Half-year Report

2017 INTERIM RESULTS

Ecclesiastical Insurance Office plc 22 August 2017

Highlights

· Strong interim results reflect the continued support of our customers, business partners and staff in building a company focused on our customers and the greater good of society

· Gross written premiums (GWP) up 9% from the same period last year at £166.0m (H1 2016: £151.8m), supported by strong retention and new propositions

· Profit before tax of £42.2m (H1 2016: £15.2m)

· Strong performance on investment returns which are ahead of prior year at £40.1m (H1 2016: £7.3m*)

· Underwriting profit of £9.6m giving a combined operating ratio (COR) of 90.5% (H1 2016: profit of £12.9m, COR 86.7%*) supported by risk management initiatives and a benign environment

· Named 'Most Trusted Home Insurer' for the second year running in the Fairer Finance Spring 2017 Home Insurance table

· 'Insurance Company of the Year' in the Better Society Awards, reflecting external endorsement of our continued focus on being the most trusted and ethical in our chosen markets

· £12m will be granted to charity in September, making a difference to people in the wider community

· Of around 5.5m companies in the UK, Ecclesiastical is now in the Top 5 for charitable giving

* The impact of discount rate changes on insurance contract liabilities is now reported within net investment return. Comparatives have been restated to the revised basis.

Mark Hews, Group Chief Executive Officer of Ecclesiastical commented:

"The Group has maintained a strong performance in the first half of 2017, once again demonstrating that running a business in an ethical way, for the greater good of society, is no hindrance to success.

We continued to build our team, particularly in our Art & Private Client niche, with the appointment of key people in early 2017. As the main insurer of iconic and historic buildings - including world heritage sites, palaces, castles, treasure houses, independent schools, cathedrals and churches, we secured significant new business across the Group. Following the introduction of a new, modern and exciting proposition to parish customers in 2016, we continued to strengthen our church relationships at all levels.

Our strategy has focused on strong underwriting disciplines and combined with benign weather and favourable claims patterns, the first half of the year has delivered good underwriting profits and a healthy combined operating ratio (COR). Gross written premiums grew by 9% with a significant contribution from our overseas businesses, particularly in Australia, demonstrating the benefits of our geographic diversification.

Following considerable volatility in financial markets during 2016, we benefited from the steady rise in global markets in the first half of 2017, delivering investment returns of £40.1m. With the prospect of continued uncertainty from the UK leaving the EU and from global, political events, our strong capital position means we are well placed to weather potential volatility. In the first half of the year, we started reporting on a Solvency II basis in which we affirmed our strong regulatory capital position.

As we look ahead to the remainder of 2017, we remain focused on the underlying performance of our business - maintaining stability, achieving strong underwriting disciplines and tightly managing our exposure to risk.

We continue to invest in our business and people through a range of initiatives including our Executive Leadership Development Programme. Ecclesiastical was ranked one of Canada's Top 100 Employers for Young People for the fifth consecutive year. Our people are the driving force for Ecclesiastical being the most knowledgeable, most trusted provider in our chosen markets.

Our purpose is to do good for society. Our strong performance in the first half of 2017 means that in September, we can donate £12 million to our charitable parent to be distributed to good causes. Together, with our customers and business partners, we are building a different kind of company, with a caring, ethical and trusted way of doing business. That is our purpose and what drives our people and our organisation forward."

Key Financial Performance Data

* The impact of discount rate changes on insurance contract liabilities is now reported within net investment return. Comparatives have been restated to the revised basis.

** Solvency II capital requirements are only calculated at the year end, unless there is a material change in business activity or environment. There were no such changes in business activity or environment during the six months to 30 June 2017.

Interim Management Report

Another good half-year result demonstrates the success we have had continuing to transform our business, with a profit before tax of £42.2m (H1 2016: £15.2m).

Our focus is on building a sustainable, ethical, values-driven business over the longer term as we work tirelessly towards our strategic goal of being the most trusted and ethical business in our chosen markets.

We continue to apply rigour in our underwriting discipline, focusing on profitability over growth, and have again delivered stable underwriting profits in the first half. The underwriting profit of £9.6m (H1 2016: £12.9m) reflects the continued benign claims environment in the UK & Ireland, and prior year releases on liability business, with the COR of 90.5% (H1 2016: 86.7%) well ahead of our long-term target of 95%.

Gross written premiums grew by 9% to £166.0m (H1 2016: £151.8m), with a significant contribution from our overseas businesses in Australia and Canada, demonstrating the benefits of our geographic diversification.

Investment markets did not suffer the short-term shocks which followed the EU referendum vote in June last year, contributing to an investment return that was significantly ahead of last year at £40.1m (H1 2016: £7.3m). Our equity portfolio made the largest contribution to the overall return as stock markets continued to grow during the year.

These positive half-year results allow us to make a grant of £12m to our charitable owner, Allchurches Trust, which has been approved by the Board and will be paid in September.

Strategic Update

We continue to work towards our 2020 Group Vision - to be the most trusted and ethical specialist financial services group. Supporting the greater good of society remains our purpose, driven by our target of delivering £100m to charity. In 2016 we launched our new Group-wide change programme which includes considerable strategic investment in our businesses. We have made strong progress to date against both of these, delivering £30m to charity and achieving several significant project milestones.

We are making substantial investments in technology, systems and innovation to enhance agility, efficiency and our effectiveness with customers and intermediaries. We continue to invest in our people, deepening and strengthening our specialist expertise, underpinning our desire to be first choice in our chosen markets.

We remain focused on achieving sustainable and profitable growth, combined with strong financial performance and improved organisational efficiency, in order to achieve our ambition to contribute to society's greater good.

General Insurance

Insurance market conditions remain highly competitive. The growing level of capital surplus in the market continues to exert downwards pressure on prices, as insurers compete in the low-growth economic climate.

We expect low interest rates to continue in the short to medium term as concerns over growth continue to hold back appetite for rate rises, lowering the returns insurers can make on their financial investments.

In this difficult environment we have maintained our focus on profitability, over top line growth, which is at the centre of our underwriting philosophy.

General Insurance - UK and Ireland

UK and Ireland report an underwriting profit of £9.9m and a net combined ratio of 85.7% (H1 2016: £15.9m profit, COR 77.7%). Property claims experience in 2017 has so far been similar to 2016, with benign weather experience contributing to results in both periods. The strong performance of our liability business continued in 2017, but lower levels of releases on prior years means we have not seen a repeat of the exceptional underwriting result from 2016.

UK and Ireland GWP was £115.0m in the six months to 30 June 2017 (H1 2016: £113.5m). Art & Private Client business grew by 44% demonstrating the success of the new policy we launched in 2016. We also saw our position as a leading insurer of heritage, listed and period properties enhanced with 12% growth in our Heritage business. The continued downwards pressure on Education business, as competitors increase their focus on the sector, represents an ongoing challenge. We have again seen high levels of retention in Education, showing the value customers place on our specialist expertise and level of service.

In 2017 we have continued to receive external recognition for our sustainable, ethical and customer centric approach. In May we were named Insurance Company of the Year at the annual Better Society Awards for the second year running, and our home insurance product remains top of the UK's Fairer Finance league table.

General Insurance - Canada

Canada has returned to double-digit growth in 2017, combining a high level of customer retention with continued success in winning new business. GWP of £22.5m (H1 2016: £18.3m) represents a 10% increase in local currency.

The underwriting loss of £1.2m and net combined ratio of 106.2% (H1 2016: £1.7m loss, COR 111.3%) resulted mainly from weather events and large fire related losses. Claims from the Fort McMurray wildfire in 2016 have developed in line with estimates, with minimal impact on current year results.

General Insurance - Australia

Our Australian business has been very successful in generating new business which, along with the positive effects of exchange, has been a key driver in the increase of GWP to £26.9m (H1 2016: £18.0m). A strong pipeline of opportunities means we expect to see growth continue into the second half of the year.

There has been a return to a more normal claims experience in the year to date and although we experienced losses from the high-profile tropical cyclone Debbie, our reinsurance programme reduced the effects at the net level. The underwriting loss for the period reduced to £0.3m with a net combined ratio of 102.4% (H1 2016: £0.7m loss, COR 108.7%).

Group Investment Returns

Overall, investment performance has been better than anticipated following a six month period characterised by relatively low volatility and rising stock markets.

Our investment portfolio delivered profit of £40.1m (H1 2016: £7.3m) which exceeded expectation. The returns were predominantly driven by our equity portfolio, which benefited from its weighting towards UK mid-cap stocks. Our overseas equities also performed well with underlying asset values outperforming benchmarks. Overall, our equity portfolio generated returns of £30.8m, compared to £0.9m in the six months to 30 June 2016 which reflected the market shock following the Brexit vote.

Returns on our bond portfolio were more in line with expectations at £6.1m, reflecting the minimal movement in interest rates.

We discount some of our liability claims reserves in respect of physical and sexual abuse and asbestosis. The reserves relate to liability policies, written over many decades, and represent very long-tail risks. The dramatic fall in bond yields following the UK's vote to leave the EU increased those reserves by £7.8m in 2016. In the corresponding six month period in 2017 a relatively small movement in yields from the year end has resulted in a small decrease of £0.4m.

The returns on investments, held to match our life business of £0.9m, were offset by an increase in life insurance claims reserves of £0.7m caused by the fall in discount rate. (H1 2016: £7.3m return, £7.1m increase in reserves due to changes in discount rate).

With the prospect of continued uncertainty as the UK looks to leave the EU, and on-going emergence of global, political events, we remain cautious in our outlook for the full year. Our approach to management of risks resulting from the Group's exposure to financial markets is outlined in note 4 to our latest annual report.

Asset Management - EdenTree

The growth in fund values, combined with positive net inflows, have had a positive effect on fee income which increased by 14%. Profit before tax remained stable at £0.8m (H1 2016: £0.8m), reflecting our continued strategic investment in the brand and technology.

Our OEIC funds saw gross inflows of £110.5m (H1 2016: £105.8m), with net inflows of £13.2m (H1 2016: outflows of £27.0m) ahead of expectations in light of the on-going investor uncertainty. Funds under management now stand at £2.6bn (H1 2016: £2.3bn)

Broking and Advisory - SEIB Insurance Brokers

In a competitive market, all SEIB's specialist sectors are showing modest increases in new business with turnover growing by 2%. SEIB continues to deliver consistent returns to the Group reporting a half year profit before tax of £1.5m (H1 2016: £1.6m).

Life Business

Our life insurance business, which is closed to new business, reported a profit before tax of £0.4m at the half year (H1 2016: £0.4m loss). Assets and liabilities are well matched, and the small profit is in line with what we would expect as the business runs off.

Balance Sheet and Capital Position

Total shareholders' equity increased by £38.3m to £556.6m in the first six months of the year. Profits in the period and actuarial gains on retirement benefit plans, following outperformance by scheme assets, were offset by a small exchange loss on overseas operations.

We paid the normal first-half dividend to preference shareholders of £4.6m and also expect to make a grant of £12m to our charitable owner in September 2017.

Our Solvency II regulatory capital position remains strong. Own funds increased in line with profits following the healthy investment return, with the growth in value of our equity portfolio also expected to contribute to an increase in the standard formula capital requirement. Overall, the level of Solvency II cover is similar to the position at the end of 2016, and in line with our expectations.

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Group and our approach to managing them are outlined in our latest annual report and in note 1 to these condensed financial statements.

Group Outlook

There is good reason to be positive when looking forward. We have delivered a third consecutive year of strong underwriting profits at the half year but, as always, our short term results are subject to volatile items such as weather and large losses.

We expect competitive pressures in the UK and Ireland to continue to dampen growth, with a modest continuation of the upwards GWP trend being driven by the strong pipeline of opportunities in our overseas businesses.

Our outlook on investment returns remains cautious. Political uncertainty now appears to be part of the foreseeable future and the potential for changes to monetary and economic policy remains. We are well placed to withstand any return to short-term volatility and have substantial headroom over our Solvency II capital requirement.

Our strong understanding and management of the risks we accept, the strength of our capital base and our reputation for providing trusted, specialist expertise means we are confident of delivering measured and sustainable growth over the longer term.

This will enable us to continue delivering a strong return to our ultimate shareholder, enabling us to benefit not only our customers but also the wider community. 

By order of the Board

Mark Hews

Group Chief Executive

22 August 2017

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the 6 months to 30 June 2017

* The impact of discount rate changes on insurance contract liabilities has been presented within net investment return in all three periods. In the 2016 half-year announcement the impact was included in claims and change in insurance liabilities. The prior period has been restated to the revised basis, detailed in note 12.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 6 months to 30 June 2017

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 6 months to 30 June 2017

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2017

* The comparative half-year period has been restated to reflect a reclassification of cash and cash equivalents to financial investments, detailed in note 12.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the 6 months to 30 June 2017

* The comparative half-year period has been restated to reflect a reclassification of cash and cash equivalents to financial investments, detailed in note 12.

NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS

1. General information

The information for the year ended 31 December 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts: its report was unqualified, did not draw attention to any matters by way of emphasis without qualifying the report, and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The half-yearly financial report was approved by the Board on 22 August 2017. The Group results for the six-month periods to 30 June 2017 and 30 June 2016 are unaudited, but have been reviewed by Deloitte LLP whose review report for the period ended 30 June 2017 is at the end of this report.

The principal risks and uncertainties of the Group are in respect of insurance risk and financial risk. 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. The 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 and supported by proactive claims handling. The overall reinsurance structure is regularly reviewed and modelled to ensure that it remains optimum to the Group's needs. The optimum reinsurance structure provides the 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.

The most important components of financial risk are interest rate risk, credit risk, currency risk and equity price risk. The Group is exposed to equity price risk because of financial investments held by the Group which are stated at fair value through profit or loss. The Group mitigates this risk by holding a diversified portfolio across geographical regions and market sectors, and through the use of derivative contracts from time to time which would limit losses in the event of a fall in equity markets. These principal risks and uncertainties, which are unchanged from those as at 31 December 2016, together with details of the financial risk management objectives and policies of the Group, are disclosed in the latest annual report.

The Group derives insurance premiums from a range of geographical locations and classes of business. Depending on the location and class of the risk, there may be a seasonal pattern to the incidence of claims. However, given the mix of business that the Group writes, overall the half-yearly results are not subject to any significant impact arising from the seasonality or cyclicality of operations.

The Directors have a reasonable expectation that the Group will continue in operation for at least twelve months from the date of approval of this report. They assessed the going concern of the Group with reference to its considerable financial resources, high percentage of liquid investments, zero borrowings, strong solvency position, resilience to stress testing and strong risk management framework. Accordingly, the Directors continue to adopt the going concern basis in preparing the half-yearly financial report.

2. Accounting policies

Ecclesiastical Insurance Office plc (hereafter referred to as the "Company"), a public limited company incorporated and domiciled in England, together with its subsidiaries (collectively the "Group") operates principally as a provider of general insurance and in addition offers a range of financial services, with offices in the UK & Ireland, Australia and Canada.

The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34, Interim Financial Reporting.

The same accounting policies and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited annual financial statements.

There have been no newly issued Standards or changes to existing Standards becoming effective during the interim period which significantly impact on the condensed set of financial statements.

IFRS 17, Insurance Contracts, was issued in May 2017 and is effective for periods beginning on or after 1 January 2021. The standard establishes revised principles for the recognition, measurement, presentation and disclosure of insurance contracts. The impact is being assessed in conjunction with IFRS 9, Financial Instruments, which provides a new model for the classification and measurement of financial instruments. IFRS 9 is effective for periods beginning on or after 1 January 2018 although can, under certain conditions, be deferred until 2021 for insurers.

3. Segment information

The Group segments its business activities on the basis of differences in the products and services offered and, for general insurance, the underwriting territory. Expenses relating to Group management activities are included within 'Corporate costs'. This reflects the management and internal Group reporting structure. A change has been made to segments since the prior period as follows:

- The investment management operating result which was previously included as part of the 'investments' result has been reclassified to 'other'.

The prior period has been restated to the revised basis.

The activities of each operating segment are described below.

Segment revenue

The Group uses gross written premiums as the measure for turnover of the general and life insurance business segments. Turnover of the non-insurance segments comprises fees and commissions earned in relation to services provided by the Group to third parties. Segment revenues do not include net investment return or general business fee and commission income, which are reported within revenue in the consolidated statement of profit or loss.

Group revenues are not materially concentrated on any single external customer.

Segment result

General business segment results comprise the insurance underwriting profit or loss, investment activities and other expenses of each underwriting territory. The Group uses the industry standard net combined operating ratio (COR) as a measure of underwriting efficiency. The COR expresses the total of net claims costs, commission and underwriting expenses as a percentage of net earned premiums. Further details on the underwriting profit or loss and COR, which are alternative performance measures that are not defined under IFRS, are detailed in note 13.

The life business segment result comprises the profit or loss on insurance contracts (including return on assets backing liabilities in the long-term fund), shareholder investment return and other expenses.

All other segment results consist of the profit or loss before tax measured in accordance with IFRS.

* The prior period has been restated for the retrospective application of the change in accounting policy, as detailed in note 12.

4. Tax

Income tax for the six month period is calculated at rates representing the best estimate of the average annual effective income tax rate expected for the full year, applied to the pre-tax result of the six month period.

5. Dividends

Interim dividends paid on the 8.625% Non-Cumulative Irredeemable Preference shares amounted to £4.6m (H1 2016: £4.6m).

6. Retirement benefit schemes

The Group's IAS 19 pension deficit reduced by £8.1m during the first half of the year, from £20.5m to £12.4m. There were modest changes in the discount rate and RPI in the first half of the year which led to actuarial losses from changes in financial assumptions of £2.9m. These were more than offset by gains on scheme assets in excess of the discount rate which totalled £12.3m. These movements have been recognised in the statement of other comprehensive income.

There was also a £1.3m increase in the scheme deficit as the Employer's agreed level of contributions was lower than the current annual service cost.

7. Financial instruments' fair value disclosures

IAS 34 requires that interim financial statements include certain of the disclosures about the fair value of financial instruments set out in IFRS 13, Fair Value Measurement and IFRS 7, Financial Instruments Disclosures.

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 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 (i.e. as prices) or indirectly (i.e. 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 current market conditions.

There have been no transfers between investment categories in the current period.

Fair value measurements in level 3 consist of financial assets, analysed as follows:

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. Where material, these valuations are reviewed by the Group Audit Committee.

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.

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, and management's consideration of constituents as to what exit price might be obtainable. Where material, these valuations are reviewed by the Group Audit Committee.

The valuation is most sensitive to the level of underlying net assets, the Euro exchange rate, the price-to-book ratio chosen, an illiquidity discount and a credit rating discount applied to the valuation to account for the risks associated with holding the asset. If the price-to-book ratio, illiquidity discount and credit rating discount applied changes by +/-10%, the value of unlisted equity securities could move by +/-£5m (H1 2016: +/-£4m).

The increase in value during the period is the result of an increase in the price / book ratio based on comparator companies, an increase in the underlying net assets and the weakening of Sterling against the Euro. The increase was partly offset by an increase in the illiquidity discount rate used.

Unlisted debt (Level 3)

Unlisted debt is valued using an adjusted net asset method whereby management uses a look-through approach to the underlying assets supporting the loan, discounted using observable market interest rates of similar loans with similar risk, and allowing for unobservable future transaction costs. Where material, these valuations are reviewed by the Group Audit Committee.

The valuation is most sensitive to the level of underlying net assets, but it is also sensitive to the interest rate used for discounting and the projected date of disposal of the asset, with the exit costs sensitive to an expected return on capital of any purchaser and estimated transaction costs. Reasonably likely changes in unobservable inputs used in the valuation would not have a significant impact on shareholders' equity or the net result.

8. Changes in estimates

The estimation of the ultimate liability arising from claims made under general insurance business contracts is a critical accounting estimate. There are various sources of uncertainty as to how much the Group will ultimately pay with respect to such contracts. There is uncertainty as to the total number of claims made on each class of business, the amounts that such claims will be settled for and the timing of any payments.

During the six month period, changes to claims reserve estimates made in prior years as a result of reserve development resulted in a net release of £15m (H1 2016: £18m) offset by a £nil (H1 2016: £8m) increase in reserves due to discount rate movements.

9. Translation and hedging reserve

10. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

Charitable grants to the ultimate parent company are disclosed in the condensed consolidated statement of changes in equity.

During the period the Company increased the amount lent to Ecclesiastical Insurance Group plc, its immediate parent company, by £6m, as part of the Group's capital management.

There have been no other material related party transactions in the period or changes thereto since the latest annual report which require disclosure.

11. Holding company

The ultimate holding company is Allchurches Trust Limited, a company limited by guarantee and a registered charity.

12. Prior period restatement

During the prior year the Group made a voluntary amendment to its policy of presenting the impact of discount rate changes on insurance contract liabilities within claims and change in insurance liabilities in the consolidated statement of profit or loss, and instead chose to present it within net investment return. The revised presentation matches movements in insurance liabilities due to discount rate changes with movements in the assets backing the liabilities. This results in the claims and change in insurance liabilities being more relevant and comparable from year to year. There is no net impact on profit before tax or shareholders' equity as a result of this reclassification.

The effects of the restatement are detailed in this note, and included throughout the comparatives, where appropriate.

Condensed consolidated statement of profit or loss

For the 6 months to 30 June 2016

In addition to the above, the comparative financial statements for the period ended 30 June 2016 have been restated to reclassify £9,766,000 from cash and cash equivalents to financial investments, to better reflect the expected maturity of the cash held on deposit. There is no net impact on profit before tax or shareholders' equity as a result of this reclassification.

The effects of the restatement are included in the statement of financial position, the statement of cash flows, and throughout the comparatives, where appropriate.

13. Reconciliation of Alternative Performance Measures

The Group uses alternative performance measures (APM) in addition to the figures which are prepared in accordance with IFRS. The financial measures in our key financial performance data include the combined operating ratio (COR). This measure is commonly used in the industries we operate in and we believe it provides useful information and enhances the understanding of our results.

Users of the accounts should be aware that similarly titled APM reported by other companies may be calculated differently. For that reason, the comparability of APM across companies might be limited.

In line with the European Securities and Markets Authority guidelines, we provide a reconciliation of the combined operating ratio to its most directly reconcilable line item in the financial statements.