skip to main content

Key performance indicators (KPIs)

We have defined eight key performance indicators that allow us to assess our performance against our strategic priorities. These are supported by further performance indicators monitored by management.

Return on tangible equity

Return on tangible equity:16.0% (2011: 10.0%; 2012: 11.5% ; 2013: 16.0%). 13.4% pro forma in 2012
Definition

The return generated on the capital that shareholders have in the business. This is calculated by dividing adjusted earnings by average tangible equity.

Aim

We aim to achieve at least a 15% RoTE. We achieved this in 2015.

Dividend per share

Dividend per share (pence): 12.6p (2012: 8p;). 12.0 pence pro forma full-year dividend for 2012 (based on the final dividend of 8.0 pence per share, representing 2/3 of the full year payout ratio - ie dividends paid prior to the IPO).
Definition

The amount of cash paid to shareholders from the Group’s profit.

Aim

We have a progressive dividend policy and aim to grow the dividend in real terms each year. Additionally, we look to return surplus capital to shareholders when appropriate.

Combined operating ratio

Combined Operating Ratio: 96.1% - 3.1 ppts improvement (2011: 101.8%; 2012: 99.2%; 2013: 96.1%)
Definition

A measure of financial year underwriting profitability. It is the sum of the claims, commissions and expenses divided by net earned premium. This excludes instalment and other operating income, and investment return. A COR of less than 100% indicates profitable underwriting.

Aim

We aim to make an underwriting profit. For 2016, we expect to achieve a COR in the range of 93% to 95% for ongoing operations, assuming a normal annual level of claims from major weather events.

Total cost base

Total cost base: £1,031.9m (2011: £1,134.0m ; 2012: £1,145.1m; 2013: £1,031.9m)
Definition

The cost of doing business, including paying our people, marketing expenses, and spending on infrastructure and IT. This includes the costs we incur handling claims, but excludes any commissions we pay to brokers or partners, and restructuring and other one-off costs.

Aim

Our aim for 2015 was to reduce the level of overall costs by improving efficiency, which we achieved. We will continue to strive to improve operating efficiency and aim to reduce total costs in absolute terms in 2016 compared to 2015. The rate of reduction will be lower than previous years, due in part to the cost of the Flood Re levy.

Basic earnings per share

Investment income yield: 2.1% (2011: 2.3%; 2012: 2.0% ; 2013: 2.1%)
Definition

This is calculated by dividing the earnings attributable to shareholders by the weighted average number of Ordinary Shares in issue.

Aim

We have not set a target. However, growing earnings per share is considered an indicator of a healthy business.

Risk-based capital coverage

Risk-based capital coverage:147.9% (2011: 169.5%; 2012: 145.4%; 2013: 147.9%)
Definition

A measure to show the level of capital held compared to the level that is required, taking into account the risks we face.

Aim

We target capital coverage to remain within our risk appetite. We also aim to maintain a rating in the ‘A’ range from our credit rating agencies. Both of these aims were satisfied in 2015.

Complaints

Complaints (per thousand in force policies): 0.32 (2011: 0.43; 2012: 0.37; 2013: 0.32).
Definition

The number of complaints we received during the year as a proportion of the average number of in-force policies.

Aim

This measure indicates the level of customer service we provide. We aim to improve this over time.

Stay informed

Receive our email alerts on upcoming news.

Quick Links

Check out our
iPad app
Click here
Stay informed
Sign up to the email alerts and receive updates on upcoming news.