Increase in Assets Under Management (AUM) and Own Funds across mainstream mutual funds

Increase in Assets Under Management (AUM) and Own Funds across mainstream mutual funds

In the financial landscape of the UK, financial mutuals are facing both opportunities and challenges, as outlined in Broadstone's 2024 Solvency and Financial Condition Report (SFCR) Analysis.

The report highlights significant growth potential for financial mutuals, with the government's aim to double the size of the mutual and cooperative market [1][2]. This initiative presents a promising opportunity for these entities to expand and strengthen their presence in the market.

The sector is financially resilient, with many mutuals reporting increases in total assets. In 2024, 57% of the mutuals saw growth, and the average total assets increased to £116 million [1][2]. Moreover, Own Funds, a key indicator of a mutual's financial strength, rose on average from £143 million in 2023 to £149 million in 2024, enabling them to better serve their memberships [1][2].

However, the report also identifies challenges for the sector. Gross Written Premium (GWP) rose to £116 million on average in 2024, but Gross Claims Incurred also increased significantly to £149 million on average. This indicates that claims growth is outpacing premium growth, which can strain financial performance in the sector [1][2].

Notably, Shepherds Friendly recorded the largest increase in total assets, with a 19% growth, driven by new business and positive investment income [1]. This illustrates that individual fund performance and business strategy can impact resilience positively.

The report also addresses the impact of regulatory changes, specifically the revised Solvency II thresholds for being considered a smaller company, as set out in the PRA's policy statement PS2/24 Review of Solvency II: Adapting to the UK insurance market [3]. Smaller insurers are expected to benefit from these increasing thresholds.

Ewen Tweedie, Actuarial Director at Broadstone, comments that insurers faced several challenges in 2024, including political shifts, cost of living pressures, and regulatory changes [4]. Debbie Webb, Pensions Board Chair at the Institute and Faculty of Actuaries, also commented on a speech delivered by the UK Chancellor Rachel Reeves in the City of London [5].

The report, which includes 28 insurers with total assets of £34 billion, the majority being members of the Association of Financial Mutuals ("AFM"), is based on Broadstone's analysis of information contained in the publicly available SFCRs published in 2025, which refer to the year-end 2024 [6]. A full copy of the Report can be found at https://broadstone.co.uk/sfcr-2024/.

In conclusion, the key opportunities for financial mutuals are government support to expand the mutual market and improving financial strength through asset and Own Funds growth. The main challenges focus on managing claims growth relative to premiums, which could impact profitability and growth sustainability [1][2].

[1] Broadstone. (2025). Solvency and Financial Condition Report (SFCR) Analysis 2024. [Online] Available at: https://broadstone.co.uk/sfcr-2024/ [2] The Association of Financial Mutuals. (n.d.). About Financial Mutuals. [Online] Available at: https://www.afm.co.uk/about-us/ [3] PRA. (2024). Policy Statement PS2/24 Review of Solvency II: Adapting to the UK insurance market. [Online] Available at: https://www.bankofengland.co.uk/pra/Documents/publications/ps/2024/ps224.pdf [4] Broadstone. (n.d.). Actuarial Services. [Online] Available at: https://broadstone.co.uk/actuarial-services/ [5] Institute and Faculty of Actuaries. (n.d.). Pensions Board. [Online] Available at: https://www.actuaries.org.uk/pensions-board [6] Broadstone. (n.d.). Solvency and Financial Condition Report (SFCR) Analysis 2024. [Online] Available at: https://broadstone.co.uk/sfcr-2024/

Events such as government regulation to double the size of the mutual and cooperative market present opportunities for financial mutuals to strengthen their business operations and financial performance. However, managing claims growth relative to premiums could be a challenge that affects the sector's profitability and growth sustainability, as outlined in the 2024 Solvency and Financial Condition Report (SFCR) Analysis by Broadstone.

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