Most mutuals are reporting a surge in AUM and an increase in Own Funds
The PRA's policy statement PS2/24 has set new thresholds for being considered within Solvency II, affecting smaller insurers in the UK. This change, according to Broadstone's 2024 Solvency and Financial Condition Report (SFCR) Analysis, has positioned the mutual and cooperative sector as financially strong and well-positioned.
The sector demonstrated resilience and the ability to continue serving its membership effectively. The report also indicates potential for growth and the capability to deliver on its commitments to members. However, specific challenges faced by the sector were not detailed in the available summary.
The average Gross Written Premium for participants in the mutual sector increased to £116m in 2024 from £105m in 2023. Additionally, the mutuals in the study recorded an increase in Own Funds, rising from £143m on average in 2023 to £149m in 2024.
Shepherds Friendly recorded the largest increase in total assets (19%) due to new business and positive investment income. The average Gross Claims Incurred for participants in the mutual sector increased to £149m in 2024 from £137m in 2023.
Smaller insurers are set to benefit from the increasing Solvency II thresholds, with smaller companies now able to operate under the revised thresholds since the publication of the PRA's policy statement PS2/24 Review of Solvency II: Adapting to the UK insurance market.
The Government's initiative to double the mutual and cooperative market is accompanied by regulatory developments, including the review of the Friendly Societies Act later this year and the implementation of solvent exit planning in 2026.
The mutual sector faced several challenges in 2024, including political shifts, ongoing cost of living pressures, regulatory change, and the first use of updated templates under the Solvency UK regime.
The UK Chancellor Rachel Reeves gave a speech at Mansion House in the City of London, expressing support for the Chancellor's efforts to stimulate growth in the UK economy and improve Defined Contribution (DC) and Local schemes. The Institute and Faculty of Actuaries is supportive of these initiatives.
Ewen Tweedie, Actuarial Director at Broadstone, stated that the sector is well positioned to continue serving its membership and deliver on the government's ambitions. Debbie Webb, Pensions Board Chair at the Institute and Faculty of Actuaries, commented on the speech.
For more detailed insights into particular financial metrics, growth areas, or identified challenges, further access to the full report or additional sources would be necessary. A full copy of the Broadstone's 2024 Solvency and Financial Condition Report (SFCR) Analysis can be found at https://broadstone.co.uk/sfcr-2024/.
- The new Solvency II thresholds, as outlined in the PRA's policy statement PS2/24, are expected to facilitate the growth of smaller insurers in the UK, particularly those in the mutual and cooperative sector, given their demonstrated financial strength and ability to continue serving their membership effectively.
- As the Government initiates measures to double the mutual and cooperative market, regulations such as the review of the Friendly Societies Act and the implementation of solvent exit planning will play a crucial role in addressing potential challenges and ensuring the sector's capacity to deliver on its commitments to members, according to Ewen Tweedie, Actuarial Director at Broadstone.
