NFU Mutual has this week issued a justification for the £2 million plus remuneration package given to their chief executive last year, despite the UK’s leading rural insurance company posting a quarter of a billion pound plus loss.

The annual report shows Lindsay Sinclair received a basic pay of £577,458, benefits worth £108,407, a bonus of £619,005 plus £699,966 from a Long Term Incentive Plan giving a total of £2,091,454 in 2018. This was marginally down on his 2017 package of £2,123,111

Justifying the £2 million plus package, a spokesperson for the Mutual said: “We need the right person in place to lead NFU Mutual and we believe people should be paid the market rate and that includes the full range of remuneration including a benefits package. We need to offer that market rate to be able to attract the right people.

“NFU Mutual competes with other large financial institutions. This means we have to pay the market rate for an appointment at that level including base pay, benefits and both short and long term incentives.”

The spokesperson added that as a mutual organisation, the company was transparent on both the chief executive’s pay and the also the rewards for the Board directors. As such members would be able to vote on these at the annual meeting to be held in late June.

The annual report also reveals that, due to losses in the Mutual’s investment portfolio, the overall financial loss for the company last year was £290 million; this despite the core insurance business which underwrites more than £1.5 billion in annual premium in life and general insurance continuing to perform strongly in 2018 with a profit of £142 million.

Explaining the financial loss, the annual report records that in 2018, because of political, social and economic uncertainty on a global scale, the company’s investments were ‘significantly impacted.’

Despite the loss in value, the Mutual said it was positive about the future. “Our financial position remains in excellent shape. Our solvency levels are very strong and we are well positioned for 2019.”

Backing this view up, the Mutual’s spokesperson added: “We have always taken a long-term view on our investments and our great financial strength means we are resilient to short-term changes in the market. While stocks and shares may have had a turbulent year across the globe, we believe our investments in companies in the UK and aboard will deliver better long-term value for our members and we expect returns will improve substantially over time.”

Commenting on prospects for the current year, the spokesperson said: “We expect the global markets to enter a phase of higher risks and lower returns compared to the last 10 years. The first half of the year has largely seen markets behave as expected. Each of the major economies face their own risks, whether it be Brexit, trade wars, political uncertainty in the EU or the risk of rising US interest rates.”

In three years’ time in 2022, the Mutual will celebrate one hundred years working with the farmers’ unions both north and south of the Border with a countrywide network of local agents working for both the insurance company and the farming lobby organisations. Last year, the Mutual donated £577,000 to NFUS in recognition of this link.