Ecclesiastical hit by credit crunch with £22.5m loss

Ecclesiastical posted a pre-tax loss of £22.5m, a massive drop from its £35.6m profits in 2007, after its investment portfolio took a hammering in the financial crisis.

The UK insurer, which has a speciality in underwriting for church organisations, lost £52.5m on its investments in 2008 as opposed to a £69.4m profit in 2007.

Ecclesiastical showed a positive performance in UK underwriting, with a profit of £9.1m last year against an £11.8m loss in 2007.

However, the company suffered high claims from London market and international business. It’s overall combined ratio was 100.8%.

The company gave £7m to its charitable owner, the highest regular grant it has ever given.

Chief executive Michael Tripp said: “The performance of our core business in 2008 was very good. It is particularly frustrating that economic conditions and poor stock market returns overshadow it. In a competitive market our UK business has done well: we’re continuing to grow our premium income with underwriting control and claims levels were lower than expected. Throughout 2008 we built our reputation as a specialist insurer of the care, charity, education, faith and heritage sectors and as a result have won some very significant business. Ecclesiastical has never been in better shape.

“However, we haven’t been able to avoid the impact of turbulence in world financial markets. We’ve suffered from market downturns because we invest relatively heavily in equities and take a longer-term view of investment returns. Short-term results may be disappointing, but we’re confident that over the long-term our financial strength will continue to grow. This has been underlined by Standard & Poor’s and A M Best both affirming our ‘A’ ratings.

“Financial services is probably the most competitive and challenging market in the world to be in at present. The failure of some providers and a black cloud of public opinion creates opportunities for those organisations which have a solid financial base and a genuinely different approach to business. Ecclesiastical is one of those companies, so we’re confident our success will continue.”