NFU Mutual distributes £54 million mutual investment bonus

Uplift also set for increase in April

NFU Mutual distributes £54 million mutual investment bonus

Insurance News

By Terry Gangcuangco

UK rural insurer NFU Mutual has disclosed its distribution of a £54 million mutual investment bonus to its qualifying with-profits customers for 2023. The bonus, which marks a 1.5% enhancement, comes in addition to any annual bonus customers might receive, underlining the insurer’s commitment to sharing financial successes with eligible policyholders.

Over the last half-decade, the financial resilience of the mutual has allowed it to augment the investments of with-profits policyholders by more than £180 million via the mutual investment bonus. Now it’s been announced that the bonus will be adjusted to 1.85% starting April 2024.

Saurabh Agrawal, who heads the with-profits segment at NFU Mutual, commented in an emailed release: “We’re delighted to share the benefits of our strong financial position with our eligible with-profits customers through mutual investment bonus.

“As a mutual without shareholders, we can share our success with our customers, whether they buy general insurance policies with us or invest in our with-profits funds. After sharing £54 million of mutual investment bonus in 2023, we are pleased to announce we are also increasing the uplift to 1.85% in April.

“Our customers typically stay with us for a long time, which means the long-term investment horizon of the with-profits fund is appealing to many of them. The approach of smoothing can provide many investors with peace of mind in times of market volatility – and can help minimise the impact of adverse market movements to those withdrawing money.

According to Agrawal, the with-profits funds allow customers to invest in different assets such as equities in firms based in the UK and overseas, local commercial property, as well as corporate and government bonds.

Currently, the with-profits fund spans more than 60,000 eligible policies. With-profits policies are designed for long-term investment, ideally suited for commitments of five years or more. This allows for the smoothing of returns over time, offering a buffer against market volatility.

The mutual investment bonus serves as an additional benefit on top of the smoothing process, available to with-profits policyholders, with the exception of those holding the capital access bond.

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