NFU Mutual pressed to demutualise


By Robert Harris


NFU Mutual, farmings biggest insurer, is facing renewed pressure to demutualise amid accusations that it is eroding members capital by subsidising new non-farming business.


Potential bidders could force a vote on the issue as soon as next spring, and hope to attract farmer backing with the promise of one-off windfall payments worth thousands of pounds.


A report in a recent issue of Insurance Times says a consortium of five investors has warned the board of NFU Mutual to consider demutualising, or face a hostile takeover bid.


John Caine, who represents the group, maintained that the insurer is using capital, much of it farmers money, to capture new markets outside agriculture, undercutting other insurers in the process.


But NFU Mutual denied it had received an approach. “We have had no contact, and no bid has materialised. We are not in talks with anyone,” said a spokesman.


There are no plans for an in-house conversion either, and he also denied claims that NFU Mutual was selling insurance to non-farming customers at knockdown rates through its subsidiary, Avon Insurance.


“It is run to make a profit, and for many years has returned substantial dividends.”


Widespread reports that members would receive 25,000 as windfalls, should mutualisation occur, have been dismissed as “totally fanciful” by the company.


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