Our vision is to be the first place people turn to when it comes to fixing, maintaining and looking after the home, recognising the problem that homeowners have throughout the world in finding a reliable tradesman and paying the repair bill in the event of a home emergency.
Our strategy is to be the leading provider of home assistance and appliance warranties to homeowners in the UK, Europe and US by offering customers annual membership.
We deliver this strategy through leveraging our product development knowledge, direct consumer marketing expertise, network management and service delivery capabilities combined with long-term relationships with business partners including utilities, appliance manufacturers, retailers and financial services companies.
The results we are announcing today show strong progress in our worldwide membership businesses and reinforce our strategy to focus exclusively on policy membership.
Our businesses
We now have access to 56m households globally, of which 32m are outside the UK. We sold 2.7m gross new policies in the year and increased total policies by 14% to 9.2m (2008: 8.1m).
UK Membership
Our UK business now provides cover for anything that goes wrong in the home that is not covered by household insurance such as pipes and wires, furniture and appliances.
UK Membership metrics are shown here.
Revenue decreased by 3% to £228.2m (2008: £236.5m) and operating profit1 increased by 14% to £87.2m (2008: £76.3m). We signed a new underwriting agreement in September 2007 with Inter Partner Assistance whereby from 1 October 2007 they took the full risk on new policy sales and we ceased reinsuring 49% of the risk through our captive insurer. The change in underwriting arrangements has reduced the reported revenue for UK Membership in the year and the phasing of profits between the first and second halves of the year. Excluding the impact of changes in underwriting arrangements, revenue in UK Membership grew by 14%.
The business achieved gross new policy sales of 1.83m (2008: 1.68m) with retention rates remaining high at 83% (2008: 85%). We continued our successful strategy of increasing value per customer through the continued success of combined policies which now represents 14% (2008: 8%) of our customers with income per customer growing 18% to £59.
1 Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs, see Financial review and notes 5 and 14.
2 Excluding amortisation of acquisition intangibles, impairment charge and exceptional operating costs, see Financial review and notes 5 and 14.
