£164m profit after tax at NFU Mutual

The UK’s largest rural insurer, NFU Mutual, returned to profit in 2023, after sustaining a significant loss in the previous financial year.

The 2023 annual report and accounts show the company made a profit after tax of £164m, which compares to the loss of £1.05bn from 2022.

As well as a wide range of insurance cover, NFU Mutual offers a variety of financial planning services, with the performance of the company heavily dependent on movements in global investment markets.

Following a challenging year for these markets in 2022, last year was much-improved, resulting in a 5.3% growth in funds under management, taking the total to £20.2bn. In 2022, funds under management declined 13.8% to £19.2bn, resulting in a loss in investment return of £830m. However, in 2023 these investment funds delivered healthy earnings of £551m.

Those returns more than offset an underwriting loss of £156m from the general insurance business.

Rising costs

In his review within the annual report, finance director Richard Morley noted that profitability in general insurance has been affected by the rising cost of claims due to inflation, severe storms towards the end of 2023 and an increase in the volume of very large claims.

NFU Mutual also paid out £244m in bonus savings to insurance customers, similar to the £247m from the previous year.

This ‘Mutual bonus’ is effectively a saving on the renewal policy for repeat business.

For the year starting 1 July 2024, anyone in the fifth year of renewal (or more) will save 10.5%.

Donations

The accounts also show that NFU Mutual made donations to charity of £3.25m in 2023 and a “voluntary donation” of £8.4m to support the work of the UK’s main farming unions.

Top executives at the business received aggregated remuneration of £4.1m, with chief executive Nick Turner on a total package of £1.766m, up from £1.31m in the previous year.

The chairman of the NFU Mutual board, former NFU Scotland president, Jim McLaren received total fees of £215,844 in 2023, with other non-executive directors on the board generally receiving between £70,000 and £100,000.