A small Yorkshire mutual achieved record growth in new business last year, as it offered a haven during a period of volatility.
Sheffield Mutual Friendly Society, which was established in the 1890s to help working class people who wanted to scrimp and save, is attracting growing numbers of members from around Britain. Many consumers are joining the mutuals because they are disillusioned with the big banks. Tony Burdin, the Sheffield Mutual chief executive, said smaller mutuals were more efficient than their larger rivals in the financial services sector, and offered a more personal service.
In 2014, Sheffield Mutual’s total premium income amounted to £10.2m, an increase of 66 per cent on 2013. The society also recorded an increase in new policies, which it said was largely due to the success of its with-profits Investment ISA.
In 2014, the mutual’s total assets increased by 14 per cent to £77.5m. New policies increased by 20 per cent to 1,555, while full membership grew by eight per cent to 9,189. Including the Child Trust Fund, the society now has 75,086 policies and accounts.
The mutual’s operating result - the equivalent of profits - was £9.4m, compared with £5.1m in 2013. One third of new business was attracted to the mutual by its website. The mutual has just nine staff, who are all “customer facing”, although some of its functions are outsourced for efficiency, such as IT services and internal audit.
A spokesman said: “Despite a volatile year for investors, Sheffield Mutual’s balanced investment fund achieved a satisfactory investment return of around four per cent, which has enabled the society to pay annual bonuses to policyholders worth in excess of £1m. The society maintained a strong financial base and its available capital resources of £9.67m, which are the surplus assets in excess of policy liabilities, are more than twice the regulatory capital requirement.”
Commenting on the results, Mr Burdin, said: “The society’s Investment ISA accounted for most of the new business growth in 2014, which is understandable given that we have paid 4.00 per cent tax-free after charges in the 2014-15 tax year, compared with the best Cash ISA rates of around 1.5 per cent.
“Our new members have come from both our Yorkshire heartland and throughout the UK, driven by the simplicity and convenience of our online policy application facility. Our prospects for 2015 and beyond are very good,’’ he added. “The reputation of our brand and the associated marketing is generating excellent levels of direct business and we have a loyal network of supporting financial intermediaries.
“Furthermore, the changes announced in last year’s Budget in relation to increased ISA limits and pension freedoms should provide additional growth opportunities over the next few years.”
In the 2014 Budget, the Chancellor George Osborne increased the annual ISA allowance from £11,520 to £15,000 a year, as part of a series of measures that aimed to provide investors with greater control over their savings.
Mr Burdin said that Sheffield Mutual offered “mutuality in the traditional form”.
He added: “All the staff are accredited to speak in depth about the products. We’re looking at a similar level of growth - around 10 per cent this year - although we have to make sure that we don’t grow too fast, Our priority is to make sure that all the members get the same deal.”
Mr Burdin started his financial services career at the Halifax Building Society in 1980. He went on to hold senior roles at Leeds Building Society and Scarborough Building Society, and he became CEO of Sheffield Mutual in 2009.
He said yesterday: “The smaller mutuals stick at what they’re doing very well. We are more efficient and do run a very tight ship.”
In 2014, Mr Burdin earned a salary of £87,500 plus bonus and pension contributions of £16,835 – which means his total remuneration was £104,335, compared with £97,350 in 2013.