Partnership Assurance : Trading Update ahead of Investor Day

26 November 2014

Partnership Assurance Group plc announces trading update ahead of investor day

Trading update

The following current trading information will be included as part of the Partnership Assurance Group plc ('Partnership') investor day today.

Partnership's Q4 performance to date is in line with guidance given at the Q3 announcement, with sales of individual annuities well below 50% of pre-Budget levels reflecting the compound effect of both lower quotes and conversion rates. As also indicated at the time of the Q3 announcement, it is possible that deferrals could increase further as we approach the implementation of the Budget proposals in April 2015.

The DB pipeline is strong and growing but quarterly completions are likely to remain lumpy.

The cost management programme announced on 23 June 2014 is tracking well against announced savings of £21 million versus the planned 2015 cost base. Headcount was reduced from 566 at 31 March to 445 at 30 September 2014. Restructuring costs are expected to be within previous guidance of £3 million.

The economic capital surplus at 30 September was £163 million, representing coverage of 149% (30 June 2014: £170 million/153%). The Board continues to maintain a target minimum coverage ratio of 125% in normal conditions. There has been no change to Partnership's pricing discipline, which seeks to ensure each policy covers its own capital requirement. However, as guided previously, while the individual annuity market remains subdued, the economic capital coverage ratio is expected to reduce.

Discussions with potential partners regarding the launch of a point of need care annuity in the US are progressing well and a reinsurance based market entry strategy has now been selected. Further updates will be communicated in due course.

Investor day

Partnership will today be hosting a presentation for investors and analysts to provide an update on the business and strategy. 

The presentation will commence at 9am at Furniture Makers Hall, 12 Austin Friars, London EC2N 2HE

A copy of the presentation will be available on our website at 9am. The event will also be available to view via a live webcast. Registration is via our website www.partnership-group.com

Commenting on today's announcement, Steve Groves, CEO commented:

"In our presentation to investors and analysts this morning, we will be providing an update on the business and the various initiatives, which we are pursuing to diversify and grow the business, including our Defined Benefit proposition and the market opportunity for a care annuity in the US. Our discussions with potential US partners are progressing well and a reinsurance based market entry strategy has now been selected. "

Enquiries

Further information

A copy of this announcement is available on Partnership's website www.partnership-group.com

The financial information contained in this announcement has not been audited or reviewed by the Group's auditors.

Financial calendar

Forward looking statements

This announcement in relation to Partnership Assurance Group plc and its subsidiaries (the 'Group') contains, and we may make other statements (verbal or otherwise) containing, forward-looking statements about the Group's current plans, goals and expectations relating to future financial conditions, performance, results, strategy and/or objectives.

Statements containing the words: 'believes', 'intends', 'expects', 'plans', 'seeks', 'targets', 'continues' and 'anticipates' or other words of similar meaning are forward-looking (although their absence does not mean that a statement is not forward-looking). Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the Group's control. For example, certain insurance risk disclosures are dependent on the Group's choices about assumptions and models, which by their nature are estimates. As such, actual future gains and losses could differ materially from those that we have estimated.

Other factors which could cause actual results to differ materially from those estimated by forward-looking statements include but are not limited to: domestic and global economic and business conditions; asset prices; market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of governmental and/or regulatory authorities, including, for example, new government initiatives related to the provision of retirement benefits or the costs of social care and the effect of the European Union's "Solvency II" requirements on the Group's capital maintenance requirements; the impact of inflation and deflation; market competition; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, gender pricing and lapse rates); risks associated with arrangements with third parties, including joint ventures and distribution partners; inability of reinsurers to meet obligations or unavailability of reinsurance coverage; the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which the Group operates.

As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set out in the forward-looking statements within this announcement. The Group undertakes no obligation to update any of the forward-looking statements contained within this announcement or any other forward-looking statements it may make. Nothing in this announcement should be construed as a profit forecast.