[fusion_text]Dear Member,

I hope this update finds everyone in good health. Last year we added a bi-monthly CEO Connect message to our regular Unimutual communication to provide Members and brokers with additional high-level information and to assist with your planning. At the time we could never have envisaged the challenges that 2020 would throw at everyone.

Whether it is closing or restricting campuses, changing teaching methods, dealing with student accommodation risks, repurposing of resources or navigating the impact for international students, Unimutual Members have been impacted by COVID-19 pandemic as hard as just about any sector. We are aware that the impact financially and emotionally has been enormous and there is still a great deal of uncertainty about the future.

We can’t remove that uncertainty for you, but we are committed to continue to provide support through this challenging period. We want to keep you updated about your mutual, the details of your cover, the progress on claims and your risk environment along with any other relevant information we can provide.

Unimutual Protections

As you are aware, losses arising as a direct consequence of a Pandemic (such as COVID-19) are excluded from property and some other insurance policies. The lack of available cover, in particular for loss of revenue, is a source of great frustration around the world and is an ongoing global debate.

The main reason the insurance industry does not provide coverage is that the exposure from a global Pandemic is likely to be too big to handle. Pandemics have the potential, as evidenced by the amount of financial support being provided by governments to sustain national economies, to bring the entire insurance industry to its knees. In this regard Pandemic falls into the same category as war or nuclear event. See our FAQ on COVID-19 coverage for further clarity.

We have also provided an FAQ on COVID-19 lockdown in recognition of the way in which Members day-to-day work is changing. Covering every potential circumstance was not possible however, so again, please contact the team if you have further questions.

As always, we will continue to be flexible and pragmatic and we thank our reinsurers who are assisting us in this approach.

Unimutual Financial Strength

Unimutual is Member-owned and exists solely for the benefit of Members.

The financial structure is designed to transfer the vast majority of risk to reinsurers and to hold an amount of free reserves to manage year-to-year volatility that can arise from retained claims. Reinsurance is purchased to protect the Mutual and its Members from a large individual loss or losses from a single event, as well as from a year where total aggregated retained claims are above budget.

Contributions for 2019/20 were set to ensure that they are sufficient to cover the cost of reinsurance, retained claims and expenses, and to generate a small expected surplus (of around 3% of total contributions).

After a benign 2018/19, the 2019/20 protection year has started poorly from a claim perspective. A significant hail event in January will give the mutual its largest ever loss, and a number of other claims (another storm and a fire) are now being managed, by our claims team and progressing normally with our reinsurers despite the disruption that has been caused generally by COVID-19.

It is important to note that, even with these claims (and losses on a small holding of equity investments), the forecast is still roughly a break-even position for your Mutual in 2019/20 sustaining our sound financial position. This position will not change with further claims this year due to the structure of the reinsurance program.

As such, Unimutual supported by leading global reinsurers, remains in a strong financial position.

2020/21 Outlook

As mentioned above, annual contributions are set to cover reinsurance costs, budgeted retained claims, expenses and a targeted level of surplus set by the Board each year.

The cost of reinsurance remains the significant driver of contribution rates. Falling reinsurance costs four or five years ago enabled Unimutual to pass on significant rate reductions to Members. However, in recent years, global factors including natural peril losses (including those from Australia) have seen reinsurance rates increasing.

Reinsurers are looking to rectify a number of years of unprofitable business – globally, by territory, and on individual portfolios. This has not been helped by global investment markets and, for those with life and health operations, the impact of COVID-19.

Recent indications are for continuation of higher rates and tighter conditions irrespective of the COVID-19 impact.

Whilst it is important to flag the upward pressure for 2020/21 we want you to know that we fully understand the financial pressures facing our Members and we are already engaging with Unimutual’s reinsurers and considering a range of different options to ensure the best possible outcome for Members at next renewal.

Usual Services Continue

The Unimutual team is working remotely but remains fully operational. We are appreciative of the ongoing engagement from Members and brokers and encourage you to continue to reach out to the team.

We continue to interact with Members around risk management and our latest Emerging Risk Report looks at the operational risks associated with COVID-19.

We have also provided further guidelines around protecting your research in controlled environments and are pleased to see the continued focus from Members on these challenges, despite the huge number of competing projects currently underway.

Given social distancing requirements, the team are now aiming to hold a Virtual Member Visit with any Member who is interested in the coming months. We can provide updates, better understand your challenges, and answer any questions or concerns. We will be in touch in the coming weeks to arrange a virtual visit.

We are in an environment where every day presents new and unique challenges and we will continue to work with you to navigate through them and support you.

Please do not hesitate to contact me, or any of the team, at any stage.[/fusion_text]