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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
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.

Dividend per share

Dividend per share
Definition

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

Aim

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

Combined operating ratio

Combined operating ratio
Definition

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

Aim

We aim to make an underwriting profit. For 2017, we expect to achieve a COR in the range of 93% to 95% for Ongoing operations, assuming a normal level of claims from major weather events and no further change to the Ogden discount rate.

Total costs

Total costs
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

We aim to reduce our expense ratio during 2017, absorbing our investment in future capability. We also aim to deliver a lower commission ratio in 2017, normalised for major weather events.

Basic earnings per share

Basic earnings per share
(pence)
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.

Capital coverage

Risk-based capital coverage
Definition

A measure to show the level of capital held compared to the level that is required, accounting for the risks we face.

Aim

We target capital coverage to the Board’s risk appetite range of 140% to 180% of our SCR. We also aim to maintain a rating in the ‘A’ range from our credit rating agencies.

Net Promoter Score

Net Promoter Score
Definition

Net Promoter Score (“NPS”) is an index that measures the willingness of customers to recommend products or services to others. It is used to gauge customers’ overall experience with a product or service, and the customer’s loyalty to a brand.

Aim

We aim to improve this to achieve strong levels of customer loyalty and retention rates.

Complaints

Complaints
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.

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