Also, eliminating expense overruns and generating enough capital to develop and grow the firm was pinpointed as a huge and fundamental challenge for the sector. With the added costs from Sol-vency II, Mr Osborn said it was important to live within one’s means, while having the financial backing to offer the riskier assets members required.
And while Foresters Friendly has the capital to offer such products – at the end of 2013 it quoted total assets of £184.9m, £19.3m surplus capital and a free asset ratio of 28.7 per cent – he warned that the smaller, non-directive friendly societies may struggle with the added pressures of Solvency II and getting professionals on board. He said: “They will find that costs will outstrip the robustness of their business models. They will be very vulnerable and struggle to sustain their business models.
“The current adage is that if you take risk you must put capital aside, which benefits the stronger-capitalised societies. The weaker ones cannot take risk and their members may look elsewhere.”
He also claimed that Foresters Friendly offered a range of other benefits that only one other competitor was still able to deliver. As part of its branch model, which sees members from different postcodes attend subsidised social events and meet in pubs and community centres three to four times a year, there are a number of additional discretionary benefits to help entice members.
Aside from charity fundraising events, the mutual offers members access to a 24/7 GP help-line, counselling service, will-writing support and hardship grants. According to Mr Osborn, these extra services meant it spent £853,000 on its members last year, and £894,000 in 2012.
As a friendly society with strong capital behind it, Mr Osborn said it listens to product requests from its members. By attending Foresters’ AGMs and regional meetings, its members rallied for a lower premium investment product, which is due to be launched at the end of 2014.
On the importance of listening to members, Mr Osborn added: “Our benchmark is to satisfy current members before we go out in the market. Our members are very forward in their views. And it is their society; we are just looking after it for them.”
After turning the corner on a couple of difficult years, Mr Osborn is looking forward to an exciting future. With further acquisitions on the cards and ambitious plans to grow its membership, his current goal is to get the almost 180-year-old mutual in great shape for future centuries.
