
restricted by £57.1m. The Parent has an unconditional right to a refund of the surplus attributable to the former Ansvar Section of the Fund, which
has been recognised in full in accordance with IFRIC 14.
In the current year, actuarial gains arising from changes in financial assumptions of £153.2m (2021: £19.4m) have been recognised in the statement
of other comprehensive income. £148.6m of this gain resulted from the 2.87% increase in the discount rate. In the prior year, the actuarial gains
arising from changes in financial assumptions resulted from a 0.6% increase in the discount rate, partially offset by inflation-linked pension
increases.
The experience loss on the defined benefit obligation of £11.8m (2021: £0.9m) resulted from actual inflation exceeding the inflation assumptions. A
review and update to certain demographic assumptions resulted in an actuarial gain of £3.4m (2021: £4.2m actuarial gain) being recognised in the
current year.
The defined benefit plan typically exposes the Group to risks such as :
-
Investment risk: The Fund holds some of its investments in asset classes, such as equities, which have volatile market values and, while these
assets are expected to provide the best returns over the long term, any short-term volatility could cause funding to be required if a deficit
emerges. Derivative contracts are used from time to time, which would limit losses in the event of a fall in equity markets;
-
Interest rate risk: Scheme liabilities are assessed using market rates of interest to discount the liabilities and are therefore subject to any
volatility in the movement of the market rate of interest. The net interest income or expense recognised in profit or loss is also calculated using
the market rate of interest. The Group's defined benefit plan holds Liability Driven Investments (LDIs) to hedge part of the exposure of the
scheme's liabilities to movements in interest rates;
-
Inflation risk: A significant proportion of scheme benefits are linked to inflation. Although scheme assets are expected to provide a good hedge
against inflation over the long term, movements over the short term could lead to a deficit emerging. The Group's defined benefit plan holds LDI s
to hedge part of the exposure of the scheme's liabilities to movements in inflation expectations;
-
Mortality risk: In the event that members live longer than assumed the liabilities may be understated originally, and a deficit may emerge if
funding has not adequately provided for the increased life expectancy; and
Page 169
-
Currency risk: The Fund holds some of its investments in foreign denominated assets. As scheme liabilities are denominated in sterling, short-
term fluctuations in exchange rates could cause funding to be required if a deficit emerges. Currency derivative contracts are used from time to
time, which would limit losses in the event of adverse movements in exchange rates.
Notes to the financial statements
19 Retirement benefit schemes (continued)
A blend of diversified growth assets (equities and property) and protection assets (bonds, gilts and cash) are deployed to balance the level of risk to
that required to provide, with confidence, a sufficient return and liquidity to continue to meet members' obligations as they fall due. The Trustees
have identified the key risks faced by the Fund in meeting this objective to be equity price risk, falls in bond yields and rising inflation.
The Trustees set the investment objectives and strategy for the Fund based on independent advice and in consultation with the employer. Key
factors addressed in setting strategy include the Fund’s liability profile, funding level and strength of employer covenant. Their key objectives are
to ensure the Fund can meet members’ guaranteed benefits as they fall due, reduce the risk of assets failing to meet its liabilities over the long
term and manage the volatility of returns and overall funding level.
A liability-driven investment (LDI) allocation is maintained as a risk management tool in order to preserve some future protection for the Fund
against falling yields and rising inflation, designed to hedge 65% of the interest rate and 75% of the inflation rate risk of the guaranteed benefits of
the Fund. Exposure of the Fund's assets to interest rates and inflation counter-balances exposure of the Fund's liabilities to these factors and has
suppressed, but not eliminated, volatility in the funding position.
During 2022, the Trustees have implemented a number of changes to reduce the Fund’s exposure to market volatility and better protect the
funding position. The Fund’s relative exposure to equity investments has been reduced and a specific allocation to infrastructure investments
created to further diversify the Fund’s investments; and overall liquidity levels have increased.
The Trustees adopt a Responsible and Sustainable Investment Policy in relation to the Fund’s equities. This includes an 'absence of harm' exclusion
policy, as well as an aspiration to reduce the portfolio’s carbon intensity over time.
The Trustees monitor investment performance and strategy over time to ensure the structure adopted continues to meet their objectives and to
highlight opportunities to reduce investment risk and volatility where practical and affordable. Their aim is to establish a Long Term Funding Target
in line with guidance from the Pensions Regulator. The Trustees intend that this long term target will be reached through investment performance
only and without requiring further contributions from the Parent.
£00 0
£000
The amounts recognised in the statement of financial position are determined as follows :
Group and Paren t
2022
2021
72,430
45,77 2
Restrictions on asset recognise d
(57,092)
(17,468)
Present value of funded obligations
(229,343)
(377,113)
Fair value of plan assets
301,77 3
422,88 5
Movements in the net defined benefit pension scheme asset recognised in the statement of financial position
are as follows:
Net defined benefit pension scheme surplus in the statement of financial position
15,33 8
28,304
Amounts recognised in other comprehensive incom e
(12,271)
39,303
At 1 January
28,304
(9,353)
Expense charged to profit or loss
(695)
(1,646)
The amounts recognised through profit or loss are as follows :
At 31 Decembe r
15,33 8
28,304
Interest expense on liabilitie s
(7,064)
(5,193)
Interest income on plan assets
7,928
5,05 8
Current service cos t
(573)
(683)
Administration cos t
(654)
(828 )
Total, included in employee benefits expense
(695)
(1,646)
Effect of interest on asset ceilin g
(332)
-
Experience losses on liabilitie s
(11,806)
(944 )
Gains from changes in demographic assumption s
3,368
4,15 5
The amounts recognised in the statement of other comprehensive income are as follows :
Return on plan assets, excluding interest incom e
(117,766)
34,200
Total included in other comprehensive incom e
(12,271)
39,303
Gains from changes in financial assumption s
153,225
19,360
Change in asset ceilin g
(39,292)
(17,468)
Page 170
Plan assets are weighted as follows:
Notes to the financial statements
19 Retirement benefit schemes (continued)
Group and Paren t
2022
2021
£00 0
£000
15,33 8
28,304
The principal actuarial assumptions (expressed as weighted averages) were as follows*:
The following is the analysis of the defined benefit pension balances :
Pension deficit
-
-
Pension surplu s
15,33 8
28,304
Discount rate
4.77
1.90
%
%
Future salary increases
4.15
4.5 0
Future increase in pensions in defermen t
3.40
3.60
Inflation (RPI)
3.3 1
3.40
Inflation (CPI)
2.80
3.00
Future average pension increases (linked to RPI )
3.0 5
3.20
Future average pension increases (linked to CPI )
2.1 0
2.20
Mortality rate
*Single-equivalent rates are disclosed for the current year.
Male
22.8
22.7
Femal e
24.1
24.0
The average life expectancy in years of a pensioner retiring at age 65, at the year-end date, is as follows:
The average life expectancy in years of a pensioner retiring at age 65, 20 years after the year-end date, is as
follows:
Male
23.5
23.5
Femal e
25.3
25.2
£00 0
£000
Equity instruments
UK quote d
44,797
81,330
Cash and other¹
36,779
38,85 6
86,997
172,115
UK unquote d
-
34
Overseas quote d
42,200
90,751
Debt instruments
UK public sector quoted - fixed interes t
-
227
Liability driven investments - unquote d
46,988
60,482
89,61 3
102,916
UK non-public sector quoted - fixed interes t
68,372
77,883
UK quoted - index-linke d
21,241
24,806
Propert y
41,984
47,66 5
Derivative financial instruments - unquote d
(588)
85 1
¹ Includes accrued income, prepayments and other debtors and creditors.
The actual return on plan assets was a loss of £109,838,000 (2021: a gain of £39,258,000).
301,77 3
422,88 5
The fair value of unquoted securities is measured using inputs for the asset that are not based on observable market data. The fair value is
estimated and approved by the Trustee based on the advice of investment managers. Property is valued annually by independent qualified
surveyors using standard industry methodology to determine a fair market value. All other investments either have a quoted price in active markets
or are valued based on observable market data.
The underlying assets of the LDIs are primarily UK government bonds and interest rate repurchase agreements at various rates and terms .
Page 171
Notes to the financial statements
19 Retirement benefit schemes (continued)
The movements in the fair value of plan assets and the present value of the defined benefit obligation over the year are as follows:
2022
2021
£00 0
£000
Plan asset s
At 1 January
422,885
394,356
Interest incom e
7,928
5,05 8
Actual return on plan assets, excluding interest incom e
(117,766)
34,200
Pension benefits paid and payable
(11,274)
(10,729)
At 31 Decembe r
301,77 3
422,88 5
Defined benefit obligatio n
At 1 January
377,11 3
403,709
Current service cos t
573
683
Administration cos t
654
82 8
Interest cos t
7,064
5,193
Pension benefits paid and payable
(11,274)
(10,729)
Experience losses on liabilitie s
11,80 6
94 4
Gains from changes in demographic assumption s
(3,368)
(4,155)
Gains from changes in financial assumption s
(153,225)
(19,360)
At 31 Decembe r
229,343
377,113
Asset ceiling
At 1 January
17,468
-
Effect of interest on the asset ceiling
332
-
Change in asset ceilin g
39,292
17,46 8
At 31 Decembe r
57,092
17,46 8
£00 0
£000
£000
£000
£000
History of plan assets and liabilitie s
2022
2021
2020
2019
2018
Present value of defined benefit obligation s
(229,343)
(377,113)
(403,709)
(371,179)
(325,738)
72,430
45,77 2
(9,353)
8,50 5
16,131
Fair value of plan assets
301,77 3
422,88 5
394,356
379,68 4
341,869
Surplus/(deficit)
15,33 8
28,304
(9,353)
8,50 5
16,131
Restrictions on asset recognise d
(57,092)
(17,468)
-
-
-
The weighted average duration of the defined benefit obligation at the end of the reporting period is 15.9 years (2021: 21 years).
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, inflation, expected salary increases and
mortality. The sensitivity analysis below has been determined based on reasonably possible changes in the assumptions occurring at the end of
the reporting period assuming that all other assumptions are held constant.
Increase/(decrease)
Assumptio n
Change in assumptio n
in plan liabilitie s
£00 0
£000
2022
2021
Discount rat e
Increase by 0.5 %
(16,133 )
(35,010)
Inflation
Increase by 0.5 %
12,552
29,134
Decrease by 0.5 %
18,17 6
40,50 5
Salary increas e
Increase by 0.5 %
2,285
5,54 0
Decrease by 0.5 %
(12,101 )
(26,435)
Life expectancy
Increase by 1 year
7,215
16,402
Decrease by 0.5 %
(2,136)
(5,128)
Decrease by 1 year
(7,479)
(16,021)
Post-employment medical benefit s
The Parent operates a post-employment medical benefit plan, for which it chooses to self-insure. The method of accounting, assumptions and the
frequency of valuation are similar to those used for the defined benefit pension plans.
Page 172
Notes to the financial statements
19 Retirement benefit schemes (continued)
-
Interest rate risk: The reserves are assessed using market rates of interest to discount the liabilities and are therefore subject to volatility in the
movement of the market rates of interest. A reduction in the market rate of interest would lead to an increase in the reserves required to be held;
The provision of the plan leads to a number of risks as follows:
-
Medical claims experience: Claims experience can be volatile, exposing the Company to the risk of being required to pay over and above the
assumed reserve. If future claims experience differs significantly from that experienced in previous years, this will increase the risk to the
Company;
-
Medical expense inflation risk: Future medical costs are influenced by a number of factors including economic trends and advances in medical
technology and sciences. An increase in medical expense inflation would lead to an increase in the reserves required to be held;
-
Mortality risk: If members live longer than expected, the Company is exposed to the expense of medical claims for a longer period, with
increased likelihood of needing to pay claims.
-
Spouse and widows' contributions: The self-insured benefit includes a potential liability for members who pay contributions in respect of their
spouse and for widows who pay contributions. There is the possibility that the contributions charged may not be sufficient to cover the medical
costs that fall due; and
Group and Paren t
2022
2021
The amounts recognised in the statement of financial position are determined as follows:
Present value of unfunded obligations and net obligations in the statement of financial positio n
4,960
7,05 8
£00 0
£000
At 1 January
7,058
6,530
Total expense charged to profit or los s
13 2
8 3
Movements in the net obligations recognised in the statement of financial position are as follows:
At 31 Decembe r
4,960
7,05 8
Net actuarial (gains)/losses during the year, recognised in other comprehensive incom e
(2,100)
643
Benefits paid
(130)
(198)
Interest cost
13 2
8 3
Total, included in employee benefits expense
13 2
8 3
The amounts recognised through profit or loss are as follows :
The weighted average duration of the net obligations at the end of the reporting period is 10.5 years (2021: 12.8 years).
The main actuarial assumptions for the plan are a long-term increase in medical costs of 7.31% (2021: 7.4%) and a discount rate of 4.77% (2021:
1.9%). An actuarial gain of £2,012,000 has been recognised in the current year due to the increase in the discount rate. A small actuarial gain has
also been recognised due to changes in mortality assumptions. In the prior year, an actuarial loss from experience of £814,000 was recognised
following a review of the medical cost scale. This was partially offset by an actuarial gain of £130,000 arising from changes in financial
assumptions and a small actuarial gain arising from changes in mortality assumptions. The sensitivity analysis below has been determined based
on reasonably possible changes in the assumptions occurring at the end of the accounting period assuming that all other assumptions are held
constant.
Assumptio n
Change in assumptio n
in plan liabilitie s
Increase/(decrease)
2022
2021
Discount rat e
Increase by 0.5 %
(239)
(421)
£00 0
£000
Medical expense inflatio n
Increase by 1.0%
497
87 5
Decrease by 0.5 %
260
46 4
Life expectancy
Increase by 1 year
372
513
Decrease by 1.0 %
(433)
(743)
Decrease by 1 year
(340)
(480)
Page 173
Transfers to investment propert y
(16)
(3,880)
-
-
8
-
3 4
2,44 4
14,971
Disposal s
11,363
1,155
(975)
-
-
-
-
(68)
20 Property, plant and equipmen t
£00 0
£00 0
£00 0
£00 0
building s
vehicle s
Right-of-
use asse t
£00 0
equipmen t
Compute r
equipmen t
£00 0
Disposal s
Exchange differences
At 31 December 2022
Net book value at 31 December 202 2
Cost or valuatio n
At 1 January 2021
Total
At 31 December 2022
Charge for the year
At 1 January 2022
Addition s
6,444
1,829
-
74
-
1,46 5
Exchange difference s
At 31 December 2021
Depreciatio n
Charge for the year
Disposal s
Exchange differences
At 31 December 2021
Net book value at 31 December 202 1
22,760
(7,969)
-
-
-
7 4
6,532
(5)
(72)
3 8
6,44 4
Land and
Motor
fittings an d
Furniture ,
Group
Notes to the financial statements
12 3
1,46 5
11 2
15,33 6
8,622
3,06 7
30,19 4
77 1
55,729
1 9
1,220
20,484
286
14,39 7
54,03 3
(140)
(1,212)
(6,194)
(4,188)
6,26 1
1 7
(13)
(1,952)
8,73 8
1,599
-
107
7,24 7
3,162
22,370
6,278
-
17
1,377
-
1 5
1,465
6,155
Addition s
4,00 6
(2,087)
(8,276)
3,248
1,46 5
2
7,66 1
31,40 5
19,02 9
146
(85 )
(77 )
22,628
4,379
60,686
(975 )
5 9
Depreciatio n
Disposal s
Exchange difference s
(654)
492
-
8,034
221
55,72 9
2,178
20,48 4
30,194
At 1 January 2021
(3,880)
-
(50)
(2,087)
112
15,336
8,622
1,465
(54 )
7,43 4
8,80 4
35,245
-
11,09 1
At 1 January 2022
5 6
-
-
15 0
27,063
6,532
-
45
Cost or valuatio n
2,440
31,766
74 6
(2,241)
-
(473)
7,843
43
3,19 3
(1,075)
6,73 6
-
(78)
-
-
11 9
(2,712)
7,434
(4,338)
Page 174
Transfers to investment propert y
(575)
-
-
-
-
(575 )
14,84 1
Charge for the year
Disposal s
Exchange differences
At 31 December 2021
Net book value at 31 December 202 1
All properties of the Group and Parent were last revalued at 31 December 2020. Valuations were carried out by Cluttons LLP, an independent
professional firm of chartered surveyors who have recent experience in the location and type of properties. Valuations were carried out using
standard industry methodology to determine a fair value. All properties are classified as level 3 assets.
7,511
50,145
-
-
(6)
7
4
5,285
-
14
5,533
20,781
(28)
(7,806)
2,530
(1,940)
Movements in fair values are taken to the revaluation reserve within equity, net of deferred tax. When such properties are sold, the accumulated
revaluation surpluses are transferred from this reserve to retained earnings. Where the fair value of an individual property is below original cost,
any revaluation movement arising during the year is recognised within net investment return in the statement of profit or loss. There have been no
transfers between investment categories in the current year.
Total
£00 0
At 31 December 2021
Depreciatio n
At 1 January 2021
Notes to the financial statements
Furniture ,
Paren t
20 Property, plant and equipment (continued)
Cost or valuatio n
Motor
fittings and
Compute r
building s
vehicles
equipment
equipmen t
Land and
-
-
-
(710)
-
-
1,17 4
1,644
1,46 5
1 4
14,841
7,51 1
£00 0
£00 0
£00 0
50,14 5
-
-
(710)
-
(1,334)
-
-
9 5
2,840
3,441
Addition s
Disposal s
372
19 4
26,39 0
1,46 5
10,38 0
1 4
14,375
14 9
29
Charge for the year
Disposal s
(1,162)
Exchange differences
-
5,37 3
-
-
58
2 1
54
-
7,66 1
3,08 0
30,90 6
3
At 1 January 2021
Addition s
(8,074)
-
-
9
10
Disposal s
Exchange difference s
54,61 7
4,129
-
27,802
53
6,192
5,635
17,374
32,771
1,465
-
8,64 9
1,876
Depreciation expense has been charged in other operating and administrative expenses .
The value of land and buildings of the Group on a historical cost basis is £1,464,000 (2021: £1,464,000). The value of land and buildings of the
Parent on a historical cost basis is £1,464,000 (2021: £1,464,000).
-
2
1,321
1,432
19,891
1,465
14
-
(39)
(2,045)
(3,795)
4 8
Right o f
use asse t
£00 0
26,314
50 6
(624)
£00 0
-
1 4
6,19 2
5,63 5
17,374
5,53 3
-
1 4
6,714
7,30 0
Exchange difference s
Depreciatio n
67 8
21,718
7,69 0
18,70 0
Cost or valuatio n
2,040
14,439
10,283
Net book value at 31 December 202 2
13 3
52,624
(2,045)
(3,793)
At 1 January 2022
At 1 January 2022
1,46 5
2,555
(452)
At 31 December 2022
-
At 31 December 2022
(2,195)
-
2,438
1,013
-
-
4 0
6,922
7,98 9
4,94 0
29
26,314
Page 175
20,105
-
-
57 5
2022
2021
68,619
£000
£000
68,620
Transfers from property, plant and equipmen t
Disposal s
Fair value (losses)/gains recognised in profit or loss
268,623
Group
Paren t
Grou p
£00 0
£00 0
£000
Fair value at 1 January
-
All investments in subsidiary undertakings are unlisted .
Financial investments summarised by measurement category are as follows:
20,238
£000
Paren t
2022
2021
162,822
163,35 5
142,142
-
142,142
97 5
140,846
140,846
162,822
Investment properties are held for long-term capital appreciation rather than short-term sale. Rental income arising from the investment
properties owned by both the Group and Parent amounted to £8,837,000 (2021: £8,648,000) and is included in net investment return.
163,355
22 Financial investment s
The Group’s investment properties were last revalued at 31 December 2022 by Cluttons LLP, an independent professional firm of chartered
surveyors who have recent experience in the location and type of properties. Valuations were carried out using standard industry methodology to
determine a fair value. There has been no change in the valuation technique during the year. All properties are classified as level 3 assets. There
have been no transfers between investment categories in the current year.
Fair value at 31 Decembe r
Notes to the financial statements
21 Investment propert y
(767)
(1,300)
Paren t
Group
Paren t
Grou p
56,13 8
-
14,64 9
(21,209)
(21,209)
£00 0
£00 0
204,071
100,631
101,73 8
-
42,707
-
66,163
206,394
-
-
2
14 7
10 0
10 0
334
870,749
636,63 7
883,77 0
707,106
11 4
11 4
670
670
248,149
281,682
254,74 3
65 5
65 5
253,325
157,774
313,294
215,496
-
-
3 4
3 4
334
85,400
85,400
269
-
870,635
593,81 6
883,100
640,273
869,980
593,16 1
882,68 6
640,004
41 4
Other loans
Equity securities
- liste d
- unliste d
Debt securities
- government bond s
- liste d
- unliste d
Structured note s
Derivative financial instrument s
Financial investments at fair value through profit or los s
Financial investments at fair value through other comprehensive income
Loans and receivable s
Parent investments in subsidiary undertaking s
- option s
- forward s
Derivative financial instrument s
- forward s
Total financial investments at fair value
The Group’s exposure to interest rate risk is detailed in note 4(c).
Shares in subsidiary undertaking s
Total financial investment s
Curren t
Non-curren t
450,123
314,63 0
436,352
314,576
420,626
322,007
447,41 8
392,530
Page 176
55,742
-
48,442
65 5
-
37,609
269
-
£00 0
£00 0
£00 0
93,71 2
-
2,475
99,369
2
Forwards (Australian dollar)
Forwards (Canadian dollar)
The derivative financial instruments of the Parent are the same as the Group, with the exception of the Australian dollar foreign exchange contract
which is classified as a non-hedge derivative.
296
35
All derivatives in the current and prior period expire within one year.
-
197,99 6
755
3,234
759
40,512
14 5
The notional amounts above reflect the aggregate of individual derivative positions on a gross basis and so give an indication of the overall scale of
the derivative transactions. They do not reflect current market values of the open positions.
Derivative fair value assets are recognised within financial investments (note 22) and derivative fair value liabilities are recognised within other
liabilities (note 31).
All contracts designated as hedging instruments were fully effective in the current and prior year.
Notes to the financial statements
The Group utilises derivatives to mitigate equity price risk arising from investments held at fair value, foreign exchange risk arising from investments
denominated in foreign currencies, and foreign exchange risk arising from investments denominated in Sterling that contain underlying foreign
currency exposure. These 'non-hedge' derivatives either do not qualify for hedge accounting or the option to hedge account has not been taken.
23 Derivative financial instrument s
2022
2021
amoun t
asse t
liabilit y
amoun t
asse t
Contract/
Contract/
Fair valu e
notional
Fair valu e
liability
notional
Fair valu e
334
Fair valu e
£000
10 0
10 0
-
34,695
331
212,185
75 0
£000
£000
The Group has also formally designated certain derivatives as a hedge of its net investments in Australia and Canada. A loss of £4,514,000 (2021:
gain of £1,912,000) in respect of these 'hedge' derivatives has been recognised in the hedging reserve within shareholders' equity, as disclosed in
note 27. The Group has formally assessed and documented the effectiveness of derivatives that qualify for hedge accounting in accordance with
IAS 39, Financial Instruments: Recognition and Measurement .
Hedge derivative s
Non-hedge derivative s
Group
Equity/Index contract s
Foreign exchange contract s
Foreign exchange contract s
Option s
Forwards (Euro)
Page 177
Receivables arising from insurance and reinsurance contract s
62,418
2022
2021
Group
Paren t
Grou p
£00 0
£00 0
Paren t
62,01 9
52,706
52,629
£000
Notes to the financial statements
The Group has recognised a net charge of £280,000 (2021: net charge of £554,000) in other operating and administrative expenses in the
statement of profit or loss for the impairment and reversal of impairment of its trade and other receivables during the year. The Parent has
recognised a net charge of £260,000 (2021: net charge of £578,000).
There has been no significant change in the recoverability of the Group's or Parent's other assets, for which no collateral is held. The directors
consider that the amounts are recoverable at their carrying values, which are stated net of an allowance for doubtful debts for those debtors that
are individually determined to be impaired.
Included within amounts due from agents, brokers and intermediaries of the Group and Parent is a letter of credit for £2,000,000 (2021:
£2,000,000) and included within amounts owed by related parties of the Parent is £11,110,000 (2021: £12,152,000) pledged as collateral in respect
of an insurance liability.
24 Other asset s
£000
3,096
67,333
15,27 0
9,429
12,583
8,001
4,122
3,00 7
3,927
84,751
56,247
43,712
125,644
131,36 8
240,910
194,80 8
8,248
5,19 0
8,606
4,42 5
19,736
-
-
7,008
-
310,788
1,11 3
98 5
88 1
Included within other assets of the Group is £42,256,000 (2021: £13,702,000) overdue but not impaired, of which £33,279,000 (2021: £11,754,000)
is not more than three months overdue at the reporting date. Included within trade receivables of the Parent is £17,556,000 (2021: £2,012,000)
overdue but not impaired, of which £15,571,000 (2021: £1,884,000) is not more than three months overdue at the reporting date.
128
10 5
262
134,17 9
59,56 4
185,15 7
134,838
181,346
134,57 4
125,63 1
2,146
68,900
80,68 8
Group
Paren t
Paren t
Grou p
10,33 5
1,757
-
-
111
111
2022
2021
£00 0
£00 0
£000
£000
269,01 7
- net investment in finance lease s
986
Movement in the year
307
985
881
723
57 4
Balance at 31 Decembe r
Movement in the allowance for doubtful debt s
Balance at 1 Januar y
Included within other receivables of the Group is £1,699,000 (2021: £1,584,000) classified as contract assets and £nil (2021: £1,618,000) classified
as receivables in accordance with IFRS 15.
- other debtor s
60,234
Curren t
Non-curren t
Other receivables
- due from contract holders
- due from agents, brokers and intermediaries
- due from reinsurer s
- accrued interest and rent
- other prepayments and accrued incom e
- amounts owed by related parties
- debtors arising from broking activities
Page 178
Included within short-term bank deposits of the Group and Parent are cash deposits of £8,810,000 (2021: £2,830,000) pledged as collateral by
way of cash margins on open derivative contracts to cover derivative liabilities. Included within cash at bank and in hand of the Group and Parent
are amounts of £866,000 (2021: £820,000) held in accordance with the third country branch requirements of the European Union.
£000
£00 0
2021
46,489
48,43 7
31,54 9
38,05 4
18,399
104,664
114,036
66,56 9
2022
58,175
Cash at bank and in hand
£00 0
Group
Paren t
Grou p
Paren t
£000
Short-term bank deposits
35,02 0
75,98 2
30,038
Notes to the financial statements
25 Cash and cash equivalent s
At 1 January and 31 Decembe r
14,027
Ordinary shares of 4p each
14,027
350,678
Holders of the Non-Cumulative Irredeemable Preference shares are not entitled to receive notice of, or to attend, or vote at any general meeting of
the Company unless at the time of the notice convening such meeting, the dividend on such shares which is most recently payable on such shares
shall not have been paid in full, or where a resolution is proposed varying any of the rights of such shares, or for the winding up of the Company.
Included within Group cash at bank and in hand are amounts of £15,109,000 (2021: £23,072,000) pledged as collateral by way of cash calls from
reinsurers, and £nil (2021: £4,604,000) of restricted cash held on an agency basis.
106,45 0
106,450
£000
120,477
£00 0
120,477
350,678
106,450
106,45 0
On winding up, the assets of the Company remaining after payment of its liabilities are to be applied to holders of the Non-Cumulative
Irredeemable Preference shares in repaying the nominal capital sum paid up on the shares and an amount equal to all arrears of accrued and
unpaid dividends up to the date of the commencement of the winding up. The residual interest in the assets of the Company after deducting all
liabilities belongs to the Ordinary shareholders.
Ordinary shares of 4p each
At 1 January and 31 Decembe r
Issued, allotted and
26 Share capita l
fully paid
2022
2021
8.625% Non-Cumulative Irredeemable Preference shares of £1 each
8.625% Non-Cumulative Irredeemable Preference shares of £1 each
The number of shares in issue are as follows :
Page 179
55 1
6,969
Attributable tax
-
131
131
64 9
485
Gains on currency translation differences
Losses on net investment hedges
The translation reserve arises on consolidation of the Group's and Parent's foreign operations. The hedging reserve represents the cumulative
amount of gains and losses on hedging instruments in respect of net investments in foreign operations.
7,036
7,067
Attributable tax
19,30 6
5,392
Gains on currency translation differences
825
-
(4,514)
(4,514)
18,588
718
At 31 December 2022
Losses on net investment hedges
-
Group
825
At 1 January 202 2
Gains on net investment hedges
-
1,912
1,912
2,678
18,230
15,552
(2,356)
-
Losses on currency translation differences
At 1 January 202 1
At 1 January 202 2
2,470
-
(1,938)
6,41 8
At 31 December 202 1
Losses on net investment hedges
At 1 January 202 1
Gains on currency translation differences
67
-
(713)
(713)
At 31 December 202 1
Paren t
At 31 December 2022
7,03 6
8,053
2,470
6,96 9
67
5,392
-
4,40 7
-
485
-
-
55 1
(2,356)
17,603
(1,386)
9,439
(1,938)
Attributable tax
Attributable tax
(183)
(183)
13,196
-
£00 0
4,407
13,19 6
17,60 3
£00 0
£00 0
Notes to the financial statements
reserv e
reserv e
Translatio n
Hedging
Total
27 Translation and hedging reserve
Page 180
(ii) Calculation of uncertainty margins
The selection of results for each accident year and for each portfolio depends on an assessment of the most appropriate method. Sometimes a
combination of techniques is used. The average weighted term to payment is calculated separately by class of business and is based on historical
settlement patterns.
To reflect the uncertain nature of the outcome of the ultimate settlement cost of claims, an uncertainty margin is added to the best estimate. The
addition for uncertainty is assessed using actuarial methods including the Mack method and Bootstrapping techniques, based on at least the 75th
percentile confidence level. For smaller reserving classes, where these methods cannot be applied, provisions are calculated at a level intended to
provide an equivalent probability of sufficiency. Where the standard methods cannot allow for changing circumstances, additional uncertainty
margins are added and are typically expressed as a percentage of outstanding claims. From time to time, management may elect to select an
additional margin to reflect short-term uncertainty driven by specific events that are not in data. This approach generally results in a favourable
release of provisions in the current financial year, arising from the settlement of claims relating to previous financial years, as shown in part (c) of
the note.
(iii) Calculation of provisions for latent claims
The Group adopts commonly used industry methods including those based on claims frequency and severity and benchmarking.
100,623
(a) General business insurance contracts
Non-current
(i) Reserving methodology
Restated*
£000
£000
£000
Gross
Recoverable from reinsurers
Net
Gross insurance liabilities
Claims outstanding
Unearned premiums
Life business provision
Total net insurance liabilities
Current
Non-current
*The comparative financial statements have been restated as detailed in note 40.
206,339
140,109
171,831
116,302
61,137
81,605
54,607
Reinsurance assets
672,338
494,778
685,633
498,466
53,905
-
73,909
-
979,300
696,024
939,069
669,375
468,671
510,629
338,685
446,655
360,508
185,636
156,093
165,069
137,958
432,797
103,815
79,081
88,089
64,431
203,147
122,165
165,347
106,478
306,962
201,246
253,436
170,909
253,158
202,389
Notes to the financial statements
28 Insurance liabilities and reinsurance assets
2022
2021
£000
Group
Parent
Group
Parent
635,944
460,850
612,002
466,986
53,905
-
73,909
-
289,451
235,174
Current
Claims outstanding
Unearned premiums
Life business provision
Total gross insurance liabilities
Claims outstanding
Unearned premiums
Total reinsurers’ share of insurance liabilities
445,119
343,714
304,576
493,950
Chain ladder methods extrapolate paid amounts, incurred amounts (paid claims plus case estimates) and the number of claims or average cost of
claims, to ultimate claims based on the development of previous years. This method assumes that previous patterns are a reasonable guide to
future developments. Where this assumption is felt to be unreasonable, adjustments are made or other methods such as Bornhuetter-Ferguson or
average cost are used. The Bornhuetter-Ferguson method places more credibility on expected loss ratios for the most recent loss years. For
smaller portfolios the materiality of the business and data available may also shape the methods used in reviewing reserve adequacy.
Reserving for non-life insurance claims is a complex process and the Group adopts recognised actuarial methods and, where appropriate, other
calculations and statistical analysis. Actuarial methods used include the chain ladder, Bornhuetter-Ferguson and average cost methods.
325,661
391,448
Page 181
3.9
*The comparative financial statements have been restated as detailed in note 40.
(v) Assumptions
2022
2021
The ultimate amount of claims settlement is uncertain and the Group's aim is to reserve to at least the 75th percentile confidence level.
There are no significant changes in approach but we continue to evolve estimates in light of underlying experience.
Gross
(vi) Changes in assumptions
(vii) Sensitivity of results
General insurance outstanding claims provisions have been discounted by applying currency and term specific discount rates in the following
territories:
The Group follows a process of reviewing its reserves for outstanding claims on a regular basis. This involves an appraisal of each reserving class
with respect to ultimate claims liability for the recent exposure period as well as for earlier periods, together with a review of the factors that have
the most significant impact on the assumptions used to determine the reserving methodology. The work conducted is subject to an internal peer
review and management sign-off process.
Parent consists of UK, Ireland and Canada. Group also includes Australia.
2022
The most significant assumptions in determining the undiscounted general insurance reserves are the anticipated number and ultimate settlement
cost of claims, and the extent to which reinsurers will share in the cost. Factors which influence decisions on assumptions include legal and judicial
changes, significant weather events, other catastrophes, subsidence events, exceptional claims or substantial changes in claims experience and
developments in older or latent claims. Significant factors influencing assumptions about reinsurance are the terms of the reinsurance treaties, the
anticipated time taken to settle a claim and the incidence of large individual and aggregated claims.
9,000
3,100
14,500
7,300
12,200
Property
17,200
19,900
15,200
18,000
13,700
16,200
14,500
18,900
Liability
- UK
£000
2022
2021
Net
Gross
Net
4.5
4.5% to 5.2%
100
100
100
100
6,200
3.8%
11,500
3,300
- Overseas
- UK
- Overseas
Notes to the financial statements
28 Insurance liabilities and reinsurance assets (continued)
Restated*
Geographical territory
Discount rate
liabilities (years)
(iv) Discounting
2021
7.5
8.2
3.6% to 5.4%
4.3
Mean term of
UK and Ireland
Canada
4.7
Restated*
1.5%
-0.5% to 2.1%
1.2% to 2.1%
Australia
The above rates of interest are based on government bond yields of the relevant currency and term at the reporting date. Adjustments are made,
where appropriate, to reflect portfolio assets held. At the year end the undiscounted gross outstanding claims liability was £734,145,000 for the
Group (2021 restated: £644,211,000), and £542,524,000 for the Parent (2021 restated: £496,881,000).
The impact of discount rate changes on the outstanding claims liability is presented within net investment return (note 8).
- UK
Motor
If final settlement of insurance claims reserved for at the year end turns out to be 10% higher or lower than the reserves included in these financial
statements, the following pre-tax Group loss or profit will be realised:
At 31 December 2022, it is estimated that a fall of 1% in the discount rates used would increase the Group's net outstanding claims liabilities by
£16,444,000 (2021 restated: £25,056,000). Financial investments backing these liabilities are not hypothecated across general insurance classes of
business. The sensitivity of Group profit or loss and other equity reserves to interest rate risk, taking into account the mitigating effect on asset
values is provided in note 4(h).
£000
£000
£000
Page 182
(667)(35,611) (26,494) (18,573)
39,099
(16,500) (10,618) (9,264) (6,192) (2,648)
Five years later
Six years later
Seven years later
27,287
37,158
50,492
23,620
31,530
43,910
23,068
30,024
42,289
25,631
28,999
25,128
40,698
27,899
30,012
Three years later
Four years later
2013
2014
2015
Parent
At end of year
One year later
Two years later
£000
51,989
(14,187) (9,642)
41,600
55,516
(48,759) (29,819) (21,970)
Effect of discounting
(15,699)(21,679)
Three years later
111,252
249,520
Total discounted gross liability (for liability classes) included in insurance liabilities in the statement of financial position
32,541
33,353
28,181
29,538
31,463
24,212
£000
£000
2016
2017
2018
Total discounted gross liability (for liability classes) included in insurance liabilities in the statement of financial position
18,656
27,413
32,013
53,942
50,587
236,722
(37,571)
Present value
Outstanding liability
Discounted liability in respect of earlier years
71,798
52,350
34,769
37,981
34,210
32,992
35,690
43,976
28,874
9,352
(1,402)
428,625
(191,903)(4,832)
199,151
151,714
£000
£000
£000
£000
45,495
37,064
34,606
34,962
36,195
33,804
350,865
7,272
11,347
18,122
48,327
56,777
81,725
80,027
69,860
54,901
46,464
51,738
50,736
43,582
46,073
46,885
38,468
38,648
29,436
37,044
40,177
48,759
Estimate of ultimate gross claims
Group
Total
2013
2014
2015
2016
2017
2018
2019
2020
£000
£000
£000
£000
£000
£000
£000
£000
2021
2022
Notes to the financial statements
(viii) Claims development tables
The nature of liability classes of business is that claims may take a number of years to settle and before the final liability is known. The tables
below show the development of the undiscounted estimate of ultimate gross and net claims cost for these classes across all territories.
28 Insurance liabilities and reinsurance assets (continued)
2019
2020
2021
2022
Total
55,252
61,901
50,571
40,337
31,738
60,267
35,261 41,655 58,774
34,649
41,041
41,883
39,801
41,600
28,211
33,362
39,801
41,655
50,134
40,461
42,044
34,680
34,355
35,261
£000
£000
£000
£000
28,622
29,557
23,116
28,489
22,301
£000
£000
25,084
36,726
40,509 31,096 25,128 25,704 28,999 22,301 28,489 27,931 41,747 37,393 309,297
40,509
25,704
(144,348)
138,268
(17,781)
164,949
(26,681)
7,923
12,499
11,683
19,225
21,739
Effect of discounting
Present value
Discounted liability in respect of earlier years
4,898
4,602
6,555
Current estimate of
ultimate claims
Cumulative payments
to date
Outstanding liability
58,774
51,989
30,129
39,015
31,941
40,153
33,719
30,285
28,618
37,393
27,931
41,747
47,945
42,467
39,859
37,091
31,322
34,355
(23,914)
40,161
60,950
54,792
31,096
30,063
56,777 37,091 31,322
8,018
At end of year
One year later
Two years later
Eight years later
Nine years later
40,041
30,505
Four years later
Five years later
£000
Six years later
66,192
60,174
56,912
Seven years later
Eight years later
Nine years later
Current estimate of
ultimate claims
Cumulative payments
to date
Page 183
Current estimate of
ultimate claims
Cumulative payments
to date
Outstanding liability
Effect of discounting
Present value
Discounted liability in respect of earlier years
Total discounted net liability (for liability classes) included in insurance liabilities in the statement of financial position
29,812
(16,500)(17,585)
40,401
(6,100) (2,624)
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Seven years later
Eight years later
Nine years later
Current estimate of
ultimate claims
Cumulative payments
to date
Outstanding liability
Effect of discounting
Present value
Discounted liability in respect of earlier years
7,302
6,785
8,824
47,443
34,245
41,706
37,456
37,509
2022
Total
£000
£000
£000
£000
£000
£000
£000
£000
Group
At end of year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
47,428
37,740
37,740
37,797
32,867
66,475
47,690
40,397
41,631
98,141
219,382
121,241
(142,156)
40,401
(35,507) (25,260) (18,074) (10,616) (9,254)
40,587
28,865
25,061
25,440
42,126
28,825
22,806
24,782
26,596
39,930
29,268
24,614
43,568
30,252
23,229
26,894
27,279
21,947
24,261
47,942
34,393
26,981
27,493
26,774
22,651
Parent
33,122
35,882
33,134
31,981
33,502
33,792
31,041
30,906
30,965
27,208
26,536
32,436
35,458
At end of year
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
170,232
Total
128,615
298,847
Total discounted net liability (for liability classes) included in insurance liabilities in the statement of financial position
(35,352)
(15,689) (14,130) (9,550) (4,804) (1,371) (181,667)
10,353
14,962
48,374 35,233 30,296 33,896 36,550 32,884 39,164 36,193 47,102 47,559 387,251
47,338
35,233
47,518
33,309
30,544
33,896
30,296
36,431
49,196
33,233
27,418
32,993
51,482
35,164
28,506
35,217
36,550
55,710
41,494
32,297
36,337
34,818
31,647
76,729
59,633
42,739
47,402
45,920
44,053
47,289
60,075
£000
2013
2014
2015
2016
2017
2018
2019
2020
2021
£000
£000
Estimate of ultimate net claims
Notes to the financial statements
28 Insurance liabilities and reinsurance assets (continued)
(41,072) (28,448) (21,472) (23,543) (21,588)
2013
2014
2015
2016
2017
2018
2019
2020
2021
57,538
38,944
40,051
29,855
38,215
29,494
28,199
28,854
29,855 24,614 25,440 26,596 21,947 27,572 24,261 32,436 35,458
(25,183)
34,822
(636)
18,318
18,161
23,787
45,459
146,424
288,580
205,584
46,188
36,193
32,884
4,894
4,595
6,540
7,855
10,096
11,331
17,195
48,374
67,690
50,025
51,828
47,559
47,102
32,688
29,509
27,615
27,572
44,230
39,842
37,243
39,164
2022
25,034
26,643
42,298
Page 184
Projected investment returns have been revised in line with the changes in the actual yields of the underlying assets. As a result, liabilities have
decreased by £19.3m (2021: £0.1m increase).
The assumed future expenses of running the business have been revised based on expenses that are expected to be incurred by the company. The
effect on insurance liabilities of the changes to renewal expense assumptions (described above) was a £2.3m decrease (2021: £0.2m increase).
Expense inflation is set with reference to the nominal and index-linked UK government bond rates of return and is assumed to be 4.30% per annum
(2021: 4.69%).
Tax
It has been assumed that current tax legislation and rates enacted at 1 January 2023 will continue to apply. All in-force business is classed as
protection business and is expected to be taxed on a profits basis.
(ii) Changes in assumptions
Numbers of policies in force and both projected and actual expenses have been considered when setting the base renewal expense level. The unit
renewal expense assumption for in-force business is £21.58 per annum (2021: £2.60 per annum). Previously, as a result of the business being in
run-off a separate fixed expense reserve was held. However, as the company has now reopened to new business the need for that separate
expense reserve has fallen away and this is why the unit renewal expense assumption has increased significantly from the level used last year
end.
The investment return assumption is determined by calculating an overall yield on all cash flows projected to occur from the portfolio of financial
assets which are assumed to back the relevant class of liabilities. For index-linked assets, the real yield is shown gross of tax.
Funeral plans renewal expense level and inflation
The investment return assumption for non-linked business is based on government bond returns at an average duration of cash flows for this
business. The return after allowance for investment expenses is 3.79%.
Corporate debt instruments: index-linked
1.00%
-2.28%
UK and overseas government bonds: non-linked
-
-
UK and overseas government bonds: index-linked
0.19%
-2.71%
2022
2021
Investment returns
Projected investment returns for index-linked business are based on actual yields for each asset class less an allowance for credit risk, where
appropriate. The risk adjusted yields after allowance for investment expenses for the current valuation are as follows:
Mortality
An appropriate base table of standard mortality is chosen depending on the type of contract. Where prudent, an allowance is made for future
mortality improvements based on trends identified in population data. For both 2022 and 2021 the base tables used were ELF16F and ELT16M with
a 1% improvement applied each year.
(b) Life insurance contracts
(i) Assumptions
The most significant assumptions in determining life reserves are as follows:
Notes to the financial statements
28 Insurance liabilities and reinsurance assets (continued)
Page 185
At 31 December 2022 53,905 - 53,905
Total insurance contract liabilities and reinsurance assets 979,300 (306,962) 672,338
Other movements
6,038
-
6,038
Changes in methodology
(2,310)
-
(2,310)
Change in discount rate
(19,261)
-
(19,261)
Effect of claims during the year
(4,467)
-
(4,467)
Changes in assumptions
(4)
-
(4)
Life business provision
At 1 January 2022
73,909
-
73,909
Exchange differences
5,674
(1,612)
4,062
At 31 December 2022
289,451
(103,815)
185,636
Increase in the period
289,404
(103,664)
185,740
Release in the period
(258,785)
89,550
(169,235)
Provision for unearned premiums
At 1 January 2022
253,158
(88,089)
165,069
Exchange differences
14,409
(4,553)
9,856
At 31 December 2022
635,944
(203,147)
432,797
- arising from prior year claims
(3,395)
105
(3,290)
- change in discount rate
(57,784)
10,188
(47,596)
Change in liabilities/reinsurance assets
- arising from current year claims
284,744
(136,612)
148,132
At 1 January 2022
612,002
(165,347)
446,655
Cash (paid)/received for claims settled in the year
(214,032)
93,072
(120,960)
Claims outstanding
Gross
Reinsurance
Net
Group
£000
£000
£000
(c) Movements in insurance liabilities and reinsurance assets
Decrease in expense inflation
-1% pa
200
500
Improvement in base renewal expense level
-10%
300
200
Increase in expense inflation
+1% pa
(200)
(600)
Decrease in fixed interest/cash yields
-1% pa
400
(400)
Worsening of base renewal expense level
+10%
(300)
(200)
Improvement in mortality
-10%
(50)
(1,500)
Increase in fixed interest/cash yields
+1% pa
(400)
-
Deterioration in mortality
+10%
40
1,300
Variable
£000
£000
2022
2021
Change in
Potential increase/
variable
(decrease) in the result
(iii) Sensitivity analysis
The sensitivity of profit before tax to changes in the key assumptions used to calculate the life insurance liabilities is shown in the following table.
No account has been taken of any correlation between the assumptions.
Notes to the financial statements
28 Insurance liabilities and reinsurance assets (continued)
Page 186
Restated*
Release in the period
(181,753)
56,049
(125,704)
Provision for unearned premiums
- arising from prior year claims
(9,317)
16,370
7,053
- change in discount rate
(12,853)
886
(11,967)
Increase in the period
202,191
(64,432)
137,759
At 1 January 2021
181,619
(56,066)
125,553
Exchange differences
(740)
(175)
(915)
At 31 December 2021
466,986
(106,478)
360,508
Exchange differences
332
18
350
At 31 December 2021
202,389
(64,431)
137,958
*The comparative financial statements have been restated as detailed in note 40.
Change in liabilities/reinsurance assets
- arising from current year claims
221,277
(102,576)
118,701
At 1 January 2021
433,846
(78,323)
355,523
Cash (paid)/received for claims settled in the year
(165,227)
57,340
(107,887)
Claims outstanding
Exchange differences
3,118
(424)
2,694
At 31 December 2022
235,174
(79,081)
156,093
Increase in the period
235,432
(79,069)
156,363
Release in the period
(205,765)
64,843
(140,922)
Provision for unearned premiums
At 1 January 2022
202,389
(64,431)
137,958
Exchange differences
6,998
(1,489)
5,509
At 31 December 2022
460,850
(122,165)
338,685
- arising from prior year claims
(8,168)
(3,734)
(11,902)
- change in discount rate
(44,562)
-
(44,562)
Change in liabilities/reinsurance assets
- arising from current year claims
208,107
(66,565)
141,542
At 1 January 2022
466,986
(106,478)
360,508
Cash (paid)/received for claims settled in the year
(168,511)
56,101
(112,410)
Claims outstanding
At 31 December 2021
73,909
-
73,909
Total insurance contract liabilities and reinsurance assets 939,069 (253,436) 685,633
Parent
Change in discount rate
147
-
147
Other movements
(11)
-
(11)
Effect of claims during the year
(5,577)
-
(5,577)
Changes in assumptions
2,493
-
2,493
Life business provision
At 1 January 2021
76,857
-
76,857
Exchange differences
(2,146)
1,188
(958)
At 31 December 2021
253,158
(88,089)
165,069
Increase in the period
253,759
(88,464)
165,295
Release in the period
(229,255)
78,580
(150,675)
Provision for unearned premiums
At 1 January 2021
230,800
(79,393)
151,407
Exchange differences
(7,338)
2,488
(4,850)
At 31 December 2021
612,002
(165,347)
446,655
- arising from prior year claims
14,980
(9,444)
5,536
- change in discount rate
(16,520)
1,909
(14,611)
Change in liabilities/reinsurance assets
- arising from current year claims
252,310
(114,378)
137,932
Notes to the financial statements
28 Insurance liabilities and reinsurance assets (continued)
£000
£000
£000
Group
Restated*
Gross
Reinsurance
Net
Claims outstanding
At 1 January 2021
560,255
(129,157)
431,098
Cash (paid)/received for claims settled in the year
(191,685)
83,235
(108,450)
Page 187
(1,825)
(157)
-
2,420
2,420
-
and lega l
provision s
£00 0
2,61 9
1,783
(1,825)
(157)
-
1,687
(1)
Non-curren t
4,107
1,76 3
1,76 3
Regulatory and legal provisions
The Group operates in the financial services industry and is subject to regulatory requirements in the normal course of business, including
contributing towards any levies raised on UK general and life business. The provisions reflect an assessment by the Group of its share of the total
potential levies.
Dilapidations provision s
The provision for other costs relates to costs in respect of dilapidations. Dilapidations provisions are based on the Group's best estimate of future
expense required to restoring a leased property to its original state on completion of the lease.
-
1,783
(2)
(1,827)
3
-
(157)
(1,826)
44
1,827
-
(157)
Regulator y
£00 0
£00 0
3,754
6,37 3
Total
Othe r
provision s
Group
At 1 January 2022
1,854
1,854
Non-curren t
7
At 31 December 2022
Notes to the financial statements
29 Provisions for other liabilities and contingent liabilitie s
Disposal of busines s
In addition, from time to time, the Group receives complaints from customers and, while the majority relate to cases where there has been no
customer detriment, we recognise that we have provided, and continue to provide, advice and services across a wide spectrum of regulated
activities. We therefore believe that it is prudent to hold a provision for the estimated costs of customer complaints relating to services provided.
The Group continues to reassess the ultimate level of complaints expected and the appropriateness of the provision, which reflects the expected
redress and associated administration costs that would be payable in relation to any complaints we may uphold.
3,449
6,068
3
Curren t
Not utilise d
Additional provisions
Used during yea r
7
At 1 January 2022
Paren t
1,687
4,107
3,54 1
5,96 1
3,450
5,870
(263)
(263)
Exchange differences
-
2,420
2,420
-
2,61 9
1,783
Additional provisions
Used during yea r
Not utilise d
Exchange differences
At 31 December 2022
Current
Page 188
Included in the above are unused tax losses of £10,565,000 (2021: £10,565,000) arising from life business, which are available for offset against
future tax profits and can be carried forward indefinitely.
£00 0
£00 0
Deferred tax liabilitie s
Deferred tax asset s
Paren t
£000
Group
Grou p
Paren t
£000
28,158
35,874
40,48 5
46,733
36,723
35,90 5
2022
2021
48,96 5
46,733
(8,565)
(8,480)
-
(31)
*The comparative financial statements have been restated as detailed in note 40.
Certain deferred tax assets and liabilities have been offset where the Group has a legally enforceable right to do so. The following is the analysis of
the deferred tax balances (after offset) for financial reporting purposes:
-
(2,543)
34,228
2,595
-
(949)
(3,028)
35,874
9
9
-
406
(485)
Exchange difference s
At 31 December 2022
The equalisation reserve was previously required by law and maintained in compliance with insurance companies' regulations. Transfers to this
reserve were deemed to be tax deductible under legislation that applied prior to 1 January 2016 and gave rise to deferred tax. With effect from the
implementation date of Solvency II, 1 January 2016, these reserves become taxable over 6 years under the transition rules set out by HM Treasury.
(8,072)
(174)
-
(23)
-
-
(264)
-
(6,499)
28,158
-
(2,543)
-
(485)
(3,028)
(9,073)
(12,081)
(174)
-
3,182
gains on
benefi t
(1,519)
-
-
-
3
3
-
(1,585)
-
66
9,48 6
Equalisatio n
Other
-
(1,585)
-
66
Charged/(credited) to profit or loss
-
(187)
44,16 9
5,309
-
(8,993)
4,022
(383)
(789 )
(8,383)
(5,533)
9,487
-
9,665
632
31,558
(3,020)
40,485
-
(178)
(1,519)
5
-
-
134
139
Unrealised
retiremen t
Ne t
Notes to the financial statements
An analysis and reconciliation of the movement of the key components of the net deferred tax liability during the current and prior reporting period is
as follows:
Group
Total
£00 0
£00 0
investment s
asset s
reserve
difference s
£00 0
£00 0
£00 0
Transfer on disposal of subsidiary
30 Deferred ta x
78 9
(445 )
At 1 January 2021 (as restated*)
9,029
28,88 2
8,58 4
(Credited)/charged to profit or loss
Credited to other comprehensive incom e
- Impact of change in deferred tax rate
Charged/(credited) to other comprehensive incom e
- Impact of change in deferred tax rate
Exchange difference s
At 31 December 2021 (as restated* )
(Credited)/charged to profit or loss
Credited to other comprehensive incom e
Exchange difference s
At 31 December 2022
Paren t
At 1 January 2021 (as restated*)
Charged/(credited) to profit or loss
(383)
(789 )
(948 )
1,418
30,560
(3,017)
78 9
34 9
- Impact of change in deferred tax rate
Exchange difference s
At 31 December 2021 (as restated* )
46,733
42,300
5,312
-
(879)
-
9,665
-
(179)
8,202
632
-
(170)
(7,840)
-
-
-
6 1
6 1
- Impact of change in deferred tax rate
Charged/(credited) to other comprehensive incom e
28,681
3,538
(287)
32,06 5
2,592
8,664
Page 189
-
331
22
235
22,758
80,389
29,678
21,551
34,86 5
Group
£00 0
£000
Included within deferred income of the Group is £nil (2021: £407,000) classified as contract liabilities in accordance with IFRS 15.
33 Investment contract liabilitie s
2022
2021
25,818
24,433
6.3144% EUR 30m subordinated deb t
2022
2021
100,83 1
80,389
96,791
Paren t
Grou p
Paren t
23,843
12,114
1,40 6
3,238
Amounts owed to related parties
Accrual s
26,077
-
5,370
3,234
331
50,60 7
-
23,714
Group
£00 0
£00 0
£000
£000
31 Other liabilities and deferred incom e
1,579
Notes to the financial statements
369
25 1
3,234
Derivative liabilities are in respect of equity futures contracts and are detailed in note 23.
101,44 3
Creditors arising out of direct insurance operation s
Creditors arising out of reinsurance operation s
Derivative liabilitie s
Creditors arising from broking activitie s
Other creditor s
97,34 7
59,65 8
3,466
-
59,65 8
17,808
14,602
61 2
38,154
-
£000
Deferred income of the Group and Parent is a current liability in both the current and prior year.
Group and Paren t
32 Subordinated liabilitie s
Curren t
Non-curren t
556
Investment contract liabilities represents amounts due to policyholders and, if applicable, the cost of the minimum repayment guarantee.
Investment contract liabilities are repayable on demand or at short notice and therefore classified as current. These liabilities are matched with
highly liquid investments.
Investment contract liabilitie s
58,479
15,519
58,479
15,519
25,818
24,433
Subordinated debt is stated at amortised cost.
Subordinated debt consists of a privately-placed issue of 20-year subordinated bonds, maturing in February 2041 and callable after February
2031. The Group's subordinated debt ranks below its senior debt and ahead of its preference shares and ordinary share capital.
2022
2021
£000
Page 190
Addition s
44 8
£00 0
£00 0
£000
(235)
(20)
(255)
Depreciation expense
-
(2,217)
(219)
(94 )
(2,530)
2021
Group
Paren t
Grou p
Paren t
Set out below are the carrying amounts of lease obligations :
Exchange differences
27
-
(1)
26
At 31 December 2021
19,669
98 7
125
20,781
Paren t
£00 0
£00 0
At 1 January 2022
19,66 9
987
12 5
20,781
building s
vehicle s
Othe r
Total
£00 0
£00 0
Land and
Motor
Exchange differences
13 6
-
Depreciation expens e
11 2
18,70 0
4
(2,278)
(180)
(97)
14 0
Notes to the financial statements
equipmen t
162
22,760
At 31 December 2021
74 6
80
50 6
Addition s
9 6
33 0
(2,555)
Disposal s
-
(172)
-
(172)
At 31 December 2022
17,62 3
At 1 January 2021
21,738
993
131
22,862
96 5
109
67 8
Disposal s
121
22,738
20,806
2022
£000
19,06 2
18,712
Curren t
2,446
2,438
3,402
2,691
Non-curren t
16,61 6
16,274
19,336
18,115
97 3
Othe r
19,02 9
Motor
vehicles
equipmen t
Total
(289)
25,48 8
17,944
11 2
21,588
1,01 0
21,588
1,010
Depreciation expens e
(2,812)
(236)
(114)
(3,162)
(23)
Exchange differences
(20)
(2)
(1)
Disposals
-
(268)
(21)
1,068
189
Addition s
189
44 8
109
Depreciation expens e
24,231
At 1 January 2021
(3,193)
(196)
Addition s
33 0
(2,879)
(118)
(1,286)
Exchange differences
16 2
1
4
At 31 December 2022
16 7
(18)
34 Lease s
35 9
77 1
Land and
82
Group as a lesse e
The Group has lease contracts for various items of property, motor vehicles and other equipment used in its operations. Leases of property
generally have terms of up to 15 years, while motor vehicles and other equipment generally have lease terms between 2 and 6 years. Lease terms
are negotiated on an individual basis and contain different terms and conditions, but do not impose any covenants other than security interests. The
Group's obligations under its leases are secured by the lessor's title to the leased assets, and leased assets may not be used as security for
borrowing purposes.
Group
(1,476)
Disposal s
At 1 January 2022
(172)
building s
£00 0
£00 0
£00 0
£00 0
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period.
16 2
22,760
Page 191
Net investment in the lease is recognised in other assets as shown in note 24.
1
4
Group profit for the year has been arrived at after crediting the following amounts in respect of finance lease contracts:
Finance income on the net investment in finance lease s
1
4
2022
2021
£00 0
£000
-
-
111
111
-
-
-
-
-
-
111
111
Finance lease s
-
-
111
111
Year 1
£000
£000
Group as a lesso r
7,165
6,014
7,165
6,014
The Group has entered into operating leases on its investment property portfolio. These leases have terms of up to 50 years. All leases include a
clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. The lessee is also required to
provide a residual value guarantee on the properties. Rental income on these properties recognised by the Group during the year is disclosed in
note 21.
Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:
48,922
48,922
53,74 9
53,74 9
7,60 4
7,60 4
£00 0
£00 0
£000
£000
2022
2021
Group
Paren t
Grou p
Paren t
7,86 6
8,11 0
8,11 0
7,86 6
Paren t
The Group had a finance leasing arrangement as a lessor to sublease a commercial office space no longer occupied by the Group. The finance
lease contract expired during 2022.
7,734
6,532
5,244
7,734
6,532
5,244
Notes to the financial statements
Group
Paren t
Grou p
£00 0
£00 0
34 Leases (continued)
4,09 3
4,159
Depreciation expense of right-of-use assets
3,19 3
3,162
Interest expense on lease liabilitie s
884
97 4
Expenses relating to short-term leases
1 6
23
Group profit for the year has been arrived at after charging the following amounts in respect of lease contracts:
2022
2021
The Group had total cash outflows for leases, including interest paid, of £3,991,000 (2021: £4,206,000). The Parent had total cash outflows for
leases, including interest paid, of £3,399,000 (2021: £3,406,000). The future cash outflows relating to leases that have not yet commenced are
disclosed in note 35.
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide
flexibility in managing the leased-asset portfolio and align with the Group's business needs. Management exercises significant judgement in
determining whether these extension and termination options are reasonably certain to be exercised, as disclosed in note 2.
£00 0
£000
16,55 4
16,55 4
20,217
20,217
4,748
4,748
4,88 3
4,88 3
Operating leases
2022
2021
Undiscounted lease payment s
Less: unearned finance incom e
Net investment in the leas e
Year 1
Year 2
Year 3
Year 4
Year 5
After 5 years
Page 192
Exempt from audit
100%
Insurance agents and broker s
100%
-
100%
-
100%
-
100%
-
Life insurance
-
-
-
-
35 Commitment s
36 Related undertakings
2021
2022
South Essex Insurance Holdings Limited
3
6317313
Ordinary
-
-
100%
-
Investment holding compan y
SEIB Insurance Brokers Limited
3
6317314
Ordinary
100%
-
-
Ansvar Risk Management Services Pty Limited
2
Ordinary
-
2519319
Ordinary
100%
EdenTree Investment Management Limite d
1
100%
0941199
Ordinary
162612286
-
-
100%
-
Dormant company
-
100%
-
100%
100%
100%
Exempt from audit under s479 of the Companies Act 2006
1
2
3
On 30 December 2022, Ecclesiastical disposed of South Essex Insurance Holdings Limited and its wholly owned subsidiary SEIB Insurance Brokers Limited (together ‘SEIB’)
to an associate of the Benefact Group
100%
Ansvar Insurance Services Pty Limited
2 6
Risk management service s
623695054
Ordinary
-
Insuranc e
The Company is a wholly-owned subsidiary of Benefact Group plc. Its ultimate parent and controlling company is Benefact Trust Limited. Both companies
are incorporated in England and Wales and copies of their financial statements are available from the registered office as shown in the Other Information
section of this Annual Report and Accounts. The parent companies of the smallest and largest groups for which group financial statements are drawn up are
Ecclesiastical Insurance Office plc and Benefact Trust Limited, respectively.
E.I.O. Trustees Limited
1 5
Ecclesiastical Financial Advisory Services Limited
1 4
-
Ecclesiastical Life Limite d
1
007216506
Ordinary
100%
Ansvar Insurance Limited
2
5
Registered office: Benefact House, 2000 Pioneer Avenue, Gloucester Business Park, Brockworth, Gloucester, GL3 4AW, United Kingdom
Registered office: Level 5, 1 Southbank Boulevard, Melbourne, VIC 3006, Australia
Exempt from audit under s480 of the Companies Act 2006
4
6
Ultimate parent company and controlling part y
Numbe r
Holding of shares b y
Related undertaking s
Group
Shar e
At the year end, the Group had capital commitments of £76,064 (2021: £nil) relating to development costs.
The Company's interest in related undertakings at 31 December 2022 is as follows:
Company
Company
The Group has lease contracts for right-of-use assets that had not commenced at 31 December 2022. These leases will commence in 2023. Leases for lan d
and buildings have a term of 10 years with expected cash outflow of £274,674 per annum. Leases for motor vehicles have a term of 4 years with expected
cash outflow of £20,580 per annum.
Notes to the financial statements
Registratio n
Holding of shares b y
Company
Group
100%
204608 7
Subsidiary undertaking s
Independent financial advisor y
Ordinary
Incorporated in Australia
Trustee compan y
Trustee compan y
0243111
Ordinary
100%
Ecclesiastical Group Healthcare Trustees Limited
1 4
Investment managemen t
Ordinary
-
10988127
Incorporated in the United Kingdom
Activit y
Company
Capital
Page 193
During the year, the Company received premiums, commission and reinsurance recoveries via a related party insurance agency amounting to
£11,000 (2021: £147,000) and paid reinsurance protection, commission and claims amounting to £16,000 (2021: £136,000).
Transactions and services within the Group are made on commercial terms. With the exception of some insurance liabilities, amounts outstanding
between Group companies are unsecured, are not subject to guarantees, and will be settled in cash. No provisions have been made in respect of
these balances.
Amounts owed to related parties by the Group and by the Parent include insurance liabilities which are included in note 28. Amounts owed to
related parties by the Group also includes investment contract liabilities which are included in note 33.
Trading, investment and other expenditure, including recharges, and amounts paid in the current year includes loans totalling £54.9m (2021:
£24.9m), general business claims of £7.7m (2021: £11.2m) and acquisition of shares totalling £13.0m (2021: £nil).
Trading, investment and other income, including recharges, and amounts received in the current year includes general business premiums totalling
£4.9m (2021: £13.0m) and deposits received for life business totalling £35.0m (2021: £11.8m).
66,254
12,278
2,156
Amounts owed by related parties
-
9,45 8
10
Amounts owed to related parties
On 30 December 2022, Ecclesiastical disposed of South Essex Insurance Holdings Limited and its wholly owned subsidiary SEIB Insurance Broker s
Limited (together ‘SEIB’) to an associate of the Benefact Group for £45.2m, recognising a gain after tax of £14.3m, as detailed in note 16.
Amounts owed by other related parties to the Group and Parent include £1.2m due from an associate for the Benefact Group, relating to the
disposal of SEIB.
960
15,625
25,971
1,438
Amounts owed by related parties
Amounts owed to related parties
15,625
-
5,706
79,219
Amounts owed to related parties***
531
2021
Group (restated)
-
-
-
66,254
-
2,646
partie s
3,17 7
-
234
-
121,67 0
6,12 9
3,56 3
1,749
26,341
9,259
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not included in
the Group analysis, but are included within the Parent analysis below.
Benefact
Group
plc
is
the
Group
and
Parent's
immediate
parent
company.
Other
related
parties,
of
both
Group
and
Parent,
include
subsidiar y
undertakings of Benefact Group plc, the ultimate parent undertaking and the Group's pension plans.
Notes to the financial statements
1,749
-
64,91 6
Othe r
37 Related party transaction s
relate d
2022
Benefact
Group plc
Subsidiarie s
11,34 2
-
-
101,66 1
4,385
55,30 0
£00 0
121,67 0
-
-
Amounts owed by related parties*
Trading, investment and other income, including recharges, and amounts received
Trading, investment and other income, including recharges, and amounts received
Trading, investment and other income, including recharges, and amounts received
Amounts owed by related parties
55,30 0
16,31 0
14,188
Trading, investment and other expenditure, including recharges, and amounts paid
Trading, investment and other expenditure, including recharges, and amounts paid
Trading, investment and other expenditure, including recharges, and amounts paid
Trading, investment and other expenditure, including recharges, and amounts paid
Paren t
Trading, investment and other income, including recharges, and amounts received
531
17,700
£00 0
Amounts owed to related parties**
Paren t
Group
£00 0
**The insurance liabilities include an element of fixed expense reserves which are not due to a related party.
***Amounts owed to related parties of the Group in the prior year have been restated from £53,924,000, to better reflect the fair value of funeral
plan liabilities.
*Includes a loan of £121.0m (2021: £66.1m).
Page 19 4
Notes to the financial statements
37 Related party transactions (continued)
The total aggregate remuneration of the directors of the Company in respect of qualifying services during 2022 was £2,838,000 (2021:
£2,801,000). After inclusion of amounts receivable under long-term incentive schemes and pension benefits, the total aggregate emoluments of
the directors was £3,496,000 (2021: £3,564,000). The key management personnel is defined as the Group Management Board (Ecclesiastical's
leadership team), Executive and Non-executive directors. The remuneration is shown below.
Group
Paren t
Grou p
Paren t
£00 0
£00 0
£000
£000
2022
Key management personne l
2021
Pension costs - defined contribution plan s
308
308
303
303
Social security cost s
Wages and salarie s
5,41 1
5,41 1
6,221
6,221
750
750
56 6
56 6
7,094
7,094
7,692
7,692
Fees and benefits for non-executive director s
625
625
602
602
Charitable grants paid to the Group's ultimate Parent undertaking are disclosed in note 15. Contributions paid to and amounts received from the
Group's defined benefits schemes are disclosed in note 19.
Page 195
Underwriting profit
[6]
27,419
-
-
-
(2,907)
17,022
-
14,115
Net change in provision for unearned premiums
369,523
Net investment return
Total revenue
Expenses
[2]
[1]
303,970
7
[3]
(159,472)
24,963
-
(25,743)
(108,581)
(115)
(4,331)
(108,696)
(342,104)
(4,978)
-
-
(25,743)
2022
-
-
(16,505)
-
-
(238,069)
(16,505)
-
-
-
(25,743)
(2,317)
-
(4,773)
9,342
-
(25,743)
-
Net expense ratio
(7,545)
-
(7,545)
(7,545)
Finance costs
Profit/(loss) before tax from continuing operations
Profit/(loss) before tax for the year
91.0%
[6]
Operating profit/(loss)
(2,456)
3,552
-
27,419
3,552
Other operating and administrative expenses
-
Total operating expenses
Combined operating ratio
Net expenses ( = [2] + [3] + [4] + [5] )
[4]
24,963
3,552
(3,080)
(3,080)
(532)
-
(88,681)
(Loss)/profit before tax attributable to discontinued operations
(2,907)
52.5%
[7]
(2,456)
(25,743)
17,022
-
-
-
[5]
-
-
-
-
-
8,523
-
-
-
-
4,058
(4,465)
(4,465)
8,530
-
-
-
£000
£000
£000
(118,036)
63,533
-
£000
£000
£000
-
558,544
2,020
(238,069)
-
-
-
303,977
2,020
-
-
-
373,588
-
-
7
-
-
63,533
Group
The Group uses the industry standard net COR as a measure of underwriting efficiency. The COR expresses the total of net claims costs,
commission and underwriting expenses as a percentage of net earned premiums. It is calculated as ( [1] - [6] ) / [1].
Life
costs
Total
Net earned premiums
Fee and commission income
Other operating income
-
(285,680)
-
Revenue
(375,905)
38 Reconciliation of Alternative Performance Measures
Notes to the financial statements
The table below provides a reconciliation of the COR and NER to its most directly reconcilable line item in the financial statements. Regulatory
capital does not have an IFRS equivalent and is covered in more detail in note 4(i).
Users of the accounts should be aware that similarly titled APM reported by other companies may be calculated differently. For that reason, the
comparability of APM across companies might be limited.
Inv'mnt
and
Inv'mnt
-
£000
-
-
-
-
The Group uses alternative performance measures (APM) in addition to the figures which are prepared in accordance with IFRS. The financial
measures included in our key performance indicators are set out in the Key Performance Indicators section of the Strategic Report within this
Annual Report and Accounts: regulatory capital, combined operating ratio (COR) and net expense ratio (NER) are APM. These measures are
commonly used in the industries the Group operates in and are considered to provide useful information and enhance the understanding of the
results.
The NER expresses total underwriting and corporate expenses as a proportion of net earned premiums. It is calculated as - [7] / [1].
The underwriting profit of the Group is defined as the operating profit of the general insurance business.
Claims and change in insurance liabilities
Reinsurance recoveries
Fees, commissions and other acquisition costs
136,507
-
-
-
-
136,507
(281,349)
Broking
Insurance
return
General
mngt
Advisory
Corporate
-
-
-
558,551
Gross written premiums
Outward reinsurance premiums
-
-
-
Page 196
(Loss)/profit before tax attributable to discontinued operations
Profit/(loss) before tax for the year
6,471
1,117
95,724
(2,525)
2,984
-
-
-
(2,525)
2,984
On
3
January
2023,
the
shares
of
EdenTree
Investment
Management
Limited
and
Ecclesiastical
Financial
Advisory
Services
Limited
wer e
distributed to the Group's immediate parent company, Benefact Group plc. Discontinued operations are disclosed separately in note 16.
[6]
8,759
96.8%
Broking
Advisory
costs
£000
£000
£000
£000
Total
and
Corporate
2021
Notes to the financial statements
38 Reconciliation of Alternative Performance Measures (continued)
Group
Restated*
£000
Inv'mnt
Inv'mnt
mngt
General
Life
£000
£000
Insurance
return
-
-
-
486,211
-
(198,601)
-
486,220
(9)
-
-
-
-
(198,601)
-
-
-
(14,620)
-
[1]
272,999
(9)
(14,620)
-
-
-
-
-
272,990
[2]
55,417
-
-
-
-
-
55,417
Claims and change in insurance liabilities
Expenses
-
-
-
102,897
-
3,939
-
-
-
432,440
98,958
329,552
(269,633)
(267,291)
(2,342)
123,822
[3]
(95,628)
(21)
123,822
-
Reinsurance recoveries
Fees, commissions and other acquisition costs
-
-
(109,514)
[4]
(81,696)
(450)
(3,234)
[5]
(24,134)
-
-
-
(95,649)
81,466
-
-
-
(24,134)
(350,974)
(3,234)
(2,813)
-
-
-
-
-
-
(24,134)
95,724
95,724
(2,288)
459
(24,134)
79,637
-
53.5%
Net expense ratio
*The comparative financial statements have been restated as detailed in note 40.
39 Events after the balance sheet date
Total operating expenses
Operating profit/(loss)
Finance costs
Profit/(loss) before tax from continuing operations
Underwriting profit
Combined operating ratio
Net expenses ( = [2] + [3] + [4] + [5] )
[7]
Other operating and administrative expenses
Other operating income
1,136
-
-
6,471
(2,288)
Net investment return
(146,041)
(320,793)
-
Revenue
Gross written premiums
Outward reinsurance premiums
Net change in provision for unearned premiums
Net earned premiums
Fee and commission income
Total revenue
[6]
8,759
-
-
-
-
-
-
-
-
-
-
3,930
-
1,136
98,958
1,117
1,117
-
-
(24,134)
79,178
Page 197
59,389
The Group considers that this change in accounting policy provides more reliable and relevant information. This is because, if the impact of
discounting were not more widely applied during a period of higher interest rates (as in 2022), it would create excessive prudence in the implied
claim reserves. Furthermore, this change to accounting policy better reflects the impact of the Group’s objective of matching assets with insurance
liabilities when managing exposure to interest rate risk.
Profit before ta x
Tax expense
Profit for the year from continuing operations
Revenue
Gross written premium s
Outward reinsurance premiums
Net change in provision for unearned premiums
Net earned premium s
Fee and commission income
Group
(95,896)
Total operating expense s
Operating profi t
77,037
(2,364)
The prior year has also been re-presented for discontinued operations as detailed in note 16 to the financial statements .
As reporte d
(17,648)
2021
£00 0
Fees, commissions and other acquisition cost s
(135,632)
(377,339)
Reinsurance recoverie s
Claims and change in insurance liabilitie s
486,211
(198,601)
(14,620)
272,990
81,54 7
1,136
101,067
Other operating incom e
Net investment retur n
Finance cost s
Restatement
As restated
2021
Under IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, a retrospective restatement of the prior period results is required.
The effects of the restatement are detailed in this note, and included throughout the financial statement comparatives, where appropriate. As a
result of the restatement, as at 1 January 2021 the Group recognised an increase in retained earnings of £0.5m.
The Group’s accounting policy for general insurance outstanding claims provisions has previously been to apply discounting only to certain longer
term liabilities. The accounting policy has been changed to include discounting of the general insurance liabilities that have not previously been
discounted. This change in accounting policy resulted in a credit of £13.2m recognised in this financial year and a credit of £2.6m in the prior year,
both within net investment return.
Notes to the financial statements
Re-presented
2021
-
272,990
-
£00 0
£000
-
(350,974)
-
(269,633)
2,600
102,897
2,600
432,440
-
338
2,106
61,495
Profit for the year (attributable to equity holders of the Parent)
-
59,389
Net profit attributable to discontinued operation s
(494 )
(18,021)
338
2,600
81,466
-
(535)
7 6
(459 )
121
(338)
40 Prior year restatemen t
2,106
61,157
-
(2,288)
2,600
79,178
-
-
-
-
79,401
24 7
26,118
26,365
Other operating and administrative expenses
-
(95,649)
55,41 7
456,74 0
(269,633)
123,822
-
(109,514)
-
-
-
123,822
-
1,136
Total revenu e
Expense s
(26,130)
-
(770)
(26,900)
£000
-
486,211
-
(198,601)
-
(14,620)
Page 198
40 Prior year restatement (continued)
Notes to the financial statements
Group
54,353
46,027
41,98 9
£00 0
Asset s
£00 0
£00 0
£00 0
Deferred acquisition cost s
46,027
-
Goodwill and other intangible asset s
52,512
-
35,245
52,512
163,355
142,142
1,078
Pension surplu s
28,304
-
28,304
1,053
Deferred tax asset s
8,480
-
8,48 0
Investment propert y
163,355
-
Property, plant and equipmen t
35,245
-
5
7,98 6
38,316
820,77 7
Reinsurers' share of contract liabilitie s
254,44 9
(1,013)
253,436
208,677
Financial investment s
883,770
-
883,770
-
Current tax recoverabl e
5
-
1,826,080
1,637,370
Total asset s
1,827,093
(1,013)
240,910
216,570
Other asset s
240,910
104,429
Cash and cash equivalent s
114,036
-
114,036
4,632
509,852
444,61 3
Share capital
120,477
-
120,477
120,477
Equit y
Retained earnings and other reserve s
507,252
2,600
Share premium accoun t
4,632
-
4,632
939,069
868,15 5
569,722
Total shareholders' equit y
632,361
2,600
634,961
Insurance contract liabilitie s
943,292
(4,223)
Liabilitie s
6,373
6,499
-
Lease obligation s
22,738
-
22,738
25,45 0
Investment contract liabilitie s
15,519
-
15,519
Provisions for other liabilitie s
6,373
-
1,232
1,293
Current tax liabilitie s
1,232
-
28,385
25,908
6,530
Deferred tax liabilitie s
48,35 5
610
48,96 5
29,84 6
Retirement benefit obligation s
7,058
-
7,05 8
Deferred incom e
28,385
-
1,191,119
1,067,648
-
Other liabilitie s
97,347
-
97,34 7
93,561
Subordinated liabilitie s
24,433
-
24,433
Total liabilitie s
1,194,732
(3,613)
Total shareholders' equity and liabilitie s
1,827,093
(1,013)
1,826,080
1,637,370
As reporte d
2021
31 Decembe r
1 Januar y
2021
2021
31 Decembe r
Restatemen t
As restate d
As restate d
Page 199
Notes to the financial statements
40 Prior year restatement (continued)
Paren t
As restate d
31 Decembe r
31 Decembe r
1 Januar y
As reported
Restatemen t
As restate d
2021
£00 0
£00 0
£00 0
£00 0
2021
2021
Goodwill and other intangible asset s
27,501
-
27,501
24,265
Asset s
33,472
Deferred acquisition cost s
36,740
-
36,740
1,053
Property, plant and equipmen t
32,771
-
32,771
34,726
Pension surplu s
28,304
-
28,304
142,142
Financial investment s
707,106
-
707,106
650,78 7
Investment propert y
162,822
-
162,822
134,516
Current tax recoverabl e
5
-
5
5,49 7
Reinsurers' share of contract liabilitie s
171,922
(1,013)
170,909
161,114
Cash and cash equivalent s
48,437
-
48,43 7
59,46 6
Other asset s
194,808
-
194,80 8
Total asset s
1,410,416
(1,013)
1,409,403
1,247,038
Equit y
120,477
Share premium accoun t
4,632
-
4,632
4,632
Share capital
120,477
-
120,477
356,805
Total shareholders' equit y
549,902
2,600
552,502
481,91 4
Retained earnings and other reserve s
424,793
2,600
427,393
Liabilitie s
615,708
Insurance contract liabilitie s
673,598
(4,223)
669,375
22,838
Provisions for other liabilitie s
6,068
-
6,068
5,84 2
Lease obligation s
20,806
-
20,806
Retirement benefit obligation s
7,058
-
7,05 8
6,530
28,562
Current tax liabilitie s
819
-
819
1,293
Deferred tax liabilitie s
46,123
610
46,733
18,85 8
Subordinated liabilitie s
24,433
-
24,433
-
Deferred incom e
21,951
-
21,951
55,08 7
Other liabilitie s
59,658
-
59,65 8
765,124
Total liabilitie s
860,514
(3,613)
856,901
1,247,038
Total shareholders' equity and liabilitie s
1,410,416
(1,013)
1,409,403
Page 200
Profit before tax from discontinued operations
-
45 9
459
-
-
-
Proceeds from issue of subordinate debt, net of
expenses
Purchases of financial instruments and investment
property
Sale of financial instruments and investment property
Proceeds from the sale of property, plant and
equipment
157,614
157,614
103,706
103,706
Notes to the financial statements
40 Prior year restatement (continued)
Paren t
Group
Profit before tax from continuing operation s
77,037
79,17 8
As reporte d
As restate d
Restatemen t
2021
2021
31 Decembe r
31 Decembe r
2,141
2,600
2021
87,71 9
90,319
£00 0
£00 0
£00 0
£00 0
Restatemen t
£00 0
As reporte d
As restate d
£00 0
31 Decembe r
31 Decembe r
2021
Adjustments for:
-
Depreciation of property, plant and equipment
6,155
6,155
5,28 5
5,285
-
Amortisation and impairment of intangible asset s
85 6
85 6
622
622
-
-
Loss on disposal of property, plant and equipmen t
2 4
2 4
11
11
-
-
-
Loss on disposal of intangible asset s
4,76 5
4,76 5
8 7
87
-
Net fair value gains on financial instruments and
investment property
Profit on disposal of subsidiary
-
-
(5)
(5)
-
-
(58,340)
(58,384 )
Finance cost s
2,364
2,364
2,276
2,276
Dividend and interest incom e
(21,802)
(21,802)
(18,822)
(18,822)
-
-
-
-
-
-
(58,340)
(58,384 )
Adjustment for pension fundin g
1,646
1,646
1,646
1,646
-
-
Net increase in insurance contract liabilitie s
83,952
81,352
57,43 9
54,83 9
(2,600)
Changes in operating assets and liabilities :
(2,600)
Net increase in reinsurers' share of contract
(49,513)
(49,513)
(37,260)
(37,260)
-
-
Net increase in investment contract liabilitie s
15,519
15,519
-
-
-
-
Net increase in other asset s
(25,891)
(25,891)
(33,049)
(33,049)
-
-
Net increase in deferred acquisition cost s
(4,376)
(4,376)
(3,169)
(3,169)
-
-
Net (decrease)/increase in other liabilitie s
(234)
(234)
114
114
-
-
Net increase in operating liabilitie s
8,47 2
8,47 2
8,54 4
8,544
-
-
-
Cash generated by operations
40,634
40,634
13,054
13,054
-
-
-
(186,514)
(186,514)
(117,611)
(117,611)
-
-
Interest receive d
14,068
14,068
8,830
8,830
-
-
Dividends receive d
7,42 7
7,42 7
9,54 7
9,547
-
-
Net cash from operating activitie s
30,087
30,087
12,614
12,614
-
-
Tax paid
(3,142)
(3,142)
(4,912)
(4,912)
-
-
Cash flows from investing activitie s
4 8
4 8
19
19
-
-
Purchases of property, plant and equipment
(3,634)
(3,634)
(3,451)
(3,451)
-
-
-
Purchases of intangible asset s
(3,914)
(3,914)
(3,914)
(3,914)
-
Disposal of subsidiary, net of cash disposed
-
-
5
5
-
-
Net cash used by investing activitie s
(7,500)
(7,500)
(7,341)
(7,341)
-
-
Cash flows from financing activitie s
Payment of lease liabilitie s
(3,209)
(3,209)
(2,512)
(2,512)
-
-
Interest pai d
(2,364)
(2,364)
(2,276)
(2,276)
-
-
-
Change in interest in subsidiary
-
-
(5,406)
(5,406)
-
Dividends paid to Company's shareholder s
(9,181)
(9,181)
(9,181)
(9,181)
-
-
25,014
25,014
25,014
25,014
-
-
(941)
(941)
Net cash used by financing activitie s
(10,740)
(10,740)
(15,361)
(15,361)
-
-
Charitable grant paid to ultimate parent undertakin g
(21,000)
(21,000)
(21,000)
(21,000)
-
-
Net increase/(decrease) in cash and cash
11,847
11,847
(10,088)
(10,088)
-
-
-
Cash and cash equivalents at beginning of year
104,429
104,429
59,46 6
59,466
-
48,437
-
-
-
-
48,43 7
Exchange losses on cash and cash equivalent s
Cash and cash equivalents at end of yea r
114,036
114,036
(2,240)
(2,240)
Page 201
Governance Financial Statements Other InformationStrategic Report
Section Four
Other Information
Directors, executive management and company information 202
Notice of meeting 203
Computershare Investor Services plc
Benefact House ,
2000 Pioneer Avenue ,
Gloucester Business Park ,
Brockworth ,
Mrs R. J. Hall FCG
F. X. Boisseau MSc
D. P. Cockrem, MA, FCA Group Chief Financial Officer
N. P. Maidment MA, FCII
S. J. Whyte MC Inst. M, ACII Deputy Group Chief Executive
A. J. McIntyre MA, ACA, FRCO
Non-Executive Directors
Gloucester, GL3 4AW
The Pavilions
Tel: 0345 777 3322
00024869
Directors
1
Directors, executive management and Company information (unaudited)
1
R. D. C. Henderson FCA
Chair
R. Bajaj MA
1
M. C. J. Hews BSc (Hons), FIA Group Chief Executive
1
1
A. Winther BA
1
Sir S. M. J. Lamport GCVO, DL
C. J. G. Moulder MA, FCA Senior Independent Director
1
1
Company Secretary
Company Registration Number
Registered and Head Office
Registrar
Bridgwater Road
Bristol BS13 8AE
1
Page 202
This notice is sent purely for information to the holders of 8.625% Non-Cumulative Irredeemable Preference shares who are not entitled to attend
and vote at the annual general meeting.
Any corporation which is a member holding ordinary shares can appoint one or more corporate representatives who may exercise, on its behalf, all
of the same powers as that corporation could exercise if it were an individual member, provided that they do not do so in relation to the same share
or shares and that they act within the powers of their appointment.
Only a member holding ordinary shares, or their duly appointed representative(s), is entitled to attend, vote and speak at the annual general
meeting.
A member holding ordinary shares is entitled to appoint a proxy or proxies (who need not be a member of the Company) to exercise all or any of
their rights to attend, speak and vote on their behalf at the annual general meeting. Such a member may appoint more than one proxy in relation to
the annual general meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that
member.
1
Brief biographies of the Directors seeking election or re-election are shown in the Board of Directors area of the Governance section within this
Annual Report and Accounts. All Non-Executive Directors seeking re-election have been subject to formal performance evaluation by the Chair
who is satisfied that the performance of each Non-Executive Director is effective and sufficient time has been spent on the Company’s affairs.
Mrs R J Hall, Secretary
16 March 2023
By order of the Board
13. To re-appoint PricewaterhouseCoopers LLP as auditors and authorise the Directors to fix their remuneration.
12. To consider the declaration of a dividend.
11.
To re-elect Mr A. Winther as a Director.
1
10.
To re-elect Mrs S. J. Whyte as a Director.
1
9.
To re-elect Mr C. J. G. Moulder as a Director.
1
8.
To re-elect Mr N. Maidment as a Director.
1
7.
To re-elect Sir S. Lamport as a Director.
1
6.
To re-elect Mr M. C. J. Hews as a Director.
1
5.
To re-elect Mr R. D. C. Henderson as a Director.
1
4.
To re-elect Mrs D. Cockrem as a Director.
1
3.
To re-elect Mr F. X. Boisseau as a Director.
1
2.
To re-elect Mrs R. Bajaj as a Director.
1
1.
To receive the Report of the Directors and Accounts for the year ended 31st December 2022 and the report of the auditors
thereon.
Notice of meeting (unaudited)
NOTICE is hereby given that the Annual General Meeting of Ecclesiastical Insurance Office plc will be held at The Belfry, Lichfield Road, Wishaw,
Sutton Coldfield, B76 9PR on Thursday, 22nd June 2023 at 12.35pm for the following purposes:
Ordinary business (unaudited)
Page 203
Ecclesiastical Insurance Office plc (EIO) Reg. No. 24869. Registered in England at Benefact House, 2000 Pioneer Avenue, Gloucester Business Park, Brockworth, Gloucester, GL3 4AW, United Kingdom.
EIO is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number 113848
Annual Report & Accounts 2022
Ecclesiastical Insurance Office plc (EIO)
Benefact House
2000 Pioneer Avenue
Gloucester Business Park
Brockworth
Gloucester
GL3 4AW