Chairman's Statement

After a year of record profit in 2010 the group has once again achieved its best ever first half year results in the six months ended 30 June 2011. Group profit before tax (PBT) was £4.7m (2010: £4.6m), an increase of 3.0%.

This strong performance reflects the continuing momentum in the growth of the group’s core employee benefits and insurance  activities, namely our hospital, convalescence and death benefit plans. Annualised new business premiums from these core products written in the first six months of 2011 was £4.0m, which in relation to equivalent periods in 2009 and 2010 represents an increase of 21.2% (£3.3m) and 14.3% (£3.5m) respectively.

The record PBT figure has been achieved despite increases in Insurance Premium Tax (which the group has itself absorbed in relation to existing policies at 31 December 2010), Value Added Tax and employer National Insurance contributions. The figure also takes account of the full charge for the costs associated with the departure of the former group chief executive.

Claims incurred have remained in line with the board’s expectations and effective cost control has resulted in a slight decrease in insurance operating expenses.

Berkeley Morgan Group (BMG), the group’s IFA and broker subsidiary, has performed marginally ahead of the board’s expectations and continues to make a valuable contribution to group PBT.

Since 30 June 2011 the group’s underwriting subsidiary, Personal Assurance Plc, has begun to underwrite some of BMG’s private medical insurance business. The board expects that, longer term, group PBT will be enhanced by this and other underwriting opportunities where the group has direct knowledge of claims histories and can put in place appropriate reinsurance arrangements.

As previously mentioned in my statements, investment income continues to be adversely affected by low interest rates.

During the first six months of 2011 investment income receivable was £0.1m (2010: £0.1m).

The group’s investment properties continue to make a small contribution to PBT. In February 2011 a firm of chartered surveyors moved into the second floor of John Ormond House, replacing a previous tenant there.

The group balance sheet has been further strengthened during the period. Equity at 30 June 2011 was £24.4m (2010: £22.5m) and includes net cash balances (including bank deposits classified under IFRS as financial assets) of over £13.0m
(2010: £10.8m).

The first and second dividends of 2011, both of 4.35p per share, were paid in March and June. The third dividend, also 4.35p per share, was paid on 23 September 2011, and the directors expect that a fourth and final dividend for 2011 will be paid in December 2011. This would give a total for the year of 17.4p per share (2010: 17.0p per share).

Ken Rooney, previously group chief executive but latterly group chief operations officer, resumed the role of group chief executive in April 2011, and continues to undertake this role pending the external appointment of a new chief executive.

Despite the uncertainties of the economic climate, the outlook for the second half of the year remains encouraging for the group, with core products and routes to market continuing to be well received in a competitive environment. Trading remains in line with the board’s expectations and the board expects that the second half of the year will show even further profit growth.

Personal Group is a dedicated and talented team. On behalf of the board I would like to thank the team, our host companies and policyholders for their continuing loyalty.

Chris Curling
Chairman
27 September 2011