Centrus Impact Report 2022

Executive Summary

The impact that we have on people and the planet sits in the same row as our financial performance. This commitment is embedded within our legal articles at Companies House, confirming obligations beyond our duties to our shareholders and acting as a public commitment to our values as a company.

As global sustainability thresholds are threatened, every industry has a part to play in adding circular credibility to the economy and using their platform for positive contribution. At Centrus, our sectors of operation have tangible impact on the environment and on society. As a service provider, our action and output on our value chain is far greater than our supply chain inputs and in this service provision, people are our most valued asset.

So that our people know how their role contributes to ESG, we strive to set an exemplary internal footprint.

This impact report shares some of our work and progress to drive Finance with Purpose and the inclusion and awareness help stimulate external advocacy of sustainable business with our clients.

Download our impact report.

For more information, please contact George Roffey, Chief Sustainability Officer – Centrus

Insurance premiums are rising for RPs. What can be done?

Rising insurance premiums

Since 2020, insurance premiums have increased substantially, putting further pressure on operating margins for the sector.

A combination of fire safety, weather-related risks, inflation in reinstatement costs and some insurers getting cold feet has resulted in a very different insurance market today.

The insurance industry is putting a greater emphasis on risk exposure, which is subjective.

Loss ratios, which are factual and backward-looking, are probably a source of frustration for the sector given the rate of increase in insurance premiums.

A bit like pricing the risk of default on a loan, pricing the risk of a weather-related event involves a huge amount of data, an interlinked financial system and a degree of judgement.

After the financial crisis, the risk premium paid for capital increased substantially but normalised in about a year.

Despite a recent ‘once in a 100 years’ pandemic and a cost of living crisis, risk premium on debt or credit spread is currently relatively low by historic standards.

However, the price of re-insurance is probably going to stay high for the foreseeable future due to a more volatile global climate.

What can RPs do to keep the price of insurance under control?

Some of the largest RPs in England have strong enough balance sheets to explore the possibility of a captive insurance agent, which are insurance companies within a group that access the re-insurance market directly.

The credit strength of some RPs could in theory lead to attractive pricing. However, given the legal and regulatory complexity, it is understandably very rare in the sector.

Increased excess amounts or partially self-insuring up to a set level is the most obvious option.

Full self-insurance, which involves setting aside funds to cover potential losses instead of purchasing insurance coverage, is not a particularly attractive option for a risk-averse sector with a long track record of raising capital and no defaults.

Lenders typically require RPs to maintain insurance on charged stock ‘that is usual for RPs and whose practice is not to self-insure’.

Where higher excess levels sit within the definition of ‘usual for RPs’ is an interesting question.

If borrowers take significant action to reduce insurance premiums by rebalancing risk, lenders may seek to adjust their approach to loan security or request detailed risk assessments and mitigation plans.

The importance of quality stock data and information knows no bounds.

At a time when business plans are stretched and headroom on loan covenants is low by historic standards, introducing elements of self-insurance or a potential and material one-off cost of insurance excess needs some careful thought.

How much headroom would be eroded? How much time would there be to react? What is the potential liquidity impact? Is there a reputational risk with other stakeholders?

There may be a way for RPs to collaborate to either pool risk or combine credit strength to reduce the cost of insurance.

However, this is a highly complex proposition with varying degrees of risk and risk management across RPs.

A specialist insurer with a different way of underwriting the risk for the difficult pockets of stock is probably the best alternative to explore if conventional insurance solutions are not economic.  

Web 3.0 and blockchain technology could reduce insurance premiums in the future by enabling the creation of smart contracts, streamlining through decentralised insurance platforms, and improving risk assessment through big data.

While RPs wait in hope for this potential revolution, they will want to tread carefully and consider the potential treasury impact of any options being considered.

Originally published in Social Housing Magazine

Market reaction to recent Thames Water announcements & press coverage​

Key events

27th June
Thames Water CEO, Sarah Bentley, steps down which had not been expected by the market
28th JunePress including BBC and the FT articles indicated that Government ministers have discussed the potential for a temporary nationalisation of Thames Water
29th JuneMoody’s published a comment entitled “CEO resignation likely to increase scrutiny, but strong liquidity supports credit quality” in response to the ongoing situation but did not take any rating action
30th JuneOne of the largest Thames Water shareholders, Universities Superannuation Scheme indicated it would support a turnaround plan
30th JuneS&P put Thames Water’s Class A and B debt on credit watch with negative implications over uncertainties around the management transition and timing of the additional equity injection 

Market reaction

  • News surrounding Thames Water led to increases in its bond spreads, which are most pronounced at Thames HoldCo (Kemble) where spreads initially widened to +2,241 bps but have since tightened.
  • The impact on wider water and regulated utility sector spreads is relatively mild, with some modest spread widening seen at Opco level but mostly not out of line with a slight widening of iBoxx £ Utilities 10+ bond spreads over the same period. New issuance in recent days from Cadent and Heathrow implies robust demand for infrastructure credit.

Centrus view

The impact of recent news flow has been substantially limited to Thames Water and we expect that once clarity is provided on the timing of further equity injections that market conditions will revert.

History of recent water sector equity announcements

August 2021Southern Water received a £1bn equity injection from its majority shareholder to recapitalise the business and implement a more sustainable financing strategy
June 2022Thames Water pledged an equity injection of £500m and a further £1bn of equity by the end of the regulatory period, subject to further conditions
June 2023Yorkshire Water raised £500m from shareholders, this was part of £940m program agreed in October. Funds are to be used to repay intercompany loans and fix water spills after Ofwat investigation
Sources: Financial Times, Thames Water website and Bloomberg

For more information, please contact Adam MacDonald, Managing Director – Centrus

What is a treasury management system?

What is a Treasury Management System (TMS)? 

A Treasury Management System (TMS) is designed to help businesses manage their cash and liquidity, financial risk, and other treasury related processes.

A TMS can automate a variety of treasury tasks from routine calculations to transaction initiation. It also greatly facilitates analysis and forecasting of treasury and risk management, contributing to greater straight-through processing (STP).


titanTreasury™ is a robust and dynamic cloud based TMS that will support your company’s continuity and flexible business operations.

titan is deployed in a hosted environment, allowing our clients to benefit from ongoing maintenance, upgrades and system support. 

Our financial advisors review current treasury and risk workflows to enable the configuration of automated processes.

  • Cash Management: Clients can integrate non treasury related cashflows, manage intercompany transactions and control liquidity and bank reconciliation.
  • Operation Workflow: Enter transactions, generate payment confirmations and schedule tasks in a single platform for smooth operation management.
  • Regulatory Reporting & EMIR: titanTreasury generates an array of documents including declarations, debt profiles, EMIR and IFRS7/9/13 reports.
  • Estimated Budget Cashflow Forecast: Make sound decisions by calculating and managing forecasts while integrating the budget of subsidiaries.
  • Audit & Security: Remain compliant by managing profiles and user rights as well as encrypting all sensitive communication and data transfers.
  • Valuation & Position Analysis: Use the platform to carry out consolidation position, amortised cost and portfolio analysis, as well as market-to-market valuations.
  • Payment Schedules and Accounting: Track payment schedules, report accounting information and forecast P&L results for a seamless approach to treasury management.
  • Financial Data: Ensure that all of your valuations are accurate with real-time access to live financial market data and updated yield curves.
  • Risk Analysis and Hedge Accounting: Conduct sensitive analyses via stress tests, ‘what if scenarios’ and activity measurement as well as assess the risks of CVAs and DVAs.

To learn more about the benefits of titanTreasury™ or to book a demo, please contact Gilles Bonlong, Head of System Implementation at Centrus .

titanTreasury™ is owned and developed by 3V Finance, and delivered by Centrus.