Half-year report
15 August 2024
2024 Interim Results Highlights
Admiral Group reports strong growth and increased
profits for H1 2024
| |
Six months ended: |
|
| |
30 June 2024 |
30 June 2023 |
% change vs. 2023 |
| Group profit
before tax |
£309.8m |
£233.9m |
+32% |
| Earnings per
share |
77.5p |
57.6p |
+35% |
| |
|
|
|
| Interim dividend
per share |
71.0p |
51.0p |
+39% |
| Return on equity
*1 |
45% |
39% |
+6pts |
| |
|
|
|
| Group turnover
*1 |
£3.21bn |
£2.24bn |
+43% |
| Insurance
revenue |
£2.21bn |
£1.61bn |
+38% |
| |
|
|
|
| Group
customers*1 |
10.53m |
9.41m |
+12% |
| UK insurance
customers*1 |
8.23m |
7.01m |
+17% |
| International
insurance customers*1 |
2.12m |
2.21m |
-4% |
| Admiral Money
gross loan balances |
£1.03bn |
£1.03bn |
— |
| |
|
|
|
| Solvency ratio
(post-dividend) *1 |
198% |
182% |
+16pts |
*1 Alternative Performance Measures – refer to the end of
the report for definition and explanation.
Over 12,500 employees each receive free share awards worth up to
£1,800 under the employee share scheme based on the interim 2024
results.
Comment from Milena Mondini de Focatiis,
Group Chief Executive Officer:
“We have delivered a strong set of results in the first half,
growing profits, revenues and customer numbers, demonstrating our
resilience and agility in changing market dynamics.
“Given our earlier pricing response to inflation in previous
years, we have been able to be more competitive in H1 and this
helped grow our customer base 12 per cent to 10.5 million. This was
driven by a record 5.5 million vehicles on cover in the UK and
nearly half a million more customers across other product lines in
the UK.
“Our Group turnover increased 43 per cent to £3.2 billion and
Group profit has increased by 32 per cent to £310 million, led by
strong UK Motor performance. We maintained a strong capital
position with a solvency ratio of 198 per cent after a higher
interim dividend per share of 71p.
“We continue to evolve our core technical competences leveraging
new data and technology. Our focus now is on unlocking the benefit
for our customers of scaled agile for faster delivery and enhancing
our capabilities in AI application.
“I am pleased to announce that our science-based targets have
been approved by the SBTi and our ESG score was recently upgraded
to AAA by MSCI.
“Looking ahead, we remain well-positioned for continued
success.
“As always, I am particularly proud of our people and hearing
how they have been there for our customers. Because of their hard
work, they have been an instrumental part of our financial strength
and our success so far.”
Dividend
The Board has declared an interim dividend of 71.0 pence per share
(2023 interim: 51.0 pence per share) representing a normal dividend
(65% of post-tax profits) of 51.3 pence per share and a special
dividend of 19.7 pence per share. The interim dividend will be paid
on 4 October 2024. The ex-dividend date is 5 September
2024 and the record date is 6 September 2024.
Management presentation
Analysts and investors will be able to access the Admiral Group
management presentation which commences at 9.30 BST on Thursday
15 August 2024 by registering at the following link to attend
the presentation in person, or access the presentation live via
webcast or conference call: 2024 Interim Results | Admiral Group
Plc. A copy of the presentation slides will be available at the
following link: Results, reports and presentations | Admiral Group
Plc (www.admiralgroup.co.uk).
H1 2024 Group overview
|
£m |
30 June 2024 |
30 June 2023 |
% change vs.
2023*4 |
|
Group turnover (£bn) *1*3 |
3.21 |
2.24 |
+43% |
|
Net insurance and investment result |
280.9 |
181.4 |
+55% |
| Net interest
income from financial services |
36.3 |
31.7 |
+14% |
| Other income and
expenses |
6.5 |
27.1 |
-76% |
| Operating
profit |
323.7 |
240.2 |
+35% |
|
Group profit before tax |
309.8 |
233.9 |
+32% |
|
|
|
|
|
| Analysis
of profit |
|
|
|
| UK Insurance |
363.3 |
303.9 |
+20% |
|
International Insurance |
1.7 |
(7.6) |
nm |
|
International Insurance – European Motor |
1.1 |
4.7 |
-77% |
|
International Insurance – US Motor |
3.0 |
(10.4) |
nm |
|
International Insurance – Other |
(2.4) |
(1.9) |
-27% |
|
Admiral Money |
6.8 |
2.7 |
+154% |
| Other |
(62.0) |
(65.1) |
+5% |
|
Group profit before tax |
309.8 |
233.9 |
+32% |
|
|
|
|
|
|
Key metrics |
|
|
|
| Reported Group
loss ratio*1*2 |
57.3% |
63.5% |
+6pts |
| Reported Group
expense ratio *1*2 |
23.1% |
26.3% |
+3pts |
| Reported Group
combined ratio *1*2 |
80.4% |
89.8% |
+9pts |
| Insurance service
margin *1*2 |
11.9% |
10.7% |
+1pts |
| Customer numbers
(million) *1 |
10.53 |
9.41 |
+12% |
| |
|
|
|
| Earnings per
share |
77.5p |
57.6p |
+35% |
| Dividend per
share |
71.0p |
51.0p |
+39% |
| |
|
|
|
| Return on equity
*1 |
45% |
39% |
+6pts |
|
Solvency ratio *1 |
198% |
182% |
+16pts |
*1 Alternative Performance Measures – refer to the end of
the report for definition and explanation.
*2 Reported Group loss and expense ratios are calculated on a
basis inclusive of all insurance revenue – this includes insurance
premium revenue, net of excess of loss reinsurance plus revenue
from underwritten ancillaries, an allocation of instalment income
and administration fees/related commissions. See glossary for an
explanation of the ratios and Appendix 1a for a reconciliation of
reported loss and expense ratios, and insurance service margin, to
the financial statements.
*3 Refer to note 14 for reconciliation to statutory income
statement measures.
*4 For % change vs 2023, + shows favourable movements, - shows
unfavourable movements. Nm – not meaningful.
Group Highlights
Admiral reports strong growth in its UK motor insurance business
and increased profits for the first half of 2024. Highlights are as
follows:
- 10.53 million Group customers at
30 June 2024, a 12% increase driven by UK Motor where over the
past six months Admiral's prices were very competitive relative to
the market
- Group turnover 43% higher driven
both by growth in the number of customers and the impact of higher
average premiums across the Group
- Group pre-tax profits of £310
million, 32% higher than the first half of 2023, driven by an
improved current year underwriting performance and continued
significant prior period releases
- The UK Insurance business generated
strong year-on-year growth in customers (+17%) and turnover (+57%).
The increase in turnover is due to the significant rate increases
in 2022 and 2023 in response to the elevated claims inflation
experienced over the past few years. Admiral decreased rates
modestly around the start of 2024 as market rates were still
increasing, leading to an improved competitive position and
significant growth in UK Motor customer numbers
- UK Insurance profit was £363
million, 20% higher than H1 2023 (£304 million), as a result of the
higher average premiums now earning through which positively
impacted the current period combined ratio, along with continued
significant releases of prior period claims reserves
- Positive performance from UK
Household, with pre-tax profit of £11 million (H1 2023: £9 million)
driven by favourable prior year development and an improved current
year combined ratio. Customer numbers grew by 8% to 1.8
million
- The More Than acquisition completed
in March 2024, with renewals having started in late July 2024 for
UK Household and due to commence later in August for UK Pet
- An improved International Insurance
result (profit of £2 million v loss of £8 million in H1 2023),
featuring a positive result in US Motor and a small profit in
European Motor. The result includes the adverse impact of updating
Italian reserves for the recent Milan court update on injury claims
costs
- Another encouraging period for
Admiral Money, where loan balances were flat half-year on
half-year, but higher than 31 December 2023, and profit
increased to £6.8 million (H1 2023: £2.7 million).
Earnings per share
Earnings per share for the first half of 2024 is 77.5 pence (H1
2023: 57.6 pence), with the increase of 35% slightly higher than
the growth in pre-tax profit (32%). This is as a result of a lower
effective tax rate in the first half of 2024.
Return on equity
The Group’s return on equity was 45% in the first half of 2024, 6
points higher than the 39% reported for H1 2023. The increase is
the result of significantly higher profit recognised in H1 2024,
partially offset by higher average equity.
Dividends and solvency
The Group’s dividend policy is to pay 65% of post-tax profits as a
normal dividend and to pay a further special dividend comprising
earnings not required to be held in the Group for solvency, buffers
or purchasing shares for the Group’s employee share plans. No
shares are expected to be purchased for the share plans until
2026.
The Board has declared an interim dividend of 71.0 pence per
share (approximately £213 million) split as follows:
- 51.3 pence per share normal
dividend
- A special dividend of 19.7 pence per
share
The 2024 interim dividend reflects a pay-out ratio of 92% of
earnings per share. 71.0 pence per share is 39% higher than the
interim 2023 dividend (51.0 pence per share), in line with the
growth in earnings per share.
The 2024 interim dividend payment date is 4 October 2024,
ex-dividend date 5 September 2024 and record date
6 September 2024.
The Group reports a strong post-dividend solvency ratio of 198%.
The ratio has decreased by 2 percentage points compared to the end
of 2023, the strong underwriting performance in UK Motor being more
than offset by a reduction of circa 11 points as a result of the
exclusion of intangible assets recognised from the More Than
acquisition, and an increase in the solvency capital requirement as
a result of growth in the business.
The Group’s results are presented in the following
sections:
- UK Insurance – including UK Motor
(Car and Van), Household, Travel and Pet
- International Insurance – including
L’olivier (France), Admiral Seguros (Spain), ConTe (Italy), and
Elephant (US)
- Admiral Money
- Other Group Items – including
Admiral Pioneer and other central costs
Economic background
Whilst remaining higher than its long-term average, the elevated
inflation observed over the course of 2022 and 2023 appeared to be
reducing in the first half of the year, including in the Group’s
main UK market. Price increases implemented to mitigate the impact
of the higher inflation have resulted in a stronger current period
underwriting performance compared to the prior year, particularly
in UK Motor.
Admiral focuses on medium term profitability and has maintained
a disciplined approach to business volumes. The customer base in UK
Motor grew significantly in H1 2024 as price reductions by Admiral
around the start of the year significantly improved the competitive
position. The Group continues to set claims reserves prudently.
Admiral Money continuously evolves its underwriting criteria to
reflect the macroeconomic environment. The business continues to
hold appropriately cautious provisions for credit losses.
UK Insurance
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Turnover *1 |
2,675.2 |
1,708.3 |
3,776.0 |
|
Total premiums written *1 |
2,511.6 |
1,581.9 |
3,502.6 |
|
Insurance revenue |
1,761.3 |
1,178.9 |
2,596.9 |
|
Underwriting result including net investment
income *1 |
293.1 |
217.5 |
438.6 |
|
Co-insurer profit commission and net other revenue |
70.2 |
86.4 |
157.9 |
|
UK Insurance profit before tax
*1 |
363.3 |
303.9 |
596.5 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation.
Split of UK Insurance profit before tax
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Motor |
358.9 |
298.2 |
593.3 |
| Household |
11.3 |
8.7 |
7.9 |
|
Travel and Pet |
(6.9) |
(3.0) |
(4.7) |
|
UK Insurance profit before tax |
363.3 |
303.9 |
596.5 |
Key performance indicators
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Vehicles insured at period end |
5.48m |
4.76m |
4.94m |
| Households
insured at period end |
1.81m |
1.67m |
1.76m |
|
Travel and Pet policies at period end |
0.94m |
0.58m |
0.69m |
|
Total UK Insurance customers |
8.23m |
7.01m |
7.39m |
Highlights for the UK Insurance business
include:
- In UK Motor
Insurance:
- An increase in customer numbers of
15% to 5.48 million compared to a year earlier (30 June 2023:
4.76 million). As noted above, after a period of prices moving
higher to address significant claims inflation, Admiral reduced
prices around the start of the year and significantly improved
competitiveness. Turnover increased as a result by 58% to £2.4bn
(H1 2023: £1.5bn)
- Profit growth of 20% to £358.9
million (v £298.2 million) as a result of higher earned premiums
contributing to a strong current period underwriting result, along
with continued significant reserve releases on prior periods.
- In UK Household
Insurance:
- An increase in customer numbers of
8% to 1.81 million compared to a year earlier (30 June 2023:
1.67 million), with growth continuing despite further rate
increases in response to high inflation. Turnover increased as a
result by 37% to £214.6 million (H1 2023: £156.6 million)
- Profit growth of 31% to £11.3
million (v £8.7 million) as a result of strong releases on back
year reserves, along with a lower current period combined ratio
driven by the higher earned premiums and relatively benign
weather.
- In UK Travel and Pet Insurance:
- Both business lines continued to grow customers and turnover.
The Travel result was slightly better than break-even, whilst the
increased loss in Pet was largely due to around £3 million of IT
integration costs in relation to the More Than acquisition.
- Acquisition of More Than:
- In March 2024, the Group completed
its first significant acquisition of the direct Household and Pet
insurance renewal rights, the More Than brand and the transfer of
circa 300 colleagues from Royal Sun Alliance ('RSA'). Liabilities
relating to existing policies and those up to renewal remain with
RSA
- The integration of the business is progressing well, with
renewals having commenced in July 2024 for Household and due to
start in later in August 2024 for Pet. The H1 2024 results
therefore do not include any premium income or claims costs in
relation to the acquired business. See note 13 to the financial
statements for further details.
UK Motor Insurance
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Turnover *1*2 |
2,402.7 |
1,520.9 |
3,371.8 |
|
Total premiums written *1*2 |
2,250.5 |
1,403.4 |
3,118.2 |
|
Gross earned premium *1*2 |
1,448.6 |
961.2 |
2,115.4 |
|
Gross other insurance revenue |
90.9 |
58.8 |
134.8 |
|
Insurance revenue |
1,539.5 |
1,020.0 |
2,250.2 |
|
Insurance revenue net of XoL *1*2*4 |
1,493.0 |
994.0 |
2,188.6 |
| Insurance
expenses *1*2*3 |
(288.0) |
(220.5) |
(451.2) |
| Insurance claims
incurred net of XoL *1*2*4 |
(1,032.0) |
(834.2) |
(1,729.0) |
| Insurance claims
releases net of XoL *1*2*4 |
218.7 |
237.1 |
392.8 |
| Quota share
reinsurance result *1*2*3 |
(132.0) |
13.1 |
(16.8) |
|
Movement in onerous loss component net of reinsurance
*2 |
0.8 |
– |
4.1 |
|
Underwriting result
*1 |
260.5 |
189.5 |
388.5 |
| Investment
income |
69.5 |
50.9 |
111.8 |
|
Net insurance finance expenses |
(38.3) |
(25.3) |
(58.2) |
|
Net investment income |
31.2 |
25.6 |
53.6 |
| Co-insurer profit
commission |
24.5 |
44.8 |
76.5 |
|
Other net income |
42.7 |
38.3 |
74.7 |
|
UK Motor Insurance profit before tax
*1 |
358.9 |
298.2 |
593.3 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation.
*2 Alternative Performance Measures – refer to Appendix 1 for
reconciliation to statutory income statement measures.
*3 Insurance expenses and quota share reinsurance result
excludes gross and reinsurers’ share of share scheme charges
respectively. For share scheme charges refer to Other Group
Items.
*4 XoL refers to Excess of Loss (non-proportional) reinsurance;
see glossary at end of report for further information.
Key performance indicators
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Reported Motor loss ratio*1*2 |
54.5% |
60.1% |
61.1% |
| Reported Motor
expense ratio*1*3 |
19.3% |
22.2% |
20.6% |
| Reported Motor
combined ratio*1 |
73.8% |
82.3% |
81.7% |
|
Reported Motor Insurance service margin*1*4 |
17.4% |
19.1% |
17.7% |
|
Core motor loss ratio before releases*1*5 |
75.3% |
92.7% |
87.0% |
|
Core motor claims releases *1*5 |
(16.1%) |
(26.9%) |
(20.2%) |
|
Core motor loss ratio *1*5 |
59.2% |
65.8% |
66.8% |
| Core motor
expense ratio *1*6 |
19.7% |
23.4% |
21.4% |
|
Core motor combined ratio *1 |
78.9% |
89.2% |
88.2% |
|
Core motor written expense ratio *1*7 |
15.5% |
19.5% |
17.8% |
|
Vehicles insured at period end *1 |
5.48m |
4.76m |
4.94m |
|
Other revenue per vehicle*8 |
£62 |
£60 |
£62 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation.
*2 Reported Motor loss ratio defined as insurance claims
incurred and claims releases divided by insurance revenue, net of
excess of loss reinsurance. Reconciliation in Appendix 1b.
*3 Reported Motor expense ratio defined as insurance expenses
divided by insurance revenue, net of excess of loss reinsurance.
Reconciliation in Appendix 1b.
*4 Reported Motor insurance service margin defined as
underwriting result divided by insurance revenue, net of excess of
loss reinsurance.
*5 Core motor loss ratio defined as insurance claims incurred
and claims releases divided by core product insurance premium
revenue, net of excess of loss reinsurance. Presented to enable
analysis of core motor result excluding other ancillary income.
Reconciliation in Appendix 1b.
*6 Core motor expense ratio defined as insurance expenses
divided by core product insurance premium revenue, net of excess of
loss reinsurance. Reconciliation in Appendix 1b.
*7 Core motor written expense ratio defined as insurance
expenses divided by core product written insurance premium for the
current underwriting year, net of excess of loss
reinsurance.
*8 Other revenue per vehicle includes other revenue included
within insurance revenue. See “Other Revenue” section for
explanation and reconciliation.
UK Motor profit in the first six months of 2024 was £358.9
million, 20% higher than the same period in 2023 (H1 2023: £298.2
million) as a result of an improved current period combined ratio
driven by higher average premiums now earning through, following
rate increases over the course of 2022 and 2023, along with
continued positive development of prior year claims. This was
partly offset by recognising the reinsurer's share of releases on
underwriting years 2021 – 2023, and minimal reinsurance recoveries
on underwriting year 2024 due to the low combined ratio. Higher
investment income, as a result of increased assets and higher
average return, is somewhat offset by the higher net insurance
finance expenses, as the discounting of claims incurred in higher
interest rate environments in 2022 and 2023 is now unwinding.
Customer numbers increased by 15% year-on-year, with the
majority of that impact (11%) in H1 2024. This was primarily due to
the improved competitive position noted above. Gross earned premium
at £1,448.6 million is 51% higher than H1 2023, reflecting growth
in customer numbers over the last 12 months and significantly
higher average premiums.
The core motor expense ratio decreased to 19.7% (H1 2023:
23.4%), driven by the increased earned premium, whilst the written
expense ratio also decreased to 15.5% (H1 2023: 19.5%) also mainly
a result of higher average premiums. Actual insurance expenses are
higher in H1 2024, driven by the growth in customers resulting in
significantly higher acquisition costs, along with the continuing
impact of inflationary wage pressures and amortisation of
intangible assets (mainly software).
Claims Incurred
Claims inflation, whilst still high, is reducing, with Admiral's
current estimate of average claims cost inflation for full year
2024 (compared to full year 2023) being approximately in high
single digits (2023: around 10%). There has been no significant
change in claims frequency.
The longer-term impacts of inflation on bodily injury claims
remains uncertain. Admiral has not observed material changes in
inflation for bodily injury claims settled in 2024 to date, when
compared to 2023. However, an allowance in the best estimate
reserve continues to be held to reflect the potential impacts of
higher than historic levels of future wage inflation on certain
elements of large bodily injury claims reserves.
There remains uncertainty within motor claims across the market
arising from inflation, and future developments relating to both
whiplash reforms, regulatory developments and the Personal Injury
('Ogden') discount rate.
The review of the Ogden discount rate commenced in July 2024,
with the new rate, and any change to methodology, due to be
announced by 11 January 2025. Admiral's assumption for the Ogden
discount rate within best estimate reserves continues to be the
prevailing rate of minus 0.25 percent.
In addition, in line with the FCA’s multi-firm review into total
loss claims valuations, Admiral is conducting a review of its total
loss and related processes which considers current practice and
customer outcomes in the recent past. The work is likely to
conclude that some action is required.
Although the process remains ongoing and there is uncertainty
over the final position, when fully concluded the cost is not
expected to have a significant impact on the financial statements.
Taking account of current information, an appropriate amount is
included within insurance contracts liabilities at 30 June
2024.
Admiral continues to hold a prudent risk adjustment above best
estimate reserves, with a consistent confidence level being
maintained (30 June 2024 and 31 December 2023: 93rd percentile; 30
June 2023: 94th percentile), given the relatively strong releases
in the best estimate, and growth in the UK motor book. The reserve
risk distribution from which the percentile is selected is
consistent with 2023.
The core motor loss ratio has reduced to 59.2% (H1 2023: 65.8%)
with offsetting movements in the current period loss ratio and
prior year reserve releases, as follows:
|
Core Motor loss
ratio*1 |
Core motor loss ratio before releases |
Impact of claims reserve releases |
Core motor loss ratio |
|
H1 2023 |
92.7% |
(26.9%) |
65.8% |
| Change in current
period loss ratio |
(17.4%) |
— |
(17.4%) |
|
Change in claims reserve release |
— |
10.8% |
10.8% |
|
H1 2024 |
75.3% |
(16.1%) |
59.2% |
*1 Reported core motor loss ratio shown on a discounted
basis, excluding unwind of finance expenses.
The core Motor loss ratio decreased by 6.6 points which can be
primarily attributed to:
- The rate increases that were put
through over the course of 2022 and 2023 leading to a very
significant improvement in the current period loss ratio. Note that
the current period loss ratio reflects the earned loss ratio for H1
2024. The loss ratio development for underwriting year 2024 is
expected to be less favourable than the progression seen on
underwriting year 2023.
- The benefit from prior period
releases decreased by 10.8 points to 16.1%. This includes both the
positive development of the best estimate reserve and the unwind of
the risk adjustment for prior period claims.
The lower release percentage is mainly a result of the
significant increase in earned premium, with a strong level of
absolute releases for the core product of £215.9 million (H1 2023:
£237.1 million; H2 2023: £155.7 million) continuing, largely due to
favourable development in the best estimate loss ratios (as noted,
the risk adjustment remained at the same confidence level at
30 June 2024 relative to 31 December 2023).
Quota share reinsurance
Under IFRS 17, Admiral’s quota share reinsurance result reflects
the net movement on ceded premiums, reinsurer margins and expected
recoveries (claims and expenses) for each underwriting year on
which quota share reinsurance is in place (primarily 2022
underwriting year onwards, with the majority of contracts for 2021
and prior now commuted).
Admiral’s UK motor quota share contracts operate on a funds
withheld basis, with Admiral retaining ceded premium (net of the
reinsurer margin) and then covering claims costs and expenses. If
an underwriting year is not profitable, investment income is
allocated to the withheld fund and used to delay the point at which
cash recoveries are collected from the reinsurer. Other features of
the arrangements include expense ratio caps and commutation options
for Admiral that become available 24-36 months after the start of
the underwriting year.
The quota share reinsurance result by underwriting year, and
remaining claims asset position at 30 June 2024, is as
follows:
Quota share reinsurance result
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
Quota share claims asset
30 June 2024 |
|
2020 & prior |
— |
0.3 |
2.3 |
5.5*1 |
| 2021 |
(16.7) |
(42.6) |
(57.6) |
22.1 |
| 2022 |
(45.2) |
45.6 |
8.2 |
96.1 |
| 2023 |
(58.9) |
9.8 |
30.3 |
15.2 |
|
2024 |
(11.2) |
— |
— |
— |
|
Total |
(132.0) |
13.1 |
(16.8) |
138.9 |
*1 This balance relates to
2018. No further income statement impact expected on
commutation.
The adverse quota share result in H1 2024 is driven by:
- The favourable developments in the
underlying loss ratios on underwriting years 2021 - 2023, which
results in the reversal of quota share recoveries previously
recognised. In underwriting year 2023, the significant favourable
development in the loss ratio more than offset the earned recovery
of expense commissions in the period.
- Only the cost of the quota share
reinsurer margin is recognised on underwriting year 2024. No quota
share recoveries have been recognised at H1 2024 due to the booked
combined ratio being below 100% as a result of the strong current
underwriting year performance.
Co-insurer profit commission
Co-insurer profit commission is lower in H1 2024 (£24.5 million)
compared to H1 2023 (£44.8 million). In H1 2024, profit commission
has been recognised on underwriting years 2020 and prior following
continued favourable development in both the best estimate and
release of the risk adjustment. There continues to be no profit
commission recognised on underwriting years 2021 and onwards, due
to the current booked combined ratio positions on those years.
Profit commission on underwriting years 2023 and 2024 will be
recognised after accounting for the cumulative losses recognised on
a booked basis on underwriting years 2021 and 2022.
Net investment income
Net investment income benefitted from higher investment income,
partially offset by increased net insurance finance expenses.
Investment income grew by 37% to £69.5 million (H1 2023: £50.9
million), as a result of increased assets (due to strong growth in
premium collected) and higher average return. Further information
on the Group’s investment portfolio and the income generated in the
period is provided later in the report.
Net insurance finance expense reflects the unwind of the
discounting benefit recognised when claims are initially incurred.
The expense has increased notably in H1 2024 (£38.3 million; H1
2023 £25.3 million) as a result of the unwind of discounting
benefit recognised from early 2022 onwards, when there was a
significant increase in risk-free interest rates. A significant
proportion of the insurance finance expense in H1 2024 relates to
claims incurred during 2022 and 2023.
Other revenue
UK Motor Insurance Other revenue
|
£m |
30 June 2024 |
|
|
Within underwriting result |
Other net income |
Total |
|
Premium and revenue from additional products &
fees*1 |
64.7 |
41.5 |
106.2 |
|
Instalment income and administration fees*2 |
90.9 |
19.8 |
110.7 |
|
Other revenue |
155.6 |
61.3 |
216.9 |
|
Claims costs and allocated expenses*3 |
(46.1) |
(18.6) |
(64.7) |
|
Net other revenue |
109.5 |
42.7 |
152.2 |
|
Other revenue
per vehicle*4 |
|
|
£62 |
|
Other revenue per vehicle net of internal costs |
|
|
£52 |
|
£m |
30 June 2023 |
|
|
Within underwriting result |
Other net income |
Total |
|
Premium and revenue from additional products &
fees*1 |
53.5 |
46.3 |
99.8 |
|
Instalment income and administration fees*2 |
58.8 |
12.4 |
71.2 |
|
Other revenue |
112.3 |
58.7 |
171.0 |
|
Claims costs and allocated expenses*3 |
(31.1) |
(20.4) |
(51.5) |
|
Net other revenue |
81.2 |
38.3 |
119.5 |
|
Other revenue
per vehicle*4 |
|
|
£60 |
|
Other revenue per vehicle net of internal costs |
|
|
£50 |
|
£m |
31 December 2023 |
|
|
Within underwriting result |
Other net income |
Total |
|
Premium and revenue from additional products &
fees*1 |
107.8 |
89.4 |
197.2 |
|
Instalment income and administration fees*2 |
134.8 |
29.3 |
164.1 |
|
Other revenue |
242.6 |
118.7 |
361.3 |
|
Claims costs and allocated expenses*3 |
(70.0) |
(44.0) |
(114.0) |
|
Net other revenue |
172.6 |
74.7 |
247.3 |
|
Other revenue
per vehicle*4 |
|
|
£62 |
|
Other revenue per vehicle net of internal costs |
|
|
£52 |
*1 Premium from underwritten ancillaries is recognised
within the insurance service result (underwriting result). Other
income from non-underwritten products and fees is included within
other net income, below the underwriting result but part of the
insurance segment result.
*2 Instalment income and administration fees are recognised
within insurance revenue (% aligned to Admiral’s share of premium,
net of co-insurance) and other revenue (% aligned to co-insurance
share of premium).
*3 Claims costs relating to underwritten ancillary products,
along with an allocation of related expenses, are recognised within
the insurance result. Expenses allocated to the generation of
revenue from non-underwritten ancillaries are recognised within
other net income.
*4 Other revenue per vehicle (before internal costs) divided by
average active vehicles, rolling 12-month basis. Presented here
based on all ancillary income.
Admiral generates other revenue from a portfolio of insurance
products that complement the core car insurance product, and also
fees generated over the life of the policy. The most material
contributors to other revenue continue to be:
- Profit earned from Motor policy
upgrade products underwritten by Admiral, including breakdown, car
hire and personal injury covers
- Revenue from other insurance
products, not underwritten by Admiral
- Fees such as administration and
cancellation fees
- Interest charged to customers paying
for cover in instalments.
Under IFRS 17, income from underwritten ancillaries and an
allocation of instalment income and administration fees in line
with Admiral’s gross share of the core motor product premium, are
included within Insurance Revenue in the underwriting result. The
remaining income from instalment income and fees, as well as income
from other non-underwritten ancillary products is presented in
other net income.
Overall contribution increased to £152.2 million (H1 2023:
£119.5 million), primarily as a result of the growth in customers,
along with a higher proportion of customers choosing to pay via
monthly payments resulting in increased instalment income.
Other revenue was equivalent to £62 per vehicle (gross of
costs), with net other revenue per vehicle at £52 per vehicle, both
up compared to 2023 in line with the increased contribution.
UK Household Insurance
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Turnover*1 |
214.6 |
156.6 |
338.6 |
|
Total premiums written*1 |
203.2 |
147.7 |
318.8 |
|
Insurance revenue |
179.6 |
136.2 |
292.8 |
|
Insurance revenue net of XoL*1*3 |
167.2 |
128.3 |
275.3 |
|
Insurance expenses*2 |
(46.5) |
(38.7) |
(80.9) |
|
Insurance claims incurred net of XoL*1*3 |
(113.5) |
(94.9) |
(199.8) |
|
Insurance claims releases net of XoL*1*3 |
32.1 |
3.9 |
6.4 |
|
Underwriting result, net of XoL
reinsurance*1*3 |
39.3 |
(1.4) |
1.0 |
|
Quota share reinsurance result*1*2 |
(32.8) |
6.2 |
(1.4) |
|
Underwriting
result*1 |
6.5 |
4.8 |
(0.4) |
|
Net insurance investment income |
1.7 |
0.4 |
1.6 |
|
Other income |
3.1 |
3.5 |
6.7 |
|
UK Household Insurance profit before
tax*1 |
11.3 |
8.7 |
7.9 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation
*2 Insurance expenses and quota share reinsurance result
excludes gross and reinsurers’ share of share scheme charges
respectively. For share scheme charges refer to Other Group
Items.
*3 XoL refers to Excess of Loss (non-proportional) reinsurance;
see glossary at end of report for further information.
Key performance indicators
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Reported Household loss ratio*1*2 |
48.7% |
71.0% |
70.2% |
| Reported
Household expense ratio*1 |
27.8% |
30.2% |
29.4% |
|
Reported Household combined ratio*1 |
76.5% |
101.2% |
99.6% |
|
Household insurance service margin*1 |
3.9% |
3.7% |
(0.1%) |
|
Household loss ratio before releases*1*2 |
67.9% |
74.0% |
72.6% |
|
Households insured at period end (m)*1 |
1.81 |
1.67 |
1.76 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation
*2 Impact of severe weather and subsidence on reported
loss ratios within expectations across all reporting periods
therefore not separately reported
The UK Household insurance business reported strong growth in
turnover which increased by 37% to £214.6 million (H1 2023: £156.6
million). The number of households insured increased by 8% to 1.81
million (30 June 2023: 1.67 million), despite continued price
increases made by Admiral during the first half of 2024 to reflect
continued higher claims inflation. Competitors are also increasing
prices though Admiral’s competitiveness in the price comparison
channel is relatively unchanged.
Profit before tax for the period was £11.3 million (H1 2023:
£8.7 million), the increase arising as a result of strong releases
on prior periods, along with a lower current period combined ratio
driven by higher earned premiums, with H1 2023 benefiting from a
one-off recognition of reinsurer profit commission following a
commutation.
The reported loss ratio decreased significantly to 49% (H1 2023:
71%) as a result of strong prior period releases contributing 19%
(H1 2023: 3%), with a current period loss ratio of 68%, improving
by 6 points from H1 2023 (H1 2023: 74%).
The impact of weather was not significant in either period.
Whilst there was some impact of freeze, flood and storm events,
this was considered within expectations for weather and therefore
the loss ratio impact has not been separately disclosed.
Prior period releases are significant and primarily reflect the
unwind of best estimate reserves in relation to the freeze event at
the end of 2022, with a significant proportion of settlements on
those events now complete.
Admiral’s expense ratio was 28%, an improvement from the first
half of 2023, as a result of the earning through of increased
average premiums. Higher absolute expenses were driven by higher
acquisition costs following the growth in customers, and a small
charge for IT integration costs related to the More Than
acquisition.
The quota share result for the period of a loss of £32.8 million
(H1 2023: profit of £6.2 million) arises as a result of the sharing
of the positive underlying underwriting result with no profit
commission currently recognised on the 2023 and 2024 underwriting
years.
UK Insurance Co- and Reinsurance
Admiral makes significant use of proportional risk sharing
agreements (co-insurance and quota share reinsurance) which include
profit commission terms that allow Admiral to retain a significant
portion of the profit generated.
Munich Re and its subsidiary entity Great Lakes currently
underwrite 40% of Admiral’s UK Car insurance business. The details
of these arrangements with Munich Re are as set out in the 2023
Annual Report, with agreements in place until at least the end of
2026.
Admiral has other UK Car quota share agreements covering 38% of
business written until 2024 and expects to conclude on extension
options in Q3.
For UK Household insurance, Admiral retains 30% and has quota
share contracts covering 70% of the business. Good progress is
being made on renewal options for the 30% quota share contract that
expires at the end of 2024.
The Group tends to commute its UK Motor insurance quota share
agreements 24-36 months after inception of an underwriting year,
assuming there is sufficient confidence in the profitability of the
business covered by the reinsurance contract and having assessed
the solvency implications of the commutation for the Group and its
underwriting subsidiary. During the first half of 2024, there were
UK motor commutations on the majority of remaining reinsurance
contracts covering 2020 and prior underwriting years (most having
been commuted previously), along with the majority of underwriting
year 2021.
International Insurance financial review
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Turnover*1 |
450.2 |
464.3 |
894.9 |
|
Total premiums written*1 |
421.0 |
437.6 |
840.0 |
|
Insurance revenue |
422.1 |
407.2 |
842.6 |
|
Insurance revenue net of XoL*1 |
403.3 |
396.8 |
811.8 |
| Insurance
expenses*2 |
(117.5) |
(125.8) |
(249.4) |
|
Insurance claims net of XoL*1 |
(289.2) |
(269.7) |
(565.2) |
|
Underwriting result, net of
XoL*1 |
(3.4) |
1.3 |
(2.8) |
| Quota share
reinsurance result*1*3 |
(0.9) |
(13.1) |
(22.1) |
|
Movement in net onerous loss component |
1.6 |
0.8 |
0.6 |
|
Underwriting
result*1 |
(2.7) |
(11.0) |
(24.3) |
| Net investment
income |
4.5 |
1.9 |
4.3 |
|
Net other revenue |
(0.1) |
1.5 |
2.0 |
|
International Insurance profit/(loss) before
tax*1*4 |
1.7 |
(7.6) |
(18.0) |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation.
*2 Insurance expenses excluding share scheme costs.
*3 Quota share reinsurance result within the segment result
excludes reinsurers’ share of share scheme costs.
*4 Costs related to the settlement of a historic Italian tax
matter during 2023 are excluded from the International Insurance
result and presented within Group other costs, given that these are
not reflective of the underlying trading performance of the
International Insurance business.
Key performance
indicators
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Loss ratio*1 |
71.7% |
68.0% |
69.6% |
|
Expense ratio*1 |
29.1% |
31.6% |
30.7% |
|
Combined ratio*1 |
100.8% |
99.6% |
100.3% |
|
Insurance service margin*1 |
(0.7%) |
(2.8%) |
(3.0%) |
|
Customers insured at period end (million)*1 |
2.12 |
2.21 |
2.17 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation
International Motor Insurance – Geographical
analysis*1
|
30 June 2024 |
Spain |
Italy |
France |
US |
Total |
|
Vehicles insured at period end |
0.44m |
1.00m |
0.43m |
0.16m |
2.03m |
|
Turnover (£m) |
67.7 |
148.2 |
117.5 |
109.4 |
442.8 |
|
30 June 2023 |
|
|
|
|
|
|
Vehicles insured at period end |
0.46m |
1.07m |
0.41m |
0.22m |
2.16m |
|
Turnover (£m) |
62.6 |
145.1 |
113.4 |
138.4 |
459.5 |
|
31 December 2023 |
|
|
|
|
|
|
Vehicles insured at period end |
0.45m |
1.04m |
0.42m |
0.19m |
2.10m |
|
Turnover (£m) |
121.8 |
272.4 |
219.1 |
271.2 |
884.5 |
*1 Alternative Performance Measures – refer to the end of
this report for definition and explanation
Split of International Insurance
result
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
European Motor |
1.1 |
4.7 |
6.1 |
|
US Motor |
3.0 |
(10.4) |
(19.6) |
|
Other |
(2.4) |
(1.9) |
(4.5) |
|
International Insurance profit/(loss) before
tax |
1.7 |
(7.6) |
(18.0) |
Admiral’s International insurance businesses
reported a small reduction in customer numbers at 30 June 2024
to 2.12 million (30 June 2023: 2.21 million), driven by a
continued reduction in the US, and a reduction in Italy as the
business prioritised margin over growth. Turnover fell slightly to
£450.2 million (H1 2023: £464.3 million), driven by a significant
reduction in the US, mostly offset by continued turnover growth in
the European businesses as a result of higher average premiums.
The combined result for the segment was an overall profit of £1.7
million (H1 2023: loss of £7.6 million), driven by a significantly
improved result in the US offset by lower profits in the European
motor businesses.
The combined ratio increased slightly to 100.8% (H1 2023:
99.6%), driven by a higher loss ratio as a result of adverse claims
development in Italy (refer below for more details), which was
largely offset by improvements in the US loss ratio and a decrease
in the expense ratio, across all businesses, to 29.1% (H1 2023:
31.6%). The lower expense ratio arises from the combined effect of
higher premiums as well as lower acquisition expenses and an
ongoing focus on the cost base.
The European insurance operations in Spain, Italy and France
insured 1.87 million vehicles at 30 June 2024 – 3% lower than
a year earlier (30 June 2023: 1.93 million). Motor turnover
was up 4% to £333.4 million (H1 2023: £321.1 million), driven by
continued price increases following continued focus on improving
loss ratios.
The combined European Motor profit was £1.1 million (H1 2023:
£4.7 million), with the combined ratio increasing to 104.7% (H1
2023: 93.2%).
The lower European motor profit results from adverse claims cost
development on prior underwriting years in ConTe in Italy, largely
due to the significant increase to the settlement inflation rate
for large bodily injury claims provided by the court of Milan
(known as the Milano tables) reducing profit by circa £12 million.
Action has been taken with price increases to mitigate the ongoing
impact of the change. Admiral continues to focus on medium term
profitability through risk selection and reducing expenses.
Vehicles insured decreased by 6% to 1.00 million (30 June
2023: 1.07 million) as a result of pricing action, with turnover
increasing by 2% to £148.2 million (H1 2023: £145.1 million).
L’olivier assurance (France) continued to grow, with the
customer base increasing by 4% to 0.43 million at 30 June 2024
(30 June 2023: 0.41 million), and turnover increasing by 4% to
£117.5 million (H1 2023: £113.4 million). The business reported
notably increased profits in H1 2024 as a result of its focus over
the past year on risk selection and loss ratio improvements, as
well as cost reduction.
In Admiral Seguros (Spain) customer numbers fell by 3% to 0.44
million over the past year (H1 2023: 0.46 million), as the business
increased prices to target loss ratio improvements. The business
continues to focus on sustainable growth through distribution
diversification through the broker channel and other partnerships.
The result for the first half was nearing break even.
In the US, Admiral underwrites motor insurance through its
Elephant Auto business. In the first half of 2024, as expected,
Elephant delivered a significantly improved result due to strong
management action on pricing, underwriting and expense control.
The Group is considering the best way forward for the Elephant
business and team and will provide an update as soon as possible.
The focus in the meantime remains on protecting the pre-tax
result.
Admiral Money
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Total interest income |
52.4 |
43.6 |
94.7 |
| Interest
expense*1 |
(18.3) |
(12.7) |
(28.3) |
| Net
interest income |
34.1 |
30.9 |
66.4 |
| Other fee
income |
0.1 |
0.1 |
0.1 |
| Total
income |
34.2 |
31.0 |
66.5 |
| Credit loss
charge |
(14.0) |
(16.6) |
(33.4) |
|
Expenses |
(13.4) |
(11.7) |
(22.9) |
|
Admiral Money profit before
tax*2 |
6.8 |
2.7 |
10.2 |
*1 Includes £1.9 million intra-group interest expense (H1
2023: £0.8 million, FY 2023: £1.5
million).
*2 Alternative Performance Measures – refer to the end of this
report for definition and explanation
Admiral Money distributes and underwrites unsecured personal
loans and car finance products for UK consumers through the
comparison channel, credit scoring applications and direct to
consumers via the Admiral website. The aim of the proposition is to
provide customers with affordable guaranteed rates, ensuring
transparency and certainty.
Gross loans balances totaled £1,029.2 million at the end of June
2024 (31 December 2023: £956.8 million; 30 June 2023:
£1,033.9 million), with a £87.4 million (31 December 2023:
£81.7 million; 30 June 2023: £74.6 million) expected credit
loss provision. This leads to a net loans balance of £941.8 million
(31 December 2023: £875.1 million; 30 June 2023: £959.3
million).
In 2024, Admiral Money has continued to focus on writing high
quality loans and the business generated a pre-tax profit of £6.8
million (improving from £2.7 million in H1 2023), the fifth
consecutive half year of profit for the business. The increase in
profit was largely driven by strong net interest income growth of
10% to £34.1 million (30 June 2023: £30.9 million) resulting
from higher net interest margins, as well as a reduced provision
charge driven by a focus on high quality risk selection and a more
stable economic environment.
Credit loss models reflect the latest economic assumptions and
appropriate post model adjustments remain in place to maintain an
appropriately cautious provision. The provision to loans balance
coverage ratio is consistent at 8.5% (31 December 2023: 8.5%;
June 2023: 7.2%), with a £5.7 million increase in absolute
provision size in the period to £87.4 million. The provision
includes post model adjustments of £8.5 million (31 December
2023: £9.2 million; June 2023: £12.6 million), reflecting the
current uncertainty in the UK economic environment.
Admiral Money is funded through a combination of internal and
external funding sources. The external funding is secured against
certain loans via a transfer of the rights to the cash-flows to two
special purpose entities (“SPEs”). The securitisation and
subsequent issue of notes via SPEs does not result in a significant
transfer of risk from the Group.
Other Group Items
Other Group items financial review
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Share scheme charges*1 |
(27.4) |
(22.7) |
(54.4) |
| Other central
costs |
(20.2) |
(15.2) |
(41.7) |
| Admiral Pioneer
result |
(5.0) |
(12.7) |
(16.2) |
| Business
development costs |
(13.9) |
(7.9) |
(15.3) |
| Finance
charges*2 |
(14.1) |
(6.3) |
(20.3) |
| Compare.com loss
before tax |
— |
(2.6) |
(2.6) |
| Sale of shares in
Insurify |
12.5 |
— |
— |
|
Other interest and investment income |
6.1 |
2.3 |
4.6 |
|
Total |
(62.0) |
(65.1) |
(145.9) |
*1 Share scheme charges are shown net of the reinsurers'
share of share scheme costs. See Appendix 1a for further
details.
*2 Finance charges within other group items include £0.9
million (H1 2023: £0.9 million, FY 2023: £1.7 million) that relate
to intra-group arrangements, with the corresponding income
presented within the UK Insurance result.
Share scheme charges relate to the Group’s two employee share
schemes. The increase in charge in the period is driven primarily
by higher vesting assumptions.
Other central costs consist of Group-related expenses and
include an allocation of group employee costs as well as the cost
of a number of significant Group projects. Additional expenses in
H1 2024 relative to H1 2023 arise primarily from projects costs for
the internal capital model development and the strategic review of
the US insurance business, as well as an increased allocation of
group employee expenses to central costs.
Admiral launched Admiral Pioneer in 2020 to focus on new product
diversification opportunities. Pioneer businesses include Veygo
(short term and learner driver car insurance in the UK) and Admiral
Business (small business insurance in the UK). Pioneer reported a
loss of £5.0 million in H1 2024 (H1 2023: £12.7 million). The
adverse result in H1 2023 was impacted by an increase in large
claims experience in Veygo (one large claim in particular); the
improved result in H1 2024 is the result of better claims
experience, with the loss reflecting continued investment in the
development of new products.
Business development costs increased to £13.9 million (H1 2023:
£7.9 million), primarily as a result of non-recurring transaction
and other costs of £8.5 million related to the More Than
acquisition.
Finance charges of £14.1 million (H1 2023: £6.3 million)
primarily related to interest on the £250 million subordinated
notes issued in July 2023 at a rate of 8.5%, with the charge in H1
2023 based on the original £200 million subordinated loan notes
issued in July 2014. The increase in finance charges is partially
offset by the increase in other interest and investment income.
A loss of £2.6 million was attributed to compare.com in H1 2023
following its disposal. As part of the disposal, the Group received
shares as a minority interest shareholder of the acquirer. In H1
2024 the Group sold those shares, and realised a one-off gain of
£12.5 million.
Group capital structure and financial
position
Group capital position (estimated)
|
£bn |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Eligible Own Funds (post-dividend) |
1.56 |
1.25 |
1.42 |
|
Solvency II capital requirement*1 |
0.79 |
0.69 |
0.71 |
|
Surplus over capital requirement |
0.77 |
0.56 |
0.71 |
|
Solvency ratio (post-dividend) |
198% |
182% |
200% |
*1 Solvency capital requirement includes updated, unapproved
‘dynamic’ capital add-on.
At the date of this report, the Group reports a strong
post-dividend solvency ratio of 198%, 2 percentage points lower
than reported with the Group’s 2023 year end results.
The increase in own funds at H1 2024 is the result of the strong
underwriting performance in UK Motor in the current period, and
prior period releases, offset by a reduction of around 11 points of
solvency ratio as a result of the de-recognition of intangible
assets recognised in the More Than acquisition due to Solvency II
rules, and a higher foreseeable dividend. The increased solvency
capital requirement arises primarily from the growth in the UK
motor book.
The Group solvency on a regulatory basis as at 30 June 2024
is estimated at 185% (31 December 2023: 182%). In the
regulatory basis, the capital add-on approved by the PRA is fixed
and so does not reflect changes in risk profile (primarily profit
commission risk) across the underwriting cycle.
Admiral continues to develop its partial internal model to form
the basis of future capital requirements and entered a
pre-application process with its regulators during H1 2024. Once
feedback is received, Admiral expects to be able to communicate
timelines for a full application for model approval. In the interim
period before model approval, the current capital add-on of £24
million will continue to be used to calculate the regulatory
capital requirement.
Solvency ratio sensitivities
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
UK Motor – incurred loss ratio +5%*1 |
-20% |
-11% |
-11% |
| UK Motor – 1 in
200 catastrophe event |
-3% |
-1% |
-1% |
| UK Household – 1
in 200 catastrophe event |
-3% |
-5% |
-5% |
| Interest rate –
yield curve up 100 bps |
-2% |
-3% |
-1% |
| Interest rate –
yield curve down 100 bps |
+1% |
+2% |
+1% |
| Credit spreads
widen 100 bps*2 |
-3% |
-6% |
-5% |
| Currency – 25%
movement in euro and US dollar |
-4% |
-3% |
-3% |
| ASHE – long term
inflation assumption up 50 bps |
-1% |
-2% |
-3% |
|
Loans – 100% weighting to ‘severe’ scenario*3 |
-1% |
-1% |
-1% |
*1 Increased sensitivity due to growth in exposure and
relative profitability of the most recent underwriting
years.
*2 H1 2023 credit spread sensitivity restated to include
benefit of offsetting movements in the volatility adjusted yield
curve used for discounting liabilities. In addition, the H1 2024
stress has been recalibrated to include only assets that are
materially exposed to corporate bond spread risk, resulting in a
reduction in the overall impact on solvency ratio.
*3 Refer to note 7 to the financial statements for further
information on the ‘severe’ scenario.
Investments and cash
Investment strategy
Admiral Group’s investment strategy focuses on capital preservation
and low volatility of returns. The business follows an asset
liability matching strategy to control interest rate, inflation and
currency risk. A prudent level of liquidity is held and the
investment portfolio has a high-quality credit profile.
Investment return
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Underlying investment income yield |
3.9% |
3.0% |
3.3% |
|
Investment return |
86.1 |
58.4 |
124.4 |
| Unrealised losses
on derivatives |
(0.2) |
(0.2) |
(0.2) |
|
Movement in provision for expected credit losses |
(2.8) |
(0.5) |
2.5 |
|
Total investment return |
83.1 |
57.7 |
126.7 |
Investment income for the first half of 2024 was £83.1 million
(H1 2023: £57.7 million). Provisions for expected credit losses
increased, driven by growth in the portfolio, leading to a £2.8
million charge (H1 2023: £0.5 million charge).
The investment return on the Group’s investment portfolio
(excluding unrealised gains and losses on derivatives and the
movement in provision for expected credit losses) was £86.1 million
in H1 2024 (compared to £58.4 million in H1 2023). The rate of
return was higher at 3.9% (H1 2023: 3.0%), mainly as a result of
higher reinvestment yields.
The increase in interest rates in H1 2024 resulted in a
reduction in the market value of the portfolio of £8.4 million (H1
2023: £22.4 million reduction). That movement is reflected in the
Statement of Other Comprehensive Income.
The Group continues to generate significant amounts of cash and
its capital-efficient business model enables the distribution of
the majority of post-tax profits as dividends. Total cash and
investments at 30 June 2024 was £4,789.4 million (30 June
2023: £4,043.9 million; 31 December 2023: £4,214.5 million), the
higher balance at the end of the current period reflecting
collections from higher written premium in UK Insurance. The net
increase in cash and investments in the period is £574.9
million.
Cash and investments analysis
|
£m |
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Fixed income and debt securities |
3,200.5 |
2,762.3 |
2,825.9 |
| Money market
funds and other fair value instruments |
1,108.0 |
713.1 |
918.8 |
| Cash
deposits |
117.3 |
105.8 |
116.7 |
|
Cash |
363.6 |
462.7 |
353.1 |
|
Total*1 |
4,789.4 |
4,043.9 |
4,214.5 |
*1 Total Cash and Investments include
£301.0 million (30 June 2023: £259.0 million, 31 December
2023: £278.2 million) of Level 3 investments. Refer to note 6c for
further information.
Taxation
The tax charge for the period is £72.6 million (H1 2023: £60.0
million), which equates to 23.4% (H1 2023: 25.6%) of profit before
tax. The reduction in effective tax rate is the result of a higher
proportion of profits generated in lower tax rate territories in H1
2024, along with higher prior period adjustments in H1 2023 which
were not repeated to the same extent in the current period.
Principal Risks and Uncertainties
Admiral continually reviews and assesses its principal risks and
uncertainties (PR&Us), including those which could have a major
impact on its customers, financial position, or reputation. This
ongoing assessment has concluded that Admiral’s PR&Us remain
consistent with those reported in the Group’s 2023 Annual Report
(pages 98-107). However, given the evolution of the following
topics, additional commentary has been provided on their specific
impact on Admiral’s PR&Us: an improving economic outlook,
ongoing geopolitical instability, UK and US elections, Consumer
Duty, cyber and operational resilience, and sustainability.
Improving Economic Outlook
The UK macroeconomic environment has improved over the first half
of the year, suggesting that the economy is recovering from the
short, shallow recession seen in H2 2023. Inflation fell to 2.0% in
May, and GDP grew by 0.7% in Q1. Admiral will closely monitor the
economic environment, taking into consideration any trends and
incidents that could affect strategic planning and operations.
Admiral has conducted a number of reviews of such trends and
incidents to analyse their effect on the economy and therefore the
financial services environment and potential impact on Admiral,
with examples including the ongoing conflict in the Middle East,
the Red Sea Crisis, the collapse of the Francis Scott Key Bridge in
Baltimore, and inflation and weak economic growth in Admiral
markets.
Admiral maintains a long-term, disciplined approach to financial
resilience and sustainable growth, including responsible management
of the insurance pricing cycle, practicing prudent reserving, and
managing risk through its investment portfolio with an emphasis on
liquidity and short-maturity, high quality assets. Admiral is also
committed to engaging with customers, staff, third-parties, and
other stakeholders to identify where support is needed to help
navigate financial challenges, given recent economic pressures and
the effects on the cost of living and business operating costs.
Geopolitical instability
Admiral is closely monitoring geopolitical risk, which remains
elevated following the Russian invasion of Ukraine in February
2022. The outbreak of the Israel-Hamas War and the Red Sea Crisis
triggered a review of potential exposure across the Group. At that
time, the two potential avenues of impact identified were on
Admiral’s supply chain and wider macro-economy disruptions. The
review concluded that Admiral’s exposure from recent geopolitical
events was not material.
While this conclusion cannot guarantee that Admiral will weather
future incidents successfully, this should provide some reassurance
around the flexibility of supply chains and the robustness of
Admiral’s repair network.
UK and US elections
The Labour Party secured a 172-seat majority in July’s election,
giving the incoming government a strong mandate to enact its policy
platform. Admiral is monitoring and pro-actively preparing for any
changes that will affect the insurance sector or wider UK corporate
environment. The outcome of November’s US election may have an
impact on trade flows, financial markets, growth and the global
economy, as well as geopolitics.
Consumer Duty
The Consumer Duty remains a key priority within Admiral, with the
focus on the delivery of good outcomes remaining strong as the work
has transitioned into business as usual. A significant amount of
work has been undertaken to improve processes and procedures to
allow for better identification of any areas where customer
outcomes can be improved. Admiral recognises that this is a cycle
and will look to actively address issues that impact customer
outcomes.
Cyber and Operational Resilience
Information Security, Technology and Cyber/Operational Resilience
continue to be a key focus for Admiral Group and its businesses.
Key developments in these areas have been:
- Enhancements to the
technology infrastructure with the migration of business-critical
customer management applications from on-premise to cloud
environments
- Improving the
mitigation of brand infringement by closing fraudulent websites
more quickly
- Improvements to
security operations tooling for vulnerability management and threat
landscape monitoring
- Embedding of
operational resilience requirements as part of BAU processes for
Important Business Services
- Providing governance
and assurance assessments for new technology, cloud, and
information security policies and standards
- Implementing
proactive training and cyber awareness campaigns for staff in new
areas such as AI-related cyber-crime.
In July 2024, a faulty update from Crowdstrike's security
software caused widespread disruption to various technology
services, including Microsoft Azure. Whilst Admiral's own systems
were not directly impacted, some third-party systems experienced
temporary outages which were successfully managed by switching
customer-facing services to alternative platforms and putting
emergency measures in place for vulnerable customers. The issue
however shows the continued risk posed by third and fourth party
technology providers and the importance of Admiral’s on-going focus
on all aspects of operational resilience.
Sustainability
Admiral continues to mature its approach to sustainability. The
Company is working on its Net Zero Transition Plan, incorporating
IFRS S1 and S21 into TCFD disclosure, and the management
of a Corporate Sustainability Reporting Directive (CSRD) regulatory
change project, ahead of CSRD coming into force on 1 January 2025
for our European businesses. The Science-Based Targets Initiative
(SBTi) have formally approved Admiral’s Scope 1, 2, and partial
Scope 3 GHG emissions reduction targets. The Group Sustainability
team is also strengthening Admiral’s approach to monitoring and
reporting on sustainability performance and raising awareness
across the business.
Disclaimer on forward-looking statements
Persons receiving this announcement should not place undue reliance
on forward-looking statements. Unless otherwise required by
applicable law, regulation or accounting standard, the Group does
not undertake to update or revise any forward-looking statements,
whether as a result of new information, future developments or
otherwise.
1 The UK Government has endorsed IFRS
(sustainability) S1 and S2 standards as part of its Green Finance
Strategy and both standards are effective for annual reporting
periods beginning on 1 January 2024. IFRS S1 and S2 incorporate the
existing recommendations of the TCFD, which means that companies
already aligning to the TCFD recommendations are starting from a
strong place when they turn their attention to the International
Sustainability Standards Board IFRS S1 and S2.
Condensed Consolidated Income Statement
(Unaudited)
| |
|
Six months ended |
Year ended |
|
|
Note |
30 June
2024
(unaudited)
£m |
30 June
2023
(unaudited)
£m |
31 December
2023
£m |
|
|
|
|
|
|
| Insurance
revenue |
5b |
2,213.8 |
1,607.0 |
3,486.1 |
|
Insurance service expenses |
5c |
(1,696.2) |
(1,437.7) |
(3,093.2) |
|
Insurance service result before reinsurance |
|
517.6 |
169.3 |
392.9 |
|
Net expense from reinsurance contracts held |
5d |
(280.6) |
(16.8) |
(87.1) |
|
Insurance service result |
|
237.0 |
152.5 |
305.8 |
| |
|
|
|
|
|
Investment return |
6a |
85.8 |
58.0 |
122.9 |
| |
|
|
|
|
| Finance expenses
from insurance contracts issued |
|
(61.2) |
(47.4) |
(94.5) |
|
Finance income from reinsurance contracts held |
|
19.3 |
18.3 |
28.9 |
|
Net insurance finance expenses |
|
(41.9) |
(29.1) |
(65.6) |
| |
|
|
|
|
| Net
insurance and investment result |
|
280.9 |
181.4 |
363.1 |
| |
|
|
|
|
| Interest income
from financial services |
|
52.7 |
43.6 |
94.9 |
|
Interest expense related to financial services |
|
(16.4) |
(11.9) |
(26.8) |
|
Net interest income from financial services |
|
36.3 |
31.7 |
68.1 |
| |
|
|
|
|
| Other revenue and
profit commission |
8 |
89.0 |
108.6 |
205.7 |
| Other operating
expenses |
9 |
(127.9) |
(120.2) |
(250.8) |
| Other operating
expenses recoverable from co-insurers |
|
62.3 |
55.8 |
107.8 |
|
Expected credit losses |
|
(16.9) |
(17.1) |
(31.0) |
|
Other income and expenses |
|
6.5 |
27.1 |
31.7 |
|
|
|
|
|
|
|
Operating profit |
|
323.7 |
240.2 |
462.9 |
|
Finance costs |
6 |
(14.1) |
(7.2) |
(20.5) |
|
Finance costs recoverable from co- and reinsurers |
6 |
0.2 |
0.9 |
0.4 |
|
Net finance costs |
|
(13.9) |
(6.3) |
(20.1) |
|
Profit before tax |
|
309.8 |
233.9 |
442.8 |
|
Taxation expense |
10 |
(72.6) |
(60.0) |
(105.6) |
|
Profit after tax |
|
237.2 |
173.9 |
337.2 |
|
Profit after tax attributable to: |
|
|
|
|
| Equity holders of
the parent |
|
237.4 |
174.5 |
338.0 |
|
Non-controlling interests (NCI) |
|
(0.2) |
(0.6) |
(0.8) |
|
|
|
237.2 |
173.9 |
337.2 |
|
Earnings per share |
|
|
|
|
|
Basic |
12 |
77.5p |
57.6p |
111.2p |
|
Diluted |
12 |
77.5p |
57.5p |
110.8p |
|
|
|
|
|
|
|
Dividends declared and paid (total) |
12 |
156.2 |
154.9 |
307.1 |
|
Dividends declared and paid (per share) |
12 |
52.0p |
52.0p |
103.0p |
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
| |
|
Six months ended |
|
Year ended |
| |
|
30 June
2024
(unaudited)
£m |
30 June
2023
(unaudited)
£m |
|
31 December
2023
£m |
| Profit
for the period |
|
237.2 |
173.9 |
|
337.2 |
| Other
comprehensive income |
|
|
|
|
|
| Items
that are or may be reclassified to profit or loss |
|
|
|
|
|
| Movements in fair
value reserve |
|
(8.4) |
(22.4) |
|
98.1 |
| Deferred tax
charge in relation to movement in fair value reserve |
|
2.1 |
1.5 |
|
(5.7) |
| Movements in
insurance finance reserve |
|
17.9 |
16.4 |
|
(78.9) |
| Deferred tax in
relation to movement in insurance finance reserve |
|
(2.2) |
(2.6) |
|
9.7 |
| Exchange
differences on translation of foreign operations |
|
(1.9) |
(2.5) |
|
3.7 |
| Movement in
hedging reserve |
|
0.3 |
11.6 |
|
(18.1) |
|
Deferred tax charge in relation to movement in hedging reserve |
|
(0.1) |
(2.9) |
|
4.5 |
|
Other comprehensive income for the period, net of income tax |
|
7.7 |
(0.9) |
|
13.3 |
|
Total comprehensive income for the period |
|
244.9 |
173.0 |
|
350.5 |
|
Total comprehensive income for the period attributable to: |
|
|
|
|
|
| Equity holders of
the parent |
|
245.1 |
173.6 |
|
351.3 |
|
Non-controlling interests |
|
(0.2) |
(0.6) |
|
(0.8) |
|
|
|
244.9 |
173.0 |
|
350.5 |
Condensed Consolidated Statement of Financial Position
(Unaudited)
| |
|
As at |
|
|
Note |
30 June
2024
(unaudited)
£m |
30 June
2023
(unaudited)
£m |
31 December
2023
£m |
|
ASSETS |
|
|
|
|
| Property and
equipment |
|
82.0 |
81.4 |
90.1 |
| Intangible
assets |
11 |
335.7 |
241.8 |
242.9 |
| Deferred tax
asset |
|
20.8 |
12.2 |
46.1 |
| Corporation tax
asset |
|
16.2 |
— |
20.4 |
| Reinsurance
contract assets |
5 |
1,055.6 |
1,113.4 |
1,191.9 |
| Loans and
advances to customers |
7 |
952.1 |
961.1 |
879.4 |
| Other
receivables |
6 |
481.8 |
373.2 |
409.9 |
| Financial
investments |
6 |
4,435.9 |
3,583.4 |
3,862.4 |
|
Cash and cash equivalents |
6 |
363.6 |
462.7 |
353.1 |
|
Total assets |
|
7,743.7 |
6,829.2 |
7,096.2 |
|
EQUITY |
|
|
|
|
| Share
capital |
|
0.3 |
0.3 |
0.3 |
| Share premium
account |
|
13.1 |
13.1 |
13.1 |
| Other
reserves |
|
(32.8) |
(54.7) |
(40.5) |
|
Retained earnings |
|
1,129.7 |
968.7 |
1,018.9 |
|
Total equity attributable to equity holders of the
parent |
|
1,110.3 |
927.4 |
991.8 |
|
Non-controlling interests |
|
0.8 |
1.2 |
1.0 |
|
Total equity |
|
1,111.1 |
928.6 |
992.8 |
|
LIABILITIES |
|
|
|
|
| Insurance
contracts liabilities |
5 |
4,946.6 |
4,139.7 |
4,581.7 |
| Subordinated and
other financial liabilities |
6 |
1,204.1 |
1,187.3 |
1,129.8 |
| Trade and other
payables |
6 |
384.9 |
480.3 |
305.8 |
| Lease
liabilities |
6 |
73.1 |
83.2 |
81.2 |
|
Corporation tax liabilities |
|
23.9 |
10.1 |
4.9 |
|
Total liabilities |
|
6,632.6 |
5,900.6 |
6,103.4 |
|
Total equity and total liabilities |
|
7,743.7 |
6,829.2 |
7,096.2 |
Condensed Consolidated Cash Flow Statement
(Unaudited)
| |
|
Six months ended |
Year ended |
|
|
Note |
30 June
2024
(unaudited)
£m |
30 June
2023
(unaudited)
£m |
31 December
2023
£m |
|
Profit after tax |
|
237.2 |
173.9 |
337.2 |
| Adjustments for
non-cash items: |
|
|
|
|
|
- Depreciation of property, plant and equipment and right-of-use
assets |
|
8.4 |
9.2 |
18.2 |
|
- Impairment/ disposal of property, plant and equipment and
right-of-use assets |
|
8.5 |
1.1 |
(4.0) |
|
- Amortisation and impairment of intangible assets |
11 |
27.4 |
17.9 |
40.5 |
|
- Movement in expected credit loss provision |
|
8.6 |
11.5 |
15.7 |
|
- Share scheme charges |
|
31.9 |
27.4 |
63.3 |
|
- Interest expense on funding for loans and advances to
customers |
|
14.2 |
11.4 |
26.2 |
|
- Investment return |
6 |
(84.1) |
(58.0) |
(119.3) |
|
- Profit on disposal of Insurify share option |
9 |
(12.5) |
– |
– |
|
- Finance costs, including unwinding of discounts on lease
liabilities |
|
14.1 |
7.3 |
20.5 |
|
- Taxation expense |
10 |
72.6 |
60.0 |
105.6 |
| Change in gross
insurance contract liabilities |
5 |
410.6 |
134.7 |
451.3 |
| Change in
reinsurance assets |
5 |
113.8 |
(102.0) |
(141.8) |
| Change in
insurance and other receivables |
|
(73.0) |
(56.8) |
(94.7) |
| Change in gross
loans and advances to customers |
7 |
(78.5) |
(148.2) |
(73.6) |
|
Change in trade and other payables, including tax and social
security |
|
80.6 |
225.4 |
52.4 |
|
Cash flows from operating activities, before movements in
investments |
|
779.8 |
314.8 |
697.5 |
|
Purchases of financial instruments |
|
(3,742.1) |
(1,399.2) |
(3,538.4) |
| Proceeds on
disposal/ maturity of financial instruments |
|
3,209.1 |
1,217.3 |
3,176.1 |
|
Interest and investment income received |
|
48.2 |
21.2 |
76.8 |
|
Cash flows from operating activities, net of movements in
investments |
|
295.0 |
154.1 |
412.0 |
|
Taxation payments |
|
(35.7) |
(43.3) |
(133.0) |
|
Net cash flow from operating activities |
|
259.3 |
110.8 |
279.0 |
|
|
|
|
|
|
| Cash
flows from investing activities: |
|
|
|
|
| Purchases of
property, equipment and software |
|
(32.9) |
(45.8) |
(75.9) |
|
Intangible assets acquired through business combinations net of
deferred tax |
|
(85.2) |
– |
– |
|
Net cash used in investing activities |
|
(118.1) |
(45.8) |
(75.9) |
|
|
|
|
|
|
| Cash
flows from financing activities: |
|
|
|
|
| Proceeds on issue
of loan backed securities |
|
59.8 |
147.9 |
44.9 |
| Proceeds from
other financial liabilities |
|
14.2 |
105.0 |
136.2 |
| Finance costs
paid, including interest expense paid on funding for loans |
|
(27.3) |
(26.6) |
(35.1) |
| Repayment of
lease liabilities |
|
(11.1) |
(1.8) |
(10.7) |
|
Equity dividends paid |
12 |
(156.2) |
(154.9) |
(307.1) |
|
Net cash used in financing activities |
|
(120.6) |
69.6 |
(171.8) |
|
Net increase in cash and cash equivalents |
|
20.6 |
134.6 |
31.3 |
|
Cash and cash equivalents at 1 January |
|
353.1 |
297.0 |
297.0 |
|
Effects of changes in foreign exchange rates |
|
(10.1) |
31.1 |
24.8 |
|
Cash and cash equivalents at end of period |
6 |
363.6 |
462.7 |
353.1 |
Condensed Consolidated Statement of Changes in Equity
(unaudited)
|
|
Attributable to the owners of the Company |
|
|
|
|
Note |
Share
Capital
£m |
Share premium account
£m |
Fair value reserve £m |
Hedging reserve
£m |
Foreign exchange reserve
£m |
Insurance finance reserve
£m |
Retained profit
and loss
£m |
Total
£m |
Non-controlling interests
£m |
Total equity
£m |
|
At 1 January 2023 |
|
0.3 |
13.1 |
(205.9) |
21.1 |
0.1 |
134.5 |
922.6 |
885.8 |
1.2 |
887.0 |
| Profit/(loss) for
the period |
|
— |
— |
— |
— |
— |
— |
174.5 |
174.5 |
(0.6) |
173.9 |
|
Other comprehensive income |
|
— |
— |
(20.9) |
8.7 |
(2.5) |
13.8 |
— |
(0.9) |
— |
(0.9) |
|
Total comprehensive income for the period |
— |
— |
(20.9) |
8.7 |
(2.5) |
13.8 |
174.5 |
173.6 |
(0.6) |
173.0 |
| Transactions with
equity holders |
|
|
|
|
|
|
|
|
|
|
|
| Dividends |
12 |
— |
— |
— |
— |
— |
— |
(154.9) |
(154.9) |
— |
(154.9) |
| Share scheme
credit |
|
— |
— |
— |
— |
— |
— |
27.4 |
27.4 |
— |
27.4 |
| Deferred tax
charge on share scheme credit |
|
— |
— |
— |
— |
— |
— |
(0.9) |
(0.9) |
— |
(0.9) |
|
Transfer to loss on disposal of assets held for sale |
|
— |
— |
— |
— |
(3.6) |
— |
— |
(3.6) |
0.6 |
(3.0) |
|
Total transactions with equity holders |
— |
— |
— |
— |
(3.6) |
— |
(128.4) |
(132.0) |
0.6 |
(131.4) |
|
As at 30 June 2023 |
|
0.3 |
13.1 |
(226.8) |
29.8 |
(6.0) |
148.3 |
968.7 |
927.4 |
1.2 |
928.6 |
|
At 1 January 2023 |
|
0.3 |
13.1 |
(205.9) |
21.1 |
0.1 |
134.5 |
922.6 |
885.8 |
1.2 |
887.0 |
| Profit/(loss) for
the period |
|
— |
— |
— |
— |
— |
— |
338.0 |
338.0 |
(0.8) |
337.2 |
|
Other comprehensive income |
|
— |
— |
92.4 |
(13.6) |
3.7 |
(69.2) |
— |
13.3 |
— |
13.3 |
|
Total comprehensive income for the period |
— |
— |
92.4 |
(13.6) |
3.7 |
(69.2) |
338.0 |
351.3 |
(0.8) |
350.5 |
|
Transactions with equity holders |
|
|
|
|
|
|
|
|
|
|
|
| Dividends |
12 |
— |
— |
— |
— |
— |
— |
(307.1) |
(307.1) |
— |
(307.1) |
| Share scheme
credit |
|
— |
— |
— |
— |
— |
— |
63.3 |
63.3 |
— |
63.3 |
| Deferred tax
credit on share scheme credit |
|
— |
— |
— |
— |
— |
— |
2.1 |
2.1 |
— |
2.1 |
|
Transfer to loss on disposal of assets held for sale |
|
— |
— |
— |
— |
(3.6) |
— |
— |
(3.6) |
0.6 |
(3.0) |
|
Total transactions with equity holders |
— |
— |
— |
— |
(3.6) |
— |
(241.7) |
(245.3) |
0.6 |
(244.7) |
|
At 31 December 2023 |
|
0.3 |
13.1 |
(113.5) |
7.5 |
0.2 |
65.3 |
1,018.9 |
991.8 |
1.0 |
992.8 |
Condensed Consolidated Statement of Changes in Equity
(unaudited) (continued)
|
|
|
Attributable to the owners of the Company |
|
|
|
|
Note |
Share
Capital
£m |
Share premium account
£m |
Fair value reserve £m |
Hedging reserve
£m |
Foreign exchange reserve
£m |
Insurance finance reserve
£m |
Retained profit
and loss
£m |
Total
£m |
Non-controlling interests
£m |
Total equity
£m |
|
At 1 January 2024 (unaudited) |
|
0.3 |
13.1 |
(113.5) |
7.5 |
0.2 |
65.3 |
1,018.9 |
991.8 |
1.0 |
992.8 |
| Profit/(loss) for
the period |
|
— |
— |
— |
— |
— |
— |
237.4 |
237.4 |
(0.2) |
237.2 |
|
Other comprehensive income |
|
— |
— |
(6.3) |
0.2 |
(1.9) |
15.7 |
— |
7.7 |
— |
7.7 |
|
Total comprehensive income for the period |
— |
— |
(6.3) |
0.2 |
(1.9) |
15.7 |
237.4 |
245.1 |
(0.2) |
244.9 |
|
Transactions with equity holders |
|
|
|
|
|
|
|
|
|
|
|
| Dividends |
12 |
— |
— |
— |
— |
— |
— |
(156.2) |
(156.2) |
— |
(156.2) |
| Share scheme
credit |
|
— |
— |
— |
— |
— |
— |
31.9 |
31.9 |
— |
31.9 |
| Deferred tax
charge on share scheme credit |
|
— |
— |
— |
— |
— |
— |
(2.3) |
(2.3) |
— |
(2.3) |
|
Transfer to loss on disposal of assets held for sale |
|
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|
Total transactions with equity holders |
— |
— |
— |
— |
— |
— |
(126.6) |
(126.6) |
— |
(126.6) |
|
As at 30 June 2024 (unaudited) |
|
0.3 |
13.1 |
(119.8) |
7.7 |
(1.7) |
81.0 |
1,129.7 |
1,110.3 |
0.8 |
1,111.1 |
Notes to the consolidated financial
statements
General information
Admiral Group plc is a public limited company incorporated in
England and Wales. Its registered office is at Tŷ Admiral, David
Street, Cardiff, CF10 2EH and its shares are listed on the London
Stock Exchange.
The condensed interim financial statements comprise the results
and balances of the Company and its subsidiaries (the Group) for
the six-month period ended 30 June 2024 and the comparative
periods for the six-months ended 30 June 2023 and the year
ended 31 December 2023. This condensed set of financial
statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the UK, and should be read in
conjunction with the Group’s last annual consolidated financial
statements as at and for the year ended 31 December 2023
(“last annual financial statements”), prepared in accordance with
United Kingdom adopted international accounting standards in
conformity with the requirements of the Companies Act 2006. They do
not include all of the information required for a complete set of
IFRS financial statements. However, selected explanatory notes are
included to explain events and transactions that are significant to
an understanding of the changes in the Group’s financial position
and performance since the last annual financial statements.
As required by the FCA’s Disclosure and Transparency Rules, the
condensed set of financial statements has been prepared applying
the accounting policies and presentation that were applied in the
preparation of the Company’s published consolidated financial
statements for the year ended 31 December 2023, except where
new accounting standards apply as noted below.
The financial statements of the Company’s subsidiaries are
consolidated in the Group financial statements. In accordance with
IAS 24, transactions or balances between Group companies that have
been eliminated on consolidation are not reported as related party
transactions.
The comparative figures for the financial year ended
31 December 2023 are the Company's statutory accounts for that
financial year. Those accounts have been reported on by the
Company's auditors and delivered to the registrar of companies. The
report of the auditors was:
I. unqualified;
II. did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report;
and
III. did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The accounts have been prepared on a going concern basis. In
considering the appropriateness of this assumption, the Board have
reviewed the Group’s projections for the next 12 months and beyond.
Further information is given in note 1 below.
1. Basis of preparation
The condensed set of interim financial statements have been
prepared applying the accounting policies and presentation that
were applied in the preparation of the Company’s published
consolidated financial statements for the year ended
31 December 2023.
A number of other IFRS and interpretations have been endorsed by
the UK in the period to 30 June 2024 and although they have
been adopted by the Group, none of them has had a material impact
on the Group’s financial statements.
The Group’s assessment of the impact of other standards that
have yet to be adopted remains consistent with that reported on
page 222 of the Group’s 2023 Annual Report.
The consolidated financial statements have been prepared on a
going concern basis. In considering this requirements, the
directors have taken into account the following:
- The Group’s profit projections,
including:
- Changes in premium rates and
projected policy volumes across the Group’s insurance
businesses
- Projected cost of settling claims
across all of the Group’s insurance businesses, including the
impact of continuing, albeit reducing, high levels of
inflation
- Projected trends in motor claims
frequency
- Projected trends in other revenue
generated by the Group’s insurance business from fees and the sale
of ancillary products
- Projected contributions to profit
from businesses other than the UK Motor insurance business
- Expected trends in unemployment in
the context of credit risks and the growth of the Group’s consumer
lending business
- The impact of the More Than
acquisition, which completed in the first half of 2024.
- The Group’s solvency position, which
has been closely monitored through periods of market volatility.
The Group continues to maintain a strong solvency position above
target levels
- The adequacy of the Group’s
liquidity position after considering all the factors noted
above
- The results of business plan
scenarios and stress tests on the projected profitability, solvency
and liquidity positions including the impact of severe downside
scenarios that assume severe adverse economic, credit and trading
stresses
- The regulatory environment, focusing
on regulatory guidance issued by the FCA and the PRA in the UK and
regular communications between management and regulators
- A review of the Company’s principal
risks and uncertainties and the assessment of emerging risks
including climate related risks.
Following consideration of all of the above, the Directors have
reasonable expectation that the Group has adequate resources to
continue in operation for the foreseeable future, a period of not
less than 12 months from the date of this report, and that it is
therefore appropriate to adopt the going concern basis in preparing
the consolidated financial statements.
The accounting policies set out in the notes to the financial
statements have, unless otherwise stated, been applied consistently
to all periods presented in these Group financial statements.
The financial statements are prepared on the historical cost
basis, except for the revaluation of financial assets classified as
fair value through profit or loss or as fair value through other
comprehensive income. The Group and Company financial statements
are presented in pounds sterling, rounded to the nearest £0.1
million.
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential
voting rights that are currently exercisable. The acquisition date
is the date on which control is transferred to the acquirer. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. Losses applicable to
the non-controlling interests in a subsidiary are allocated to the
non-controlling interests even if doing so causes the
non-controlling interests to have a deficit balance.
2. Critical accounting judgements and
estimates
The Group’s 2023 Annual Report provides full details of significant
judgements and estimates used in the application of the Group’s
accounting policies, other than:
- in relation to the additional
intangible assets acquired in the period, for which the relevant
information is included in notes 11 and 13
- in relation to the calculation of
insurance reserves where the estimation basis has been updated both
for the growth of the UK motor book and for motor total loss claims
settled in previous periods, where management exercises judgement
in assessing which customers should be remediated and applies
estimation techniques in deriving the remediation amounts.
There have been no additional critical judgements or estimates
applied in the period.
Notes 3 and 5 provide further information as to the changes in
the estimates with respect to the calculation of insurance
reserves.
Note 7 provides further information as to changes in the
estimates with respect to the calculation of the expected credit
loss provision for the Admiral Money business.
3. Insurance and financial risk
3a. Insurance risk sensitivity
analysis
The following sensitivity analysis shows the impact on profit for
reasonably possible movements in key assumptions with all other
assumptions held constant. The correlation of assumptions will have
a significant effect in determining the ultimate impacts, but to
demonstrate the impact due to changes in each assumption,
assumptions have been changed on an individual basis. It should be
noted that movements in these assumptions are non-linear.
The sensitivities are shown for UK motor only, being the line of
business where such sensitivities could have a material impact at a
Group level. The sensitivities are shown on a gross and net of
quota share reinsurance basis to illustrate the impacts on
shareholder profit and equity before and after risk mitigation from
quota share reinsurance. The sensitivities (both gross and net)
include the impacts of movements in co-insurance profit commission,
given that underwriting year loss ratios including risk adjustment
are a direct input to the calculation of profit commission.
Ogden discount rate
The sensitivities reflect the impact on profit before tax and
equity in H1 2024 for changes to the Ogden discount rate from the
current rate of minus 0.25%, with all other assumptions (including
the absolute level of risk adjustment) remaining unchanged. The
sensitivities assume the change in rate takes place from 1 January
2025.
|
|
30 June 2024 (unaudited) |
|
£m |
Impact on profit before tax gross of
reinsurance |
Impact on profit before tax net of
reinsurance |
Impact on equity gross of reinsurance |
Impact on equity net
of reinsurance |
|
Ogden discount rate increase by 125 bps to +1.00% |
154.8 |
121.3 |
124.2 |
111.4 |
| Ogden discount
rate increase by 75 bps to +0.50% |
99.5 |
75.5 |
79.8 |
71.0 |
| Ogden discount
rate increase by 25 bps to 0.00% |
35.1 |
25.7 |
28.2 |
24.6 |
|
Ogden discount rate decrease by 75 bps to -1.00% |
(120.4) |
(85.8) |
(96.9) |
(82.8) |
Should the Ogden discount rate change in future periods, the
ultimate impacts on profit before tax and equity are likely to be
slightly larger than those set out above, as a result of including
the impacts on claims arising in relation to premium written and
earned beyond 30 June 2024. It is also expected that some of
the ultimate impact of a change in Ogden rate will flow into future
financial periods.
Risk adjustment
The sensitivities reflect the impact on profit before tax and
equity in 2024 for changes in the selection of the UK motor risk
adjustment confidence level at 30 June 2024, with all other
assumptions remaining unchanged.
|
|
30 June 2024 (unaudited) |
|
£m |
Impact on profit before tax gross of
reinsurance |
Impact on profit before tax net of
reinsurance |
Impact on equity gross of reinsurance |
Impact on equity net
of reinsurance |
|
Risk adjustment increase to 95th percentile |
(40.2) |
(26.2) |
(33.0) |
(21.3) |
| Risk adjustment
decrease to 90th percentile |
58.1 |
40.2 |
47.7 |
32.5 |
|
Risk adjustment decrease to 85th percentile |
117.2 |
85.1 |
96.1 |
69.1 |
Undiscounted loss ratios, including risk adjustment
(unaudited)
The sensitivities reflect the impact on profit before tax and
equity in 2024 of a change in the booked loss ratios for individual
underwriting years (UWY) as at 30 June 2024, with all other
assumptions remaining unchanged.
|
£m |
UWY 2020 impact on: |
UWY 2021 impact on: |
UWY 2022 impact on: |
UWY 2023 impact on: |
|
|
PBT |
Equity |
PBT |
Equity |
PBT |
Equity |
PBT |
Equity |
| |
|
|
|
|
|
|
|
|
| Increase of 1%:
gross of reinsurance |
(19.7) |
(14.7) |
(13.8) |
(10.6) |
(14.4) |
(12.1) |
(17.9) |
(15.3) |
| Increase of 5%:
gross of reinsurance |
(98.3) |
(73.5) |
(68.9) |
(53.2) |
(72.2) |
(60.4) |
(86.5) |
(74.0) |
| Increase of 10%:
gross of reinsurance |
(196.6) |
(147.0) |
(137.8) |
(106.4) |
(144.4) |
(120.9) |
(172.3) |
(147.3) |
| |
|
|
|
|
|
|
|
|
| Decrease of 1%:
gross of reinsurance |
19.7 |
14.7 |
13.8 |
10.6 |
14.4 |
12.1 |
16.4 |
14.0 |
| Decrease of 5%:
gross of reinsurance |
98.3 |
73.5 |
68.9 |
53.2 |
72.2 |
60.4 |
85.0 |
72.6 |
| Decrease of 10%:
gross of reinsurance |
196.6 |
147.0 |
157.2 |
121.0 |
144.4 |
120.9 |
199.1 |
167.2 |
| |
|
|
|
|
|
|
|
|
| Increase of 1%:
net of reinsurance |
(19.7) |
(14.7) |
(10.4) |
(8.0) |
(4.3) |
(3.5) |
(10.2) |
(8.6) |
| Increase of 5%:
net of reinsurance |
(98.3) |
(73.5) |
(54.0) |
(41.5) |
(21.3) |
(17.5) |
(44.8) |
(37.7) |
| Increase of 10%:
net of reinsurance |
(196.6) |
(147.0) |
(108.4) |
(83.4) |
(46.1) |
(37.9) |
(79.6) |
(66.9) |
| |
|
|
|
|
|
|
|
|
| Decrease of 1%:
net of reinsurance |
19.7 |
14.7 |
12.0 |
9.2 |
7.7 |
6.4 |
11.6 |
9.8 |
| Decrease of 5%:
net of reinsurance |
98.3 |
73.5 |
54.9 |
42.2 |
21.3 |
17.5 |
71.9 |
61.3 |
|
Decrease of 10%: net of reinsurance |
196.6 |
147.0 |
134.8 |
103.4 |
64.7 |
53.7 |
186.0 |
155.8 |
* ‘Booked’ loss ratios are undiscounted underwriting year
loss ratios, including risk adjustment.
3b. Financial risk: Interest rate sensitivity
analysis
Impact on insurance contracts liabilities and
reinsurance contract assets
The impact on profit and loss (before tax) and equity arising from
the impact of 100 basis point and 200 basis point increases and
decreases in interest rates on insurance contract liabilities and
reinsurance contract assets, is as follows:
|
|
30 June 2024 (unaudited) |
|
£m |
Impact on profit before tax gross of
reinsurance |
Impact on profit before tax net of
reinsurance |
Impact on equity gross of reinsurance |
Impact on equity net of reinsurance |
|
Increase of 100 basis points |
13.3 |
12.9 |
57.4 |
52.5 |
| Decrease of 100
basis points |
(14.3) |
(13.9) |
(64.4) |
(59.3) |
| Increase of 200
basis points |
25.6 |
24.9 |
109.3 |
99.8 |
|
Decrease of 200 basis points |
(29.9) |
(29.1) |
(138.5) |
(127.9) |
Impact on investments and cash
The impact on profit before tax of a 100 basis and 200 basis point
move in relation to investments and cash is not significant, at
£6.7 million and £13.4 million respectively. The impact on equity
is more significant, at £84.7 million and £162.9 million
respectively, as a result of the gains and losses on the majority
of the financial investment portfolio being reflected in Other
Comprehensive Income.
4. Operating segments
The Group has four reportable segments; UK Insurance, International
Insurance, Admiral Money, and Other. These reportable segments are
consistent with those set out on page 238 of the Group’s 2023
Annual Report.
An analysis of the Group’s revenue and results for the period
ended 30 June 2024, by reportable segment, is shown below. The
accounting policies of the reportable segments are consistent with
those presented in the notes to the 2023 Group financial
statements.
|
|
|
Six months ended 30 June 2024 (unaudited) |
|
|
UK Insurance £m |
Int. Insurance
£m |
Admiral Money
£m |
Other
£m |
Eliminations
£m*3 |
Total
£m |
|
Turnover*1 |
2,675.2 |
450.2 |
50.4 |
32.0 |
– |
3,207.8 |
|
Insurance revenue |
1,761.3 |
422.1 |
– |
30.4 |
– |
2,213.8 |
| Insurance revenue
net of XoL |
1,701.9 |
403.3 |
– |
27.5 |
– |
2,132.7 |
| Insurance
services expenses |
(360.6) |
(117.5) |
– |
(14.8) |
– |
(492.9) |
| Insurance claims
net of XoL |
(917.1) |
(289.2) |
– |
(15.9) |
– |
(1,222.2) |
| Quota share
reinsurance result |
(164.9) |
(0.9) |
– |
– |
– |
(165.8) |
|
Net movement in onerous loss component |
0.8 |
1.6 |
– |
– |
– |
2.4 |
|
Underwriting result |
260.1 |
(2.7) |
– |
(3.2) |
– |
254.2 |
| Net investment
income*2 |
33.0 |
4.5 |
0.1 |
0.3 |
(2.8) |
35.1 |
| Net interest
income from financial services |
– |
– |
34.1 |
0.3 |
1.9 |
36.3 |
|
Net other revenue and operating expenses |
70.2 |
(0.1) |
(27.4) |
(5.0) |
– |
37.7 |
|
Segment profit/(loss) before
tax*4 |
363.3 |
1.7 |
6.8 |
(7.6) |
(0.9) |
363.3 |
| Other
central revenue and expenses, including share scheme
charges*4 |
|
(46.4) |
|
Investment and interest income |
|
|
6.1 |
|
Finance costs |
|
|
(13.2) |
|
Consolidated profit before tax |
|
|
|
309.8 |
|
Taxation expense |
|
|
|
|
|
(72.6) |
|
Consolidated profit after tax |
|
|
|
|
237.2 |
Revenue and results for the corresponding reportable segments
for the period ended 30 June 2023 are shown below.
|
|
|
Six months ended 30 June 2023 (unaudited) |
|
|
UK Insurance £m |
Int. Insurance
£m |
Admiral Money
£m |
Other
£m |
Eliminations £m*3 |
Total
£m |
|
Turnover*1 |
1,708.3 |
464.3 |
43.6 |
21.3 |
– |
2,237.5 |
|
Insurance revenue |
1,178.9 |
407.5 |
– |
20.6 |
– |
1,607.0 |
| Insurance revenue
net of XoL |
1,144.8 |
396.8 |
– |
19.7 |
– |
1,561.3 |
| Insurance
services expenses |
(271.7) |
(125.7) |
– |
(14.2) |
– |
(411.6) |
| Insurance claims
net of XoL |
(701.1) |
(269.7) |
– |
(19.9) |
– |
(990.7) |
| Quota share
reinsurance result |
19.4 |
(13.2) |
– |
(0.1) |
– |
6.1 |
|
Net movement in onerous loss component |
0.6 |
0.8 |
– |
– |
– |
1.4 |
|
Underwriting result |
192.0 |
(11.0) |
– |
(14.5) |
– |
166.5 |
| Net investment
income*2 |
25.5 |
1.9 |
0.3 |
0.1 |
(1.6) |
26.2 |
| Net interest
income from financial services |
– |
– |
31.0 |
– |
0.7 |
31.7 |
|
Net other revenue and operating expenses |
86.4 |
1.5 |
(28.6) |
(3.4) |
– |
55.9 |
|
Segment profit/(loss) before
tax*4 |
303.9 |
(7.6) |
2.7 |
(17.8) |
(0.9) |
280.3 |
| Other
central revenue and expenses, including share scheme
charges*4 |
|
(42.4) |
|
Investment and interest income |
|
|
2.3 |
|
Finance costs |
|
|
(6.3) |
|
Consolidated profit before tax |
|
|
|
233.9 |
|
Taxation expense |
|
|
|
|
|
(60.0) |
|
Consolidated profit after tax |
|
|
|
|
173.9 |
Revenue and results for the corresponding reportable segments
for the year ended 31 December 2023 are shown below.
|
|
|
Year ended 31 December 2023 |
|
|
UK Insurance £m |
Int. Insurance
£m |
Admiral Money
£m |
Other
£m |
Eliminations £m*3 |
Total
£m |
|
Turnover*1 |
3,776.0 |
894.9 |
92.1 |
48.5 |
– |
4,811.5 |
|
Insurance revenue |
2,596.8 |
842.6 |
– |
46.7 |
– |
3,486.1 |
| Insurance revenue
net of XoL |
2,517.3 |
811.8 |
– |
44.4 |
– |
3,373.5 |
| Insurance
services expenses |
(559.6) |
(249.4) |
– |
(27.9) |
– |
(836.9) |
| Insurance claims
net of XoL |
(1,560.2) |
(565.2) |
– |
(33.1) |
– |
(2,158.5) |
| Quota share
reinsurance result |
(18.4) |
(22.1) |
– |
0.1 |
– |
(40.4) |
|
Net movement in onerous loss component |
4.3 |
0.6 |
– |
– |
– |
4.9 |
|
Underwriting result |
383.4 |
(24.3) |
– |
(16.5) |
– |
342.6 |
| Net investment
income*2 |
55.2 |
4.3 |
– |
0.3 |
(3.2) |
56.6 |
| Net interest
income from financial services |
– |
– |
66.4 |
0.2 |
1.5 |
68.1 |
|
Net other revenue and operating expenses |
157.9 |
2.0 |
(56.2) |
(12.4) |
– |
91.3 |
|
Segment profit/(loss) before
tax*4 |
596.5 |
(18.0) |
10.2 |
(28.4) |
(1.7) |
558.6 |
| Other
central revenue and expenses, including share scheme
charges*4 |
|
(101.8) |
|
Investment and interest income |
|
|
4.6 |
|
Finance costs |
|
|
(18.6) |
|
Consolidated profit before tax |
|
|
|
442.8 |
|
Taxation expense |
|
|
|
|
|
(105.6) |
|
Consolidated profit after tax |
|
|
|
|
337.2 |
*1 Turnover is an Alternative Performance Measure presented
before intra-group eliminations. Refer to the glossary and note 14
for further information.
*2 Net Investment income is reported net of impairment of
financial assets, in line with management reporting.
*3 Eliminations are in respect of the intra-group trading
between the Group’s comparison and UK and International insurance
entities and intra-group interest charges related to the UK
Insurance and Admiral Money segment.
*4 Segment results are presented net of gross share scheme
charges, and any quota share reinsurance recoveries; these net
share scheme charges are presented within ‘Other central revenue
and expenses, including share scheme charges in line with internal
management reporting.
5. Insurance Service result
5a. Accounting policies
The full accounting policies are provided in the Group’s 2023
Annual Report.
Discount rates
A bottom-up approach has been applied in the determination of
discount rates. Under this approach, the discount rate is
determined as the risk-free yield adjusted for differences in
liquidity characteristics between the financial assets used to
derive the risk-free yield and the relevant liability cashflows
(known as an illiquidity premium).
The following weighted average rates, based on the yield curves
derived using the above methodology, were used to discount the
liability for incurred claims at the end of the current and prior
periods:
| |
30 June 2024 (unaudited) |
30 June 2023 (unaudited) |
31 December 2023 |
| |
1 year |
3 years |
5 years |
10 years |
1 year |
3 years |
5 years |
10 years |
1 year |
3 years |
5 years |
10 years |
| UK Insurance |
5.5% |
4.9% |
4.6% |
4.5% |
6.7% |
6.3% |
5.7% |
4.9% |
5.4% |
4.3% |
4.0% |
3.9% |
| International
(European motor) |
4.1% |
3.6% |
3.4% |
3.4% |
4.6% |
4.2% |
3.8% |
3.5% |
4.0% |
3.1% |
3.0% |
3.0% |
5b. Insurance revenue
Insurance revenue for the corresponding reportable segments for the
period ended 30 June 2024 are shown below.
|
30 June 2024 (unaudited) |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
|
Insurance revenue related movement in liability for
remaining coverage |
1,539.5 |
221.8 |
422.1 |
30.4 |
2,213.8 |
Insurance revenue for the corresponding reportable segments for
the period ended 30 June 2023 are shown below.
|
30 June 2023 (unaudited) |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
|
Insurance revenue related movement in liability for
remaining coverage |
1,020.0 |
158.9 |
407.5 |
20.6 |
1,607.0 |
|
|
Insurance revenue for the corresponding reportable segments for
the year ended 31 December 2023 are shown below.
|
31 December 2023 |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
|
Insurance revenue related movement in liability for
remaining coverage |
2,250.2 |
346.6 |
842.6 |
46.7 |
3,486.1 |
The Group’s share of its insurance business was
underwritten by Admiral Insurance (Gibraltar) Limited, Admiral
Insurance Company Limited, Admiral Europe Compañia Seguros (‘AECS’)
and Elephant Insurance Company. The majority of contracts are short
term in duration, lasting for between 6 and 12 months.
5c. Insurance service expenses
Insurance service expenses for the corresponding reportable
segments for the period ended 30 June 2024 are shown
below.
|
30 June 2024 (unaudited) |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
| Incurred
claims |
|
|
|
|
|
| Claims incurred
in the period |
1,049.1 |
138.0 |
271.0 |
17.7 |
1,475.8 |
|
Changes to liabilities for incurred claims |
(274.6) |
(37.5) |
20.1 |
(1.9) |
(293.9) |
|
Total incurred claims |
774.5 |
100.5 |
291.1 |
15.8 |
1,181.9 |
| Movement in
onerous contracts |
(3.6) |
(0.3) |
(1.9) |
— |
(5.8) |
| Directly
attributable expenses |
|
|
|
|
|
| Administration
expenses |
226.3 |
49.6 |
87.6 |
9.3 |
372.8 |
|
Acquisition expenses |
61.7 |
23.0 |
29.9 |
5.5 |
120.1 |
|
Insurance expenses |
288.0 |
72.6 |
117.5 |
14.8 |
492.9 |
|
Share scheme expenses |
19.1 |
2.4 |
5.0 |
0.7 |
27.2 |
|
Total insurance expenses including share scheme
expenses |
307.1 |
75.0 |
122.5 |
15.5 |
520.1 |
|
Total Insurance service expenses |
1,078.0 |
175.2 |
411.7 |
31.3 |
1,696.2 |
Insurance services expenses for the corresponding reportable
segments for the period ended 30 June 2023 are shown
below.
|
30 June 2023 (unaudited) |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
| Incurred
claims |
|
|
|
|
|
| Claims incurred
in the period |
851.1 |
109.1 |
287.6 |
15.5 |
1,263.3 |
|
Changes to liabilities for incurred claims |
(249.1) |
(5.1) |
(5.1) |
3.5 |
(255.8) |
|
Total incurred claims |
602.0 |
104.0 |
282.5 |
19.0 |
1,007.5 |
| Movement in
onerous contracts |
(3.4) |
— |
(1.5) |
— |
(4.9) |
| Directly
attributable expenses |
|
|
|
|
|
| Administration
expenses |
189.6 |
33.8 |
89.6 |
9.4 |
322.4 |
|
Acquisition expenses |
30.9 |
17.5 |
36.2 |
4.7 |
89.3 |
|
Insurance expenses |
220.5 |
51.3 |
125.8 |
14.1 |
411.7 |
|
Share scheme expenses |
17.9 |
1.6 |
3.6 |
0.3 |
23.4 |
|
Total insurance expenses including share scheme
expenses |
238.4 |
52.9 |
129.4 |
14.4 |
435.1 |
|
Total Insurance service expenses |
837.0 |
156.9 |
410.4 |
33.4 |
1,437.7 |
Insurance service expenses for the corresponding reportable
segments for the year ended 31 December 2023 are shown
below.
|
31 December 2023 |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
| Incurred
claims |
|
|
|
|
|
| Claims incurred
in the period |
1,755.5 |
255.0 |
618.2 |
36.4 |
2,665.1 |
|
Changes to liabilities for incurred claims |
(406.9) |
(9.1) |
(21.3) |
(3.3) |
(440.6) |
|
Total incurred claims |
1,348.6 |
245.9 |
596.9 |
33.1 |
2,224.5 |
| Movement in
onerous contracts |
(18.6) |
(2.4) |
(2.4) |
— |
(23.4) |
| Directly
attributable expenses |
|
|
|
|
|
| Administration
expenses |
377.8 |
73.5 |
184.0 |
19.0 |
654.3 |
|
Acquisition expenses |
73.4 |
34.8 |
65.4 |
8.9 |
182.5 |
|
Insurance expenses |
451.2 |
108.3 |
249.4 |
27.9 |
836.8 |
|
Share scheme expenses |
43.2 |
2.4 |
8.9 |
0.8 |
55.3 |
|
Total insurance expenses including share scheme
expenses |
494.4 |
110.7 |
258.3 |
28.7 |
892.1 |
|
Total Insurance service expenses |
1,824.4 |
354.2 |
852.8 |
61.8 |
3,093.2 |
5d. Net expenses from reinsurance contracts
held
Net expenses from reinsurance contracts held for the corresponding
reportable segments for the period ended 30 June 2024 are
shown below.
|
30 June 2024 (unaudited) |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
|
Allocation of reinsurance premiums |
66.9 |
23.9 |
82.4 |
2.8 |
176.0 |
| Amounts
recoverable from reinsurers for incurred insurance service
expenses |
|
|
|
|
|
| Incurred
claims |
(27.0) |
(4.4) |
(154.1) |
— |
(185.5) |
|
Changes to liabilities for incurred claims |
172.2 |
28.0 |
86.5 |
— |
286.7 |
|
Net expense from reinsurance contracts excluding movement
in onerous loss component |
212.1 |
47.5 |
14.8 |
2.8 |
277.2 |
|
Other reinsurance recoveries including movement in onerous loss
component |
2.9 |
0.2 |
0.3 |
— |
3.4 |
|
Net expenses from reinsurance contracts held |
215.0 |
47.7 |
15.1 |
2.8 |
280.6 |
Net expenses from reinsurance contracts held for the
corresponding reportable segments for the period ended 30 June
2023 are shown below.
|
30 June 2023 (unaudited) |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
|
Allocation of reinsurance premiums |
41.6 |
25.2 |
93.2 |
0.9 |
160.9 |
| Amounts
recoverable from reinsurers for incurred insurance service
expenses |
|
|
|
|
|
| Incurred
claims |
(120.1) |
(20.3) |
(129.6) |
— |
(270.0) |
|
Changes to liabilities for incurred claims |
81.4 |
(4.1) |
44.1 |
0.8 |
122.2 |
|
Net expense from reinsurance contracts excluding movement
in onerous loss component |
2.9 |
0.8 |
7.7 |
1.7 |
13.1 |
|
Other reinsurance recoveries including movement in onerous loss
component |
3.0 |
— |
0.7 |
— |
3.7 |
|
Net expenses from reinsurance contracts held |
5.9 |
0.8 |
8.4 |
1.7 |
16.8 |
Net expenses from reinsurance contracts held for the
corresponding reportable segments for the year ended
31 December 2023 are shown below.
|
31 December 2023 |
|
|
UK Motor
£m |
UK Non-motor
£m |
Int. Insurance
£m |
Other
£m |
Total Group
£m |
|
Allocation of reinsurance premiums |
93.6 |
49.5 |
190.0 |
2.2 |
335.3 |
| Amounts
recoverable from reinsurers for incurred insurance service
expenses |
|
|
|
|
|
| Incurred
claims |
(173.8) |
(52.0) |
(270.3) |
— |
(496.1) |
|
Changes to liabilities for incurred claims |
135.1 |
(1.4) |
95.9 |
(0.1) |
229.5 |
|
Net expense from reinsurance contracts excluding movement
in onerous loss component |
54.9 |
(3.9) |
15.6 |
2.1 |
68.7 |
|
Other reinsurance recoveries including movement in loss recovery
component |
14.5 |
2.2 |
1.7 |
— |
18.4 |
|
Net expenses/(income) from reinsurance contracts
held |
69.4 |
(1.7) |
17.3 |
2.1 |
87.1 |
5e. Finance (expenses)/income from insurance
contracts held and reinsurance contracts issued
|
£m |
30 June 2024 (unaudited) |
30 June 2023 (unaudited) |
31 December 2023 |
| Amounts
recognised through the income statement |
|
|
|
| Insurance finance
expenses from insurance contracts issued |
(61.2) |
(47.4) |
(94.5) |
|
Insurance finance income from reinsurance contracts held |
19.3 |
18.3 |
28.9 |
|
Net finance expense from insurance / reinsurance contracts
issued |
(41.9) |
(29.1) |
(65.6) |
|
Amounts recognised in other comprehensive
income |
|
|
|
| Gains/ (losses) due
to changes in discount rates – insurance contracts |
31.0 |
20.4 |
(128.1) |
|
(Losses)/gains due to changes in discount rates – reinsurance
contracts |
(13.1) |
(4.0) |
49.2 |
|
Total gains before tax recognised in other comprehensive
income |
17.9 |
16.4 |
(78.9) |
5f. Insurance Liabilities and Reinsurance
assets
(i). Analysis of recognised amounts
| |
Period ended 30 June 2024 (unaudited) |
|
Year ended 30 June 2023 (unaudited) |
|
Year ended 31 December 2023 |
| £
million |
Liability for remaining coverage |
Liability for incurred claims |
Total |
|
Liability for remaining coverage |
Liability for incurred claims |
Total |
|
Liability for remaining coverage |
Liability for incurred claims |
Total |
|
Insurance contracts issued |
|
|
|
|
|
|
|
|
|
|
| UK Motor |
989.5 |
2,649.3 |
3,638.8 |
|
663.1 |
2,337.4 |
3,000.5 |
|
769.0 |
2,546.7 |
3,315.7 |
| UK Non-motor |
173.6 |
195.3 |
368.9 |
|
123.5 |
181.7 |
305.2 |
|
136.2 |
217.5 |
353.7 |
| International
Motor |
227.1 |
645.4 |
872.5 |
|
223.5 |
569.6 |
793.1 |
|
221.0 |
641.5 |
862.5 |
|
Other |
4.7 |
61.7 |
66.4 |
|
2.7 |
38.2 |
40.9 |
|
3.5 |
46.3 |
49.8 |
|
Total insurance contracts issued |
1,394.9 |
3,551.7 |
4,946.6 |
|
1,012.8 |
3,126.9 |
4,139.7 |
|
1,129.7 |
3,452.0 |
4,581.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Asset/(liability) for remaining coverage |
Asset for incurred claims |
Total |
|
Asset/(liability) for remaining coverage |
Asset for incurred claims |
Total |
|
Asset/(liability) for remaining coverage |
Asset for incurred claims |
Total |
|
Reinsurance contracts held |
|
|
|
|
|
|
|
|
|
|
| UK Motor |
48.4 |
351.4 |
399.8 |
|
39.2 |
466.3 |
505.5 |
|
23.1 |
496.8 |
519.9 |
| UK Non-Motor |
(29.9) |
179.6 |
149.7 |
|
25.1 |
150.0 |
175.1 |
|
21.4 |
170.2 |
191.6 |
| International
Motor |
(25.5) |
525.1 |
499.6 |
|
(51.5) |
485.0 |
433.5 |
|
(21.0) |
502.8 |
481.8 |
|
Other |
(0.3) |
6.8 |
6.5 |
|
(0.8) |
0.1 |
(0.7) |
|
(1.4) |
— |
(1.4) |
|
Total reinsurance contracts held |
(7.3) |
1,062.9 |
1,055.6 |
|
12.0 |
1,101.4 |
1,113.4 |
|
22.1 |
1,169.8 |
1,191.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Liability/(asset) for remaining coverage |
Liability/(asset) for incurred claims |
Total |
|
Liability/(asset) for remaining coverage |
Liability/(asset) for incurred claims |
Total |
|
Asset for remaining coverage |
Asset for incurred claims |
Total |
|
Net |
|
|
|
|
|
|
|
|
|
|
|
| UK Motor |
941.1 |
2,297.9 |
3,239.0 |
|
623.9 |
1,871.1 |
2,495.0 |
|
745.9 |
2,049.9 |
2,795.8 |
| UK other |
203.5 |
15.7 |
219.2 |
|
98.4 |
31.7 |
130.1 |
|
114.8 |
47.3 |
162.1 |
| International
Motor |
252.6 |
120.3 |
372.9 |
|
275.0 |
84.6 |
359.6 |
|
242.0 |
138.7 |
380.7 |
|
Other |
5.0 |
54.9 |
59.9 |
|
3.5 |
38.1 |
41.6 |
|
4.9 |
46.3 |
51.2 |
|
Total insurance contracts issued |
1,402.2 |
2,488.8 |
3,891.0 |
|
1,000.8 |
2,025.5 |
3,026.3 |
|
1,107.6 |
2,282.2 |
3,389.8 |
(ii). Roll-forward of net asset or liability for insurance
contracts issued
The following tables reconcile the opening and closing balances of
the LRC and LIC for UK Motor.
|
30 June 2024 (unaudited) |
Liability for remaining coverage |
|
Liability for incurred claims |
|
|
| £
million |
Excluding loss component |
Loss component |
Total |
|
Present value of future cashflows |
Risk adj. for non-financial risk |
Total |
|
Total |
| Opening assets |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Opening liabilities |
(766.0) |
(3.0) |
(769.0) |
|
(2,202.8) |
(343.9) |
(2,546.7) |
|
(3,315.7) |
|
Net opening balance |
(766.0) |
(3.0) |
(769.0) |
|
(2,202.8) |
(343.9) |
(2,546.7) |
|
(3,315.7) |
|
Insurance revenue |
1,539.5 |
— |
1,539.5 |
|
— |
— |
— |
|
1,539.5 |
| Insurance
service expenses |
|
|
|
|
|
|
|
|
|
| Incurred claims and
insurance service expenses |
— |
— |
— |
|
(1,252.6) |
(103.6) |
(1,356.2) |
|
(1,356.2) |
| Changes to
liabilities for incurred claims |
— |
— |
— |
|
166.7 |
107.9 |
274.6 |
|
274.6 |
|
Losses and reversals of losses on onerous contracts |
— |
3.6 |
3.6 |
|
— |
— |
— |
|
3.6 |
|
Insurance service result |
1,539.5 |
3.6 |
1,543.1 |
|
(1,085.9) |
4.3 |
(1,081.6) |
|
461.5 |
|
Insurance finance income/(expense) recognised in profit or
loss |
— |
(1.0) |
(1.0) |
|
(39.8) |
(7.2) |
(47.0) |
|
(48.0) |
|
Insurance finance income/(expense) recognised in OCI |
— |
0.4 |
0.4 |
|
23.6 |
2.2 |
25.8 |
|
26.2 |
|
Total changes in comprehensive income |
1,539.5 |
3.0 |
1,542.5 |
|
(1,102.1) |
(0.7) |
(1,102.8) |
|
439.7 |
|
Other changes |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Cashflows |
|
|
|
|
|
|
|
|
|
| Premiums
received |
(1,763.0) |
— |
(1,763.0) |
|
— |
— |
— |
|
(1,763.0) |
| Claims and other
insurance service expenses paid |
— |
— |
— |
|
1,000.2 |
— |
1,000.2 |
|
1,000.2 |
|
Other movements |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Total cashflows |
(1,763.0) |
— |
(1,763.0) |
|
1,000.2 |
— |
1,000.2 |
|
(762.8) |
|
Net closing balance |
(989.5) |
— |
(989.5) |
|
(2,304.7) |
(344.6) |
(2,649.3) |
|
(3,638.8) |
|
Closing assets |
— |
— |
— |
|
— |
— |
— |
|
— |
| Closing
liabilities |
(989.5) |
— |
(989.5) |
|
(2,304.7) |
(344.6) |
(2,649.3) |
|
(3,638.8) |
|
30 June 2023 (unaudited) |
Liability for remaining coverage |
|
Liability for incurred claims |
|
|
| £
million |
Excluding loss component |
Loss component |
Total |
|
Present value of future cashflows |
Risk adj. for non-financial risk |
Total |
|
Total |
| Opening assets |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Opening liabilities |
(534.1) |
(8.1) |
(542.2) |
|
(1,984.5) |
(426.6) |
(2,411.1) |
|
(2,953.3) |
|
Net opening balance |
(534.1) |
(8.1) |
(542.2) |
|
(1,984.5) |
(426.6) |
(2,411.1) |
|
(2,953.3) |
|
Insurance revenue |
1,020.0 |
— |
1,020.0 |
|
— |
— |
— |
|
1,020.0 |
| Insurance
service expenses |
|
|
|
|
|
|
|
|
|
| Incurred claims and
insurance service expenses |
— |
— |
— |
|
(1,009.2) |
(80.3) |
(1,089.5) |
|
(1,089.5) |
| Changes to
liabilities for incurred claims |
— |
— |
— |
|
88.8 |
160.3 |
249.1 |
|
249.1 |
|
Losses and reversals of losses on onerous contracts |
— |
3.4 |
3.4 |
|
— |
— |
— |
|
3.4 |
|
Insurance service result |
1,020.0 |
3.4 |
1,023.4 |
|
(920.4) |
80.0 |
(840.4) |
|
183.0 |
|
Insurance finance income/(expense) recognised in profit or
loss |
— |
(6.3) |
(6.3) |
|
(27.0) |
(5.4) |
(32.4) |
|
(38.7) |
|
Insurance finance income/(expense) recognised in OCI |
— |
(4.2) |
(4.2) |
|
29.9 |
(1.9) |
28.0 |
|
23.8 |
|
Total changes in comprehensive income |
1,020.0 |
(7.1) |
1,012.9 |
|
(917.5) |
72.7 |
(844.8) |
|
168.1 |
|
Other changes |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Cashflows |
|
|
|
|
|
|
|
|
|
| Premiums
received |
(1,133.8) |
— |
(1,133.8) |
|
— |
— |
— |
|
(1,133.8) |
| Claims and other
insurance service expenses paid |
— |
— |
— |
|
918.5 |
— |
918.5 |
|
918.5 |
|
Other movements |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Total cashflows |
(1,133.8) |
— |
(1,133.8) |
|
918.5 |
— |
918.5 |
|
(215.3) |
|
Net closing balance |
(647.9) |
(15.2) |
(663.1) |
|
(1,983.5) |
(353.9) |
(2,337.4) |
|
(3,000.5) |
|
Closing assets |
— |
— |
— |
|
— |
— |
— |
|
— |
| Closing
liabilities |
(647.9) |
(15.2) |
(663.1) |
|
(1,983.5) |
(353.9) |
(2,337.4) |
|
(3,000.5) |
| 31 December
2023 |
Liability for remaining coverage |
|
Liability for incurred claims |
|
|
| £
million |
Excluding loss component |
Loss component |
Total |
|
Present value of future cashflows |
Risk adj. for non-financial risk |
Total |
|
Total |
| Opening assets |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Opening liabilities |
(534.1) |
(8.1) |
(542.2) |
|
(1,984.5) |
(426.6) |
(2,411.1) |
|
(2,953.3) |
|
Net opening balance |
(534.1) |
(8.1) |
(542.2) |
|
(1,984.5) |
(426.6) |
(2,411.1) |
|
(2,953.3) |
|
Insurance revenue |
2,250.2 |
— |
2,250.2 |
|
— |
— |
— |
|
2,250.2 |
| Insurance
service expenses |
|
|
|
|
|
|
|
|
|
| Incurred claims and
insurance service expenses |
— |
— |
— |
|
(2,105.1) |
(144.8) |
(2,249.9) |
|
(2,249.9) |
| Changes to
liabilities for incurred claims |
— |
— |
— |
|
140.1 |
266.8 |
406.9 |
|
406.9 |
|
Losses and reversals of losses on onerous contracts |
— |
18.6 |
18.6 |
|
— |
— |
— |
|
18.6 |
|
Insurance service result |
2,250.2 |
18.6 |
2,268.8 |
|
(1,965.0) |
122.0 |
(1,843.0) |
|
425.8 |
|
Insurance finance income/(expense) recognised in profit or
loss |
— |
(4.1) |
(4.1) |
|
(59.0) |
(12.3) |
(71.3) |
|
(75.4) |
|
Insurance finance income/(expense) recognised in OCI |
— |
(9.4) |
(9.4) |
|
(60.5) |
(27.0) |
(87.5) |
|
(96.9) |
|
Total changes in comprehensive income |
2,250.2 |
5.1 |
2,255.3 |
|
(2,084.5) |
82.7 |
(2,001.8) |
|
253.5 |
|
Other changes |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Cashflows |
|
|
|
|
|
|
|
|
|
| Premiums
received |
(2,482.1) |
— |
(2,482.1) |
|
— |
— |
— |
|
(2,482.1) |
| Claims and other
insurance service expenses paid |
— |
— |
— |
|
1,866.2 |
— |
1,866.2 |
|
1,866.2 |
|
Other movements |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Total cashflows |
(2,482.1) |
— |
(2,482.1) |
|
1,866.2 |
— |
1,866.2 |
|
(615.9) |
|
Net closing balance |
(766.0) |
(3.0) |
(769.0) |
|
(2,202.8) |
(343.9) |
(2,546.7) |
|
(3,315.7) |
|
Closing assets |
— |
— |
— |
|
— |
— |
— |
|
— |
| Closing
liabilities |
(766.0) |
(3.0) |
(769.0) |
|
(2,202.8) |
(343.9) |
(2,546.7) |
|
(3,315.7) |
(iii). Roll-forward of net asset or liability for
reinsurance contracts issued
UK Motor
The following tables reconcile the opening and closing balances of
the ARC and AIC for UK Motor.
|
30 June 2024 (unaudited) |
Asset for remaining coverage |
|
Asset for incurred claims |
|
|
| £
million |
Excluding loss component |
Loss-recovery component |
Total |
|
Present value of future cashflows |
Risk adj. for non-financial risk |
Total |
|
Total |
| Opening assets |
20.8 |
2.3 |
23.1 |
|
313.2 |
183.6 |
496.8 |
|
519.9 |
|
Opening liabilities |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Net opening balance |
20.8 |
2.3 |
23.1 |
|
313.2 |
183.6 |
496.8 |
|
519.9 |
|
Allocation of reinsurance premiums |
(66.9) |
— |
(66.9) |
|
— |
— |
— |
|
(66.9) |
| Amounts
recoverable from reinsurers for incurred claims |
|
|
|
|
|
|
|
|
|
| Incurred
claims |
— |
— |
— |
|
15.8 |
11.2 |
27.0 |
|
27.0 |
| Changes to
liabilities for incurred claims |
— |
— |
— |
|
(98.3) |
(73.9) |
(172.2) |
|
(172.2) |
|
Changes in the loss recovery component |
— |
(2.9) |
(2.9) |
|
— |
— |
— |
|
(2.9) |
|
Net income/ (expense) from reinsurance contracts
held |
(66.9) |
(2.9) |
(69.8) |
|
(82.5) |
(62.7) |
(145.2) |
|
(215.0) |
|
Reinsurance finance income/(expense) recognised in profit or
loss |
— |
0.9 |
0.9 |
|
5.5 |
4.0 |
9.5 |
|
10.4 |
|
Reinsurance finance income/(expense) recognised in OCI |
— |
(0.3) |
(0.3) |
|
(5.9) |
(3.8) |
(9.7) |
|
(10.0) |
|
Total changes in comprehensive income |
(66.9) |
(2.3) |
(69.2) |
|
(82.9) |
(62.5) |
(145.4) |
|
(214.6) |
|
Cashflows |
|
|
|
|
|
|
|
|
|
| Premiums
paid |
94.5 |
— |
94.5 |
|
— |
— |
— |
|
94.5 |
| Claims
recoveries |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Recoveries as a result of commutations |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Total cashflows |
94.5 |
— |
94.5 |
|
— |
— |
— |
|
94.5 |
|
Net closing balance |
48.4 |
— |
48.4 |
|
230.3 |
121.1 |
351.4 |
|
399.8 |
|
Closing assets |
48.4 |
— |
48.4 |
|
230.3 |
121.1 |
351.4 |
|
399.8 |
| Closing
liabilities |
— |
— |
— |
|
— |
— |
— |
|
— |
|
30 June 2023 (unaudited) |
Asset for remaining coverage |
|
Asset for incurred claims |
|
|
| £
million |
Excluding loss component |
Loss-recovery component |
Total |
|
Present value of future cashflows |
Risk adj. for non-financial risk |
Total |
|
Total |
| Opening assets |
20.2 |
6.3 |
26.5 |
|
255.4 |
175.6 |
431.0 |
|
457.5 |
|
Opening liabilities |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Net opening balance |
20.2 |
6.3 |
26.5 |
|
255.4 |
175.6 |
431.0 |
|
457.5 |
|
Allocation of reinsurance premiums |
(41.6) |
— |
(41.6) |
|
— |
— |
— |
|
(41.6) |
| Amounts
recoverable from reinsurers for incurred claims |
|
|
|
|
|
|
|
|
|
| Incurred
claims |
— |
— |
— |
|
69.2 |
50.9 |
120.1 |
|
120.1 |
| Changes to
liabilities for incurred claims |
— |
— |
— |
|
(24.1) |
(57.3) |
(81.4) |
|
(81.4) |
|
Changes in the loss recovery component |
— |
(3.0) |
(3.0) |
|
— |
— |
— |
|
(3.0) |
|
Net income/ (expense) from reinsurance contracts
held |
(41.6) |
(3.0) |
(44.6) |
|
45.1 |
(6.4) |
38.7 |
|
(5.9) |
|
Reinsurance finance income/(expense) recognised in profit or
loss |
— |
5.1 |
5.1 |
|
4.3 |
3.3 |
7.6 |
|
12.7 |
|
Reinsurance finance income/(expense) recognised in OCI |
— |
3.5 |
3.5 |
|
(8.0) |
(2.3) |
(10.3) |
|
(6.8) |
|
Total changes in comprehensive income |
(41.6) |
5.6 |
(36.0) |
|
41.4 |
(5.4) |
36.0 |
|
— |
|
Cashflows |
|
|
|
|
|
|
|
|
|
| Premiums
paid |
48.7 |
— |
48.7 |
|
— |
— |
— |
|
48.7 |
| Claims
recoveries |
— |
— |
— |
|
(0.7) |
— |
(0.7) |
|
(0.7) |
|
Recoveries as a result of commutations |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Total cashflows |
48.7 |
— |
48.7 |
|
(0.7) |
— |
(0.7) |
|
48.0 |
|
Net closing balance |
27.3 |
11.9 |
39.2 |
|
296.1 |
170.2 |
466.3 |
|
505.5 |
|
Closing assets |
27.3 |
11.9 |
39.2 |
|
296.1 |
170.2 |
466.3 |
|
505.5 |
| Closing
liabilities |
— |
— |
— |
|
— |
— |
— |
|
— |
| 31
December 2023 |
Asset for remaining coverage |
|
Asset for incurred claims |
|
|
| £
million |
Excluding loss component |
Loss-recovery component |
Total |
|
Present value of future cashflows |
Risk adj. for non-financial risk |
Total |
|
Total |
| Opening
assets |
20.2 |
6.3 |
26.5 |
|
255.4 |
175.6 |
431.0 |
|
457.5 |
|
Opening liabilities |
— |
— |
— |
|
— |
— |
— |
|
— |
|
Net opening balance |
20.2 |
6.3 |
26.5 |
|
255.4 |
175.6 |
431.0 |
|
457.5 |
|
Allocation of reinsurance premiums |
(93.6) |
— |
(93.6) |
|
— |
— |
— |
|
(93.6) |
| Amounts
recoverable from reinsurers for incurred claims |
|
|
|
|
|
|
|
|
|
| Incurred
claims |
— |
— |
— |
|
96.7 |
77.1 |
173.8 |
|
173.8 |
| Changes to
liabilities for incurred claims |
— |
— |
— |
|
(43.1) |
(92.0) |
(135.1) |
|
(135.1) |
|
Changes in the loss recovery component |
— |
(14.5) |
(14.5) |
|
— |
— |
— |
|
(14.5) |
|
Net income/ (expense) from reinsurance contracts
held |
(93.6) |
(14.5) |
(108.1) |
|
53.6 |
(14.9) |
38.7 |
|
(69.4) |
|
Reinsurance finance income/(expense) recognised in profit or
loss |
— |
3.2 |
3.2 |
|
9.4 |
7.5 |
16.9 |
|
20.1 |
|
Reinsurance finance income/(expense) recognised in OCI |
— |
7.3 |
7.3 |
|
12.5 |
15.4 |
27.9 |
|
35.2 |
|
Total changes in comprehensive income |
(93.6) |
(4.0) |
(97.6) |
|
75.5 |
8.0 |
83.5 |
|
(14.1) |
|
Cashflows |
|
|
|
|
|
|
|
|
|
| Premiums
paid |
94.2 |
— |
94.2 |
|
— |
— |
— |
|
94.2 |
| Claims
recoveries |
— |
— |
— |
|
(2.2) |
— |
(2.2) |
|
(2.2) |
|
Recoveries as a result of commutations |
— |
— |
— |
|
(15.5) |
— |
(15.5) |
|
(15.5) |
|
Total cashflows |
94.2 |
— |
94.2 |
|
(17.7) |
— |
(17.7) |
|
76.5 |
|
Net closing balance |
20.8 |
2.3 |
23.1 |
|
313.2 |
183.6 |
496.8 |
|
519.9 |
|
Closing assets |
20.8 |
2.3 |
23.1 |
|
313.2 |
183.6 |
496.8 |
|
519.9 |
| Closing
liabilities |
— |
— |
— |
|
— |
— |
— |
|
— |
(iv). UK Motor Loss ratios and Changes to
liabilities for incurred claims (unaudited)
The table below shows the development of UK Motor Insurance loss
ratios for the past four financial periods, presented on an
underwriting year basis, both using undiscounted amounts (i.e.
cashflows) and discounted amounts.
|
|
31 December |
30 June (unaudited) |
|
UK Motor Insurance loss ratio development - undiscounted, gross net
of excess of loss reinsurance |
2021 |
2022 |
2023 |
2024 |
|
Underwriting year |
|
|
|
|
| 2019 |
73% |
71% |
67% |
65% |
| 2020 |
68% |
65% |
58% |
57% |
| 2021 |
95% |
91% |
86% |
84% |
| 2022 |
— |
104% |
96% |
93% |
| 2023 |
— |
— |
94% |
85% |
|
2024 |
— |
— |
— |
79% |
|
|
31 December |
30 June (unaudited) |
|
UK Motor Insurance loss ratio development - discounted*, gross net
of excess of loss reinsurance |
2021 |
2022 |
2023 |
2024 |
|
Underwriting year |
|
|
|
|
| 2019 |
71% |
69% |
65% |
63% |
| 2020 |
67% |
63% |
57% |
56% |
| 2021 |
92% |
86% |
81% |
79% |
| 2022 |
— |
97% |
88% |
85% |
| 2023 |
— |
— |
86% |
78% |
|
2024 |
— |
— |
— |
73% |
*Loss ratios using discounted locked-in curves, excluding
finance expenses are presented from the transition date of IFRS 17
(1 January 2022) onwards.
The following table analyses the impact of movements in changes
to liabilities from incurred claims by underwriting year on a gross
and net of excess of loss reinsurance basis for UK Motor.
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Gross |
|
|
|
|
Underwriting year |
|
|
|
| 2018 &
prior |
67.9 |
55.1 |
91.5 |
| 2019 |
29.5 |
36.9 |
61.4 |
| 2020 |
16.1 |
44.1 |
98.2 |
| 2021 |
36.4 |
60.2 |
76.4 |
| 2022 |
57.0 |
52.8 |
79.4 |
|
2023 |
64.9 |
— |
— |
|
Total UK motor gross changes to liabilities for incurred
claims*1 |
271.8 |
249.1 |
406.9 |
|
Net |
|
|
|
| Underwriting
year |
|
|
|
| 2018 &
prior |
28.5 |
47.9 |
80.6 |
| 2019 |
23.5 |
39.4 |
65.0 |
| 2020 |
17.3 |
44.8 |
97.7 |
| 2021 |
28.3 |
62.1 |
80.1 |
| 2022 |
56.1 |
42.9 |
69.4 |
|
2023 |
62.2 |
— |
— |
|
Total UK motor net of excess of loss changes to liabilities
for incurred claims*1 |
215.9 |
237.1 |
392.8 |
*1 Excludes releases on non-core products.
6. Investment income and finance costs
6a. Investment return
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Investment return |
|
|
|
| On assets
classified as FVTPL |
33.1 |
20.7 |
43.3 |
| On debt
securities classified as FVOCI*1*3 |
48.0 |
34.1 |
73.4 |
| On assets
classified as amortised cost |
3.3 |
2.1 |
4.1 |
| |
|
|
|
| Net
unrealised losses |
|
|
|
| Unrealised loss
on forward contracts |
(0.2) |
(0.2) |
(0.2) |
| Share of
associate profit/(loss) |
(0.1) |
(0.2) |
(1.3) |
|
Interest receivable on cash and cash equivalents*1 |
1.7 |
1.5 |
3.6 |
|
Total investment and interest
income*2 |
85.8 |
58.0 |
122.9 |
*1 Interest received during the year was £48.2 million
(30 June 2023: £21.2 million, 31 December 2023: £76.8
million).
*2 Total investment return excludes £2.8 million of intra-group
interest (30 June 2023: £1.6 million, 31 December 2023:
£3.2 million).
*3 Realised losses on sales of debt securities classified as
FVOCI are £0.6 million.
6b. Finance costs
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Interest payable on subordinated loan notes and other credit
facilities*1 |
13.2 |
6.3 |
18.5 |
| Interest payable
on lease liabilities |
0.9 |
0.9 |
2.0 |
|
Interest recoverable from co and re-insurers |
(0.2) |
(0.9) |
(0.4) |
|
Total finance costs |
13.9 |
6.3 |
20.1 |
*1 Interest paid during the year was £14.1 million
(30 June 2023: £7.2 million, 31 December 2023: £20.5
million).
Finance costs represent interest payable on the £305.1 million
(31 December 2023: £305.1 million) subordinated notes and
other financial liabilities. £55.1 million in relation to the
subordinated loan notes issued on 25 July 2014 at a fixed rate of
5.5% per annum have been repaid in July 2024.
Interest payable on lease liabilities represents the unwinding
of the discount on lease liabilities under IFRS 16 and does not
result in a cash payment.
6c. Financial assets and
liabilities
The Group’s financial instruments can be analysed as follows:
|
|
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Financial investments measured at FVTPL |
|
|
|
| Money market
funds |
751.0 |
464.7 |
587.5 |
| Other
funds*1 |
311.1 |
195.1 |
301.3 |
| Derivative
financial instruments |
10.4 |
43.6 |
17.6 |
|
Equity investments (designated FVTPL)*3 |
35.7 |
9.7 |
12.4 |
|
|
1,108.2 |
713.1 |
918.8 |
| Financial
investments classified as FVOCI |
|
|
|
| Corporate debt
securities |
2,289.5 |
1,866.9 |
2,040.6 |
| Government debt
securities |
633.6 |
646.2 |
519.6 |
|
Private debt securities |
255.8 |
224.5 |
242.7 |
|
|
3,178.9 |
2,737.6 |
2,802.9 |
|
Equity investments (designated FVOCI) |
21.6 |
24.7 |
23.0 |
|
|
3,200.5 |
2,762.3 |
2,825.9 |
| Financial
assets measured at amortised cost |
|
|
|
| Deposits with
credit institutions |
117.3 |
105.8 |
116.7 |
| |
|
|
|
| Investment in
Associate |
0.9 |
2.2 |
1.0 |
| Investment
Property |
9.0 |
– |
– |
|
|
|
|
|
|
Total financial investments |
4,435.9 |
3,583.4 |
3,862.4 |
|
|
|
|
|
| Other
financial assets |
|
|
|
| Insurance
receivables |
331.1 |
225.0 |
272.7 |
|
Trade and other receivables (measured at amortised cost) |
81.6 |
92.4 |
75.0 |
|
Insurance and other
receivables*4 |
412.7 |
317.4 |
347.7 |
| Loans and
advances to customers (note 7) |
952.1 |
961.1 |
879.4 |
|
Cash and cash equivalents |
363.6 |
462.7 |
353.1 |
|
Total financial assets |
6,164.3 |
5,324.6 |
5,442.6 |
|
|
|
|
|
| Financial
liabilities |
|
|
|
| Subordinated
notes*2 |
315.3 |
204.4 |
315.2 |
| Loan backed
securities |
819.4 |
857.7 |
759.6 |
| Other
borrowings |
69.2 |
125.0 |
55.0 |
|
Derivative financial instruments |
0.2 |
0.2 |
– |
|
Subordinated and other financial liabilities |
1,204.1 |
1,187.3 |
1,129.8 |
| Trade and other
payables |
384.9 |
480.3 |
305.8 |
|
Lease liabilities |
73.1 |
83.2 |
81.2 |
|
Total financial liabilities |
1,662.1 |
1,750.8 |
1,516.8 |
*1 Other funds include fixed income securities recognised as
fair value through profit and loss.
*2 The fair value of subordinated notes (level one valuation)
at 30 June 2024 is £331.8 million (30 June 2023: £196.9
million, 31 December 2023: £329.8 million).
*3 Equity investments include a £12.5m receivable relating to
the sale of shares in Insurify.
*4 Other receivables (HY 2024: £481.8 million; HY 2023: £373.2
million; FY 2023: £409.9 million) includes insurance and other
receivables (HY 2024: £412.7 million; HY 2023 £317.4 million; FY
2023: £347.7 million), prepayments (HY 2024: £56.9 million; HY
2023: £43.3 million; FY 2023: £49.2 million) and accrued income and
other debtors (HY 2024: £12.2 million; HY 2023: £12.5 million; FY
2023: £13.0 million).
The table below shows how the financial assets held at fair
value have been measured using the fair value hierarchy:
| |
Unaudited |
|
|
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
|
FVTPL
£m |
FVOCI
£m |
FVTPL
£m |
FVOCI
£m |
FVTPL
£m |
FVOCI
£m |
|
Level one (quoted prices in active markets) |
1,061.5 |
2,923.1 |
659.7 |
2,513.1 |
888.8 |
2,560.1 |
| Level two (use of
observable inputs) |
22.9 |
– |
43.6 |
– |
17.6 |
– |
|
Level three (use of significant unobservable inputs) |
23.6 |
277.4 |
9.8 |
249.2 |
12.4 |
265.8 |
|
Total*1 |
1,108.0 |
3,200.5 |
713.1 |
2,762.3 |
918.8 |
2,825.9 |
*1 There were no transfers between fair
value hierarchy levels in the reporting period.
Level three investments consist of debt securities and equity
securities.
Debt securities are comprised primarily of investments in debt
funds which are valued at the proportion of the Group’s holding of
the Net Asset Value (NAV) reported by the investment vehicle. These
include funds that invest in corporate direct lending, residential
and commercial mortgages, and other private debt. In addition,
there is a small allocation of privately placed bonds which do not
trade on active markets, these are valued using discounted
cash-flow models designed to appropriately reflect the credit and
illiquidity of these instruments; these valuations are performed by
the external fund managers. The key unobservable input across
private debt securities is the discount rate which is based on the
credit performance of the assets. A deterioration of the credit
performance or expected future performance will result in higher
discount rates and lower values.
Equity securities are primarily comprised of investments in
Private Equity and Infrastructure Equity funds, which are valued at
the proportion of the Group’s holding of the NAV reported by the
investment vehicle. These are based on several unobservable inputs
including market multiples and cashflow forecasts.
There were no significant inter-relationships between
unobservable inputs that materially affect fair values.
The table below presents the movement in the period relating to
financial instruments valued using a level three valuation:
|
|
Unaudited |
|
| Level
Three Investments |
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
| Balance
as at 1 January |
278.2 |
198.2 |
198.2 |
| Gains recognised
in the Income Statement |
4.2 |
1.2 |
9.9 |
| Losses recognised
in Other Comprehensive Income |
(2.7) |
(0.1) |
(0.2) |
| Purchases |
37.4 |
67.4 |
95.7 |
| Disposals |
(16.1) |
(7.6) |
(25.4) |
|
Translation differences |
— |
(0.1) |
— |
|
Balance as at 30 June/ 31 December |
301.0 |
259.0 |
278.2 |
7. Loans and Advances to Customers
| |
Unaudited |
|
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Loans and advances to customers – gross carrying amount |
1,029.2 |
1,033.9 |
956.8 |
|
Loans and advances to customers – provision |
(87.4) |
(74.6) |
(81.7) |
|
Total loans and advances to customers – Admiral
Money |
941.8 |
959.3 |
875.1 |
|
Total loans and advances to customers – Other |
10.3 |
1.8 |
4.3 |
|
Total loans and advances to customers |
952.1 |
961.1 |
879.4 |
Gross loans and advances to customers are comprised of the
following:
| |
Unaudited |
|
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
Unsecured personal loans |
1,015.4 |
1,008.3 |
937.7 |
|
Finance leases |
13.8 |
25.6 |
19.1 |
|
Other |
10.5 |
1.9 |
4.4 |
|
Total loans and advances to customers, gross |
1,039.7 |
1,035.8 |
961.2 |
Forward-looking information (unaudited)
Under IFRS 9 the provision must reflect an unbiased and
probability-weighted amount that is determined by evaluating a
range of possible outcomes. The means by which the Group has
addressed this is to run scenario analysis across a range of
different macroeconomic scenarios.
Management judgment has been used to define the weighting and
severity of the different scenarios, with the scenarios and
forecasts themselves updated in conjunction with a third-party
economics provider.
The key economic driver of credit losses from the scenarios is
the likelihood of a customer entering hardship through
unemployment. Unemployment forecasts include a risk grade split of
the Probability of Default ('PD') based on the correlation between
grade-level default rates observed relative to the change in
unemployment rates in the previous downturn, adjusted for the
unemployment forecast expected in the current economic
environment.
The scenario weighting assumptions used are detailed below,
along with the unemployment rate assumed in each scenario.
|
|
30 June 2024 Scenario peak
Unemployment rate |
30 June 2024 Weighting |
31 December 2023 Scenario peak
Unemployment rate |
31 December 2023 Weighting |
|
Base |
4.4% |
50% |
4.7% |
50% |
|
Upturn |
3.5% |
10% |
3.5% |
10% |
|
Downturn |
6.0% |
30% |
6.0% |
30% |
|
Severe |
8.0% |
10% |
8.0% |
10% |
The probability weightings reflect the view that there is a
probability of 90% attached to recessionary outcomes i.e. all but
the upturn scenario.
Sensitivities to key areas of estimation uncertainty
(unaudited)
The key areas of estimation uncertainty identified, as per note 3
to the financial statements, are in the PD and the forward-looking
scenarios.
|
|
30 June 2024 Weighting |
30 June 2024 Sensitivity £m |
31 December 2023 Weighting |
31 December 2023 Sensitivity £m |
|
Base |
50% |
(1.6) |
50% |
(1.1) |
|
Upturn |
10% |
(5.2) |
10% |
(5.2) |
|
Downturn |
30% |
2.3 |
30% |
2.5 |
|
Severe |
10% |
5.4 |
10% |
8.2 |
The sensitivities in the above tables show the variance to ECL
that would be expected if the given scenario unfolded rather than
the weighted position the provision is based on. At 30 June
2024 the implied weighted peak unemployment rate is 5.2%: the table
shows that in a downturn scenario with a 6.0% peak unemployment
rate the provision would increase by £2.3 million, whilst the
upturn would reduce the provision by £5.2 million, base case reduce
by £1.6 million and severe increase the provision by £5.4
million.
Stage 1 assets represent 84% of the total loan assets; 0.1%
increase in the stage 1 PD, i.e. from 2.2% to 2.3% would result in
a £0.6 million increase in ECL.
Post Model Adjustments (‘PMA’s) (unaudited)
As at 30 June 2024, the expected credit loss allowance
included PMAs totaling £8.5 million (2023: £9.2 million).
|
Post Model Adjustments |
30 June 2024 (£m) |
30 June 2023 (£m) |
31 December 2023 (£m) |
|
Model performance |
2.0 |
4.1 |
2.0 |
| Cost of
Living |
6.5 |
4.5 |
6.5 |
|
Economic scenarios |
— |
4.0 |
0.7 |
|
|
8.5 |
12.6 |
9.2 |
PMAs are calculated using management judgement
and analysis. The key categories of PMAs are as follows:
Model performance
The model has been calibrated on historical data that may not fully
reflect the risk of losses in the recent uncertainty in the UK
economic environment. In addition, interest rate rises in 2023
created the potential for performance uncertainty. For this reason
a Model Performance PMA has been made. It effectively recalibrates
the modelled probability of default of the loans to reflect recent
monitored performance.
Cost of Living
This PMA captures the risk of customers falling into a negative
affordability position, whereby customers are no longer able to
meet their credit commitments due to higher expenditure driven by
higher prices and increased mortgage payments, when their standard
variable or fixed term rate comes to an end. A PMA is held to
acknowledge this, using both external and internal data.
Credit grade information
Credit grade is the internal credit banding given to a customer at
origination and is based on external credit rating information. The
credit grading at 30 June 2024 and comparative period is as
follows:
| |
|
|
|
Unaudited |
|
| |
|
|
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
|
Stage 1
12- month ECL
£m |
Stage 2
Lifetime ECL
£m |
Stage 3
Lifetime ECL
£m |
Total
£m |
Total
£m |
Total
£m |
|
Credit Grade*1 |
|
|
|
|
|
|
| Higher |
666.4 |
71.4 |
— |
737.8 |
711.8 |
649.3 |
| Medium |
156.3 |
24.0 |
— |
180.3 |
220.6 |
186.6 |
| Lower |
37.4 |
8.8 |
— |
46.2 |
57.3 |
65.4 |
|
Credit impaired |
— |
— |
64.9 |
64.9 |
44.2 |
55.5 |
|
Gross carrying amount |
860.1 |
104.2 |
64.9 |
1,029.2 |
1,033.9 |
956.8 |
|
Expected credit loss allowance |
(14.1) |
(27.3) |
(45.4) |
(86.8) |
(74.0) |
(81.1) |
|
Other loss allowance*2 |
(0.5) |
(0.1) |
— |
(0.6) |
(0.6) |
(0.6) |
|
Carrying amount – Admiral Money |
845.5 |
76.8 |
19.5 |
941.8 |
959.3 |
875.1 |
|
Carrying amount – Other |
10.1 |
0.1 |
0.1 |
10.3 |
1.8 |
4.3 |
|
Carrying amount |
855.6 |
76.9 |
19.6 |
952.1 |
961.1 |
879.4 |
*1 Credit grade is the internal credit banding given to a
customer at origination. This is based on external credit rating
information.
*2 Other loss allowance covers losses due to a reduction in
current or future vehicle value or costs associated with recovery
and sale of vehicles and those as a result of changes in the
performance of the effective interest rate (EIR) asset.
8. Other revenue and co-insurer profit
commission
| |
30 June 2024 (unaudited) |
|
|
UK Insurance
£m |
International Insurance
£m |
Admiral Money
£m |
Other
£m |
Total
£m |
|
Major products/service line |
|
|
|
|
|
| Fee and
commission revenue |
56.2 |
— |
0.1 |
— |
56.3 |
| Revenue from law
firm |
8.2 |
— |
— |
— |
8.2 |
|
Comparison income |
— |
— |
— |
— |
— |
|
Total other revenue |
64.4 |
— |
0.1 |
— |
64.5 |
|
Profit commission from co-insurers |
24.5 |
— |
— |
— |
24.5 |
|
Total other revenue and co-insurer profit
commission |
88.9 |
— |
0.1 |
— |
89.0 |
|
|
|
|
|
|
|
| Timing of
revenue recognition |
|
|
|
|
|
| Point in
time |
64.6 |
— |
0.1 |
— |
64.7 |
| Over time |
9.5 |
— |
— |
— |
9.5 |
|
Revenue outside the scope of IFRS 15 |
14.8 |
— |
— |
— |
14.8 |
|
|
88.9 |
— |
0.1 |
— |
89.0 |
| |
30 June 2023 (unaudited) |
|
|
UK Insurance
£m |
International Insurance
£m |
Admiral Money
£m |
Other
£m |
Total
£m |
|
Major products/service line |
|
|
|
|
|
| Fee and
commission revenue |
51.3 |
— |
0.1 |
— |
51.4 |
| Revenue from law
firm |
10.8 |
— |
— |
— |
10.8 |
|
Comparison income |
— |
— |
— |
1.6 |
1.6 |
|
Total other revenue |
62.1 |
— |
0.1 |
1.6 |
63.8 |
|
Profit commission from co-insurers |
44.8 |
— |
— |
— |
44.8 |
|
Total other revenue and co-insurer profit
commission |
106.9 |
— |
0.1 |
1.6 |
108.6 |
|
|
|
|
|
|
|
| Timing of
revenue recognition |
|
|
|
|
|
| Point in
time |
86.4 |
— |
0.1 |
1.6 |
88.1 |
| Over time |
11.7 |
— |
— |
— |
11.7 |
|
Revenue outside the scope of IFRS 15 |
8.8 |
— |
— |
— |
8.8 |
|
|
106.9 |
— |
0.1 |
1.6 |
108.6 |
| |
31 December 2023 (unaudited) |
|
|
UK Insurance
£m |
International Insurance
£m |
Admiral Money
£m |
Other
£m |
Total
£m |
|
Major products/service line |
|
|
|
|
|
| Fee and
commission revenue |
107.2 |
— |
0.1 |
— |
107.3 |
| Revenue from law
firm |
18.3 |
— |
— |
— |
18.3 |
|
Comparison income |
— |
— |
— |
1.6 |
1.6 |
|
Total other revenue |
125.5 |
— |
0.1 |
1.6 |
127.2 |
|
Profit commission from co-insurers |
76.5 |
2.0 |
— |
— |
78.5 |
|
Total other revenue and co-insurer profit
commission |
202.0 |
2.0 |
0.1 |
1.6 |
205.7 |
|
|
|
|
|
|
|
| Timing of
revenue recognition |
|
|
|
|
|
| Point in
time |
160.4 |
2.0 |
0.1 |
1.6 |
164.1 |
| Over time |
20.1 |
— |
— |
— |
20.1 |
|
Revenue outside the scope of IFRS 15 |
21.5 |
— |
— |
— |
21.5 |
|
|
202.0 |
2.0 |
0.1 |
1.6 |
205.7 |
Profit commission analysis
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Underwriting year |
|
|
|
| 2020 &
prior |
24.5 |
46.6 |
76.5 |
| 2021 |
— |
— |
— |
| 2022 |
— |
— |
— |
| 2023 |
— |
(1.8) |
— |
|
2024 |
— |
— |
— |
|
Total UK motor profit commission |
24.5 |
44.8 |
76.5 |
9. Directly attributable and other expenses
| |
30 June 2024 (unaudited) |
|
|
Directly attributable expenses
£m |
Other operating expenses
£m |
Total expenses
£m |
|
Administration and acquisition expenses |
492.9 |
54.9 |
547.8 |
| Expenses relating
to additional products and fees |
— |
21.9 |
21.9 |
| Share scheme
expenses |
27.2 |
14.8 |
42.0 |
| Loan expenses
(excluding movement on ECL provision) |
— |
13.4 |
13.4 |
| Movement in
expected credit loss provision |
— |
16.9 |
16.9 |
| Profit on
disposal of Insurify share option |
— |
(12.5) |
(12.5) |
|
Other*1 |
— |
35.4 |
35.4 |
|
Total expenses |
520.1 |
144.8 |
664.9 |
| |
30 June 2023 (unaudited) |
|
|
Directly attributable expenses
£m |
Other operating expenses
£m |
Total expenses
£m |
|
Administration and acquisition expenses |
411.6 |
52.2 |
463.8 |
| Expenses relating
to additional products and fees |
— |
20.8 |
20.8 |
| Share scheme
expenses |
23.3 |
13.0 |
36.3 |
| Loan expenses
(excluding movement on ECL provision) |
— |
12.2 |
12.2 |
| Movement in
expected credit loss provision |
— |
17.1 |
17.1 |
|
Other*1 |
— |
22.0 |
22.0 |
|
Total expenses |
434.9 |
137.3 |
572.2 |
| |
31 December 2023 |
|
|
Directly attributable expenses
£m |
Other operating expenses
£m |
Total expenses
£m |
|
Administration and acquisition expenses |
836.8 |
100.8 |
937.6 |
| Expenses relating
to additional products and fees |
— |
41.4 |
41.4 |
| Share scheme
expenses |
55.3 |
28.5 |
83.8 |
| Loan expenses
(excluding movement on ECL provision) |
— |
23.0 |
23.0 |
| Movement in
expected credit loss provision |
— |
31.0 |
31.0 |
|
Other*1 |
— |
57.1 |
57.1 |
|
Total expenses |
892.1 |
281.8 |
1,173.9 |
*1 Other includes centralised costs (HY 2024: £19.9 million;
HY 2023 £13.2 million; FY 2023: £34.5 million), business
development costs (HY 2024: £14.1 million; HY 2023: £7.9 million;
FY 2023: £15.3 million) and other costs (HY 2024: £1.4 million; HY
2023: £0.9 million; FY 2023: £7.3 million).
10. Taxation
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Current tax |
|
|
|
| Corporation tax
on profits for the year |
47.5 |
39.1 |
91.6 |
| Under/(over)
provision relating to prior periods |
— |
9.4 |
21.3 |
|
Pillar Two income taxes |
11.4 |
— |
— |
|
Current tax charge |
58.9 |
48.5 |
112.9 |
| Deferred
tax |
|
|
|
| Current period
deferred taxation movement |
7.2 |
11.5 |
0.7 |
|
Under/(Over) provision relating to prior periods |
6.5 |
— |
(8.0) |
|
Total tax charge per Consolidated Income
Statement |
72.6 |
60.0 |
105.6 |
Factors affecting the total tax charge are:
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Profit before tax |
309.8 |
233.9 |
442.8 |
| Corporation tax
thereon at effective UK corporation tax rate of 25% (2023:
23.5%) |
77.5 |
55.0 |
104.1 |
| Expenses and
provisions not deductible for tax purposes |
2.3 |
1.1 |
3.0 |
| Non-taxable
income |
(4.2) |
(5.7) |
(13.4) |
| Impact of change
in UK tax rate on deferred tax balances |
— |
(0.6) |
(0.4) |
| Adjustments
relating to prior periods |
6.5 |
9.4 |
13.5 |
| Impact of
different overseas tax rates |
(11.9) |
(2.3) |
(8.9) |
| Unrecognised
deferred tax |
2.4 |
2.4 |
7.7 |
|
Loss on disposal of compare.com |
— |
0.7 |
— |
|
Total tax charge for the period as above |
72.6 |
60.0 |
105.6 |
The UK corporation tax rate for 2024 is 25.0% (2023: 23.5%)
following the increase from 19% to 25% that took effect from 1
April 2023.
Legislation to introduce a global minimum effective tax rate of
15% known as the Pillar Two rules was substantively enacted in the
UK on 20 June 2023 under Finance (No.2) Act 2023. The rules
introduce a domestic top-up tax and multinational top-up tax
effective for accounting periods starting on or after 31 December
2023. Top-up taxes are expected to arise in relation to our
operations in Gibraltar, where the statutory corporate tax rate is
12.5% and an estimate has been included in the current tax charge
above.
The Group has applied the temporary mandatory exception to
recognising and disclosing information about deferred tax assets
and liabilities related to Pillar Two income taxes, as provided in
the amendments to IAS 12 issued in May 2023.
The Government in Gibraltar have enacted a change in the
taxation of interest income for accounting periods beginning on or
after 1 February 2024 and announced planned changes to the
corporation tax rate to 15% and utilisation of tax losses. These
are not expected to have a material impact on the Group tax
charge.
11. Other Assets and Other Liabilities
11a. Intangible assets
Accounting Policies
Renewal Rights (included within Customer contracts,
relationships and brand)
Renewal rights are recognised as an intangible asset and amortised
using the reducing balance method over an expected useful life
determined as ranging between nine and fourteen years. Renewal
rights on initial recognition have been recognised at fair value
arising through an acquisition.
The carrying value of renewal rights is reviewed every six
months for evidence of impairment, with the value being written
down if any impairment exists. Impairment may be reversed if
conditions subsequently improve.
Brand (included within Customer contracts, relationships
and brand)
Brand rights are recognised as an intangible asset and amortised
using the straight line method over an expected useful life of
fifteen years. Brand rights on initial recognition have been
recognised at its fair value arising through an acquisition.
The carrying value of brand rights is reviewed every six months
for evidence of impairment, with the value being written down if
any impairment exists. Impairment may be reversed if conditions
subsequently improve.
Goodwill
All business combinations are accounted for using the acquisition
method. Goodwill has been recognised on acquisitions of trade and
assets representing a business and/or acquisition of subsidiaries
and represents the difference between the cost of the acquisition
and the fair value of the net identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment loss.
Goodwill is allocated to cash generating units (CGUs) according to
business segment and is reviewed every six months for evidence of
impairment and tested annually for impairment.
|
|
Goodwill |
Customer contracts, relationships and brand |
Software – Internally generated |
Software – Other |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
|
At 1 January 2023 |
62.3 |
— |
136.4 |
18.9 |
217.6 |
| Additions |
— |
8.5 |
29.3 |
5.3 |
43.1 |
| Amortisation
charge |
— |
— |
(14.8) |
(3.1) |
(17.9) |
| Disposals |
— |
— |
— |
— |
— |
| Impairment |
— |
— |
— |
— |
— |
|
Foreign exchange movement |
|
(0.1) |
0.2 |
(1.1) |
(1.0) |
|
At 30 June 2023 |
62.3 |
8.4 |
151.1 |
20.0 |
241.8 |
| |
|
|
|
|
|
| At 1
January 2023 |
62.3 |
— |
136.4 |
18.9 |
217.6 |
| Additions |
— |
7.9 |
51.1 |
7.7 |
66.7 |
| Amortisation
charge |
— |
— |
(34.8) |
(5.5) |
(40.3) |
| Disposals |
— |
— |
(0.1) |
— |
(0.1) |
| Impairment |
— |
— |
(0.2) |
— |
(0.2) |
|
Foreign exchange movement |
— |
— |
(0.4) |
(0.4) |
(0.8) |
|
At 31 December 2023 |
62.3 |
7.9 |
152.0 |
20.7 |
242.9 |
| Additions |
49.8 |
44.6 |
25.0 |
1.5 |
120.9 |
| Amortisation
charge |
— |
(0.3) |
(24.8) |
(2.3) |
(27.4) |
| Transfers |
— |
— |
5.6 |
(5.6) |
— |
|
Foreign exchange movement & other |
— |
(0.2) |
(0.2) |
(0.3) |
(0.7) |
|
At 30 June 2024 |
112.1 |
52.0 |
157.6 |
14.0 |
335.7 |
11b. Contingent liabilities
The Group’s legal entities operate in numerous tax jurisdictions
and on a regular basis are subject to review and enquiry by the
relevant tax authority.
One of the Group’s previously owned subsidiaries was subject to
a Spanish Tax Audit which concluded with the Tax Authority denying
the application of the VAT exemption relating to insurance
intermediary services. The Company has appealed this
decision via the Spanish Courts and is confident in defending its
position which is, in its view, in line with the EU Directive and
is also consistent with the way similar supplies are treated
throughout Europe. Whilst the Company is no longer part of
the Admiral Group, the contingent liability which the Company is
exposed to has been indemnified by the Admiral Group up to a cap of
€24 million.
No material provisions have been made in these financial
statements in relation to the matters noted above.
The Group is, from time to time, subject to threatened or actual
litigation and/or legal and/or regulatory disputes, investigations
or similar actions both in the UK and overseas. All potentially
material matters are assessed, with the assistance of external
advisers if appropriate, and in cases where it is concluded that it
is more likely than not that a payment will be made, a provision is
established to reflect the best estimate of the liability. In some
cases it will not be possible to form a view, for example if the
facts are unclear or because further time is needed to properly
assess the merits of the case or form a reliable estimate of its
financial effect. In these circumstances, specific disclosure of a
contingent liability and an estimate of its financial effect will
be made where material, unless it is not practicable to do so.
The Directors do not consider that the final outcome of any such
current case will have a material adverse effect on the Group’s
financial position, operations or cashflows, and as such, no
material provisions are currently held in relation to such
matters.
A number of the Group’s contractual arrangements with reinsurers
include features that, in certain scenarios, allow for reinsurers
to recover losses incurred to date. The overall impact of such
scenarios would not lead to an overall net economic outflow from
the Group.
12. Dividends, Earnings and Related Parties
12a. Dividends
Dividends were proposed, approved and paid as follows:
| |
Unaudited |
|
| |
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
| Proposed March
2023 (52.0 pence per share, approved April 2023 and paid June
2023) |
— |
154.9 |
154.9 |
| Declared August
2023 (51.0 pence per share, paid October 2023) |
— |
— |
152.2 |
|
Proposed March 2024 (52.0 pence per share, approved April 2024 and
paid June 2024) |
156.2 |
— |
— |
|
Total dividends |
156.2 |
154.9 |
307.1 |
The dividends proposed in March (approved in April) represent
the final dividends paid in respect of the 2022 and 2023 financial
years. The dividend declared in August reflects the 2023 interim
dividend.
A 2024 interim dividend of 71.0p pence per share (approximately
£213 million) has been proposed.
12b. Earnings per share
| |
Unaudited |
|
|
|
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Profit for the financial year after taxation attributable to equity
shareholders |
237.4 |
174.5 |
338.0 |
|
Weighted average number of shares – basic |
306,304,676 |
303,075,355 |
303,989,170 |
|
Unadjusted earnings per share – basic |
77.5p |
57.6p |
111.2p |
|
Weighted average number of shares – diluted |
306,304,676 |
303,761,032 |
305,052,941 |
|
Unadjusted earnings per share – diluted |
77.5p |
57.5p |
110.8p |
The difference between the basic and diluted number of shares at
the end of the period (being nil; 30 June 2023: 685,677;
31 December 2023: 1,063,771 ) relates to awards committed, but
not yet issued under the Group’s share schemes.
12c. Related party transactions
The Board considers that only the Executive and Non-Executive
Directors of Admiral Group plc are key management personnel.
Further detail on the remuneration and shareholdings of key
management personnel is set out in the Directors’ Remuneration
Report in the Group’s 2023 Annual Report.
13. Business combinations
(unaudited)
As at 2nd April 2024, Admiral successfully completed the purchase
of the direct Home and Pet renewal rights from the RSA Insurance
Group Limited (“RSA”), a general insurer based in the UK. The
transaction includes the renewal rights, the “More Than” brand and
the transfer of c.300 people but does not include liabilities
relating to existing policies which will remain with RSA. The
acquisition is closely aligned to Admiral’s strategy to diversify
its product offering and build multi-product customer relationships
in its core markets. It will strengthen Admiral’s home business and
accelerate its direct pet proposition launched in 2022.
The consideration included an initial cash payment of £82.5
million with contingent consideration of £32.5 million. The
contingent consideration has a range of £nil to a maximum of £32.5
million dependent on the number of policies successfully migrated
to Admiral. The fair value of the contingent consideration has a
value of £2.7 million and is based on a probability weighted
scenario including an element of discounting relating to the timing
of payments.
The amounts recognised in respect of the identifiable assets
acquired at at the acquisition date are as set out in the table
below:
| |
£m |
| Total
consideration |
|
| Amount settled in
cash |
82.5 |
|
Fair value of contingent consideration |
2.7 |
|
Total consideration |
85.2 |
|
|
|
|
Identifiable assets acquired |
|
| Renewal
Rights |
36.4 |
|
Brand |
8.1 |
|
Total identifiable assets acquired |
44.5 |
|
|
|
| Purchase
price recognised as Goodwill |
40.7 |
|
Additional Goodwill recognised on Deferred Tax Liability |
9.1 |
|
Total Goodwill recognised on acquisition |
49.8 |
A deferred tax liability has been recognised of £9.1m based upon
a tax base cost of £36.4 million representing the fair value of the
renewal rights. A corresponding increase in goodwill of £9.1
million is recognised as a result. The goodwill and brand are not
considered deductible for tax purposes. The deferred tax liability
will unwind in line with the amortisation of the renewal rights
acquired.
The recognition of goodwill reflects the synergies arising
through the transaction including operational, capital, pricing and
risk synergies, as well as the attributable value to the workforce
in place.
The policies in relation to the acquisition started renewing in
July 2024. As at 30 June 2024, transaction costs of £8.5
million have been recognised within operating expenses, along with
integration costs of £4.0 million within insurance expenses. The
impact of the acquisition if it had happened as at the start of the
reporting period is impractical for disclosure given the nature of
the trade and assets acquired for integration.
14. Reconciliation of turnover to reported insurance
premium and other revenue as per the financial
statements
The following table reconciles turnover, a significant Key
Performance Indicator (KPI) and non-GAAP measure presented within
the Strategic Report, to insurance revenue, as presented in note 4
to the financial
statements.
| |
|
Unaudited |
|
|
|
Note |
30 June 2024
£m |
30 June 2023
£m |
31 December 2023
£m |
|
Insurance premium revenue*1 |
5b |
2,085.3 |
1,515.5 |
3,283.3 |
|
Movement in unearned premium and cancellations |
|
465.8 |
262.2 |
528.3 |
|
Premiums written after coinsurance |
|
2,551.1 |
1,777.7 |
3,811.6 |
|
Co-insurer share of written premiums |
|
413.0 |
260.9 |
577.8 |
|
Total premiums written |
|
2,964.1 |
2,038.6 |
4,389.4 |
| Other insurance
revenue*1 |
5b |
128.5 |
91.5 |
202.8 |
| Other
revenue |
8 |
64.6 |
63.8 |
127.2 |
|
Interest income on loans to customers |
|
50.6 |
43.6 |
92.1 |
|
Turnover as per note 4 of financial
statements |
|
3,207.8 |
2,237.5 |
4,811.5 |
*1 Total Insurance revenue of £2,213.8 million (30 June
2023: £1,607.0 million, 31 December 2023: £3,486.1 million),
comprised of Insurance premium revenue of £2,085.3 million,
(30 June 2023: £1,515.5 million, 31 December 2023:
£3,283.3 million) and Other insurance revenue of £128.5 million,
(30 June 2023: £91.5 million, 31 December 2023: £202.8
million).
APPENDIX 1 TO THE GROUP FINANCIAL STATEMENTS
(unaudited)
1a: Reconciliation of reported loss and expense
ratios: Group
|
30 June 2024 (unaudited) |
|
£m |
Consolidated Financial Statement Note |
Core product |
Ancillary income |
Total gross |
Total, net of XoL reinsurance |
|
Insurance premium revenue |
|
2,008.6 |
76.7 |
2,085.3 |
2,004.2 |
|
Administration fees, instalment income and non-separable ancillary
commission |
|
— |
128.5 |
128.5 |
128.5 |
|
Insurance revenue (A) |
5b/5d |
2,008.6 |
205.2 |
2,213.8 |
2,132.7 |
|
Insurance expenses (B) |
5c |
(465.1) |
(27.8) |
(492.9) |
(492.9) |
| Claims incurred
(C) |
5c/5d |
(1,447.5) |
(28.3) |
(1,475.8) |
(1,456.4) |
| Claims releases
(D) |
5c/5d |
290.6 |
3.3 |
293.9 |
234.2 |
| Quota share
reinsurance result*1 |
|
|
|
|
(165.8) |
|
Onerous loss component movement*2 |
|
|
|
|
2.4 |
|
Underwriting result (E) |
|
|
|
|
254.2 |
|
Net share scheme costs*3 |
|
|
|
|
(17.2) |
|
Insurance service result |
|
|
|
|
237.0 |
|
Reported loss ratio ((C+D)/A) |
|
|
|
|
57.3% |
|
Reported expense ratio (B/A) |
|
|
|
|
23.1% |
|
Insurance service margin (E/A) |
|
|
|
|
11.9% |
|
30 June 2023 (unaudited) |
|
£m |
Note |
Core product |
Ancillary income |
Total gross |
Total, net of XoL reinsurance |
|
Insurance premium revenue |
|
1,449.0 |
66.5 |
1,515.5 |
1,469.8 |
|
Administration fees and non-separable ancillary commission |
|
— |
91.5 |
91.5 |
91.5 |
|
Insurance revenue (A) |
5b/5d |
1,449.0 |
158.0 |
1,607.0 |
1,561.3 |
|
Administration and acquisition expenses (B) |
5c |
(392.9) |
(18.8) |
(411.7) |
(411.7) |
| Claims incurred
(C) |
5c/5d |
(1,242.5) |
(20.8) |
(1,263.3) |
(1,244.7) |
| Claims releases
(D) |
5c/5d |
255.8 |
— |
255.8 |
254.0 |
| Quota share
reinsurance result*1 |
|
|
|
|
6.1 |
|
Onerous loss component movement*2 |
|
|
|
|
1.4 |
|
Underwriting result (E) |
|
|
|
|
166.4 |
|
Net share scheme costs*3 |
|
|
|
|
(13.9) |
|
Insurance service result |
|
|
|
|
152.5 |
|
Reported loss ratio ((C+D)/A) |
|
|
|
|
63.5% |
|
Reported expense ratio (B/A) |
|
|
|
|
26.3% |
|
Insurance service margin (E/A) |
|
|
|
|
10.7% |
|
|
|
31 December 2023 |
|
£m |
Consolidated Financial Statement Note |
Core product |
Ancillary income |
Total gross |
Total, net of XoL reinsurance |
|
Insurance premium revenue |
|
3,152.3 |
131.0 |
3,283.3 |
3,170.6 |
|
Administration fees, instalment income and non-separable ancillary
commission |
|
— |
202.8 |
202.8 |
202.8 |
|
Insurance revenue (A) |
5b/5d |
3,152.3 |
333.8 |
3,486.1 |
3,373.4 |
|
Insurance expenses (B) |
5c |
(795.2) |
(41.6) |
(836.8) |
(836.8) |
| Claims incurred
(C) |
5c/5d |
(2,624.6) |
(40.5) |
(2,665.1) |
(2,605.8) |
| Claims releases
(D) |
5c/5d |
440.6 |
— |
440.6 |
447.3 |
| Quota share
reinsurance result*1 |
|
|
|
|
(40.4) |
|
Onerous loss component movement*2 |
|
|
|
|
4.9 |
|
Underwriting result (E) |
|
|
|
|
342.6 |
|
Net share scheme costs*3 |
|
|
|
|
(36.8) |
|
Insurance service result |
|
|
|
|
305.8 |
|
Reported loss ratio ((C+D)/A) |
|
|
|
|
63.9% |
|
Reported expense ratio (B/A) |
|
|
|
|
24.8% |
|
Insurance service margin (E/A) |
|
|
|
|
10.2% |
*1 Quota share reinsurance result excludes quota share
reinsurers’ share of share scheme costs and movement in onerous
loss recovery
component.
*2 Onerous loss component movement is shown net of all
reinsurance.
*3 Net share scheme costs of £17.2 million (HY 2023: £13.9
million, FY 2023: £36.8 million), being gross costs of £27.2
million (HY 2023: £23.3 million, FY 2023: £55.3 million, see note
5c) less reinsurers’ share of share scheme costs of £10.0 million
(HY 2023: £9.4 million, FY 2023 £18.5 million), are excluded from
the underwriting result.
1b. Reconciliation
of reported loss and expense ratios: UK Motor
|
30 June 2024 (unaudited) |
|
£m |
Consolidated Financial Statement Note |
Core product |
Ancillary
income*1 |
Total gross |
Total, net of XoL reinsurance |
Core product, net of XoL |
|
Total premiums written |
|
2,163.4 |
87.1 |
2,250.5 |
2,183.3 |
2,096.2 |
|
Gross premiums written |
|
1,715.3 |
87.1 |
1,802.4 |
1,749.2 |
1,662.1 |
|
Insurance premium revenue |
|
1,383.9 |
64.7 |
1,448.6 |
1,402.1 |
1,337.4 |
| Instalment
income |
|
— |
68.5 |
68.5 |
68.5 |
— |
|
Administration fees non-separable ancillary commission |
|
— |
22.4 |
22.4 |
22.4 |
— |
|
Insurance revenue (A) |
5b/5d |
1,383.9 |
155.6 |
1,539.5 |
1,493.0 |
1,337.4 |
|
Insurance expenses (B) |
5c |
(264.1) |
(23.9) |
(288.0) |
(288.0) |
(264.1) |
| Claims incurred
(C) |
5c/5d |
(1,024.1) |
(25.0) |
(1,049.1) |
(1,032.0) |
(1,007.0) |
|
Claims releases (D) |
5c/5d |
271.8 |
2.8 |
274.6 |
218.7 |
215.9 |
|
Current period loss ratio (C/A) |
|
|
|
|
69.1% |
75.3% |
|
Claims releases (D/A) |
|
|
|
|
(14.6%) |
(16.1%) |
|
Reported loss ratio ((C+D)/A) |
|
|
|
|
54.5% |
59.2% |
|
Reported expense ratio (B/A) |
|
|
|
|
19.3% |
19.7% |
|
30 June 2023 (unaudited) |
|
£m |
Consolidated Financial Statement Note |
Core product |
Ancillary
income*1 |
Total gross |
Total, net of XoL reinsurance |
Core product, net of XoL |
|
Total premiums written |
|
1,343.2 |
60.2 |
1,403.4 |
1,358.1 |
1,297.9 |
|
Gross premiums written |
|
1,096.9 |
60.2 |
1,157.1 |
1,120.1 |
1,059.9 |
|
Insurance premium revenue |
|
907.7 |
53.5 |
961.2 |
935.2 |
881.7 |
| Instalment
income |
|
— |
40.4 |
40.4 |
40.4 |
— |
|
Administration fees non-separable ancillary commission |
|
— |
18.4 |
18.4 |
18.4 |
— |
|
Insurance revenue (A) |
5b/5d |
907.7 |
112.3 |
1,020.0 |
994.0 |
881.7 |
|
Insurance expenses (B) |
5c |
(206.6) |
(13.9) |
(220.5) |
(220.5) |
(206.6) |
| Claims incurred
(C) |
5c/5d |
(833.9) |
(17.2) |
(851.1) |
(834.2) |
(817.0) |
|
Claims releases (D) |
5c/5d |
249.1 |
— |
249.1 |
237.1 |
237.1 |
|
Current period loss ratio (C/A) |
|
|
|
|
83.9% |
92.7% |
|
Claims releases (D/A) |
|
|
|
|
(23.9%) |
(26.9%) |
|
Reported loss ratio ((C+D)/A) |
|
|
|
|
60.1% |
65.8% |
|
Reported expense ratio (B/A) |
|
|
|
|
22.2% |
23.4% |
|
31 December 2023 |
|
£m |
Consolidated Financial Statement Note |
Core product |
Ancillary
income*1 |
Total gross |
Total, net of XoL reinsurance |
Core product, net of XoL |
|
Total premiums written |
|
3,004.3 |
113.9 |
3,118.2 |
3,016.8 |
2,903.0 |
|
Gross premiums written |
|
2,453.9 |
113.9 |
2,567.8 |
2,485.0 |
2,371.1 |
|
Insurance premium revenue |
|
2,007.6 |
107.8 |
2,115.4 |
2,053.8 |
1,946.0 |
| Instalment
income |
|
— |
99.0 |
99.0 |
99.0 |
— |
|
Administration fees non-separable ancillary commission |
|
— |
35.8 |
35.8 |
35.8 |
— |
|
Insurance revenue (A) |
5b/5d |
2,007.6 |
242.6 |
2,250.2 |
2,188.6 |
1,946.0 |
|
Insurance expenses (B) |
5c |
(416.8) |
(34.4) |
(451.2) |
(451.2) |
(416.8) |
| Claims incurred
(C) |
5c/5d |
(1,719.9) |
(35.6) |
(1,755.5) |
(1,729.0) |
(1,693.4) |
|
Claims releases (D) |
5c/5d |
406.9 |
— |
406.9 |
392.8 |
392.8 |
|
Current period loss ratio (C/A) |
|
|
|
|
79.0% |
87.0% |
|
Claims releases (D/A) |
|
|
|
|
(17.9%) |
(20.2%) |
|
Reported loss ratio ((C+D)/A) |
|
|
|
|
61.1% |
66.8% |
|
Reported expense ratio (B/A) |
|
|
|
|
20.6% |
21.4% |
*1 Ancillary income combined with other net income is
presented as part of UK motor insurance other revenue in reporting
“Other revenue per vehicle”. Total other revenue was £152.2 million
(HY 2023: £119.5 million, FY 2023: £247.3 million).
Glossary
Alternative Performance Measures
Throughout this report, the Group uses a number of Alternative
Performance Measures (APMs); measures that are not required or
commonly reported under International Financial Reporting
Standards, the Generally Accepted Accounting Principles (GAAP)
under which the Group prepares its financial statements.
These APMs are used by the Group, alongside GAAP measures, for
both internal performance analysis and to help shareholders and
other users of the Annual Report and financial statements to better
understand the Group’s performance in the period in comparison to
previous periods and the Group’s competitors.
The table below defines and explains the primary APMs used in
this report. Financial APMs are usually derived from financial
statement items and are calculated using consistent accounting
policies to those applied in the financial statements, unless
otherwise stated. Non-financial KPIs incorporate information that
cannot be derived from the financial statements but provide further
insight into the performance and financial position of the
Group.
APMs may not necessarily be defined in a consistent manner to
similar APMs used by the Group’s competitors. They should be
considered as a supplement rather than a substitute for GAAP
measures.
|
Turnover |
Turnover is defined as total premiums written (as below), Other
insurance revenue, Other revenue and interest income from Admiral
Money. It is reconciled to financial statement line items in note
14 to the financial statements.
This measure has been presented by the Group in every Annual Report
since it became a listed Group in 2004. It reflects the total value
of the revenue generated by the Group and analysis of this measure
over time provides a clear indication of the size and growth of the
Group.
The measure was developed as a result of the Group’s business
model. The UK Car insurance business has historically shared a
significant proportion of the risks with Munich Re, a third party
reinsurance Group, through a co-insurance arrangement, with the
arrangement subsequently being replicated in some of the Group’s
international insurance operations. Premiums and claims accruing to
the external co-insurer are not reflected in the Group’s income
statement and therefore presentation of this metric enables users
of the Annual Report to see the scale of the Group’s insurance
operations in a way not possible from taking the income statement
in isolation. |
|
Total Premiums Written |
Total premiums written are the total forecast premiums, net of
forecast cancellations written in the underwriting year within the
Group, including co-insurance. It is reconciled to financial
statement line items in note 14 to the financial statements.
This measure has been presented by the Group in every Annual Report
since it became a listed Group in 2004. It reflects the total
premiums written by the Group’s insurance intermediaries and
analysis of this measure over time provides a clear indication of
the growth in premiums, irrespective of how co-insurance agreements
have changed over time.
The reasons for presenting this measure are consistent with that
for the Turnover APM noted above. |
|
Earnings per share |
Earnings per share represents the profit after tax attributable to
equity shareholders, divided by the weighted average number of
basic shares. |
|
Underwriting result (profit or loss) |
For each insurance business an underwriting result is presented.
This shows the insurance segment result before tax excluding
investment income, finance expenses, co-insurer profit commission
and other net income. It excludes both gross share scheme costs and
any assumed quota share reinsurance recoveries on those share
scheme costs. |
|
Loss Ratio |
Loss ratios are reported as follows:
Reported loss ratios are expressed as a
percentage, of claims incurred, on a gross basis net of XoL
reinsurance, divided by insurance revenue net of XoL reinsurance
premiums ceded.
The reported loss ratios use the total claims, and earned premium
and related income (instalment income, administration fees and
ancillary income where it is highly correlated to the core
product). It is understood that this is consistent with the
approach taken by peers, and it is considered to reflect the true
profitability of products sold.
Core product loss ratios use the total claims and
earned premiums for the core product only. This measure is more
consistent with that used previously, and are reflective of the
performance of the core product in a line of business.
Incurred loss ratios are based on claims incurred in the current
period whilst releases reflect the development of liabilities for
claims incurred in prior periods.
The calculations and compositions of the loss ratios are presented
within Appendix 1a and Appendix 1b to these financial
statements. |
|
Expense Ratio |
Expense ratios are reported as follows:
Reported expense ratios are expressed as a
percentage, of expenses incurred, on a gross basis excluding share
scheme costs, divided by insurance revenue net of XoL reinsurance
premiums ceded.
The reported expense ratios use the total expenses (excluding share
scheme costs), and earned premium and related income (instalment
income, administration fees and ancillary income where it is highly
correlated to the core product). It is understood that this is
consistent with the approach taken by peers, and it is considered
to reflect the true profitability of products sold.
Core product expense ratios use the total expenses
(excluding share scheme costs) and earned premiums for the core
product only. This measure is more consistent with that used
previously, and are reflective of the performance of the core
product in a line of business.
Written expense ratios are calculated using total
expenses (excluding share scheme costs) and written premiums, net
of cancellation provision, for the core product only.
The calculations of the reported expense ratios are presented
within Appendix 1a and Appendix 1b to the financial
statements. |
|
Combined Ratio |
Combined ratios are the sum of the loss and expense ratios as
defined above. Explanation of these figures is noted above and
reconciliation of the calculations are provided in Appendix 1a and
Appendix 1b. |
|
Insurance service margin |
This is the reported insurance segment underwriting result, divided
by insurance revenue net of excess of loss premiums ceded. |
|
Quota share result |
The total result (ceded premiums minus ceded recoveries) from
contractual quota share arrangements, excluding the quota share
reinsurer’s share of share scheme expenses finance expenses and
onerous loss component. |
|
Segment result |
The profit or loss before tax reported for individual business
segments, which exclude net share scheme costs and other central
expenses. |
|
Return on Equity |
Return on equity is calculated as profit after tax for the period
attributable to equity holders of the Group divided by the average
total equity attributable to equity holders of the Group in the
year. This average is determined by dividing the opening and
closing positions for the year by two. It excludes the impact of
discontinued operations. |
|
Group Customers |
Group customer numbers reflect the total number of cars, vans,
households and pets on cover at the end of the year, across the
Group, and the total number of travel insurance and Admiral Money
customers.
This measure has been presented by the Group in every Annual Report
since it became a listed Group in 2004. It reflects the size of the
Group’s customer base and analysis of this measure over time
provides a clear indication of the growth. It is also a useful
indicator of the growing significance to the Group of the different
lines of business and geographic regions.
The measure has been restated from 2022 onwards to exclude Veygo
policies, given the significant fluctuations that can arise at a
point in time as a result of the short-term nature of the
product. |
|
Effective Tax Rate |
Effective tax rate is defined as the approximate tax rate derived
from dividing the Group’s profit before tax by the tax charge going
through the income statement. It is a measure historically
presented by the Group and enables users to see how the tax cost
incurred by the Group compares over time and to current corporation
tax rates. |
Additional Terminology
There are many other terms used in this report that are specific
to the Group or the markets in which it operates. These are defined
as follows:
|
Accident year |
The year in which an accident occurs. Claims incurred may be
presented on an accident year basis or an underwriting year basis,
the latter sees the claims attach to the year in which the
insurance policy incepted. |
|
Actuarial best estimate |
The probability-weighted average of all future claims and cost
scenarios calculated using historical data, actuarial methods and
judgement. |
|
ASHE |
‘Annual Survey of Hours and Earnings’ – a statistical index that is
typically used for calculating the inflation of annual payment
amounts under Periodic Payment Order (PPO) claims settlements. |
|
Claims reserves |
A monetary amount set aside for the future payment of incurred
claims that have not yet been settled, thus representing a balance
sheet liability. |
|
Co-insurance |
An arrangement in which two or more insurance companies agree to
underwrite insurance business on a specified portfolio in specified
proportions. Each co-insurer is directly liable to the policyholder
for their proportional share. |
|
Commutation |
An agreement between a ceding insurer and the reinsurer that
provides for the valuation, payment, and complete discharge of all
obligations between the parties under a particular reinsurance
contract.
The Group typically commutes UK motor insurance quota share
contracts after 24-36 months from the start of an underwriting year
where it makes economic sense to do so. Although an individual
underwriting year may be profitable, the margin held in the
financial statement claims reserves may mean that an accounting
loss on commutation must be recognised at the point of commutation
of the reinsurance contracts. This loss on commutation unwinds in
future periods as the financial statement loss ratios develop to
ultimate. |
|
Insurance market cycle |
The tendency for the insurance market to swing between highs and
lows of profitability over time, with the potential to influence
premium rates (also known as the “underwriting cycle”). |
|
Claims net of XoL reinsurance |
The cost of claims incurred in the period, less any claims costs
recovered via salvage and subrogation arrangements or under XoL
reinsurance contracts. It includes both claims payments and
movements in claims reserves. |
|
Excess of Loss (‘XoL’) reinsurance |
Contractual arrangements whereby the Group transfers part or all of
the insurance risk accepted to another insurer on an excess of loss
(‘XoL’) basis (full reinsurance for claims over an agreed
value). |
|
Insurance premium revenue net of XoL |
The element of premium, less XoL reinsurance premium, earned in the
period. |
|
Insurance revenue |
Gross earned premium (excluding any co-insurer share) plus Other
insurance revenue. |
|
Net promoter score |
NPS is currently measured based on a subset of customer responding
to a single question: On a scale of 0-10 (10 being the best score),
how likely would you recommend our Company to a friend, family or
colleague through phone, online or email. Answers are then placed
in 3 groups; Detractors: scores ranging from 0 to 6;
Passives/neutrals: scores ranging from 7 to 8; Promoters: scores
ranging from 9 to 10 and the final NPS score is : % of promoters -
% of detractors |
|
Ogden discount rate |
The discount rate used in calculation of personal injury claims
settlements in the UK. |
|
Other insurance revenue |
Revenue that is considered non-separable from the core insurance
product sold and therefore under IFRS 17 is reported as insurance
revenue. For the Group, this is typically the instalment income,
administration fees and any other non-separable income related to
the Group’s retained share of the underwritten products. |
|
Periodic Payment Order (PPO) |
A compensation award as part of a claims settlement that involves
making a series of annual payments to a claimant over their
remaining life to cover the costs of the care they will
require. |
|
Premium |
A series of payments are made by the policyholder, typically
monthly or annually, for part of or all of the duration of the
contract. Written premium refers to the total amount the
policyholder has contracted for, whereas earned premium refers to
the recognition of this premium over the life of the contract. |
|
Profit commission |
A clause found in some reinsurance and co-insurance agreements that
provides for profit sharing. Co-insurer profit commission is
presented separately on the income statement whilst reinsurer
profit commissions are presented within the reinsurance result, as
a part of any recovery for incurred claims. |
|
Regulatory Solvency Capital Requirement
(‘SCR’) |
The Group’s Regulatory Solvency Capital Requirement (SCR) is an
amount of capital that it should hold in addition to its
liabilities in order to provide a cushion against unexpected
events. In line with the rulebook of the Group’s regulator, the
PRA, the Group’s SCR is calculated using the Solvency II Standard
Formula, and includes a fixed capital add-on to reflect limitations
in the Standard Formula with respect to Admiral’s risk profile
(predominately in respect of co-and reinsurance profit commission
arrangements and risks relating to Periodic Payment Orders (PPOs).
The Group’s current fixed capital add-on of £24 million was
approved by the PRA during 2023.
The Group is required to maintain eligible Own Funds ( Solvency II
capital) equal to at least 100% of the Group SCR. Both eligible Own
Funds and the Group SCR are reported to the PRA on a quarterly
basis and reported publicly on an annual basis in the Group’s
Solvency and Financial Condition Report.
Admiral separately calculates a ‘dynamic’ capital add-on and has
used this this to report a solvency capital requirement and
solvency ratio at the date of this report. A reconciliation between
the regulatory solvency ratio and that calculated on a dynamic
basis is included in note 3 to the Group financial statements. |
|
Reinsurance |
Contractual arrangements whereby the Group transfers part or all of
the insurance risk accepted to another insurer. This can be on a
quota share basis (a percentage share of premiums, claims and
expenses) or an excess of loss (‘XoL’) basis (full reinsurance for
claims over an agreed value). |
|
Scaled Agile |
Scaled Agile is a framework that uses a set of organisational and
workflow patterns for implementing agile practices at an enterprise
scale. Scaled agile at Admiral represents the ability to drive
agile at the team level whilst applying the same sustainable
principles of the group. |
|
Securitisation |
A process by which a group of assets, usually loans, is aggregated
into a pool, which is used to back the issuance of new securities.
A Company transfer assets to a special purpose entity (SPE) which
then issues securities backed by the assets. |
|
Solvency ratio |
A ratio of an entity’s Solvency II capital (referred to as Own
Funds) to Solvency Capital Requirement. Unless otherwise stated,
Group solvency ratios include a reduction to Own Funds for a
foreseeable dividend (i.e. dividends relating to the relevant
financial period that will be paid after the balance sheet
date) |
|
Special Purpose Entity (SPE) |
An entity that is created to accomplish a narrow and well-defined
objective. There are specific restrictions or limited around
ongoing activities. The Group uses an SPE set up under a
securitisation programme. |
|
Ultimate loss ratio |
A projected actuarial best estimate loss ratio for a particular
accident year or underwriting year. |
|
Underwriting year |
The year in which an insurance policy was incepted. |
|
Underwriting year basis |
Also referred to as the written basis. Claims incurred are
allocated to the calendar year in which the policy was
underwritten. Underwriting year basis results are calculated on the
whole account (including co-insurance and reinsurance shares) and
include all premiums, claims, expenses incurred and other revenue
(for example instalment income and commission income relating to
the sale of products that are ancillary to the main insurance
policy) relating to policies incepting in the relevant underwriting
year. |
|
Written/Earned basis |
An insurance policy can be written in one calendar year but earned
over a subsequent calendar year. |
Responsibility statement of the directors in respect of
the half-yearly financial report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in
accordance with the UK-adopted IAS 34 'Interim Financial
Reporting' and gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Group.
• the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board,
Geraint Jones
Chief Financial Officer
14 August 2024
INDEPENDENT REVIEW REPORT TO ADMIRAL GROUP
PLC
Conclusion
We have been engaged by the company to review the condensed
consolidated set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 which
comprises the Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Statement of Financial position, the
Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Cash Flow Statement, and related notes 1 to
14.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2024 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom’s Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity” issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, “Interim Financial Reporting”.
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group’s ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the review of the
financial information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
14 August 2024
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