Ecclesiastical Insurance Office plc, the Gloucester-headquartered specialist financial services group, has reported losses of nearly £60 million in the first half of 2020.
Its 2020 interim results show that following a strong year in 2019, in the first half of 2020 it made loss before tax of £59.7 million, compared to a pre tax profit in the first half of 2019 of £42.8 million. The results are due to COVID-19’s impact on financial markets, said the insurer.
Mark Hews, Group Chief Executive Officer of Ecclesiastical, said: “Whilst our headline loss before tax is disappointing, in the main it has been driven by unrealised fair value losses on our investment portfolio. These are investments that are being held for the long term and on which we have already seen some recovery. We expect this to continue over the months and years ahead, and we continue to take a long-term view and look beyond the current pandemic.”
During March the Group announced that it had made a record £32 million donation to charity for the previous calendar year, almost double its original expectations. Since then the Group has continued to support charities and communities during the pandemic. Notably in the first half of the year the £1 million Movement for Good awards were launched again and £500,000 distributed; the Group has also responded to coronavirus response appeals initiated by the National Emergencies Trust, Disasters Emergencies Committee and Association of British Insurers with donations totalling £200,000.
Mark added: “The first half of 2020 was uniquely challenging due to the significant impact of COVID-19. However, we remain true to our core purpose and have continued to give to church, charities and communities most in need.”
The Group has now donated more than £97 million to charity since 2016 and is just short of its enhanced target of giving more than £100 million by September 2021. This giving has enabled the Group and its parent charity, Allchurches Trust, to accelerate its giving to churches and charities most in need.
However, Mark said that underlying performance is resilient and Ecclesiastical is starting to see activity returning to normal levels.
“We recognise and understand that the coronavirus pandemic has created a worrying and uncertain time for many customers and businesses and we recognise the challenges they have faced. As an ethical insurer, we are driven by a desire to help our customers in their moment of need and we have continued to pay claims where cover was offered, quickly and fairly. We have also offered enhanced cover, free of charge, to many of our customers alongside a range of additional support measures.
In May the Financial Conduct Authority launched a test case on the lack of clarity in insurance documents. Many customers say they have tried and failed to claim on their business insurance. This has led to widespread disruption and business closures resulting in substantial financial loss.
The FCA’s view remains that most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic. It is now seeking a judgment that will help policyholders and insurers have a much clearer view of which business interruption policies respond to the pandemic, and those that don’t. Therefore, the court may well decide a number of these policies respond to the pandemic and others do not.
Mark acknowledged the issues that some Ecclesiastical customer were facing.”We also recognise that some customers have been disappointed that their policy has not provided business interruption cover during the pandemic, in common with much of the market. As a result, we were pleased to participate, alongside seven other leading insurers, in the Financial Conduct Authority’s Test Case. We hope that this will provide maximum clarity for all concerned in the shortest amount of time. We expect to hear the outcome, which may be subject to appeal, later in the year.
“As we head into the second half of the year we recognise the challenges in the economic environment but are energised by the clarity of our charitable purpose and are optimistic about the opportunities ahead.”