Annual Financial Report

Ecclesiastical Insurance Office public limited company announces results for the yearended 31 December 2025

Ecclesiastical Insurance Office public limited company ('Ecclesiastical', 'EIO' or 'the Company'), a specialist insurance group1, today announces its full year results for 2025. A copy of the results will be available on the company's website at ecclesiastical.com.

Financial highlights 

Another strong year of performance 

· Ecclesiastical delivered a profit before tax of £84.6m (2024: £82.5m). This reflects an insurance service result of £104.7m and an investment result of £91.0m, supported by positive market conditions and disciplined portfolio management.

Sustained premium growth 

· Gross written premiums (GWP)2 increased by 2.1% to £653.7m (2024: £640.3m) driven by strong new business growth in the UK and solid retention across our specialist segments.

Robust underwriting performance 

· Underwriting profit2 rose to £62.2m (2024: £47.6m). As in 2024, the year saw an unusually low level of weather related and large loss activity, with underwriting performance remaining robust across all territories. As the insurer of many iconic and irreplaceable buildings we recognise the inherent volatility in the annual results.

Strong capital position 

· The EIO Group's financial strength remains solid. Both Moody's (A2, stable outlook) and AM Best (A, stable outlook) reaffirmed our credit ratings, and our Solvency II coverage ratio at 252% remains well above regulatory requirements and our own conservative risk appetite thresholds.

Key achievements 

Giving to good causes 

· Ecclesiastical donated over £28m to charity and good causes during 2025. This brings total giving since 2014 to over £275m, further advancing the ambition of our parent, Benefact Group1, to contribute meaningfully to communities and good causes across the UK and beyond.

Growth in specialist markets 

· Ecclesiastical deepened its presence in its core sectors and expanded into new areas where specialist expertise delivers genuine value. This included enhancements to our Schemes proposition, growth in Care & Leisure and Arts & Culture portfolios and continued investment in services for commercial customers. Ecclesiastical's reputation as trusted specialists remains one of our strongest differentiators, reflected in further industry recognition throughout the year.

Continued recognition for trusted service 

· For the fifth consecutive year, Ecclesiastical UK received the Outstanding UK Claims Service Quality Marque from independent research consultancy Gracechurch. The business also retained its long held position at the top of Fairer Finance's rankings, securing 1st place for the 22nd consecutive time.

A culture that sets us apart 

· Benefact Group has recently been named one of the Top 4 "Best Big Companies to Work For" and the #2 Insurance Company by Best Companies. In Canada, Ecclesiastical was named a Greater Toronto Top Employer for the eighth consecutive year and was recognised as a Leader in Philanthropy and Community Engagement by Imagine Canada for the fifth year in a row. These achievements reflect a culture centred on specialist capability and deep commitment to the communities we serve.

Mark Hews, Ecclesiastical Chief Executive Officer said:

I'm very pleased to report another year of strong financial performance for Ecclesiastical Insurance Office public limited company. We continued to deliver on our strategy of sustainable, profitable growth while staying true to our purpose - to grow our business so that we can give more to good causes. That purpose has once again guided our decisions and inspired our teams, enabling us to support even more charities and communities across the UK and beyond. 

Thanks to our strong financial performance, we have been able to donate over £28m to good causes this year. This contribution will support vital projects for those facing the greatest challenges in society. Having now donated over £275m since 2014, we have now surpassed our target to give £250m and have become one of the largest corporate donors to charity in the UK.

Our General Insurance business delivered an underwriting profit of £62.2m, an increase on last year, supported by unusually benign weather conditions and the absence of major losses. While this is a welcome result, it is important to recognise the inherent volatility of our specialist markets. As the insurer of many iconic, historic and irreplaceable buildings, we are acutely aware of the responsibility we carry and the potential for significant losses. In recent years we have supported customers through devastating fires, floods and storms, and these events remain a powerful reminder of why our long-term, disciplined approach is so essential.

We remain committed to delivering good value and uniquely specialist propositions to our customers, ensuring we are there for them when they need us most. I congratulate my colleagues on their simultaneous recognition as one of the most trusted insurers in the UK, one of the best employers and one of the largest corporate donors. These achievements provide an excellent foundation upon which we can both grow our business and grow our giving.

I want to express my heartfelt thanks to our colleagues, brokers, customers, and partners. Your support and belief in our mission not only drives our success, but also enables us to make a lasting, meaningful difference in people's lives. As we look ahead to 2026, we remain committed to delivering brilliant service, driving sustainable growth, and continuing to build a legacy of good that will endure for generations.

1. The 'Group' or 'EIO Group' refers to Ecclesiastical Insurance Office public limited company together with its subsidiaries. The 'Benefact Group' and 'wider group' refers to Benefact Group plc, the immediate parent company of Ecclesiastical Insurance Office public limited company, together with its subsidiaries. The 'Benefact Trust' and 'the Trust' refers to Benefact Trust Limited, the ultimate parent undertaking of Ecclesiastical Insurance Office public limited company.

2. The EIO Group uses Alternative Performance Measures (APMs) to help explain performance. More information on APMs is included in note 9 to this announcement.

ECCLESIASTICAL INSURANCE OFFICE PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2025

The Company has now approved its Annual Report and Accounts for 2025.

This Annual Financial Report announcement contains the information required to comply with the Disclosure and Transparency Rules, and extracts of the Strategic Report and Directors' Report forming part of the full financial statements.

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 December 2025. The Annual Report and Accounts will be available on or before 20 April 2026 on the Company's website at ecclesiastical.com. Copies of the audited financial statements are also available from the registered office at Benefact House, 2000 Pioneer Avenue, Gloucester Business Park, Brockworth, Gloucester GL3 4AW.

A copy of the Company's statutory accounts for the year ended 31 December 2025 will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Group Chief Executive's review

Overview

2025 was another outstanding year for the Ecclesiastical Group. Our teams delivered a strong performance and demonstrated what a values-driven business can achieve when commercial focus and purpose-driven impact work hand in hand.

We have now surpassed £275m given to good causes since 2014 - another remarkable milestone for the EIO Group and one that reflects the collective commitment of colleagues, customers, brokers and partners who choose to work with an organisation that uses profit as a force for good.

What defines us is not only the results we deliver, but the lives we help change along the way. That is the heart of Benefact Group, and it is the foundation on which we continue to build.

Our General Insurance business delivered an underwriting profit1 of £62.2m, up 30.5% on the previous year. While the year benefited from unusually benign weather and no major losses, our long-term outlook recognises the inherent volatility as the insurer of many iconic and irreplaceable buildings. Over recent years we have experienced several devastating fires, flood events and storms, and these remain a powerful reminder of the responsibility and potential for large losses given the significant nature of many of the buildings we insure.

Gross Written Premiums rose by 2.1%, driven by growth in the UK and Ireland, supported by continued strong retention and acquisitions of customers across both our traditional segments and newer segments such as Leisure and an expanded Care appetite. With changed market conditions we continue to be selective and disciplined in our growth.

At Benefact Group, our purpose continues to be the foundation of our success. As a charity owned, commercially disciplined business, we grow so we can give. Over the past year that purpose has guided our decisions, strengthened our resilience and deepened the impact we create for the communities we serve.

Our Chair

This year offered an important moment to say a heartfelt thank you to David Henderson, whose leadership as Chair has played a central role in our success. We are delighted that David will continue to champion our purpose as Chair of Benefact Trust.

We are equally pleased to welcome François-Xavier Boisseau as the new Chair of Benefact Group and EIO. With deep experience, a strong understanding of our organisation and unwavering commitment to our purpose, François-Xavier is well placed to guide the EIO Group into its next chapter.

Delivering for our customers

Across our Group we continued to deliver high-quality outcomes for our customers and to be recognised for the expertise, trust and care our teams demonstrate every day.

In the UK, our General Insurance claims team earned the Outstanding Service Quality Marque from Gracechurch for the fifth year running - a powerful endorsement of the empathy, expertise and consistency our customers experience when they need us most. Ecclesiastical UK retained its position at the top of the Fairer Finance rankings for the 22nd time and secured Which? Best Buy recognition for both buildings and contents insurance for the third consecutive year.

Internationally, Ecclesiastical Canada was honoured for Excellence in Philanthropy & Community Service for the fifth year running by Imagine Canada.

These achievements matter, not because they are independent trophies or awards, but because they reflect who we are: a Group built on empathy, integrity and genuine care, a culture where people put customers first, every single day.

Building a movement for good

Strong financial performance enabled us to give over £28m to good causes this year, including £24m to our charitable owner, Benefact Trust Limited. In doing so, we have now surpassed giving over £275m to good causes. This is an extraordinary achievement and the impact it has is real. 

This year alone, our giving helped regenerate communities, protect heritage buildings, support families facing financial pressure, strengthen mental health services, assist those experiencing homelessness, and fund youth programmes that give hope and opportunity. Through our donations to Benefact Trust's, the Trust has made a number of humanitarian grants, supporting refugees fleeing conflict, contributing to medical relief efforts in Gaza, aiding communities recovering from climate related disasters and so much more.

Behind every grant there is a story - a life made safer, brighter, and more hopeful. Lives touched because our customers, clients, brokers, partners, reinsurers and colleagues choose to do business with us.

Our Planet, Our Part

We recognise our role in the natural world and our duty to protect it. Our response to climate change is action-led, rooted in our values and has gone well beyond talk. We have embedded environmental, social and governance considerations across our investment decisions and supported customers and communities to become more climate resilient.

Whilst there is always more to do, after high-quality charitable offsets, we have achieved net-negative direct emissions for two years in a row. We do not underwrite or invest in businesses involved in fossil fuel extraction, heavy industry or commercial aviation, and we do not invest in organisations that conflict with our values.

With focus, innovation and determination, we will strive to keep driving down our emissions and supporting our customers on the journey to net zero.

Destination employer

As a charity owned organisation with a purpose unlike any other in our industry, we attract people who want their work to create a positive impact. Our colleagues come together around a shared ambition: to grow a commercially successful, values-driven business so that we can give even more to good causes.

That purpose shapes a culture where people feel respected, supported and inspired to do their best work. We provide life changing careers that change lives, and I'm proud that this commitment is reflected in our employee engagement results, achieving Best Companies "Outstanding" and "World Class" accreditations, alongside further national, international and diversity awards.

Our parent company, Benefact Group has recently been named one of the Top 4 "Best Big Companies to Work For" in the UK, a testament to the strength of our culture and leadership. These results reflect who we are, and the extraordinary people who make this organisation such a special place to work.

Looking ahead

We enter 2026 with momentum, clarity and confidence. Inspired by the impact of our giving, we remain focused on sustainable growth, operational excellence and enhancing the products and services that set us apart. 2026 will be pivotal as we launch a new strategic chapter and set our stretch goals for the future. Our ambition is bold: to build a stronger Group so we can create even greater impact for the good causes and communities we exist to support.

Join our movement

Surpassing £275m in charitable giving is a proud milestone for us, yet it marks just the starting point for how far we plan to go. We thank all our existing supporters and invite others to join us - as a customer, colleague, partner or investor. Every time an individual or business chooses our Group, they help us grow our impact and improve the world in which we live.

Together, we will continue to build a business where profit is used as a force for good and where long-term value is measured by the difference we make.

1 The EIO Group uses Alternative Performance Measures (APMs) to help explain performance. More information on APMs is included in note 9 to this announcement.

Group Chief Financial Officer's review

It gives me great pleasure to be able to present another outstanding set of results for the year. The Company is reporting a profit before tax of £84.6m (2024: £82.5m), outperforming expectations and achieving another year of profitable growth. The result represents one of the strongest results in our 138 year history and, importantly, has enabled us to continue to give more to good causes, having now donated over £275m in charitable giving, since 2014.

Overall, the profit was driven by a strong net investment result of £91.0m (2024: £71.9m) and excellent trading performance with an insurance service result of £104.7m (2024: £83.5m). Gross written premium1 increased by 2.1% to £653.7m (2024: £640.3m) following continued and disciplined growth, despite increasingly challenging market conditions. During the year, as part of a strategic reassessment of programme plans for internally generated software assets, a £14.6m impairment was recognised.

EIO Group's strong credit ratings with both Moody's (A2 with stable outlook) and AM Best (A with stable outlook) were reaffirmed during the year, and our Solvency II regulatory capital position remains highly resilient, well above both regulatory requirements and risk appetite.

General Insurance

Overall, our underwriting businesses contributed to an exceptional result in the year. Collectively, our businesses have continued to deliver robust and profitable growth in insurance revenue during challenging market conditions, building on our strong position in core segments and recent product launches. The increase in gross written premium of 2.1% to £653.8m (2024: £640.6m) reflected significant new business wins and robust retention levels.

Underwriting experience benefited from particularly favourable claims experience, resulting in an insurance service result of £90.9m (2024: £72.7m) and an exceptional Combined Operating Ratio1 (COR) of 83.7% (2024: 86.9%). The result reflected benign weather claims and limited large loss experience across most territories, alongside relatively stable prior year claims development. The devastating impact of Storm Eowyn in Ireland and legacy claims strengthening in Canada did, however, highlight the potential for higher cost of claims and the inherent volatility in our insurance exposures.

Our overall profit includes a net insurance financial loss of £19.0m (2024: £6.9m net loss) which is driven by the impact of discount rate movements in the year, albeit this would be offset by returns in our well-matched investment portfolio, included in the net investment result.

United Kingdom and Ireland

In the United Kingdom and Ireland, reported underwriting profits1 were £49.5m (2024: £53.6m), resulting in a COR of 81.0% (2024: 77.4%). The result benefitted from another benign year for weather claims, large losses and higher associated reinsurance profit commission. Whilst Storm Eowyn had a devastating impact on many of our customers within the Ireland branch, the rest of the UK business remained largely unaffected due to a late change in the storm path. The business was similarly fortunate to avoid material losses from other named storms in the year.

Despite increasingly soft market conditions throughout the financial year, the portfolio continued its growth journey and gross written premium increased by 5.6% to £461.2m (2024: £436.9m). The portfolio continued to be disciplined in its approach and adaptive to market conditions, prioritising its commitment to insuring significant value locations and to managing the associated risk.

Australia

In Australia, the business reported an underwriting loss of £2.9m (2024: £3.4m loss)2, resulting in a COR of 109.3% (2024: 107.4%). Overall, the gross claims experience was favourable for the year, led by positive current year Liability experience, including more stable PSA prior year development. However, the net result was impacted by the cost of intra-group reinsurance arrangements and increased investment in the business.

Consistent with other territories, the business experienced challenging market conditions and gross written premium fell slightly by 1.5% to £93.9m (2024: £95.3m)2. This was largely driven by lower than expected new business and rate on renewals, partially offset by improved retention rates.

Canada

Canada reported an underwriting profit of £11.9m2 (2024: £13.8m profit) leading to a COR of 83% (2024: 81.4%). The result reflected lower current-year loss activity and disciplined expense management, partially offset by strengthening of prior year latent claims following adverse experience in the prior year. Within the current loss year, favourable claims experience was led by especially benign weather claims in the period.

Levels of income remained broadly consistent with the prior year, reporting a small reduction in gross written premium to £101.0m (2024: £101.6m)2. Strong new business wins, led by growth in our core segments, were offset by lower retention and rate on renewals due to softening market conditions.

Investments

The Company reported a particularly strong net investment result for the year of £91.0m (2024: £71.9m profit), as the majority of its asset classes performed well in more positive market conditions.

The investment result was supported by stable investment income levels of £46.0m (2024 £50.1m) and especially strong fair value gains of £44.7m (2024: £21.4m gains). Fair value gains benefitted from favourable returns on bonds, OEIC listed equities and property, as well outstanding performance in our strategic unlisted equity investment portfolio.

We remain committed to our long-term investment philosophy, with a well-diversified and appropriately matched portfolio. Our investment approach is a key part of our climate strategy, and you can find out more in the Responsible Business report.

Long-term business

Ecclesiastical Life Limited, our life business, reported an improved profit before tax of £3.1m for the year (2024: £1.4m profit), driven by growth and investment gains in the period. Assets and liabilities in relation to the life insurance business remain well matched.

Outlook

We expect increasingly soft and competitive insurance market conditions to remain a key feature of 2026. During this period, we are committed to modest and profitable growth, maintaining our underwriting discipline and continuing to ensure we can provide market leading services to its customers. With a fast-developing Technology and AI landscape, we are prepared to innovate and invest in the business to strive for operational excellence and to continue to provide our services to customers as efficiently and effectively as possible.

External economic and market conditions may continue to change during 2026. Recent geopolitical events have contributed to changes in financial markets and the wider economic environment. These developments may influence inflation, interest rates and general business activity in the UK and the territories we operate in, although the extent of any impact is not yet clear. Our investment strategy and highly resilient capital position ensures we can take a long-term view and remain in a position of strength as we look to prioritise supporting our customers during increasingly uncertain and challenging times.

Balance sheet and capital position

In the year, total shareholders' equity reduced by £9.0m to £618.0m, as reported profits were offset by charitable donations and paying a dividend of £50m to Benefact Group to support the effective use of capital across the wider Benefact Group. The Company's capital position remains extremely robust, with Solvency II capital ratio cover for EIO remaining at 252% (2024: 252%).

During the year charitable donations of £24.0m were paid to the Company's ultimate shareholder, Benefact Trust Limited, as well as £4.1m to other causes. The Company has now given over £275m in charitable donations since 2014, continuing the Benefact Group's ambition to give more to good causes.

1 The EIO Group uses Alternative Performance Measures (APMs) to help explain performance. More information on APMs is included in note 9 to this announcement.

2 Values here have been calculated using a constant exchange rate to ensure the effects of exchange rates have been removed. The prior year end rate has been used in the calculation here

Directors' Report

Principal activities

The Company operates principally as a provider of general insurance. Details of the subsidiary undertakings of the Company are shown in note 34 to the financial statements.

Future Developments

Looking ahead, the Company expects to continue progressing initiatives that support the EIO Group's strategic priorities and long‑term objectives. More information on forthcoming developments, planned activities and areas of focus can be found in the Strategic Report and the Corporate Governance Report

Ownership and share capital

At the date of this report, the entire issued Ordinary share capital of the Company was owned by Benefact Group plc. In addition, 3.37% of the issued 8.625% non-cumulative irredeemable preference shares of £1 each ('Preference shares') are owned by Benefact Group plc. In turn, the entire issued ordinary share capital of Benefact Group plc was owned by Benefact Trust Limited, the ultimate parent of the EIO Group.

Dividends

Dividends paid on the preference shares were £9,181,000 (2024: £9,181,000). The Directors do not recommend a final dividend on the Ordinary shares (2024: £nil).

An interim dividend of £50m on the Ordinary Shares of 4p each was paid to Benefact Group plc during the year.

Charitable and political donations

Charitable donations made in the year amounted to £28.1m (2024: £36.5m).

No political donations were made in the year (2024: £nil). The EIO Group policy is that no political donations may be made or expenditure incurred.

Principal risks and uncertainties

The directors have carried out a robust assessment of the principal risks facing the EIO Group including those that threaten its business model, future performance, solvency and liquidity. The principal risks and uncertainties, together with explanations of how they are mitigated, are included in the Principal risks section of this announcement.

Going concern

The financial performance and principal risks and uncertainties section of the Strategic Report starting on page 2 provide a review of the EIO Group's business activities and disclose the EIO Group's principal risks and uncertainties, including exposures to insurance, financial, operational and strategic risk.

The EIO Group has considerable financial resources: financial investments of £1,094.7m, 76% of which are liquid (2024: financial investments of £982.0m, 78% liquid) and cash and cash equivalents of £93.2m (2024: £105.8m) to withstand economic pressures. Liquid financial investments consist of listed equities and open-ended investment companies, government bonds and listed debt.

The EIO Group has a strong risk management framework and solvency position, is well placed to withstand significant market disruption and has proved resilient to stress testing. The EIO Group has considered its capital position, liquidity and expected performance. The EIO Group and its businesses have sufficient levels of cash and other liquid resources and has expectations it can meet its cash commitments over its planning horizon. The EIO Group and its businesses expect to continue to meet regulatory requirements.

Despite economic pressures and challenges, given the EIO Group's operations, robust capital strength, liquidity and in conjunction with forecast projections and stress testing, the directors have a reasonable expectation that the EIO Group has adequate resources and is well placed to manage its risks successfully and continue in operational existence for at least 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Principal risks and uncertainties

EIO is an insurance company headquartered in the UK and with operations in Australia, Canada and Ireland. It is also the holding company for the DB Pension Scheme Corporate Trustee (EIO Trustees Limited) and a Life Insurance Company (Ecclesiastical Life Limited). EIO forms the major part of the Insurance Division within the Benefact Group, which additionally has divisions relating to Asset Management, and Broking & Advisory.

This section sets out both the principal risks, i.e. those that are assessed as having the highest inherent rating in the context of EIO in its capacity as described above. It is recognised that, given the importance of the Insurance Company to the overall strategic execution and performance of the Benefact Group, those risks and uncertainties are also likely to be a feature of the Benefact Group's overall risk profile.

There is an ongoing risk assessment process which uses the Benefact Group Risk Taxonomy to establish a view on the current principal risks to EIO, which are organised and aligned to the Level 1 Risk Categories below:

Statement of directors' responsibilities in respect of the financial statements

The following statement is extracted from the Directors' report of the 2025 Annual Report and Accounts, and is repeated here for the purposes of the Disclosure and Transparency Rules. The statement relates solely to the Company's 2025 Annual Report and Accounts and is not connected to the extracted information set out in this announcement. The names and functions of the directors making the responsibility statement are set out in the Governance section of the full Annual Report & Accounts.

The directors consider that the 2025 Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the EIO Group's and Company's position and performance, business model and strategy. Each of the directors, whose names and functions are listed on the Governance section of the full Annual Report and Accounts confirm that, to the best of their knowledge:

§ the EIO Group and Company financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities and financial position of the EIO Group and Company, and of the profit of the EIO Group; and

§ the Strategic Report includes a fair review of the development and performance of the business and the position of the EIO Group and Company, together with a description of the principal risks and uncertainties that it faces.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 31 December 2025

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2025

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2025

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2025

The revaluation reserve represented cumulative net fair value gains on owner-occupied property with the movement in the year representing the sale of a property. Details of the translation and hedging reserve are included in note 6 to this announcement.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2025

NOTES TO THIS ANNUAL FINANCIAL REPORT ANNOUNCEMENT OF RESULTS

for the year ended 31 December 2025

1.  Accounting policies

The Company has prepared this announcement of its consolidated results using the same accounting policies and methods of computation as the full financial statements for the year ended 31 December 2025 as prepared in accordance with UK-adopted international accounting standards (UKIAS) applicable at 31 December 2025 issued by the International Accounting Standards Board (IASB).

One amendment issued by the International Accounting Standards Board (IASB) and endorsed by the UK is effective for periods beginning on or before 1 January 2025 and is therefore applicable for the 31 December 2025 financial statements in relation to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023). This amendment does not have a material impact on the EIO Group's Consolidated Financial Statements.

2.  General Information

Whilst the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of UKIAS, this announcement does not itself contain sufficient information to comply with UKIAS. Full financial statements that comply with UKIAS were approved by the Board of Directors on 19 March 2026.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2025 or 2024, but is derived from those accounts. Statutory accounts for 2024 have been delivered to the Registrar of Companies and those for 2025 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under sections 498(2) and 498(3) of the Companies Act 2006.

This announcement was approved at a meeting of the Board of Directors held on 19 March 2026.

Ecclesiastical Insurance Office public limited company is a subsidiary of Benefact Group plc which is an investment holding company whose ordinary shares are not listed.

The ordinary shares of Ecclesiastical Insurance Office public limited company are not listed.

Copies of the audited financial statements are available from the registered office at Benefact House, 2000 Pioneer Avenue, Gloucester Business Park, Brockworth, Gloucester, GL3 4AW, United Kingdom.

The following information is included in this announcement in compliance with the Disclosure and Transparency Rules and has been extracted from the full financial statements for 2025.

3.  Insurance Risk

Through its general and life insurance operations, the EIO Group is exposed to a number of risks. The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount and timing of the resulting claim. Factors such as the business and product mix, the external environment including market competition and reinsurance capacity all may vary from year to year, along with the actual frequency, severity and ultimate cost of claims and benefits. This subjects the EIO Group to underwriting and pricing risk (the risk of failing to ensure disciplined risk selection and to obtain the appropriate premium), claims reserving risk (the risk of actual claims payments exceeding the amount we are holding in reserves) and reinsurance risk (the risk of failing to access and manage reinsurance capacity at a reasonable price).

(a) Risk mitigation

Statistics demonstrate that the larger and more diversified the portfolio of insurance contracts, the smaller the relative variability in the expected outcome will be. The EIO Group's underwriting strategy is designed to ensure that the underwritten risks are well diversified in terms of type and amount of risk and geographical spread. In all operations pricing controls are in place, underpinned by sound statistical analysis, market expertise and appropriate external consultant advice. Gross and net underwriting exposure is protected through the use of a comprehensive programme of reinsurance using both proportional and non-proportional reinsurance, supported by proactive claims handling. The overall reinsurance structure is regularly reviewed and modelled to ensure that it remains optimum to the EIO Group's needs. The optimal reinsurance structure provides the EIO Group with sustainable, long-term capacity to support its specialist business strategy, with effective balance sheet and profit and loss protection at a reasonable cost.

Catastrophe protection is purchased following an extensive annual modelling exercise of gross and net (of proportional reinsurance) exposures. In conjunction with reinsurance brokers the EIO Group utilises the full range of proprietary catastrophe models and continues to develop bespoke modelling options that better reflect the specialist nature of the portfolio. Reinsurance is purchased in line with the EIO Group's risk appetite.

(b) Concentrations of risk

The core business of the EIO Group is general insurance, with the principal classes of business written being property and liability. The miscellaneous financial loss class of business covers personal accident, fidelity guarantee and loss of money, income and licence. The other class of business includes cover of legal expenses and also a small portfolio of motor policies, but this has been in run-off in the United Kingdom since November 2012. The EIO Group's whole-of-life insurance policies support funeral planning products.

The table below summarises written premiums for the financial year, before and after reinsurance, by territory and by class of business which is an indication of the concentration of risk accepted by the EIO Group in the year. Further details on the gross and net written premiums, which are alternative performance measures that are not defined under IFRS, are detailed in note 9 in this announcement.

(c) General insurance risks

Property classes

Property cover mainly compensates the policyholder for damage suffered to their property or for the value of property lost. Property insurance may also include cover for pecuniary loss through the inability to use damaged insured commercial properties (business interruption).

For property insurance contracts, there can be variability in the nature, number and size of claims made in each period.

The nature of claims may include those arising from the perils of fire, weather damage, escape of water, explosion, riot and malicious damage, subsidence, accidental damage, theft and earthquake. Subsidence claims are particularly difficult to predict because the damage is often not apparent for some time. The ultimate settlements can be small or large with a risk of a settled claim being reopened at a later date.

The number of claims made can be affected in particular by weather events, changes in climate, economic environment, and crime rates. Climate change may give rise to more frequent and extreme weather events, such as river flooding, hurricanes and drought, and their consequences, for example, subsidence claims. If a weather event happens near the end of the financial year, the uncertainty about ultimate claims cost in the financial statements is much higher because there is insufficient time for adequate data to be received to assess the final cost of claims.

Individual claims can vary in amount since the risks insured are diverse in both size and nature. The cost of repairing property varies according to the extent of damage, cost of materials and labour charges.

Contracts are underwritten on a reinstatement basis or repair and restoration basis as appropriate. Costs of rebuilding properties, of replacement or indemnity for contents and time taken to bring business operations back to pre-loss levels for business interruption are the key factors that influence the cost of claims. Individual large claims are more likely to arise from fire, storm or flood damage. The greatest likelihood of an aggregation of claims arises from earthquake, weather or major fire spreading events.

Claims payment, on average, occurs within a year of the event that gives rise to the claim. However, there is variability around this average with larger claims typically taking longer to settle and business interruption claims taking much longer depending on the length of the indemnity period involved.

Liability classes

The main exposures are in respect of liability insurance contracts which protect policyholders from the liability to compensate injured employees (employers' liability) and third parties (public liability).

Claims that may arise from the liability portfolios include damage to property, physical injury, disease and psychological trauma. The EIO Group has a different exposure profile to most other commercial lines insurance companies as it has lower exposure to industrial risks. Therefore, claims for industrial diseases are less common for the EIO Group than injury claims such as slips, trips and back injuries.

The frequency and severity of claims arising on liability insurance contracts can be affected by several factors. Most significant are the increasing level of awards for damages suffered, legal costs and the potential for periodic payment awards.

The severity of bodily injury claims can be influenced particularly by the value of loss of earnings and the future cost of care. The settlement value of claims arising under public and employers' liability is particularly difficult to predict. There is often uncertainty as to the extent and type of injury, whether any payments will be made and, if they are, the amount and timing of the payments, including the discount rate applied for assessing lump sums. Key factors driving the high levels of uncertainty include the late notification of possible claim events and the legal process.

Late notification of possible claims necessitates the holding of provisions for incurred claims that may only emerge some years into the future. In particular, the effect of inflation over such a long period can be considerable and is uncertain. A lack of comparable past experience may make it difficult to quantify the number of claims and, for certain types of claims, the amounts for which they will ultimately settle. The legal and legislative framework continues to evolve, which has a consequent impact on the uncertainty as to the length of the claims settlement process and the ultimate settlement amounts.

Claims payment, on average, occurs about three to four years after the event that gives rise to the claim. However, there is significant variability around this average.

Provisions for latent claims

The public and employers' liability classes can give rise to very late reported claims, which are often referred to as latent claims. These can vary in nature and are difficult to predict. They typically emerge slowly over many years, during which time there can be particular uncertainty as to the number of future potential claims and their cost. The EIO Group has reflected this uncertainty and believes that it holds adequate reserves for latent claims that may result from exposure periods up to the reporting date.

Note 8 to this announcement presents the development of the estimate of ultimate claim cost for public and employers' liability claims occurring in a given year. This gives an indication of the accuracy of the estimation technique for incurred claims.

(d) Life insurance risks

The EIO Group provides whole-of-life insurance policies to support funeral planning products, for most of which the future benefits are linked to inflation and backed by index-linked assets. None of the risks arising from this business are amongst the EIO Group's principal risks and no new policies with insurance risk have been written in the life fund since 2013.

The primary risk on these contracts is the level of future investment returns on the assets backing the liabilities over the life of the policyholders is insufficient to meet future claims payments, particularly if the timing of claims is different from that assumed. The interest rate and inflation risk within this has been largely mitigated by holding index-linked assets of a similar term to the expected liabilities profile. The main residual risk is the spread risk attached to corporate bonds held to match the liabilities.

Uncertainty in the estimation of the timing of future claims arises from the unpredictability of long-term changes in overall levels of mortality. The EIO Group bases these estimates on standard industry and national mortality tables and its own experience. The most significant factors that could alter the expected mortality rates profile are epidemics, widespread changes in lifestyle and continued improvement in medical science and social conditions. This small mortality risk is retained by the EIO Group. The EIO Group holds a reserve to meet the costs of future expenses in running the life business and administration of the policies. There is a risk that this is insufficient to meet the expenses incurred in future periods.

4.  Financial risk and capital management

The EIO Group is exposed to financial risk through its financial assets, financial liabilities, reinsurance assets and insurance liabilities. In particular, the key financial risk is that the proceeds from its financial assets are not sufficient to fund the obligations arising from its insurance contracts. The most important components of financial risk are interest rate risk, credit risk, equity price risk and currency risk.

There has been no change from the prior year in the nature of the financial risks to which the EIO Group is exposed. The continued conflict in Ukraine, Middle East and the cost of living crisis means there is continued uncertainty in relation to the economic risks to which the EIO Group is exposed. This includes equity price volatility, movements in exchange rates and long-term UK growth prospects. The EIO Group's management and measurement of financial risks is informed by either stochastic modelling or stress testing techniques

(a) Categories of financial instruments

(i) Categories applying IFRS 9

The carrying value of those financial assets and liabilities not carried at fair value in the financial statements is considered to approximate to their fair value.

(b) Fair value hierarchy

The fair value measurement basis used to value those financial assets and financial liabilities held at fair value is categorised into a fair value hierarchy as follows:

Level 1: fair values measured using quoted bid prices (unadjusted) in active markets for identical assets or liabilities. This category includes listed equities in active markets, listed debt securities in active markets and exchange-traded derivatives.

Level 2: fair values measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). This category includes listed debt or equity securities in a market that is not active and derivatives that are not exchange-traded.

Level 3: fair values measured using inputs for the asset or liability that are not based on observable market data (unobservable inputs). This category includes unlisted debt and equities, including investments in venture capital, and suspended securities. Where a look-through valuation approach is applied, underlying net asset values are sourced from the investee, translated into the Group's functional currency and adjusted to reflect illiquidity where appropriate, with the fair values disclosed being directly sensitive to this input.

Instruments move between fair value hierarchies primarily due to increases or decreases in market activity or changes to the significance of unobservable inputs to valuation, and are recognised at the date of the event or change in circumstances which caused the transfer. During the year there was a transfer from level 1 to level 2 due to a change in the observable inputs.

\* The fair value hierarchy disclosures have been restated to reclassify debt securities of £108.2m from Level 1 to Level 2 and £1.1m from Level 1 to Level 3. This reflects a change in approach that better evidences input observability and provides a more accurate classification.

Gains and losses on derivative liabilities of the Group were recognised through other comprehensive income if they were hedge accounted, otherwise were recognised at fair value through profit or loss. Derivative liabilities are categorised as level 2 (see note 5 to this announcement).

Fair value measurements based on level 3

Fair value measurements in level 3 consist of financial assets at fair value through profit or loss, analysed as follows:

All the above gains or losses included in profit or loss for the year are presented in net investment return within the statement of profit or loss.

The valuation techniques used for instruments categorised in levels 2 and 3 are described below.

Listed debt and equity securities not in active market (level 2)

These financial assets are valued using third-party pricing information that is regularly reviewed and internally calibrated based on management's knowledge of the markets.

Non exchange-traded derivative contracts (level 2)

The Group's derivative contracts are not traded in active markets. Foreign currency forward contracts are valued using observable forward exchange rates corresponding to the maturity of the contract and the contract forward rate. Over-the-counter equity or index options and futures are valued by reference to observable index prices.

Structured notes (level 2)

These financial assets are not traded on active markets. Their fair value is linked to an index that reflects the performance of an underlying basket of observable securities, including derivatives, provided by an independent calculation agent.

Unlisted equity securities (level 3)

These financial assets are valued using observable net asset data, adjusted for unobservable inputs including comparable price-to-book ratios based on similar listed companies, normalised for performance measures where appropriate, and management's consideration of constituents as to what exit price might be obtainable.

The valuation is sensitive to the level of underlying net assets, the Euro exchange rate, the price-to-tangible book ratio, an illiquidity discount and a credit rating discount applied to the valuation to account for the risks associated with holding the asset. The sensitivity of the valuation to reasonable changes in the unobservable inputs is as follows: