PERSONAL GROUP HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2007

The board of directors of Personal Group Holdings Plc, providers of employee benefits, insurance and consultancy, are pleased to announce the group’s results as follows:

HIGHLIGHTS

        *              EBITD is defined as earnings before interest, tax and depreciation.

**           The directors have declared a dividend of 3.3 pence per share payable on 27 June 2008 to

                shareholders on the register at the close of business on 13 June 2008.  Shares will be marked

ex-dividend on 11 June 2008. The AGM will be held on 29 April 2008.

Ken Rooney, Chief Executive, commented:

“During 2007 we launched 21 new benefit programmes, including schemes for Somerfields, the Intercontinental Hotel Group, Pirelli and The Belfry.

73 employers with more than 300,000 employees are now using our PERFLEX employee benefit software platform allowing access to both internet and intranet voluntary and employer paid benefit selections.  This is a substantial increase on last year but those preferring to use their computers to select benefits still represent a minority within our customer base.

The relocation of the Berkeley Morgan Ltd, Universal Provident and Rapidinsure operation from Blackburn to our Head Office in Milton Keynes proceeded smoothly and was completed before the end of 2007. 

2008 has got off to a great start with all time record new business production in both January and February.”

CHAIRMAN’S STATEMENT

BUSINESS REVIEW

I am pleased to report that the group’s financial result for 2007, which is now prepared under IFRS, demonstrated continuing strong performance and was in line with market expectations.  Group profit before tax (PBT) decreased by £0.7m to £8.6m (2006: £9.3m) and earnings before interest, tax and depreciation (EBITD) decreased by £0.7m to £9.4m (2006: £10.1m).

As I mentioned in my review last year our lower new business production in 2006 has had an impact on repeat premium volumes and profit in 2007.  2006 was a ‘bad year’ for new business production but a ‘good year’ for profits;  conversely 2007 has been a ‘good year’ for new business production but not such a ‘good year’ for profits. Our policy of charging all our selling and related administration costs in the year they are incurred results in expenses exceeding the income those sales generate in the first year, these being fully recovered at some point in the second year. The effect of this policy is to eliminate what can become large ‘deferred acquisition costs’ on the balance sheet,  reduce the impact of a poor year for sales on profits and leave the value of the annual premium ‘bank’ unimpaired.

After provision for taxation, there was a surplus of £6.4m which was added to reserves.  Equity stood at £26.7m (2006: £23.8m) on 31 December 2007, which is 87 pence (2006: 78 pence) per share.

Our Personal Hospital Plan (PHP), Supplementary Sick Pay, Death Benefit (DB) and related policies have now accumulated a  £12.9m annual premium ‘bank’ of business that has been in force for more than two years and where all original sales costs have been recovered.

Our PHP and DB new business production during 2007 was 37.6% ahead of 2006. What was particularly gratifying was that total sales costs rose by only 2.1%.  When translated into new business acquisition cost ratios the comparatives show that the cost of enrolling £100 of new annual premium in 2007 was £82.50 compared with £114.50 in 2006, a 27.9% saving.  This improved efficiency will help bring 2007 new business into profit earlier.

In keeping with our commitment to treating our customers fairly enhancements were made to the terms and benefits provided by our PHP during 2007 at no extra cost to our policyholders.  25,992

(2006: 24,312) claims were processed, of which fewer than 1% were denied benefit, with the great majority paid in full by return of post.  2007 was the fifth year in succession when no policyholder had their benefit curtailed because their hospital stay exceeded the maximum period payable. No Personal Assurance Plc claims were referred to the Financial Ombudsman Service during the year.

Our collaboration with Unum to market Voluntary Group Income Protection (VGIP) to our host employers got off to an encouraging start in April 2007.  As expected this new approach to the provision of extended sick pay arrangements by employers, where the cost is borne only by those employees who wish to participate, is proving popular. We have launched six schemes to date and have experienced improved take up levels as we have identified areas for improvement and changes to the procedures and terms have been implemented. One of our most recent schemes resulted in a 40% enrolment level from 592 qualifying employees.

I believe VGIP has the potential to grow into a major profit contributor to the group.

During the financial year Berkeley Morgan Group (BMG) companies contributed £1.1m (2006: £1.3m) of PBT. This represented approximately 11.7% of the EBITD of the group and is after making full provision for the costs, amounting to £0.3m, directly related to the closure of the former BMG head office at Blackburn and moving all functions to John Ormond House in Milton Keynes.

Our investment income, including realised and recycled unrealised gains and losses and related expenses, was marginally down from a net income of £0.9m in 2006 to a net income of £0.8m in 2007. 

At 31 December 2007 our government fixed interest securities and cash deposits amounted to £10.7m (2006: £12.5m).   During 2007 we reduced our outstanding borrowings, which were taken out to help fund the acquisition of BMG in 2005, by a further £4.0m, reducing our outstanding debt to £2.0m. 

The group’s joint venture with Abbeygate Developments Limited, of additional office space and residential units on the site adjacent to John Ormond House, is fully let and generated a gross income of £0.4m in 2007 (2006: £0.4m) of which 50% is receivable by the group.

As stated in Personal Assurance Plc’s annual return to the Financial Services Authority the capital resources requirement at 31 December 2007 was £2.9m (2006: £2.9m).  Personal Assurance Plc’s capital resources available to cover this requirement were £7.2m (2006: £7.6m).

DIVIDENDS AND DIVIDEND POLICY

The directors have decided to cease paying three dividends a year and move to the practice of paying four dividends a year as commonly used in the USA.  We have taken this decision as we believe that this change in policy will prove beneficial to shareholders and that the company, which has enjoyed a transparent and steady history of profitability, is well positioned to take this step.

The first of our new quarterly dividends will be 3.3 pence a share and will be payable in June 2008.  Provided business continues as expected we anticipate paying the same amounts in September 2008, December 2008 and March 2009.  Dividends paid in 2007 totalled 12 pence, an increase of 8.1% compared with 2006.  The effect of the move to quarterly dividends is to make the probable dividend during 2008 a total of 16.5 pence per share.  This will include the last of the larger second interim dividends that was paid in March.  It is therefore unlikely that dividends in 2009 will equal those expected to be paid in 2008.

THE BOARD

I’m sad to report the death on 1 March 2008 of John Swarbrick, who served as our chairman from 1994 to 2003.  John was the first non-executive director of Personal Assurance Plc appointed in December 1984 by our outside investors as their nominee.  Starting as a monitor he quickly became a mentor.  John was a first class ‘insurance’ man who had spent most of his working life with Refuge Assurance Group and eventually retired as general manager (general insurance) so he knew the business we are in as well as anyone could.  We could not have had a more capable and eloquent advocate with our investors and a more valuable adviser.  It has now been five years since he left our board and we continue to miss him.

Having served as a non-executive director of Personal Assurance Plc since 1993, and additionally of Personal Group Holdings Plc since it was formed in 1997, Sidney Donald will be retiring at the end of April 2008.  On behalf of everyone at Personal Group who has had the pleasure of working with him, I wish him every happiness in his retirement. Sidney has always been a staunch supporter of our business and will be greatly missed. 

Subject to FSA approval the board anticipate appointing Harry Driver as non-executive director.  Harry was at the Royal & Sun Alliance Insurance Group for over thirty-five years, where he held a wide range of roles including being a member of their UK board for two years.  He is a non-executive director of Congregational & General Insurance Plc.

PROSPECTS FOR 2008

Current trading is in line with directors’ expectations. Our worksite team is larger than it has ever been and is performing well ahead of the same period last year.  We anticipate their continued utilisation at optimum levels during the year.

My thanks to all our policyholders, host employers, employees and associates for their contribution to our continuing success.

Christopher W T Johnston
Chairman

28 March 2008

Enquiries:

Personal Group Holdings Plc                                           Tel: 0207 367 8888 (on 31/3/08).

Christopher Johnston, Chairman                                               01908 605000 ext 235 (thereafter)

Ken Rooney, Chief Executive

John Barber, Finance Director

Bankside Consultants

Simon Rothschild                                                                 Tel: 0207 367 8871

Cenkos Securities plc

Stephen Keys                                                                       Tel: 020 7397 8926

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

		Note	2007	2006
			£000	£000
Gross premiums written			16,007	15,933
Change in unearned premiums			31	20
			________	________
Net premiums written			16,038	15,953
Other income:
Insurance related			7,769	9,227
Non-insurance related			1,746	1,502
Investment income			848	867
			________