Monday 17 June 2013

TREVOR CHARLES GROOCOCK DIRECTOR OF MUNICIPAL MUTUAL INSURANCE LTD

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MUNICIPAL MUTUAL
INSURANCE LIMITED
Annual Report and Accounts
for the year ended
30 June 2012
Registered number: 76678 England
Website: www.mminsurance.co.uk
Municipal Mutual Insurance Limited
Annual Report and Accounts
for the year ended 30 June 2012
CONTENTS
Page
Notice of meeting 2
Board of Directors and Executive Committee 3
Chairman’s statement 4
Report on corporate governance 8
Report of the Directors 9
Report of the independent auditors 13
Profit and loss account 15
Balance sheet 16
Cash flow statement 17
Notes to the financial statements 18
1
Municipal Mutual Insurance Limited
NOTICE OF MEETING
Notice is hereby given that the Annual General Meeting of the Company will be held at the Crowne Plaza Hotel,
Buckingham Gate, London SW1 on Wednesday, 10 October 2012 at 11.30 a.m. for the following purposes:
Ordinary resolutions
1. To receive and adopt the Annual Report and Accounts for the year ended 30 June 2012.
2. To re-elect Mr T C Groocock as a Director.
3. To re-appoint PricewaterhouseCoopers LLP as the auditors of the Company.
4. To authorise the Directors to fix the remuneration of the auditors.
Special resolution
5. That Article 1(B) of the Articles of Association of Municipal Mutual Insurance Limited (“the
Company”) be amended by deleting the word “five” and substituting the word “two”.
By order of the Board
T C Groocock
Secretary
4 September 2012
Registered Office
29 Buckingham Gate
Westminster
London
SW1E 6NF
Note:
Any person entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his or her stead. A proxy must be a
member of the Company. A form of proxy is enclosed. This form of proxy, duly completed, and the power of attorney (if any) under which
it is signed, must reach the registered office of the Company not later than 11.30 a.m. on 8 October 2012.
2
Municipal Mutual Insurance Limited
Registered number: 76678 England
BOARD OF DIRECTORS
Chairman
*Sir John Lovill, CBE, DL
T C Groocock, FCA
A C D Castle, FCA (Finance Director)
*C J Winslet, BSc (Econ), FCA, ATII
I A Willett, ACII (Claims Director)
Company Secretary
T C Groocock, FCA
* Non-executive
Executive Committee
Sir John Lovill (Chairman)
A C D Castle
I A Willett
3
CHAIRMAN’S STATEMENT
Introduction
I have pleasure in submitting this statement with the Annual Report and Accounts of the Company for the
year ended 30 June 2012.
Supreme Court hearing – Employers Liability Policy Trigger Litigation
Over recent years the Company’s attention has been focussed upon the achievement of certainty in the basis
of estimation of its insurance liabilities. Action has revolved around litigation as to the extent of the
Company’s obligations arising from asbestos and the asbestos related disease of mesothelioma which by value
account for 76% of MMI’s total liabilities. To achieve this certainty the Company has been a party in a
combined court action known as the Employers Liability Policy Trigger Litigation. After progressing through
the High Court in 2008 and the Court of Appeal in 2009 the case was heard by the Supreme Court in
December 2011 with judgement being handed down on 28 March 2012. I regret to say that the Supreme Court
held against the Company, it being the unanimous view of the five justices that all three MMI policy wordings
operate on a basis such that if the asbestos exposure occurred during the currency of the policy MMI would
be obliged to indemnify the policyholder. The Directors are of course disappointed by the judgement but we
welcome the clarification which it brings in respect of the Company’s liability for mesothelioma claims under
Employers Liability policies written in the period up to 30 September 1992. From the outset this was the main
objective sought by the Board in bringing the litigation which now enables the Company to take steps towards
finalising its affairs.
Financial result for the year ended 30 June 2012
The Company is in the twentieth year of its run-off, having ceased to write business on 30 September 1992.
The combined result of the technical and non-technical accounts was a loss of £80.8 million, with no provision
having been made for the commission for risk payable to Scheme Creditors. The commission for risk would
be payable up to a maximum of £30 million at the conclusion of the run-off but only to the extent of available
net assets and thus remains at nil in the accounts of the Company as the balance sheet at 30 June 2012 shows
net liabilities of £152.8 million. Given the outcome of the litigation outlined above and the consequences that
flow from it which are discussed at greater length below it is highly unlikely that there will be any commission
for risk available for payment to Scheme Creditors at the conclusion of the run-off.
The loss on the technical account for the year of £66.1 million compares to a loss incurred in 2011 of
£26.5 million. The number of valid mesothelioma claims received during the financial year was materially
greater than anticipated and greater than the numbers received in the prior three years which, year on year,
had increased only modestly. The sharply increased loss in the year arises not from the relatively small number
that relate to the additional claims received in 2011/2012 but from the need to strengthen the forecast
provisions of the Company in respect of future years. Whilst the actuarial assessment of the appropriate
provision for mesothelioma prepared this year uses assumptions consistent with those adopted over recent
years, the effect of increased mesothelioma claims received in the year has the effect of changing the
assessment of when the peak in mesothelioma claims will arise. Pushing back the date has a substantial adverse
effect upon the number of future claims and increasing somewhat the average cost per claim has increased
the value of total estimated future mesothelioma claims. With the experience of the number of claims received
in the previous three years it had been felt that the number of mesothelioma claims was plateauing but
unfortunately in light of recent experience this seems to have been an optimistic view. In addition, recent
experience for other heads of claim has also been adverse requiring increased estimates for future abuse claims,
noise induced deafness and other industrial disease claims. This increasing emphasis upon estimated future
claims increases the volatility of the Company’s provisions and makes it effectively impossible to establish
the extent to which the deterioration will be borne out in future incurred claims. The actuarial assumptions
made on such matters as the estimate of the number and timing of future claims, the average cost per claim,
the propensity to claim and the rate of decline in numbers of claims once the peak of claims experience is
past are all factors that will materially alter the outcome of the run-off of the Company’s liabilities. The
Directors accept the actuarial advice provided by KPMG and have incorporated the resulting numbers in the
year’s accounts, as has been the case in all years since the commencement of the run-off.
The Company is now beginning to seek recovery of substantial amounts which have become due under its
reinsurance arrangements as a result of the judgement handed down by the Supreme Court in the Employers
Liability Policy Trigger Litigation. Claimants periods of exposure to asbestos stretch back to the 1950s and
a great deal of work is required to prepare for these recoveries. The Directors believe that amounts recoverable
4
could be materially larger than the relatively modest amounts that are now taken into account. Last year the
Company had an asset of £9.0 million in its balance sheet in respect of reinsurers share of claims outstanding
and as a result of a review just undertaken that figure has now been increased to £12.3million. Almost all of
this amount relates to mesothelioma.
Following upon the certainty gained from the Supreme Court judgement which has removed any doubt as to
where the responsibility for these claims lies there has been a detailed in-house review of all claims files of
settled and outstanding mesothelioma cases to assess the potential of reinsurance recoveries that may now
arise. In addition further work has also now been undertaken in conjunction with our actuarial advisers,
KPMG, as part of their annual IBNR assessment to evaluate as closely as can be within an actuarial context
the value of the reinsurance that may relate to their IBNR assessment. On top of this series of difficult
assessments in respect of reinsurance recoveries for paid and outstanding mesothelioma cases and the
indication of reinsurance in relation to the IBNR element there has to be prudent consideration of the amount
recoverable from an uncertain reinsurance market.
The non-technical account showed a loss for the year of £14.7 million which compares to a profit of
£3.1 million in 2011. The Company’s portfolio of gilts and high quality quoted fixed interest investments
maintained its value over the year. Realised and unrealised gains for the year totalled £1.6 million. The overall
return on the Company’s quoted investments and cash deposits which averaged £132.2 million over the year
amounted to 3.3%, net of investment expenses. Investment return for the year amounted to £4.5 million. The
defensive investment posture of the Company remains unchanged from that adopted when the Company
entered run-off in 1992. Further information on the trading results for the year to 30 June 2012 is provided
in the Report of the Directors on page 9.
Implications of the Supreme Court judgement
Last year it was your Directors’ view that if a positive outcome could be achieved by the Company in the
Supreme Court on the Employers Liability Policy Trigger Litigation a solvent run-off with full payment of
all agreed claims would be achieved. Such an outcome would have enabled the Company to reduce its
insurance obligations by a very substantial amount. Unfortunately the judgement delivered has not enabled
any such adjustment to be made and thus as soon as the judgement was received and assessed the Directors
commenced a review of their responsibilities. Advice has been sought from Slaughter and May, the Company’s
corporate legal advisers and meetings have been held with our regulator, the Financial Services Authority,
with the Scheme Administrator of the Company’s Scheme of Arrangement (see the paragraph below), with
the Creditors Committee and with the Financial Services Compensation Scheme (FSCS).
On the basis of the results for the year and the Balance Sheet contained within this Annual Report and
Accounts there is an accumulated deficit of net assets of £152.8 million. In addition, the run-off projection
which is prepared for each scheduled meeting of the Directors indicates, even if the insurance liabilities do
not deteriorate further from the balance sheet level, that there is forecast to be a continuing material deficit
of net assets throughout the run-off period after account is taken of the benefit of future investment income,
net of management expenses.
Accordingly, the Directors have a duty to consider whether there is any other reasonable alternative prospect
of avoiding insolvent liquidation before they face the prospect of resolving whether to trigger the Scheme of
Arrangement. Triggering the Scheme is an irreversible decision. Alternatives to the Scheme of Arrangement
have been reviewed in conjunction with Slaughter and May and KPMG Insurance Solutions. It seems likely
that none of the options available is viable or would necessarily avoid the prospect of insolvent liquidation.
In addition, discussions are being held with Zurich Insurance which has an ongoing responsibility to the
Company and any assignee to provide claims handling and technical accounting services until the completion
of the run-off. They clearly have a direct interest in how the future of the Company is settled.
As has been the case since the Company was placed in run-off in September 1992 agreed claims have continued
to be paid in full and thus postponing a decision on whether or when to trigger the Scheme of Arrangement
until such time as the conclusion is clear does not prejudice the interest of any stakeholders. A decision on
whether the Scheme of Arrangement should be triggered will be taken by the Directors as soon as the results
of these reviews are finalised and it is unlikely to be long delayed.
It is important to reiterate, especially when triggering the Scheme is in prospect, that the claimants (or their
dependant families claiming following the death of the victim) who contract the terrible disease of
mesothelioma as a result of inhaling asbestos fibres in the course of their employment with local authorities
and similar bodies will not be prejudiced if the Scheme of Arrangement is triggered. The MMI policy provides
indemnity to the local authority and other insureds for their liability to pay compensation to employees who
5
develop mesothelioma and if the Scheme is triggered, subsequent claims payments by the Company at less
than 100% of agreed settlement would be made up to 100% by the local authority or by the FSCS, as
appropriate.
Scheme of Arrangement under section 425 of the Companies Act 1985 (now section 899 of the Companies Act
2006)
The Scheme of Arrangement (the Scheme) continues to be held in reserve to underpin the Company’s
operations with agreed claims continuing to be paid in full.
Under the terms of the Scheme individual statements of total payments and estimated outstanding claims
are sent to each of the 729 largest insurance creditors (the “Scheme Creditors”) twice a year based upon
information available at the end of March and September. As at March 2012 an aggregate amount of
£707.9 million had been paid to 575 Scheme Creditors who had been paid more than £50,000 since the
inception of the Scheme. As and when a solvent run-off can no longer be foreseen by the Directors and there
are no means by which an insolvent liquidation can otherwise be avoided the Scheme will be triggered. In
this event the Scheme Creditors of the Company have undertaken to accept partial payment of claims.
Recoveries in respect of past claims paid would be achieved by means of a percentage levy imposed by the
Scheme Administrator on Scheme Creditors in excess of the first £50,000 and future claims payments would
be reduced by an equivalent percentage. Other creditors of the Company would continue to be paid in full
following activation of the Scheme. Based upon the balance sheet at 30 June 2012 and the run-off projection
that flows therefrom the Directors are of the view that the percentage levy, in current circumstances, would
be modest (see Note 1(a) to the Financial Statements).
The Creditors’ Committee under the Chairmanship of the Rev. Bill Church met in November 2011 and again
in May 2012, following the handing down of the Supreme Court judgement and has continued to be
supportive of the Company’s actions. The Committee monitors the implementation of the Scheme and
supervises the Scheme Administrator, Gareth Hughes of Ernst & Young LLP, in the performance of his duties
under the Scheme. Once more, I should like to take this opportunity to thank the Chairman and his fellow
members of the Committee for their continuing support.
Zurich Agreement
Zurich has continued to handle a substantial proportion of the Company’s commercial lines claims and to
provide insurance accounting services, free of charge, to the Company pursuant to the agreement concluded
in 1995 which will continue until the run-off of the Company’s business has been completed. In order to
ensure that appropriate standards of claims handling are followed by Zurich with regard to the Company’s
claims, liaison with Zurich personnel concerned is maintained continually, including meetings with those
specifically responsible for implementing the 1995 agreement and visits to Zurich claims handling offices by
the Company’s claims staff to inspect samples of claims files.
We remain grateful to Zurich personnel for the assistance they continue to provide to the Company and for
the professional manner in which they undertake the obligations required of them under the agreement.
The Company itself continues to handle certain claims but whether a claim is handled by Zurich, or by the
Company, the underlying approach to all claims is to seek to be firm but fair and to ensure that all claims are
settled as efficiently, equitably and as early as practicable by the Company.
At the end of May 2012 a meeting was held with senior Zurich personnel to re-establish the dialogue that
was suspended some years ago prior to the commencement of the Employers Liability Policy Trigger
Litigation.
Board of Directors and Committees
After a period of poor health Mr S G Errington retired from the Board as a non-executive director on
22 February 2012. I should like to express my sincere and heartfelt thanks to Stuart who after an illustrious
career in the City joined MMI as a non-executive in 1989. His experience and wise counsel have been invaluable
to the Company over the years and we wish him a speedy recovery and the very best of good health in the future.
Following Mr Errington’s retirement it was resolved to wind up the Audit and Remuneration Committees of
the Board and to subsume their activities into the proceedings of the Board itself.
I should again like to take this opportunity of thanking all of my remaining colleagues on the Board for their
unwavering commitment and support over the years. The Executive Directors are a highly effective team who
with dedication seek to achieve the best outcome by their conduct of the affairs of the Company in run-off.
6
Management and Staff
The small team at Buckingham Gate continues to offer a highly skilled and cost effective service that is critical
in optimising the Company’s position during its run-off. The unchanged team continues to serve the Company
loyally and diligently and, on behalf of the Board, I thank each member of staff for all their efforts.
John Lovill
Chairman
4 September 2012
7
REPORT ON CORPORATE GOVERNANCE
Ownership of the Company
The Company is a company limited by guarantee and does not have a share capital. It is owned by its members.
Board Executive Committee
Constitution
The membership of this Committee comprises Sir John Lovill, Chairman of the Board, who also acts as
Chairman of the Committee, together with the Finance Director and the Claims Director. Sir John Lovill,
Mr A C D Castle and Mr I A Willett served throughout the year. The Committee has the power to co-opt
senior management of the Company and advisers for assistance or advice as and when necessary.
Terms of reference
The Committee has responsibility for reviewing any matters which it considers necessary in the interests of
the Company’s business, but particularly those which do not fall specifically within the remit of the Finance
Director or the Claims Director, and for making recommendations to the Board as appropriate. The
Committee meets on an ad hoc basis, but the frequency of meetings depends upon matters arising in the
course of business upon which decisions or recommendations require to be made.
Directors
Information relating to Directors’ emoluments is set out in note 5 to the accounts.
John Lovill
Chairman
4 September 2012
8
REPORT OF THE DIRECTORS
The Directors present their report and the audited accounts of the Company (registered number: 76678
England) for the year ended 30 June 2012.
Activities
The principal activity of the Company during the year continued to be the run-off of its general insurance
liabilities on policies issued up to 30 September 1992, the date on which the Company ceased to write general
insurance business.Scheme of Arrangement
The contingent Scheme of Arrangement under section 425 of the Companies Act 1985 (now section 899 of
the Companies Act 2006) became effective on 21 January 1994, but remains held in reserve. The commission
for risk of up to £30 million due to Scheme Creditors is not payable until the conclusion of the run-off and
would have been shown as a liability in the balance sheet if sufficient assets had been available to pay the
commission after all other liabilities of the Company have been met. As at 30 June 2012 the balance sheet of
the Company showed net liabilities and accordingly no liability to pay the commission for risk is shown at
that date. It seems highly unlikely that there will be an eventual surplus sufficient to pay the commission of
£30 million or any part of it, but this position could change following the current review into alternatives that
the Company might adopt which would avoid insolvent liquidation and a triggering of the Scheme.
In accordance with the terms of the Scheme, a meeting was held with the Creditors’ Committee in November
2011 at which the Committee members were briefed on the progress being made by the Company in the runoff
of its business. A further meeting with the Creditors’ Committee took place in May 2012 following the
handing down of the judgement of the Supreme Court.
Results for, and review of, the year to 30 June 2012
The results for the year ended 30 June 2012 are set out in the accounts on pages 15 to 23 and show a loss of
£80.8 million. This compares to a loss of £23.4 million for the previous year. For the year to 30 June 2012 the
commission for risk payable to Scheme Creditors remains at nil as the accumulated deficit on the balance
sheet at 30 June 2012 has increased to £152.8 million from £72.0 million at 30 June 2011. The commission is
payable at the conclusion of the run-off only to the extent that there are available assets for the purpose.
The loss on the technical account of £66.1 million is attributable mainly to the Employers Liability class of
business, the largest part of which is the mesothelioma account. The Public Liability account showed a loss
for the year as a result of adverse development on the abuse account. There were 2,379 reported claims
outstanding at 30 June 2012, whilst the corresponding figure at 30 June 2011 was 2,127, an increase of 252 in
the year under review.
The Company’s outstanding book of business comprises substantially Employers Liability and Public Liability
claims. In the former class, the Company continues to have significant risk exposure to claims for asbestos
related diseases, in particular mesothelioma, and to other industrial diseases such as deafness. In the latter
class, abuse claims continue to form a major risk category and, whilst there is also some exposure on this
account to asbestos related disease cases, this has now been substantially reduced.
In accordance with the Company’s normal practice, the Directors received actuarial advice from KPMG
Actuaries Pty Ltd (KPMG) to assist in establishing the undiscounted claims provisions as at 30 June 2012.
This advice took into account all the relevant factors which affect MMI’s liability in relation to asbestos
related disease and the estimated incidence of future claims. The Board has accepted advice from KPMG
with regard to the level of outstanding claims provisions to be included in the accounts for the year ended 30
June 2012.
Claims handling responsibilities continue to be shared between the Company and Zurich under the 1995
agreement. This service is provided, free of charge to the Company, until the conclusion of the run-off, and
close liaison is maintained between the Company’s claims staff and the claims teams of Zurich to ensure that
service standards are maintained.
The loss on the non-technical account was £14.7 million for the year ended 30 June 2012, compared to a
profit of £3.1 million for the previous year. Market value of gilts and other fixed interest investments remained
largely unchanged during the year, resulting in realised and unrealised gains amounting to £1.6 million.
Investment income at £4.5 million was lower than the figure achieved in the previous year due to the reduction
in total assets and continuing low interest rates. Operating expenses, including investment management
9
expenses, totalled £5.3 million for the year ended 30 June 2012 compared to £1.9 million for the previous year
and continue to be closely controlled against budget. These expenses include costs amounting to £3.4 million
compared to £0.2 million for the previous year relating to the Employers Liability Policy Trigger Litigation.
Consolidated accounts for the year ended 30 June 2012 have not been prepared. This is consistent with the
accounting policy followed in previous accounting periods because the Company has no day to day control
over the assets and management of its sole remaining subsidiary undertaking, Municipal General Insurance
Limited (MGI). MGI remains in provisional liquidation, which commenced on 9 March 1994 and is subject
to a Scheme of Arrangement which was sanctioned by the Court under section 425 of the Companies Act
1985 (now section 899 of the Companies Act 2006) on 18 December 2003 and which became effective on
15 January 2004. The Company has no expectation of a distribution at the end of the liquidation process.
Principal risks and uncertainties
The management of the business and the execution of the Company’s strategy are subject to a number of
risks.
A paper covering significant risk areas is submitted annually to the Board at the time when the annual
accounts are reviewed.
In the opinion of the Board, the key business risks affecting the Company are as follows:
1. Claims volatility
Continuing claims volatility represents the greatest threat to the Company. Claims activity is continually
monitored, with numbers and values both of newly reported claims and claims settlements being reported
at each Board meeting. The provision for claims incurred but not reported is determined after careful
consideration of the recommendations made by the Company’s actuarial advisers, KPMG, at each year
end. The uncertainty in this area is accentuated by changes in law and legal interpretation including
notably those considered in the Employers' Liability Policy Trigger Litigation described in the Chairman's
Statement.
2. Investments – market and counterparty risk
Throughout the run-off period the Company has followed a risk-averse investment strategy, as set out
in the discretionary management agreement with its fund managers Aviva Investors Limited. This strategy
is “to acquire secure assets which will generate income and capital growth to meet as far as practicable
the cost of current and future liabilities pursuant to the insurance business of the Company”.
As the Company has no premium income, the underlying security of the investment portfolio is
paramount to ensure that the income generated is available to meet payment of claims and operating
expenses. The portfolio is invested in gilts, high quality bonds, debentures, floating rate notes and
certificates of deposit, with the remainder in cash deposits.
Counterparty risk is reduced by imposing a limit on deposits placed with any single institution, and by
permitting deposits to be placed only with double-A and triple-A rated institutions. The assets of the
Company are invested to match the estimated timing of the payment obligations. By so doing the
investment risk is further reduced. Fluctuations in the value of longer dated securities will ultimately be
eliminated as and when the stocks are redeemed at maturity.
3. Outsourcing and business interruption
The Company has received assurances from third parties, in particular Zurich and Aviva Investors, that
appropriate recovery plans are in existence in the event of unforeseen extended interruptions to the
services which are provided to the Company.
4. Staffing
The Company takes action to ensure that staffing levels remain in line with its level of activity and to
this end has appropriate terms and conditions of employment.
10
Key performance indicators (KPIs)
Since the Company went into run-off on 30 September 1992, the scale of its operations has reduced
significantly with the sole activity being the handling and settlement of claims and the only source of income
being investment income.
Under the terms of the Scheme of Arrangement, the first £30 million of any ultimate surplus is payable to
Scheme Creditors as a commission for risk and unless the surplus exceeds this figure, members have no
entitlement. Currently the balance sheet of the Company shows net liabilities and accordingly no liability to
pay a commission for risk is shown. Were the balance sheet of the Company to show net assets, the movement
in the provision for commission for risk would be an indication of the effect of the results for the year on the
position of Scheme Creditors, i.e. a profit would enable the provision to be increased to their advantage, whilst
a loss would have the opposite effect.
Further to the Supreme Court judgement in the Employers Liability Policy Trigger Litigation, the Directors
are reviewing possible alternative options to avoiding insolvent liquidation before considering whether to
trigger the Scheme of Arrangement.
The following KPIs are also relevant to the Company’s performance:
1. Outstanding claims
A comparison of the number of outstanding claims at the beginning and end of the year, after allowing
for newly reported claims in the year, gives an indication of the progress made towards the achievement
of the Company’s primary objective in the year under review. At 30 June 2011, there were 2,127
outstanding reported claims. In the year ended 30 June 2012, there were 945 newly reported claims, and
the number of outstanding reported claims at that date was 2,379.
2. Investment income
The statistics relating to the investment income for the past two years are as follows:
2012 2011
£000 £000
Investment funds at 1 July 138,997 147,766
Investment funds at 30 June 125,369 138,997
Average 132,183 143,382
–––––––––––––––––––––––––– ––––––––––––––––––––––––––
Investment income 4,461 4,650
–––––––––––––––––––––––––– ––––––––––––––––––––––––––
Investment income as a percentage of average
investment funds 3.37% 3.24%
–––––––––––––––––––––––––– ––––––––––––––––––––––––––
Run-off expenses
A charge of £15,523,000 has been made in the current year profit and loss account being the estimated net cost
of managing the run-off of the Company’s liabilities, after deducting estimated future investment income. This
provision is required as estimated future investment income no longer exceeds the estimated cost of the run-off.
Outlook
The Directors are of the view that, unless a reasonable alternative option of avoiding insolvent liquidation
can be found, they will be unable to foresee a position in which future investment income, net of operating
expenses, is adequate to achieve payment of agreed claims in full and hence consideration will be given to
triggering the Scheme of Arrangement. In the meantime the Board is committed to continue to manage the
run-off as efficiently and effectively as has been the case throughout.
Directors
A list of the present Directors is shown on page 3, all of whom served throughout the year. In addition
Mr S G Errington served as a Director until his retirement on 22 February 2012.
Mr T C Groocock retires by rotation in accordance with Article 34 of the Articles of Association and, being
eligible, is recommended for re-election.
11
Directors’ interests
Sir John Lovill and Mr T C Groocock are members of the Company and thus entitled to participate in any
surplus upon the final winding-up of the Company after payment of up to £30 million to Scheme Creditors
as a commission for risk, for which no provision has been made in the accounts at 30 June 2012 as a result of
the net liability position at that date.
Special resolution to be proposed to the Annual General Meeting
Members will note from the Notice of Meeting on page 2 that a special resolution is to be proposed at the
Annual General Meeting to reduce the minimum number of Directors currently prescribed by Article 1(B)
of the Company’s Articles of Association from five to two.
The purpose of this resolution is to simplify future administration of the Company following the final decision
taken by the Board concerning the strategy to be followed either by triggering the Scheme of Arrangement
or by pursuing an alternative option.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Directors’Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law
the Directors have prepared financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the
Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss of the Company for that period. In
preparing these financial statements, the Directors are required to:
● select suitable accounting policies and then apply them consistently;
● make judgements and accounting estimates that are reasonable and prudent;
● state whether applicable United Kingdom Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
● prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
In the case of each of the persons who is a Director at the date of approval of this report:
(a) so far as the Director is aware, there is no relevant audit information of which the Company’s auditors
are unaware, and
(b) the Director has taken all the steps that he ought to have taken as a Director in order to make himself
aware of any relevant audit information and to establish that the Company’s auditors are aware of that
information.
Auditors
A resolution to re-appoint PricewaterhouseCoopers LLP as the auditors of the Company will be proposed
at the Annual General Meeting.
Approved by the Board on 4 September 2012 and signed on its behalf.
T C Groocock
Secretary
12
REPORT OF THE INDEPENDENT AUDITORS
Independent auditors’ report to the members of Municipal Mutual Insurance Limited
We have audited the financial statements of Municipal Mutual Insurance Limited for the year ended 30 June
2012 which comprise the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement and the
related notes. The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 12 the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical Standards for Auditors. This report, including the
opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the
Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the Directors and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial information in the annual report to identify
material inconsistencies with the audited financial statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
● give a true and fair view of the state of the Company’s affairs as at 30 June 2012 and of its loss and cash
flows for the year then ended;
● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
● have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – significant uncertainties in estimating gross claims outstanding
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy
of the disclosures made in notes 1(a) and 12 to the financial statements. Note 1(a) concerns the ability of the
Company to achieve a solvent run-off. There is significant uncertainty over whether a solvent run-off of the
Company’s obligations can now be achieved. If at any time the Directors resolve that a solvent run-off can
no longer be foreseen then the Company’s contingent Scheme of Arrangement will be activated and the
responsibility for the Company’s management will pass to the Scheme Administrator. The financial statements
do not include the adjustments that would result if the contingent Scheme of Arrangement were activated.
Note 12 to the financial statements concerns the significant uncertainties in estimating gross claims
outstanding. The ultimate cost of claims could vary materially from the amounts recorded in the financial
statements.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
13
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
● adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
● the financial statements are not in agreement with the accounting records and returns; or
● we have not received all the information and explanations we require for our audit.
Thomas Robb (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 September 2012
Notes:
The maintenance and integrity of the Municipal Mutual Insurance Limited website is the responsibility of the Directors; the work carried
out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
14
MUNICIPAL MUTUAL INSURANCE LIMITED
PROFIT AND LOSS ACCOUNT
TECHNICAL AND NON-TECHNICAL ACCOUNT
for the year ended 30 June 2012
Note 2012 2011
–––––––––––––––––––––– ––––––––––––––––––––––
£000 £000 £000 £000
Technical account
Claims paid
Gross amount (14,933) (12,811)
Reinsurers’ share 887 490
––––––––– –––––––––
Net claims paid (14,046) (12,321)
––––––––– –––––––––
Change in provision for claims
Gross amount (55,266) (14,143)
Reinsurers’ share 3,250 –
––––––––– –––––––––
Change in net provision for claims (52,016) (14,143)
––––––––– –––––––––
Claims (incurred) net of reinsurance 2 (66,062) (26,464)
––––––––– –––––––––
Balance on general business technical account (66,062) (26,464)
Non-technical account
Investment income
Income from investments 4,461 4,650
(Loss)/profit on realisation of investments (26) 234
––––––––– –––––––––
4,435 4,884
Unrealised gains on investments 1,670 46
Investment expenses and charges (152) (158)
Other charges 3 (5,214) (1,709)
Run-off provision 13 (15,523) –
––––––––– –––––––––
Operating (loss) before taxation (80,846) (23,401)
Tax relating to ordinary activities 8 – –
––––––––– –––––––––
(Loss) on ordinary activities after taxation 15 (80,846) (23,401)
–––––––––––––––––– ––––––––––––––––––
All of the above items relate to discontinued activities.
The Company has no recognised gains and losses other than those included in the results above and therefore no separate statement of
recognised gains and losses has been presented.
15
MUNICIPAL MUTUAL INSURANCE LIMITED
BALANCE SHEET
as at 30 June 2012
Note 2012 2011
–––––––––––––––––––––– ––––––––––––––––––––––
£000 £000 £000 £000
Fixed assets
Land and buildings 9 1,712 1,712
Investments
Other financial investments 10 118,583 132,004
––––––––– –––––––––
120,295 133,716
Reinsurers’ share of technical provisions
Claims outstanding 12 12,250 9,000
Debtors
Direct insurance operations 186 186
Reinsurance operations 1,461 631
Other 1,830 2,127
––––––––– –––––––––
3,477 2,944
Other assets
Cash at bank and in hand 6,786 6,993
––––––––– –––––––––
Total assets 142,808 152,653
Technical provisions
Gross claims outstanding 12 (275,266) (220,000)
Run-off provision 13 (15,523) –
Creditors
Other creditors 14 (4,852) (4,640)
––––––––– –––––––––
Total liabilities (295,641) (224,640)
––––––––– –––––––––
Net liabilities (152,833) (71,987)
–––––––––––––––––– ––––––––––––––––––
Accumulated deficit 15 (152,833) (71,987)
–––––––––––––––––– ––––––––––––––––––
The financial statements on pages 15 to 23 were approved by the Board of Directors on 4 September 2012 and signed on its behalf by:
John Lovill A C D Castle
Chairman Finance Director
16
MUNICIPAL MUTUAL INSURANCE LIMITED
CASH FLOW STATEMENT
for the year ended 30 June 2012
Note 2012 2011
–––––––––––––––––––––– ––––––––––––––––––––––
£000 £000 £000 £000
Net cash (outflow) from operating activities 16(i) (20,028) (13,596)
Return on investments and servicing of finance
Interest received 16(ii) 4,756 4,548
––––––––– –––––––––
Net cash (outflow) (15,272) (9,048)
–––––––––––––––––– ––––––––––––––––––
Cash flows were applied as follows:
(Decrease) in cash holdings (207) (5,213)
Net portfolio investments 16(ii)
UK Gilts and debentures and floating rate notes (15,065) (3,835)
––––––––– –––––––––
Net application of cash flows (15,272) (9,048)
–––––––––––––––––– ––––––––––––––––––
Movement in opening and closing portfolio
investments net of financing 16(iii)
Net cash (outflow) for year (207) (5,213)
Cash flow
Portfolio investments (15,065) (3,835)
––––––––– –––––––––
Movement arising from cash flows (15,272) (9,048)
Changes in market value and exchange rates 1,644 279
––––––––– –––––––––
Total movement in portfolio investments net of
financing (13,628) (8,769)
Portfolio investments net of financing at 1 July 138,997 147,766
––––––––– –––––––––
Portfolio investments net of financing at 30 June 125,369 138,997
–––––––––––––––––– ––––––––––––––––––
17
1. Accounting policies
The financial statements have been prepared in accordance with:
(i) the provisions of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, and with the
Statement of Recommended Practice on Accounting for Insurance Business issued by the Association of British Insurers dated
December 2005 as amended in December 2006; and
(ii) applicable accounting standards together with the historical cost accounting rules modified to include the revaluation of certain
assets.
A summary of the more important accounting policies, which have been applied consistently, is set out below.
Basis of preparation
(a) Going concern
The Company ceased writing insurance business on 30 September 1992. In order to ensure an orderly run-off a contingent Scheme of
Arrangement (the “Scheme”) was put in place and became effective on 21 January 1994. The Directors will continue to pay all creditors
in full until they resolve that a solvent run-off can no longer be foreseen, when the Scheme would be triggered and responsibility for the
Company’s management would pass to the Scheme Administrator, Mr Gareth Hughes of Ernst & Young LLP. In this event up to 729
of the largest insurance creditors, the Scheme Creditors, of the Company have undertaken to accept partial payment of claims. Recoveries
in respect of past claims paid would be achieved by means of one or more percentage levies on Scheme Creditors and future claims
payments would be reduced by equivalent percentages. Other creditors of the Company would continue to be paid in full following
activation of the Scheme.
The judgement handed down by the Supreme Court on 28 March 2012 in the Employers Liability Policy Trigger Litigation was
unfavourable to the Company and hence the Directors are of the opinion that it is most unlikely that a solvent run-off of all the
Company’s obligations can now be achieved. Since the handing down of the judgement, the Directors have been considering whether
there are any viable alternatives to avoiding insolvent liquidation, other than by triggering the Scheme of Arrangement, and this process
will continue until the Directors are in a position to take a final decision regarding the future of the Company. This work is necessary to
ensure that there is no alternative which may be more advantageous to creditors than triggering the Scheme of Arrangement. A Scheme
trigger is irrevocable and will only be undertaken once all other potential solutions have been considered and discounted. In the meantime
the Board is committed to continue to manage the run-off as efficiently and effectively as has been the case throughout.
The current net liabilities position disclosed by the Company’s balance sheet depends on there being no future material adverse
development in the provision made for outstanding claims and on assets being realised at the values shown in the financial statements
or at their estimated disposal proceeds. Details of the uncertainties affecting the provision for outstanding claims are given in note 12.
Similarly, future investment income may vary due to changes in investment rates, the ultimate cost of claims and the timing of claims
payments. The financial statements have been prepared on the going concern basis, which the Directors consider to be appropriate. The
financial statements do not include the adjustments that would result if the contingent Scheme of Arrangement were triggered.
(b) Non-consolidation of Municipal General Insurance Limited
As in prior years the Company’s wholly-owned subsidiary Municipal General Insurance Limited (MGI) has not been consolidated
because of severe long-term restrictions which substantially hinder the exercise of the parent undertaking’s rights over MGI’s assets and
management. These restrictions arose upon the appointment of joint provisional liquidators to MGI on 9 March 1994. MGI is now
subject to a Scheme of Arrangement under section 425 of the Companies Act 1985 (now section 899 of the Companies Act 2006) which,
pursuant to an order of the High Court dated 18 December 2003, became effective on 15 January 2004.
The most recent published accounts for MGI for the year to 31 December 2011 showed zero net worth. The Company has no obligation
to support or fund MGI and therefore its investment in MGI is valued at nil at 30 June 2012 (2011 – nil).
Basis of accounting
The technical result is determined on an annual basis and represents the incurred cost of claims, commissions and related expenses.
Claims incurred
Claims incurred comprise claims and related expenses paid in the year and changes in provisions for outstanding claims, including
provisions for claims incurred but not reported and related expenses. Where applicable, deductions are made for recoveries.
The provision for outstanding claims comprises the estimated cost of claims notified but not settled at the date of the balance sheet
together with the estimated cost of claims incurred but not reported at that date. Claims provisions are calculated gross of any reinsurance
recoveries and are not discounted. Independent actuarial advice has been received to assist the Directors in establishing the provision
for claims incurred but not yet reported at the date of the balance sheet. Note 12 gives further details of the basis on which provision is
made.
Reinsurance
Reinsurers’ share of technical provisions are estimates based upon gross provisions for outstanding claims, having due regard to
collectability (note 12). Reinsurance recoveries in respect of estimated claims incurred but not reported are assumed to be consistent
with the historical pattern of claims reported to date, adjusted to reflect changes in the nature and extent of the Company’s reinsurance
programme over time. The recoverability of reinsurance recoveries is assessed having regard to market data on the financial strength of
each of the reinsurance companies. The reinsurers’ share of claims incurred, in the profit and loss technical account, reflects the amounts
received or receivable from reinsurers in respect of those claims incurred during the period.
18
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
1. Accounting policies continued
Run-off provision
As future investment income no longer exceeds the cost of managing the run-off of the Company to extinction a provision for the
estimated cost of running off the Company less the investment income that is forecast to arise during the period until cash reserves are
exhausted has been shown in the profit and loss account non-technical account.Provision for commission for risk payable to Scheme Creditors
Under the terms of the Scheme of Arrangement, which was sanctioned by the Court in January 1994, the commission for risk of up to
£30 million due to Scheme Creditors is payable at the conclusion of the run-off, when all other liabilities have been met in full. The
commission represents compensation to the Scheme Creditors for assuming the risk under the Scheme of having to make payments to
the Company in order to satisfy the imposition of a levy by the Scheme Administrator, or of having insurance claims payments reduced.
In the opinion of the Directors the provision for commission for risk payable to Scheme Creditors is a liability in accordance with
Financial Reporting Standard 25. The liability is recognised to the extent that net assets are available to pay the commission after all
other liabilities of the Company have been met.
Deferred taxation
In accordance with Financial Reporting Standard 19 deferred tax has been recognised as a liability or asset if transactions have occurred
at the balance sheet date that give rise to an obligation to pay more taxation, or a right to pay less taxation, in the future. An asset is not
recognised to the extent that the transfer of economic benefits in the future is uncertain. Deferred tax assets and liabilities are not
discounted.
Land and buildings
Land and buildings are valued by the Directors with the assistance of independent advice.
Investments
Listed investments are stated at market value at the balance sheet date.
Investment income
Interest is included in the profit and loss non-technical account on an accruals basis.
Investment gains and losses
Realised gains and losses on investments are calculated as the difference between sales proceeds and the cost of acquisition, together
with any diminution in the value of the Company’s assets which is considered to be permanent.
The movement in unrealised gains and losses on investments represents the difference between the valuation at the balance sheet date
and their purchase price or, if they have been previously valued, their valuation at the last balance sheet date, together with the reversal
of unrealised gains and losses recognised in earlier accounting periods in respect of investment disposals in the current year. The aggregate
realised and unrealised surplus or deficit is taken to the profit and loss non-technical account.
Pensions
The Company operates a Group Personal Pension Plan, a defined contribution scheme. Contributions to the Group Personal Pension
Plan are made by the Company based upon amounts of salary sacrificed by each employee at the employee’s sole discretion and are
charged to the profit and loss non-technical account as incurred.
2. Segmental information
2012 2011
Reinsurance Reinsurance
Incurred claims Gross ceded Net Gross ceded Net
£000 £000 £000 £000 £000 £000
Third party liability (69,894) 4,137 (65,757) (26,967) 490 (26,477)
Other direct (305) – (305) 13 – 13
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
(70,199) 4,137 (66,062) (26,954) 490 (26,464)
––––––––––––––––––––– ––––––––––––––––––––– ––––––––––––––––––––– ––––––––––––––––––––– ––––––––––––––––––––– –––––––––––––––––––––
No note on movement in prior years’ claims provisions has been presented because the Company is in run-off and therefore such
information is represented by the profit and loss account shown on page 15. All business results from contracts concluded in the UK.
19
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
3. Other charges
2012 2011
£000 £000
Administration costs 1,830 1,517
Employers Liability Policy Trigger Litigation costs 3,384 192
––––––––– –––––––––
Total other charges 5,214 1,709
––––––––––––––––––––– –––––––––––––––––––––
Claims handling for the Company is undertaken by Zurich at no charge and therefore all expenses have been included in the profit and
loss non-technical account.
4. Employee information
The monthly average number of persons (including executive Directors) employed by the Company during the year was 6 (2011 – 6). All
staff were employed in the run-off administration of the Company.
Staff costs for the above persons were:
2012 2011
£000 £000
Salaries, including amounts sacrificed as pension contributions (Note 6) 568 554
Social security costs 54 45
––––––––– –––––––––
622 599
––––––––––––––––––––– –––––––––––––––––––––
5. Directors’ emoluments
2012 2011
£000 £000
The aggregate emoluments paid to Directors in respect of qualifying services were 587 529
––––––––– –––––––––
The amount included above in respect of the highest paid Director was 190 182
––––––––– –––––––––
Number Number
The number of Directors who were accruing benefits under the defined contribution pension
scheme was: 2 2
––––––––– –––––––––
The emoluments of executive Directors are subject to the approval of the Board. Fees paid to non-executive Directors are approved by
the Board but the non-executive Directors abstain from voting. At 30 June 2012, the Board comprised 2 non-executive Directors (2011 – 3)
and 3 executive Directors (2011 – 3).
An analysis of the remuneration package of each executive Director is set out below:
Benefits Total Total
Salary in kind 2012 2011
£000 £000 £000 £000
A C D Castle 100 5 105 99
T C Groocock 56 6 62 53
I A Willett 188 2 190 182
––––––––– ––––––––– ––––––––– –––––––––
344 13 357 334
––––––––––––––––––––– ––––––––––––––––––––– ––––––––––––––––––––– –––––––––––––––––––––
Non-executive Directors
The level of fees payable to non-executive Directors is in line with that paid by other companies of a similar size. Fees are increased
annually on 1 July in line with percentage increases in salaries awarded to executive Directors and staff.
The charge in the accounts for individual non-executive Directors is set out below:
2012 2011
£000 £000
Sir John Lovill (Chairman) 115 109
Mr S G Errington (Retired 22 February 2012) 66 38
Mr C J Winslet 39 38
––––––––– –––––––––
220 185
––––––––––––––––––––– –––––––––––––––––––––
In addition to their fees, non-executive Directors are eligible for reimbursement of expenditure incurred on the provision of private
medical insurance and in attendance at Board meetings.
20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
6. Pensions
The Company operates a Group Personal Pension Plan, a defined contributions scheme. Contributions to the Group Personal Pension
Plan are made by the Company based upon amounts of salary sacrificed by each employee at the employee’s sole discretion. Amounts
shown in Note 5 above in respect of executive Directors are the gross salaries to which executive Directors are entitled before deductions
by way of salary sacrifice. Contributions made for death in service benefits for both executive Directors and staff during the year
amounted to £12,000 (2011 – £12,000).
7. Auditors’ remuneration
2012 2011
£000 £000 £000 £000
Audit services – fee for the audit of the Company 163 158
Non audit services – taxation 23 13
– insolvency advice 7 1
––––––––– –––––––––
30 14
––––––––– –––––––––
193 172
––––––––––––––––––––– –––––––––––––––––––––
8. Tax relating to ordinary activities
The standard rate of Corporation Tax in the UK changed from 26% to 24% with effect from 1 April 2012. The relevant deferred tax
balances have been recalculated at 24%. The differences are explained below:
2012 2011
£000 £000
Loss on ordinary activities before tax (80,846) (23,401)
––––––––– –––––––––
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 25.5%
(2011 – 27.5%) (20,610) (6,430)
Effect of tax on losses not provided for 20,610 6,430
––––––––– –––––––––
Tax charge in non-technical account – –
––––––––––––––––––––– –––––––––––––––––––––
There is deferred tax not provided on tax losses of £51,090,000 (2011 – £34,330,000), which will be recovered if the Company makes
future trading profits.
By agreement with the Inspector of Taxes, the Company has been treated as wholly non-mutual for tax purposes from 1993 onwards.
9. Fixed assets
Land and buildings
£000
Directors’ valuation at 1 July 2011 and 30 June 2012 1,712
–––––––––––––––––––––
This represents the Company’s sole property, which is freehold, and is occupied by the Company for its own activities.
10. Investments
Other financial investments
2012 2011
Market Market
Value Cost Value Cost
£000 £000 £000 £000
UK Gilts and debentures and floating rate notes 118,583 112,822 132,004 122,047
––––––––––––––––––––– ––––––––––––––––––––– ––––––––––––––––––––– –––––––––––––––––––––
UK Gilts and debentures and floating rate notes are listed on a recognised investment exchange.
11. Subsidiary company
The Company’s interest in its sole subsidiary company, Municipal General Insurance Limited (in provisional liquidation), comprises
shares, the estimated realisable value of which is nil (2011 – nil). The subsidiary has not been consolidated for the reason given in note
1(b).
The subsidiary is wholly and directly owned by the Company, and incorporated in Great Britain. No value is included in the accounts
for this investment for the reason given in note 1(b).
21
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
12. Outstanding claims
2012 2011
£000 £000
Gross claims outstanding 275,266 220,000
––––––––––––––––––––– –––––––––––––––––––––
Provision is made in the accounts for the estimated cost of claims notified but not settled at the date of the balance sheet and for the
estimated cost of claims incurred but not reported at that date. Claims provisions are not discounted for inclusion in the accounts.
Independent actuarial advice has been received to assist the Directors in establishing the undiscounted claims provisions for all classes
of business of the Company as at 30 June 2012. A number of different estimation techniques, generally based upon statistical analyses
of historical experience and particular claim characteristics including appropriate industry benchmarks, are used to calculate the estimated
cost of unpaid claims. The most appropriate estimation technique is selected taking into account the characteristics of the business class
and the extent of the development of each accident year. Large claims impacting each business class are generally assessed separately
on a case by case basis.
The provisions have been made with appropriate prudence having regard to past claims experience, current judicial interpretations of
the law and other relevant information including views as to the rate of inflation. However, no allowance has been made for any new
categories of claim not so far reflected in the experience seen. Furthermore, the inherent uncertainty of the insurance process makes it
likely that historical data will not be wholly predictive of the actual future emergence and development of claims. In addition, a substantial
measure of judgement is involved in both establishing the individual claims provisions and in interpreting past claims experience as part
of the process of establishing the total claims provision. By their nature certain classes of business, such as Employers Liability and
Public Liability are inherently more uncertain than others and the ultimate cost of such claims is more likely to vary as a result of
subsequent developments. Provisions on these classes include substantial amounts for asbestos related and abuse claims.
A significant issue for asbestos claims is the long delay in reporting losses, since the onset of illness and disability arising from the
exposure to harmful conditions may only become apparent many years later. For example cases of mesothelioma usually have a latency
period of between 10 and 40 years. There is substantial actuarial sensitivity in the claims assumptions. For example if numbers of future
reported claims were increased by 10%, the initial average cost of claims were to increase by £15,000 and long run claims inflation were
to increase by 1% per annum, there would be a need to add almost £80 million to mesothelioma claims provisions. In addition the rate
of future notification of abuse claims may vary significantly depending upon the incidence of any as yet unnotified major cases and the
ultimate cost will also depend on judicial rulings as to the common law level of damages.
For these and other reasons the ultimate cost of claims could vary, perhaps materially, from the provisions established and therefore
affect the financial position disclosed in these financial statements.
Provisions are calculated gross of any reinsurance recoveries. Amounts recoverable from reinsurers are estimated separately, based upon
the gross provisions and on a prudent basis having due regard to inherent uncertainties over the amounts and the collectability thereof.
13. Run-off provisionProvision has been made in these accounts for the estimated cost of £26,021,000 for managing the run-off of the Company to extinction,
net of estimated investment income of £10,498,000 that will arise up to the date at which the Company’s resources are estimated to be
exhausted. No comparative figure is shown for the prior year as previously it was estimated that forecast investment income would exceed
the estimated costs of the run-off of the Company. Should the Scheme of Arrangement be triggered and a subsequent levy made by the
Scheme Administrator, the necessity for this provision may be eliminated in susequent years by future investment income exceeding
estimated run-off costs.
14. Other creditors
2012 2011
£000 £000
Other creditors including taxation and social security 4,852 4,640
––––––––––––––––––––– –––––––––––––––––––––
15. Accumulated deficit
£000
At 1 July 2011 71,987
Deficit for the year 80,846
–––––––––
At 30 June 2012 152,833
–––––––––––––––––––––
As explained in Note 1(a) Basis of preparation, Going concern, the Directors are now considering whether there are viable options to
avoiding insolvent liquidation which may be more advantageous to creditors other than triggering the Scheme of Arrangement.
22
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
16. Notes to cash flow statement
(i) Loss on operating activities:
2012 2011
£000 £000
(Loss) on ordinary activities after taxation (80,846) (23,401)
Investment return (6,105) (4,930)
Increase in gross claims provision 55,266 14,143
Increase in run-off provision 15,523 –
(Increase) in reinsurers’ share of claims provision (3,250) –
Increase in other creditors 212 954
(Increase) in amounts due from reinsurers (830) (353)
Decrease/(increase) in debtors 2 (9)
––––––––– –––––––––
Net cash outflow from operating activities (20,028) (13,596)
––––––––––––––––––––– –––––––––––––––––––––
(ii) Analysis of cash flows for headings netted in the cash flow statement:
2012 2011
£000 £000
Interest received 4,756 4,548
––––––––––––––––––––– –––––––––––––––––––––
2012 2011
£000 £000
Net portfolio investments
Purchase of UK Gilts and debentures and floating rate notes (50,831) (4,985)
Sale of UK Gilts and debentures and floating rate notes 65,896 8,820
––––––––– –––––––––
Net cash outflow on portfolio investments 15,065 3,835
––––––––––––––––––––– –––––––––––––––––––––
(iii) Movement in cash, portfolio investments and financing:
Changes
At to market At
1 July Cash value and 30 June
2011 flow currencies 2012
£000 £000 £000 £000
Cash in hand and at bank and deposits with credit institutions 6,993 (207) – 6,786
UK Gilts and debentures and floating rate notes 132,004 (15,065) 1,644 118,583
––––––––– ––––––––– ––––––––– –––––––––
Total 138,997 (15,272) 1,644 125,369
––––––––––––––––––––– ––––––––––––––––––––– ––––––––––––––––––––– –––––––––––––––––––––
17. Transactions with related parties
There are no further disclosures required under Financial Reporting Standard 8 in respect of transactions with related parties.
18. Contingent liabilities
The Company has no material contingent liabilities at 30 June 2012 (2011 – Nil).
19. Ultimate controlling party
The Company is a company limited by guarantee and does not have a share capital. It is owned by its members and as such there is no
single controlling party.
23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
Perivan Financial Print 226158

http://www.mminsurance.co.uk/index.htm

Director Summary





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Director Overview
Trevor Groocock holds 2 current appointment, has resigned from 2 companies and held appointments at 0 dissolved companies. Trevor began their first appointment at the age of 55 and their longest current appointment spans 19 years and 10 months at MUNICIPAL MUTUAL INSURANCE LIMITED.

The combined cash at bank value for all of Trevor's current businesses is £0, with a combined assets value of £0 and liabilities of £0. Roles associated with Trevor Groocock within the recorded businesses include: Company Secretary, Director

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Registered Details
Short name Trevor Groocock
Year of Birth: 1936
Director ID: 900813091

Registered Address
28 Pensford Avenue
Kew
Richmond
Surrey
TW9 4HP


Directorships
2 current appointments
2 resigned appointments
0 dissolved appointments

MUNICIPAL MUTUAL INSURANCE LIMITED


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Company Summary
Status: Active
Incorporated on: 13/03/1903
Company number: 00076678
SIC code: 6603
Business Activity: Non-life insurance/reinsurance

Appointment Details
Function: Director
Appointment Date: 01/10/1995


Latest Key Financials
Cash at bank: £0
Net Worth: £0
Total Current Assets: £0
Total Current Liabilities: £0


Registered Office
29 BUCKINGHAM GATE WESTMINSTER, LONDON, SW1E 6NF

Company Officers
Mr Ian Albert Willett
Mr Trevor Charles Groocock
Mr Trevor Charles Groocock
Sir John Roger Lovill


22 comments:

Zoompad said...



Mr Trevor Charles Groocock.



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9
Directorships 2
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About Mr Trevor Charles Groocock


Mr Trevor Charles Groocock was born in 1936 and the first directorship we have on file was in 1997 at Zelron Limited. Him most recent directorship is with Municipal Mutual Insurance Limited where he holds the position of "Director and company secretary". This company has been around since 13 Mar 1903 . In total, Trevor has held 14 directorships, 1 of which are current, and 13 are previous.

Zoompad said...



Mr Trevor Charles Groocock.



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Municipal Mutual (Capital Market & Treasury Services) Limited
(Company is dissolved)

02136344

Closed: 17 Apr 1992 — Close

Company Secretary

Other Financial Intermediation



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Property Management Limited
(Company is dissolved)

01328131

Closed: 31 May 1992 — Close

Company Secretary

Development & Sell Real Estate



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Mount Manor Property Development Limited
(Company is dissolved)

01596953

Closed: 31 May 1992 — Close

Company Secretary

Development & Sell Real Estate



1994199619982000200220042006200820102012-10M-10M0M0M10M10M20M20M






Prosperity Mortgage Services Limited
(Company is dissolved)

02167794

Closed: 31 May 1992 — Close

Company Secretary

Other Financial Intermediation



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Warwick Northgate Limited
(Company is dissolved)

02158629

Closed: 31 May 1992 — Close

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Investment Management Limited
(Company is dissolved)

02383880

Closed: 31 May 1992 — Close

Company Secretary

Other Financial Intermediation



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Warwickshire Computing Limited
(Company is dissolved)

02401924

Closed: 13 Aug 1992 — Close

Company Secretary

Software Publishing



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Computing Holdings Limited
(Company is dissolved)

02405431

Closed: 13 Aug 1992 — Close

Company Secretary

Holding Companies Including Head Offices

Zoompad said...



Mr Trevor Charles Groocock.



Vitals
Directorships
Map







Directorships

Showing all directorships


















Directorship Lifetime

Company Lifetime











Warwickshire Computing Limited
(Company is dissolved)

02401924

Closed: 13 Aug 1992 — Close

Company Secretary

Software Publishing



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual (Nominees) Limited
(Company is dissolved)

00470379

Closed: 01 Aug 1993 — Close

Company Secretary

Dormant Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Insurance Limited
(Non trading)

00076678

Open: 01 Aug 1993 — Present (19 years, 10 months, 16 days)

Company Secretary

Non-Life Insurance/Reinsurance



1994199619982000200220042006200820102012-100M-100M-50M-50M0M0M50M50M






Housing Standards Company Limited
(Company is dissolved)

02218187

Closed: 01 Aug 1993 — Close

Company Secretary

Other Business Activities



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Insurance, Limited
(Company is dissolved)

01534095

Closed: 01 Aug 1993 — Close

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Zelron Limited
(Company is dissolved)

01242681

Closed: 01 Aug 1993 — Close

Company Secretary

Other Business Activities

Zoompad said...



Municipal Insurance Group Limited
(Company is dissolved)

02275396

Closed: 01 Aug 1993 — Close

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Rimesale Limited
(Company is dissolved)

02163009

Closed: 01 Aug 1993 — Close

Company Secretary

Other Business Activities

Zoompad said...



Mr Trevor Charles Groocock.



Vitals
Directorships
Map







Directorships

Showing all directorships


















Directorship Lifetime

Company Lifetime











Insurance Service For Housing Associations Limited
(Company is dissolved)

01577775

Closed: 01 Aug 1993 — Close

Company Secretary

Other Business Activities



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Zelron Limited
(Company is dissolved)

01242681

Closed: 01 Aug 1993 — Close

Company Secretary

Other Business Activities



19941996199820002002200420062008201020120M0M-25M-25M25M25M






Oqs Organisation Plc
(Company is dissolved)

02136965

Closed: 01 Aug 1993 — Close

Company Secretary

Other Business Activities



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Oqs Management Limited
(Company is dissolved)

02218291

Closed: 01 Aug 1993 — Close

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Mgi Limited
(Company is dissolved)

02182158

Closed: 01 Aug 1993 — Close

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Insurance Service For Housing Associations Limited
(Company is dissolved)

01577775

Closed: 01 Dec 1993 — Close

Director, Deputy Company Secretary

Other Business Activities



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Computing Holdings Limited
(Company is dissolved)

02405431

Closed: 13 May 1994 — Close

Director, Group Company Secretary

Holding Companies Including Head Offices



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Warwick Northgate Limited
(Company is dissolved)

02158629

Closed: 13 May 1994 — Close

Director, Group Company Secretary

Non-Trading Company

Zoompad said...



Mr Trevor Charles Groocock.



Vitals
Directorships
Map







Directorships

Showing all directorships


















Directorship Lifetime

Company Lifetime











Municipal Mutual Computing Limited
(Company is dissolved)

02110660

Closed: 13 May 1994 — Close

Director, Group Company Secretary

Software Publishing



199619982000200220042006200820102012

No net asssets or turnover figures to plot






Warwickshire Computing Limited
(Company is dissolved)

02401924

Closed: 13 May 1994 — Close

Director, Group Company Secretary

Software Publishing



199619982000200220042006200820102012

No net asssets or turnover figures to plot






Oqs Organisation Plc
(Company is dissolved)

02136965

Closed: 27 Jul 1994 — Close

Director, Group Company Secretary

Other Business Activities



199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual (Capital Market & Treasury Services) Limited
(Company is dissolved)

02136344

Closed: 10 Jan 1995 — Close

Director, Group Company Secretary

Other Financial Intermediation



199619982000200220042006200820102012

No net asssets or turnover figures to plot






Prosperity Mortgage Services Limited
(Company is dissolved)

02167794

Closed: 03 Mar 1995 — Close

Director

Other Financial Intermediation



199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Insurance Limited
(Non trading)

00076678

Open: 01 Oct 1995 — Present (17 years, 8 months, 16 days)

Director, Director and Company Secretary

Non-Life Insurance/Reinsurance



199619982000200220042006200820102012-100M-100M-50M-50M0M0M50M50M






Rimesale Limited
(Company is dissolved)

02163009

Closed: 09 Aug 1996 — Close

Director, Group Company Secretary

Other Business Activities



1996199820002002200420062008201020120M0M-20M-20M20M20M






Mount Manor Property Development Limited
(Company is dissolved)

01596953

Closed: 09 Aug 1996 — Close

Director, Company Secretary

Development & Sell Real Estate

Zoompad said...



Mr Trevor Charles Groocock.



Vitals
Directorships
Map







Directorships

Showing all directorships


















Directorship Lifetime

Company Lifetime











Municipal Mutual Investment Management Limited
(Company is dissolved)

02383880

Closed: 09 Aug 1996 — Close

Director, Group Company Secretary

Other Financial Intermediation



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Municipal Mutual Property Management Limited
(Company is dissolved)

01328131

Closed: 09 Aug 1996 — Close

Director

Development & Sell Real Estate



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Zelron Limited
(Company is dissolved)

01242681

Closed: 16 Sep 1997 — Close

Director, Group Company Secretary

Other Business Activities



19941996199820002002200420062008201020120M0M-25M-25M25M25M






Municipal General Insurance Limited
(Non trading)

01302575

Retired: 01 Aug 1993 — 12 Dec 1995 (2 years, 4 months, 11 days)

Company Secretary

Non-Life Insurance/Reinsurance



1994199619982000200220042006200820102012-400M-400M-200M-200M0M0M200M200M






Micklam Limited
(Company is dissolved)

02163190

Retired: 01 Aug 1993 — 12 Dec 1995 (2 years, 4 months, 11 days)

Company Secretary

Other Business Activities



1994199619982000200220042006200820102012-10k-10k0k0k10k10k20k20k






Prosperity Life Assurance Limited
(Company is dissolved)

00058469

Retired: 31 May 1992 — 31 Dec 1994 (2 years, 7 months)

Company Secretary

Life Insurance/Reinsurance



19941996199820002002200420062008201020120M0M100M100M200M200M






Prosperity Investment Management Limited
(Company is dissolved)

02172605

Retired: 31 May 1992 — 30 Dec 1994 (2 years, 6 months, 30 days)

Company Secretary

Other Financial Intermediation



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Prosperity Unit Trust Management Limited
(Company is dissolved)

01977499

Retired: 31 May 1992 — 30 Dec 1994 (2 years, 6 months, 30 days)

Company Secretary

Other Financial Intermediation

Zoompad said...



Mr Trevor Charles Groocock.



Vitals
Directorships
Map







Directorships

Showing all directorships


















Directorship Lifetime

Company Lifetime











Prosperity (Nominees) Limited
(Company is dissolved)

02050296

Retired: 25 Jul 1992 — 30 Dec 1994 (2 years, 5 months, 5 days)

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Prosperity Financial Services Limited
(Company is dissolved)

02136803

Retired: 01 Aug 1993 — 30 Dec 1994 (1 year, 4 months, 29 days)

Company Secretary

Non-Trading Company



1994199619982000200220042006200820102012

No net asssets or turnover figures to plot






Prudential Health Insurance Limited


02123483

Retired: 01 Aug 1993 — 22 Jun 1994 (10 months, 21 days)

Company Secretary

Non-Life Insurance/Reinsurance



19941996199820002002200420062008201020120M0M250M250M500M500M






Dexia Management Services Limited


01935154

Retired: 31 May 1992 — 20 May 1994 (1 year, 11 months, 20 days)

Company Secretary

Auxiliary Financial Intermed

Zoompad said...

THIS CHAPS BEEN PUTTING IT ABOUT A BIT HASN'T HE?

ITS A WONDER HE EVEN FOUND TIME TO GO EAT HIS DINNER AND GO TO THE TOILET, WITH THIS WORKLOAD!

Anonymous said...

Very interesting Zoompad.

And he's a freemason, a huge workload he has.

Also these insurance companies are now awake to the scenario of compensation claims being put before councils and the huge payouts those will have.

Oakwood school stowmarket has over 90 claimants now.

A friend

Anonymous said...

Another observation I have, money is a great corrupter, greed overcomes most people, and that is why you can't trust people, not even people you've known for years, money and or the threat of losing your home or income will make most people turn on their best friend.

I see from todays news that the NSPCC has been infiltrated as one of their staff has been dismissed for giving convicted Stuart hall a character reference, will it never stop, probably not, the nspcc has names of pedophiles and events but chooses not to believe people, it's going to be savile all over again.

Only thing is over 90 victims at one a school in Suffolk and what appears to be a huge paedophile ring all becoming apparent will come out, then what, are hundreds of us lying?

Zoompad said...

I've just been watching the BBC news (I only watch it to see what lies and propaganda they are coming out with every day) and they had that really smarmy looking presenter on and his female side kick, interviewing NAPAC's head Peter Saunders and a child abuse victim called Martin Robinson about the tap on the wrist the seriel paedophile protecting judge Anthony Russell QC gave Stuart Hall yesterday.

Peter Saunders said on telly that he was very glad he would be working more closely with the NSPCC. Not a single word about what Patricia McMillan, Chair of the East Cheshire branch of the NSPCC did, her character reference of hall, or Scandalsons involvement with the NSPCC. But that does not surprise me, I have already had my own run in with Saunders, he does not give a shit about victims of Pindown child abuse, I contacted him years ago about Pindown and Secret Courts and he wasn't only dead nasty to me, he's also libelled me by spreading rumours about me being "Aggressive", I am Assertive, as Pindown victims have to be in order to survive, but I am certainly not agressive, and him spreading lies about me being aggressive is libel

Zoompad said...

If I hadn't stood my ground when all those blasted cheeky as fuck paedos (including Nigel Oldfield) attacked me for 2 years on Mothers for Justice, if I hadn't stood up to those horrible bullies, no-one would ever have known what the Secret Family Courts were using in the UK, syndromes invented by American paedophiles, the False Memory Syndrome Foundation (FMSF), the British False Memory Society, Richard Gardner and Ralph Underwager, it would have all been brushed under the carpet, it was only me keeping the shout up about it going at one time, and didn't they just attack me like a load of angry hornets for that, didn't they just!
When all this is over I should get a great big golden medal for what I did, how bravely I fought those blasted devils. I deserve one, because I fought like a tiger and felt so very very low some days, because of them bullying me. I probably wont get one and didnt do it for that anyway, I fought them because how could I not, how can anyone just let those bastards get away with abusing children and smashing up families? But I'll get my reward in heaven, Jesus said that. I wouldn't want any OBE or anything anyway, because all the worst people seem to get those awards, as far as I am concerned, they're tainted.

Peter Saunders is a liar. I am ASSERTIVE, I am NOT Agressive. There is a big difference between being assertive and being aggressive.

Zoompad said...

Ralph Underwager told all the other paedos to be bold. Good advice wasn't it? Its let us victims of abuse see the horrible bullies for exactly what they are, its flushed them out.

One day the people in this country will see clearly what has been going on.

Zoompad said...

The paedos taking over councelling for victims of abuse surely has to be the nastiest most spiteful thing ever.

They tell us to "get over it" and they make damned sure we cant!

Zoompad said...

I'm specially angry today because yesterday I had to go round my daughters house because she got very agitated about ATOS going round her house, the ATOS woman had a massive thick file on her, its vile the way these IT partners of the British Buggery Club are being allowed to persecute our family, if they think I am going to stop moaning about it they can dream on, the more they persecute me and my family the louder I will scream about it.

My daughter is going bald because of them, how the fuck am I supposed to just ignore what they are doing, are they stupid or just thick?

Anonymous said...

Hi Zoompad

So much of this is political now, I didnt realize napac were also dodgy.

Victims have nowhere and no one to trust.

But as was proved with savile one day all this will come out.

A friend

Anonymous said...

just looking at some of these names here, reminded me that a 13 year old boy being bullied at school went missing two years ago.
after 3 months the police told us he wont be found now as he has been murdered, no child can stay away that long with no money or food. but my mother and the boys family kept searching and last friday now aged 15 he was picked up alive and well in brighton england. we are overjoyed apparently he was working as a bumbadillo on the streets, and had over £1000 in his back pack, and aprt from a sexual disease is fine
we are having a big party for his eturn in victoria st this weekend.
thankyou to al those who helped us lok for him

Anonymous said...

I see in the magazine london review
pictures of jimmy saville in israel
shown with menachem begin the ex israeli chief, who is awardeing jimmy some medal of recognition of services to israel, i then discover that both men were pedophiles, who enjoyed small arab boys, i am sorry i just find the whole thing very sick

Zoompad said...

"I didnt realize napac were also dodgy."

The British Buggery Club dont sent victims of child abuse to anyone decent who truly wants to help then to heal and "get over it", they just want the whole thing to be covered up.

Anonymous said...

I THINK YOUR EMAILS ARE BEING VETTED BARABARA, AS A COUPLE MYSELF AND MY NEINGHBOUR SENT YOU HAVE NOT GONE ON TO YOU

Zoompad said...

Yes, my Hotmail account is being interfered with, I keep getting funny emails for Raspberry Ultra from contacts from ages ago.

I wont say your name just in case I am wrong or you prefer me not to, but I think the two you sent me I got ok, dont know about the other persons though, anyway, I've replied to yours. I dont go on the computer so much these days, (to try to ease the depression and panic attacks, just trying to keep myself well as I can) so if I dont respond to emails straight away it can sometimes be because of that, but yes, I do know my Hotmail and other social networking is being mucked about with, and other anti child abuse campaigners are also having the same sort of problems with their social networking, which is SUPPOSED to be private!