Most farmers who are insured with NFU Mutual can expect another year of healthy discounts when they next renew their policies.

The firm, which claims a 65-70% share of the UK’s farming insurance market, confirmed that general insurance policy holders will be eligible for a £70m slice of the record retained £481m profit the company generated in 2005.

That means farmers who have been insured with the company for five years or more can expect a 10% discount on their next renewal premiums through the Mutual Bonus scheme, slightly more than last year.

That, the firm claims, will be worth hundreds of pounds to typical customers holding several policies.

A further proportion of the profits has been used to strengthen NFU Mutual’s assets to protect against volatility in insurance and investment markets.

Extra funding was also provided to the national farmers’ unions.

In gross profit terms, about £140m was underwriting profit generated from sales worth £840m.

A further £500m came from investment income on unrealised gains.

Fewer claims

“It’s been a really good year,” said chief executive Ian Geden.

“Benign weather meant there was little storm damage, so there were fewer big claims, or they were settled for less than we had put by in the reserves.

And we also benefited from a huge rise in global stock markets, thanks to a return in investor confidence.”

That strong growth in equity markets also helped NFU Mutual’s Life arm, which includes life, pensions and investment sales, grow by 14%.

That compared with a market average of 8%, Mr Geden said.

Across the group, funds under management topped £10bn for the first time in its 95-year history, ending the year at £10.7bn.

Mr Geden also said that NFU Mutual had introduced changes to its corporate governance in response to the Myners report on the management of mutuals.

As part of this, regional boards and members’ forums will replace the company’s existing local board structure.

That, said Mr Geden, would provide greater member involvement including the non-farming sector, which now accounts for 55% of members.