Record profits for NFU Mutual lift farmer bonus

Farmers who insure with NFU Mutual are in line for a significant increase this year in the discount they receive when they renew.

The business has announced record profits for 2016 of just over £1bn, compared with £359m in 2015.

This means the “Mutual Bonus” offered to members, which is paid as a percentage of renewals premiums, will be significantly higher than in previous years.

See also: NFU Mutual profits rise 84% in 2015 despite huge flood payouts

The actual rate will not be announced until April and will take effect from July.

Customers qualify for a bonus payment in the first year they renew their insurance, although they are not eligible for the full discount until year five.

The full rate of discount for long-term customers was 6% in 2014, which rose to 8.5% in 2015. 

Strong investments

Strong investment performance was the key driver of the higher profits, with the total funds under management rising from £16.3bn in 2015 to £18.8bn in 2016

Profit from underwriting fell to £151m in 2016, compared with £281m in 2015.

The combined operating ratio, a measure used by insurance companies to indicate how well they perform in daily operations, including cost control, was 88.3%, up from 77.5% in 2015.

Solid results

Lindsay Sinclair, group chief executive, said the business had seen very solid results for both the general insurance and life sides.

“All our general insurance customers – about a million people with farms, businesses, homes and cars insured with us – will see a significant increase in our Mutual Bonus payment, which comes in the form of a discount off renewal premiums,” he said. 

“It’s a very important way of showing our appreciation of our customers’ loyalty to the business.”