The 70% of the farming community insured with the business will see its 2007 renewal premiums cut by 10%. This follows the company’s decision to return a further £75m to policyholders via its MutualBonus scheme.
Ironically, chief executive Ian Geden said the bonus was partly possible because the early impact of global warming on the UK meant insurance claims had been lower than expected.
“Global warming does mean the weather is becoming more volatile, but at the moment it’s been helping us. The climate is milder and we haven’t seen so much frost and snow.
Potential catastrophe claims
“Harvest conditions have also been better. This means farmers haven’t had to push themselves and their kit so hard and there have been fewer claims for fires and accidents.”
However, Mr Geden conceded that climate change would probably have more of an impact in the future. “Our reinsurance bill for potential catastrophe claims is already higher.”
Farmers who have with-profits life and pension policies will also see their annual bonuses increased following a 12.5% increase in the value of with-profit funds.
Funds under management topped £11bn for the first time with running costs of 17p in the pound, compared with an industry average of 32p. General insurance premium income rose 3% to £868m and new life, pension and investment business was up 16%.
After-tax profit fell from £481m in 2005to £384m, but Mr Geden said this was largely due to lower insurance premiums for its members.
Over half of NFU Mutual’s business now comes from non-farmers and the firm is hoping to build on this by sponsoring two series of Sunday-evening drama Heartbeat, which, according to Mr Geden, appealed to the insurers target rural audience.
He would not reveal how much the sponsorship cost, but said it was cheaper than conventional advertising.