12 August 2020
Continued significant improvements in back year claims drive positive Admiral Group results for H1 2020
Admiral Group plc results for the six months ended 30 June 2020
2020 Interim Results Highlights
30 June 2020

30 June 2019% change

Group’s share of profit before tax1
Group statutory profit before tax
Earnings per share£286.7 million£286.1 million
82.9 pence£220.2 million£218.2 million
63.0 pence

+30%
+31%
+32%

Interim dividend
Payment of deferred special dividend
Return on equity

70.5 pence
20.7 pence
50%

63.0 pence

+12%

-

-

47%

+7%

Group turnover1,2Group net revenue
Group customers1
UK Insurance customers1
International Insurance customers1£1.69 billion£0.69 billion
7.17 million
5.58 million
1.49 million£1.76 billion£0.65 billion
6.74 million
5.32 million
1.36 million

-4%
+6%
+6%
+5%
+10%

Group’s share of Comparison profit1
Statutory Comparison profit£13.1 million£12.5 million£7.4 million£5.4 million

+78%
+131%

186%

190%

Solvency ratio (post dividend) 1

Over 10,000 staff each receive free shares worth up to £1,800 under the employee share scheme based on theinterim 2020 results.
Comment from David Stevens, Group Chief Executive Officer“A year ago I described our results as ‘frankly a bit dull’. With the benefit of hindsight there’s a lot to be said for‘dull’ if the alternative is a global pandemic.
“Our response to that pandemic highlighted two of Admiral’s key strengths – competent execution in the short termand sustainable values for the long term. We adapted quickly to the new circumstances, pirouetting from one
working model to another and compressing years of learning and development into a matter of weeks through aphenomenal collective effort across the company at all levels. Alongside this adaptability, we also stayed true to our
long-term commitment to balanced outcomes for all our stakeholders, notably through our £25 a vehicle ‘Stay atHome’ rebate.
“This year’s interims benefit again from our consistently competent underwriting and conservative reserving on past
years, feeding into another strong set of results in the core business and beyond. Thank you to all our staff,
shareholders and customers who have made this possible.”

1

Alternative Performance Measures - refer to the end of the report for definition and explanation

2

Group Turnover in H1 2020 presented net of the ‘Stay at Home’ premium refund issued to UK motor insurance customers of£97 million. Refer to the Alternative Performance Measures section at the end of this report for further explanation.

1

Dividend
The Board has declared an interim dividend of 70.5 pence, made up of a normal dividend of 55.0 pence per shareand a special dividend of 15.5 pence per share, 12% higher than the 2019 interim dividend of 63.0 pence per share.
The payment represents 85% of first half earnings.
In addition, the deferred special dividend from the full year 2019 results of 20.7 pence per share will be paid
alongside the 2020 interim dividend. Payment will be on 2 October 2020. The ex-dividend date is 3 September 2020
and the record date is 4 September 2020.
Management presentation
Analysts and investors will be able to access the Admiral Group management presentation which commences at
9.00 BST on Wednesday 12 August 2020 by registering at the following link on webcast at
https://pres.admiralgroup.co.uk/admiral038 or via conference call at
https://pres.admiralgroup.co.uk/admiral038/vip_connect. A copy of the presentation slides will be available atwww.admiralgroup.co.uk

H1 2020 Group overview£m

30 June2018
1.66

30 June2019
1.76

30 June2020
1.69

31 Dec
2019
3.46

93.4
29.6
93.3
216.3
210.7
211.7

96.0
36.1
92.3
224.4
218.2
220.2

152.7
44.6
95.0
292.3
286.1
286.7

238.0
114.9
182.3
535.2
522.6
526.1

Analysis of profit:
UK Insurance
International Insurance
Comparison
Admiral Loans
Other
Group’s share of profit before tax*2

247.0
(0.6)
3.5
(6.4)
(31.8)
211.7

254.7
(2.7)
7.4
(4.3)
(34.9)
220.2

313.8
6.5
13.1
(9.4)
(37.3)
286.7

597.4
(0.9)
18.0
(8.4)
(80.0)
526.1

Key metrics
Group loss ratio*2*3Group expense ratio*2*3Group combined ratio*2
Customer numbers (million) *2

65.2%
22.2%
87.4%
6.23

69.1%
23.2%
92.3%
6.74

54.7%
28.3%
83.0%
7.17

64.9%
23.7%
88.6%
6.98

Earnings per share
Dividend per share*4
Return on Equity*2
Solvency ratio*2

61.6 p60.0 p54%
196%63.0 p63.0 p47%190%82.9 p70.5 p50%
186%148.3 p140.0 p52%
190%

Turnover (£bn)*1*2
Underwriting profit including investment
income*2
Profit commission
Net other revenue and expenses*2
Operating profit
Group statutory profit before tax
Group’s share of profit before tax*1 Group Turnover in H1 2020 presented net of the ‘Stay at Home’ premium refund issued to UK motor insurance customers of£97 million. Refer to note 13(g) to the financial statements for reconciliation to the net insurance premium impact of £21million.
*2
Alternative Performance Measures – refer to the end of the report for definition and explanation.
*3
See notes 13b and 13c for a reconciliation of reported loss and expense ratios to the financial statements.
*4
The deferred special dividend from 2019 will be paid with the interim 2020 dividend, resulting in a total dividend of 91.2
pence per share, to be paid in October 2020. The 20.7 pence per share is allocated to the 2019 full year dividend in the table.

2

Covid-19 impact
The unprecedented Covid-19 (‘Covid’) pandemic has impacted the interim results across all our businesses.
Lockdown restrictions in the Group’s markets resulted in significantly lower motor insurance claims frequency as
customers stayed at home and fewer miles were driven. The UK has lagged other markets due to a later lockdown
implementation and lifting of restrictions. In contrast, the US saw a shorter restriction period, particularly in Texas
where Admiral writes a large portion of its US business, and hence the claims frequency impact was lower. Quote
volumes saw a slowdown in early lockdown, though have recovered strongly in most markets as lockdown
restrictions eased.
As a result of Covid and the related economic uncertainty, Admiral also paused sales of Travel insurance andlending products in March, cautiously re-entering both markets in the second half of 2020. Admiral Loans is
prepared for the strong likelihood of increased arrears experience resulting from an increase in unemployment
levels, although no significant increase in the level of defaults has been experienced to date.
Admiral maintained a commitment to supporting customers, staff, emergency workers and local communities
during the coronavirus crisis, taking several steps and adapting to each market context. These include:-

Customer initiatives included supporting customers through relaxed payment terms, reduced/waived
administration fees, premium rate reductions, and providing additional support for emergency workers. In the
UK, Admiral announced a £110 million Stay at Home premium refund for all existing motor insurance
customers, which amounted to £25 per vehicle on cover.

-Staff initiatives: The safety of staff has remained of utmost importance, with many employees alreadyworking from home before the official government lockdown was in place. Various initiatives were
implemented to optimize staff working from home and provide sufficient support. Staff engagement levels aremonitored regularly and remain high.
All employees were paid their full salaries, and aside from a very small number of staff in France, no staff were
furloughed and no support has been sought or received from government schemes.

-

Community initiatives: Admiral has supported the community across our global operations through donationsand volunteer activities, with Admiral setting up a £6m fund to support charities and communities.

Group Highlights
Key highlights for the Group results in H1 2020 include:•

Group turnover reduced by 4% to £1.69 billion (H1 2019: £1.76 billion) largely as a result of the impact of Covid
and the Stay at Home premium refund; excluding the premium refund, turnover increased by 2%. Customer
numbers were 6% higher at 7.17 million (30 June 2019: 6.74 million)•

Group share of pre-tax profits of £286.7 million (H1 2019: £220.2 million) and statutory profit before tax of£286.1 million (H1 2019: £218.2 million), growing by 30% and 31% respectively, primarily as a result of strong
prior year reserve releases in the UK and internationally and also some non-recurrence of negative items in 2019
including the £33 million Ogden discount rate impact•

UK Insurance recorded a 7% reduction in turnover to £1.25 billion (H1 2019: £1.34 billion) due to the impact of
the Stay at Home premium refund, with customer numbers growing to 5.58 million (30 June 2019: 5.32 million)•

Significant profit growth of £59.1 million in UK Insurance, primarily attributable to favourable development inprior year loss ratios for UK Motor, and higher investment income. Profit growth excluding the impact of the3

Ogden discount rate impact in H1 2019 (£33.3 million) was £25.8 million•

UK Household profit improved in H1 2020 to £5.5 million (H1 2019: £4.2 million) despite bad weather which
impacted the current period by around £5.3 million•

International Insurance businesses made a combined profit of £6.5 million (£2.7 million loss in H1 2019), with
continued profit in the European operations and lower losses in the US•

The combined International insurance turnover grew by 3% to £329.5 million (H1 2019: £319.5 million) andcustomer numbers by 10% to 1.49 million (30 June 2019: 1.36 million), both figures negatively impacted by the
reduced demand in the early Covid lockdown period•

The Comparison result increased to £13.1 million from £7.4 million in H1 2019, mainly driven by a very strong
first half from confused.com in the UK

Earnings per share
Earnings per share is 32% higher than in H1 2019 at 82.9 pence (H1 2019: 63.0 pence), broadly consistent with thegrowth in pre-tax profit.
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 or buffers.
The Board has declared a total interim dividend of 91.2 pence per share (approximately £263 million). This
comprises an interim dividend in respect of 2020 first half profit of 70.5 pence per share in addition to the 20.7
pence per share special dividend that was deferred in April 2020. The Board is confirming payment of this previously
deferred amount based on the Group’s strong financial position and the reduced level of uncertainty in theeconomic environment compared to earlier in the year.
The 70.5 pence per share interim 2020 dividend is split as follows:•

55.0 pence per share normal dividend, based on the dividend policy of distributing 65% of the Group’s share of
post-tax profits; plus•

A special dividend of 15.5 pence per share

The total 2020 interim dividend (excluding the deferred 2019 special dividend) is 12% ahead of the 2019 interim
dividend (63.0 pence per share), with a pay-out ratio of 85% of earnings per share.
The payment date is 2 October 2020, ex-dividend date 3 September 2020 and record date 4 September 2020.
The Group maintained a strong solvency ratio at 186% (post-dividend), which has reduced from 190% at 31
December 2019. Both Own Funds and the Solvency Capital Requirement (SCR) increased in the period. The
increase in Own Funds is the result of the strong generation of economic profit, in particular due to favourable
movements of projected loss ratios on prior underwriting years, partially offset by the impact of net adverse
movements in credit spreads on the Group’s bond portfolios in the period.

4The Group’s results are presented in the following sections:•

UK Insurance – including UK Motor (Car and Van), Household and Travel•

International Car Insurance – including L’olivier (France), Admiral Seguros (Spain), ConTe (Italy), and Elephant(US)•

Comparison – including Confused.com (UK), LeLynx (France), Rastreator (Spain), compare.com (US), andPreminen (new markets)

UK Insurance£mTurnover*1
Total premiums written*1
Net insurance premium revenue
Underwriting profit including
investment income*1
Profit commission and other income
UK Insurance profit before tax

30 June2018
1,319.1
1,167.1
254.6

30 June2019
1,338.8
1,186.0
264.7

30 June2020
1,248.4
1,101.6
251.7

31 Dec2019
2,635.0
2,321.7
533.2

101.6
145.4
247.0

106.7
148.0
254.7

158.1
155.7
313.8

257.4
340.0
597.4

*1 Alternative Performance Measures – refer to the end of this report for definition and explanation

Split of UK Insurance profit before tax£m
Motor
HouseholdTravelUK Insurance profit
Key performance indicators£m
Vehicles insured at period end
Households insured at period end
Travel Insurance customers
Total UK Insurance customers

30 June
2018
249.5
(1.9)
(0.6)
247.0

30 June
2019
251.7
4.2
(1.2)
254.7

30 June
2020
310.4
5.5
(2.1)
313.8

31 Dec
2019
591.5
7.5
(1.6)
597.4

30 June
2018
4.26m
0.78m
0.03m
5.07m

30 June
2019
4.33m
0.92m
0.07m
5.32m

30 June
2020
4.42m
1.07m
0.09m
5.58m

31 Dec
2019
4.37m
1.01m
0.09m
5.47m

Highlights for the UK insurance business for H1 2020 include:
In motor insurance:• Reduced premiums, reflecting the Stay at Home premium rebate for customers, premium rate reductions toreflect reduced claims frequency as a result of Covid, and reduced demand in early lockdown•

An increase in profit to £310.4 million (H1 2019: £251.7 million). After excluding an adverse impact of £33
million arising from the Ogden discount rate change in the prior period, the increase is primarily a result ofstrong prior year reserve releases and higher investment income as a result of releases of accruals held forreinsurers’ share of investment income. Current year underwriting profitability is also higher as a result of thelower claims frequency in the period

In household insurance:• Continued growth, with customers 16% higher than one year ago at 1.07 million (30 June 2019: 0.92 million)•

Profit of £5.5 million (H1 2019: £4.2 million), with positive development on prior year claims offset by bad
weather in H1 2020 with an approximate impact of £5 million, net of Flood Re recoveries5UK Motor Insurance£mTurnover*1
Total premiums written*1
Net insurance premium revenue
Investment income
Net insurance claims
Net insurance expenses
Underwriting profit*1*2
Profit commission
Underwriting profit and profit
commission
Net other revenue*3
UK Motor Insurance profit before tax

30 June2018
1,247.2
1,102.3
221.1
15.8(104.1)(33.9)
98.9
30.8

30 June2019
1,255.2
1,110.1
225.4
15.9(106.2)(36.1)
99.0
35.0

30 June2020
1,158.3
1,019.8
208.5
30.6(48.9)(38.6)
151.6
41.1

31 Dec2019
2,455.3
2,158.5
452.6
30.4(164.7)(74.7)
243.6
112.2

129.7
119.8
249.5

134.0
117.7
251.7

192.7
117.7
310.4

355.8
235.7
591.5

*1 Alternative Performance Measures – refer to the end of this report for definition and explanation.
*2 Underwriting profit excludes contribution from underwritten ancillaries (included in net other revenue)*3 Net other revenue includes instalment income and contribution from underwritten ancillaries and is analysed
later in the report.

Key performance indicators

Reported Motor loss ratio*1,*2
Reported Motor expense ratio*1,*3
Reported Motor combined ratio
Written basis Motor expense ratio
Reported loss ratio before releases
Claims reserve releases – original
net share*1,*4
Claims reserve releases –commuted reinsurance*1,*5
Total claims reserve releases
Vehicles insured at period end
Other Revenue per vehicle

30 June
2018
60.3%
17.9%
78.2%
17.1%
85.9%

30 June
2019
67.8%
18.7%
86.5%
17.5%
90.0%

30 June
2020
49.4%
21.3%
70.7%
18.8%
80.2%

31 Dec
2019
60.7%
19.1%
79.8%
18.5%
87.6%

£56.5m£50.0m£64.2m£121.7m£35.2m£91.7m4.26m£67£52.8m£102.8m
4.33m£66£60.0m£124.2m
4.42m£64£121.7m£243.4m
4.37m£66*1 Alternative Performance Measures – refer to the end of this report for definition and explanation*2 Motor loss ratio adjusted to exclude impact of reserve releases on commuted reinsurance contracts.
Reconciliation in note 13b.
*3 Motor expense ratio is calculated by including claims handling expenses that are reported within claims costs in theincome statement. Reconciliation in note 13c.
*4 Original net share shows reserve releases on the proportion of the account that Admiral wrote on a net basis at thestart of the underwriting year in question.
*5 Commuted reinsurance shows releases on the proportion of the account that was originally ceded under quota sharereinsurance contracts but has since been commuted and hence reported through underwriting profit and not profit
commission.

UK Motor profit in the first six months of 2020 was £58.7 million ahead of the same period in 2019 (H1 2020:£310.4 million; H1 2019: £251.7 million). Profit in first half of 2019 was adversely impacted by £33.3 million as aresult of the change in Ogden discount rate to -0.25%. Excluding this impact, the increase in profit is £25.4 million.
The main driver of lower premium and claims trends for the market and Admiral in the first half of 2020 was thesignificant reduction in claims frequency as a result of the Covid crisis, followed by a recent recovery (strong inpremiums, partial in claims frequency) as lockdown restrictions eased. Premiums in the period were also lower as aresult of the Stay at Home premium rebate to customers, rate decreases and reduced demand in early lockdown.
The ‘Stay at Home’ premium rebate of £110 million, when adjusted for Insurance Premium Tax (IPT), impacted
6

written premium at the whole account level by £97 million, which is reflected within turnover and total premiumsin H1 2020.
Highlights for the period were as follows:•

Net insurance premium revenue was 7.5% lower than H1 2019 at £208.5 million (H1 2019: £225.4 million),with the ‘Stay at Home’ premium rebate to customers having a significant impact•

Investment income was £30.6 million, significantly increased from £15.9 million in H1 2019, primarily as aresult of releases of accruals held in relation to reinsurance contracts. Excluding these releases, investment
income was £17.7 million•

The reported combined ratio improved to 70.7% (H1 2019: 86.5%), with the loss ratio improving to 49.4% (H1
2019: 67.8%) as follows:
Reported Motor loss ratio
Reported
Loss ratio
beforereleases

H1 2019
Impact of Ogden change (0% to -0.25%)
H1 2019 (excluding Ogden impact)
Change in current period loss ratio
Change in claims reserve release – original net share
H1 2020

90.0%
-1.9%
88.1%
-7.9%
—

80.2%

Impact of Reported
claims Loss Ratio
reservereleases net originalshare-22.2%
67.8%
-4.9%
-6.8%
-27.1%
61.0%
—
-7.9%
-3.7%
-3.7%
-30.8%
49.4%•

In H1 2019, the Ogden discount rate changed to minus 0.25% (best estimate assumption of 0% at 31 December2018) reducing the UK Motor profit by £33.3 million, and increasing the reported combined ratio by close to 7
percentage points•

Excluding the impact of the Ogden rate change on the prior period, the 2020 H1 loss ratio was just under 8percentage points lower than H1 2019. Claims experience in the period was heavily impacted by the Covid-19
lockdown, with customers driving less and claims frequency significantly reduced•

Reserve releases on original net share of reserves of £64.2 million (H1 2019: £50.0 million) equated to 31% ofpremium (H1 2019: 22%). Excluding the impact of the Ogden change in the prior period, releases were 3.7
percentage points higher than H1 2019 (27%). Whilst the releases were broadly consistent in absolute terms(after excluding the impact of the Ogden change in the prior period), the lower premium earned in H1 2020
resulted in the slightly higher percentage.

•

The margin held in the financial statements above the projected best estimate reserves remains appropriately
prudent, and is consistent with that held at the end of 2019, in relative terms.
The written basis expense ratio, also impacted by lower premium in the period, is 18.8% for H1 2020 (H1 2019:17.5%), with the earned expense ratio also higher at 21.3% (H1 2019: 18.7%). In addition to the lower
premium, net insurance expenses were £2.5m higher than H1 2019 (£38.6 million; H1 2019: £36.1 million) withinvestment in both the digital customer journey in the period and Covid-related remote working capability.

•

Both claims reserve releases from commuted reinsurance and profit commission were higher in H1 2020 than
H1 2019, as follows:7£m

H1 2019
Impact of Ogden change (0% to -0.25%)
H1 2019 (excluding Ogden impact)
Change in reserve releases on commuted reinsurance
Change in profit commission
H1 2020

Reservereleases –commutedreinsurance
52.8
9.1
61.9
-1.9

Profitcommission

Total

35.0
8.8
43.8

—

-2.7
41.1

87.8
17.9
105.7
-1.9
-2.7
101.1

60.0

—

•

Releases on reserves originally reinsured but since commuted were higher at £60.0 million (v £52.8 million in
H1 2019). Excluding the impact of the prior period Ogden change, the current year releases are £1.9 million
lower at £60.0m (H1 2019: £61.9 million).

•

Profit commission (excluding the prior period Ogden impact) was broadly consistent at £41.1 million (H1 2019:£43.8 million). This aligns with the similar level of reserve releases period on period.

•

Both releases from commuted reinsurance and profit commission are discussed in more detail in the co- andreinsurance section below

Market prices decreased over the first half of 2020, primarily to reflect the significant reduction in claims frequency
during the Covid lockdown period. Part of Admiral’s response to the drop in claims frequency was to pay a Stay atHome refund to reflect lower vehicle usage as well as through reducing rates over the period. The Stay at Home
premium refund is fully reflected in the gross written premium for the period. The number of vehicles insured
increased by 2% to 4.42 million (30 June 2019: 4.33 million). Customer retention was strong during the period.
Co- and reinsurance, commutations and profit commission
Admiral makes significant use of proportional risk sharing agreements, where insurers outside the Group
underwrites a majority of the risk generated, either through co-insurance or quota share reinsurance contracts. The
Group’s net retained share of that business is 22%. These arrangements include profit commission terms whichallow Admiral to retain a significant portion of the profit generated. The proportional co- and reinsurance
arrangements in place for the motor business are the same as those reported in the 2019 Annual Report and willcontinue in 2020. Admiral expects to conclude extensions to its UK quota share contracts for the years beyond 2020in the second half of 2020.
Admiral tends to commute its UK Car Insurance quota share reinsurance contracts for an underwriting year 24
months from inception, assuming there is sufficient confidence in the profitability of the business covered by thereinsurance contract.
As at 30 June 2020, all UK car quota share reinsurance contracts for underwriting years up to 2016 have beencommuted, along with the majority of contracts for the 2017 and 2018 underwriting year, meaning Admiral assumes
a higher net risk for these years than had the reinsurance been left in place.

8

Other Revenue and Instalment Income
UK Motor Insurance Other Revenue – analysis of contribution:£m
30 June2018
Contribution from additional products & fees
105.6
Contribution from additional products
underwritten by Admiral*1
5.9
Instalment income
37.5
Other revenue
149.0
Internal costs*2(29.2)Net other revenue
119.8*3
Other revenue per vehicle£67
Other revenue per vehicle net of internal costs£57

30 June2019
102.4

30 June2020
95.6

31 Dec
2019
202.1

7.9
42.0
152.3
(34.6)
117.7
£66
£56

8.6
47.6
151.8
(34.1)
117.7
£64
£54

13.9
83.9
299.9
(64.2)
235.7
£66
£56

*1 Included in underwriting profit in income statement but re-allocated to Other Revenue for purpose of KPIs.
*2 Internal costs reflect an allocation of insurance expenses incurred in generating other revenue.
*3 Other revenue (before internal costs) divided by average active vehicles, rolling 12-month basis.

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 net Other Revenue continue to be:•

Profit earned from motor policy upgrade products underwritten by Admiral, including breakdown, car hire andpersonal 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

Overall contribution (Other Revenue net of costs plus instalment income) was in line with H1 2019 at £117.7 million(H1 2019: £117.7 million). This included a reduction in admin fees and optional ancillary income, partly reflecting
more transactions completing digitally and also reflecting the impact of Covid resulting in lower sales and reduced
fees. This was partially offset by increased instalment income primarily arising from more customers choosing to pay
by monthly instalment. In addition, there was a positive impact from other revenue generated on the Van insurancebook.
Other revenue was equivalent to £64 per vehicle (gross of costs; H1 2019: £66) and Net Other revenue (after
deducting costs) per vehicle was £54 (H1 2019: £56).
UK Household Insurance£mTurnover*1
Total premiums written*1
Net insurance premium revenue
Underwriting result1*2
Profit commission and other income
UK Household insurance profit/(loss)

30 June
2018
68.3
61.3
14.7
(2.9)
1.0
(1.9)

30 June
2019
80.0
72.2
18.1
0.6
3.6
4.2

30 June
2020
87.0
78.7
20.9
(0.7)
6.2
5.5

31 Dec
2019
171.3
154.9
37.2
0.7
6.8
7.5

*1 Alternative Performance Measures – refer to the end of this report for definition and explanation*2 Underwriting loss excluding contribution from underwritten ancillaries

9Key performance indicators

Reported household loss ratio*1
Reported household expense ratio*1
Reported household combined ratio*1
Impact of extreme weather and subsidence*1
Households insured at period end (m)30 June
2018
87.6%
32.1%
119.7%
25.3%
0.78

30 June
2019
66.8%
30.1%
96.9%
—

0.92

30 June
2020
69.0%
34.2%
103.2%
11.1%
1.07

31 Dec
2019
69.1%
28.9%
98.0%
—

1.01

*1 Alternative Performance Measures – refer to the end of this report for definition and explanation

Admiral’s Household business continued to grow strongly, increasing the number of homes insured by 16% to
1,066,400 (H1 2019: 920,900), with turnover increasing to £87.0 million (H1 2019: £80.0 million). New businessmarket volumes slowed as lockdown was implemented but recovered as restrictions eased. Retention remained
strong. Overall, customers have shifted towards using digital channels more for both shopping and reporting
claims.
The household business reported a profit of £5.5 million (H1 2019: £4.2 million profit) with the result being
impacted by weather events in early 2020 costing approximately £5 million, net of recoveries from Flood Re (H1
2019: nil). Excluding the weather impact, the first half of 2020 saw favourable development of prior periods, mostnotably in relation to escape of water and fire perils.
The market saw a reduction in claims frequency in early lockdown which has subsequently recovered to morenormal levels. As more people were staying at home during the Covid lockdown, the claims mix for Admiral shifted
towards increased claims for damage and reduced escape of water claims.
Admiral’s expense ratio increased to 34.2% (H1 2019: 30.1%) as a result of lower than expected premium due tosales disruption during the lockdown period, as well as increased acquisition cost as a result of more online
comparison sales and increased investment in digital and claims capabilities.

International Insurance£mTurnover*1
Total premiums written*1
Net insurance premium revenue
Investment income
Net insurance claims
Net insurance expenses
Underwriting result*1
Net other income
International Car Insurance result

30 June
2018
260.1
234.0
66.2
0.6
(49.7)(25.3)
(8.2)
7.6
(0.6)

30 June
2019
319.5
288.0
80.6
0.9
(66.0)(26.7)(11.2)
8.5(2.7)

30 June
2020
329.5
297.6
95.5
(0.1)
(63.3)(37.7)
(5.6)
12.1
6.5

31 Dec
2019
623.6
562.6
168.6
1.5
(137.2)(53.0)(20.1)
19.2
(0.9)

10

Key performance indicators

Loss ratio*2
Expense ratio*2
Combined ratio*3
Combined ratio, net of Other revenue*4
Claims reserve releases (£m)
Vehicles insured at period end

30 June
2018
78%
39%
117%
106%
6.1
1.12m

30 June
2019
76%
38%
114%
103%
9.0
1.36m

30 June
2020
63%
45%
108%
95%
11.7
1.49m

31 Dec
2019
77%
37%
114%
104%
14.4
1.42m

*1 Alternative Performance Measures – refer to the end of this report for definition and explanation*2 Loss ratios and expense ratios adjusted to remove the impact of reinsurer caps
*3 Combined ratio is calculated on Admiral’s net share of premiums and excludes Other Revenue. It excludes the impactof reinsurer caps. Including the impact of reinsurer caps the reported combined ratio would be H1 2020: 106%; FY
2019: 113%; H1 2019: 115%; H1 2018: 113%.
*4 Combined ratio, net of Other Revenue is calculated on Admiral’s net share of premiums and includes Other Revenue.
Including the impact of reinsurer caps the reported combined ratio, net of Other Revenue would be H1 2020: 93%; FY
2019: 102%; H1 2019: 104%; H1 2018: 102%.

Geographical analysis*1
30 June 2020
Vehicles insured at period end
Turnover (£m)

Spain
0.30m
40.8

Italy
0.71m
106.2

France
0.26m
64.1

US
0.22m
118.4

Total
1.49m
329.5

30 June 2019
Vehicles insured at period end
Turnover (£m)

Spain
0.28m
40.2

Italy
0.66m
105.2

France
0.20m
51.4

US
0.22m
122.7

Total
1.36m
319.5

31 Dec 2019
Vehicles insured at period end
Turnover (£m)

Spain
0.29m
78.2

Italy
0.69m
204.2

France
0.23m
108.1

US
0.21m
233.1

Total
1.42m
623.6

*1 Alternative Performance Measures – refer to the end of this report for definition and explanation

International Insurance financial performance
Admiral’s international insurance businesses continued to grow despite a slowdown resulting from reduced
demand during Covid lockdown restrictions, with customer numbers 10% higher than a year earlier and turnovergrowth of 3% to £329.5 million (H1 2019: £319.5 million).
The combined ratio, net of other revenue improved to 95% (H1 2019: 103%). This was driven both by positive
prior year development as well as lower claims costs seen as a result of Covid.
The expense ratio deteriorated to 44.8% (H1 2019: 38.4%) as a result of both lower than expected premium in the
period as a result of Covid and also an increase in the net retained share of business in the US where the Groupnow retains a 50% share of the current underwriting year. This results in a temporary increase in expense ratio as
the recognition of the increase in earned premium arising from this change, lags the increase in expenses.
The European insurance operations in Spain, Italy and France insured 1.27m vehicles at 30 June 2020 – 12% higher
than a year earlier (30 June 2019: 1.13m). Turnover was up 7% at £211.1 million (H1 2019: £196.8 million). The
businesses recorded a profit of £9.8 million (H1 2019: profit of £3.5 million) with each reporting a positive result.
All businesses continued to focus on improving their loss ratio and also experienced positive development of prioryear loss ratios. The combined ratio net of other revenue (excluding the impact of reinsurer caps) improved
materially to 82% from 93% due to the improved claims experience and growth in other revenue.
Admiral Seguros (Spain) grew by 10% to just over 300,000 customers over the past year (30 June 2019: 275,000).
11

The business continued to focus on sustainable growth and increased retention in a competitive market. In
addition, the business continued to grow distribution via the broker channel and implemented improvements tothe online customer experience.
The Group's largest international operation, ConTe in Italy, continued to perform well and increased vehicles
insured by 9% to 712,000 (30 June 2019: 656,000). Retention remained strong during the period and the business
continued a focus on improving the loss ratio and risk selection.
L'olivier assurances (France) continued to grow strongly, particularly via the direct channel, increasing its customer
base by 28% to 261,000 at 30 June 2020. Growth was also facilitated through marketing and productimprovements, and the business also experienced strong retention.
In the US, Admiral underwrites motor insurance in seven states (Virginia, Maryland, Illinois, Texas, Indiana,
Tennessee and Ohio) through its Elephant Auto business. The number of vehicles insured slightly decreased to
218,000 at 30 June 2020 (H1 2019: 222,000) and turnover was also down by 2% to £118.4 million (H1 2019: £122.7
million). The business continued to focus on improving the loss ratio with a cautious approach to growth andimproving risk selection capabilities. In addition, the business shifted towards providing policies with a six, rather
than twelve month term, based on customer demand and more in line with standard market practice. This resulted
in a lower written premium compared to the prior period.
Elephant reported a lower loss of £3.3 million (from £6.2 million in H1 2019) due to loss ratio improvements in H1
as a result of the focus to improve loss ratio over the past few periods as well as the impact of Covid, although thiswas partially offset by increased forbearance in respect of customer payment difficulties and other operational
expenses.
Elephant continues to focus on cost control and improving customer service through the digital channel, which has
contributed to continued improvement in the expense ratio. Overall, the combined ratio net of other revenue
improved to 111% (116% in H1 2019).

Comparison£m

30 June2018

30 June2019

30 June2020

31 Dec2019

Revenue
Car insurance comparison
Other
Total Revenue
ExpensesProfit before tax

57.0
19.6
76.6
(74.0)
2.6

59.0
24.4
83.4
(78.0)
5.4

61.8
28.9
90.7
(78.2)
12.5

119.4
52.2
171.6
(156.9)14.7

Confused.com profit
International comparison result
Statutory profit before tax

5.8
(3.2)
2.6

8.7
(3.3)
5.4

13.5
(1.0)
12.5

20.4
(5.7)
14.7

Confused.com profit
International comparison result
Group’s share of profit before tax*1

5.8
(2.3)
3.5

8.7
(1.3)
7.4

13.5
(0.4)
13.1

20.4
(2.4)
18.0

*1 Alternative Performance Measure – refer to the end of this report for definition and explanation

Whilst the UK comparison market remained competitive in the first half of 2020, Confused.com performed verystrongly. Turnover increased by 18% to £63.7 million (H1 2019: £54.2 million) as a result of strong growth in market
share for both motor and household insurance. Confused.com continued to improve the customer and product12

proposition, and improved marketing efficiencies over the period. Profit increased to £13.5 million (H1 2019: £8.7
million). Confused saw a fall in demand for its services in the initial period of lockdown restrictions, thoughvolumes recovered significantly in the latter part of the first half.
Admiral operates several comparison businesses outside the UK including Rastreator (Spain), LeLynx (France),compare.com (US) and the Preminen operations in emerging markets. The Group owns 75% of Rastreator, 59.25%
of compare.com and 50% of Preminen.
Combined revenue for the continental European operations in the first half of 2020 decreased by 7% to £23.2
million (H1 2019: £25.0 million), as a result of lower quote volumes during the lockdown period. The Group’s shareof the combined result for Rastreator and LeLynx was a profit of £0.7 million (H1 2019: £2.1 million). Performancefor both businesses was adversely impacted by Covid, with marketing and other variable costs being reduced inline with the fall in revenue, but fixed costs remaining stable. Similar to Confused.com, Rastreator and LeLynx saw
a significant impact on volumes in early lockdown with improvements later in the first half.
During the first half of 2020 in the US, Admiral’s share of compare.com’s loss reduced to £0.5 million before tax (H1
2019: £2.8 million). Compare’s revenue was largely in line with 2019 but the reduced size of the business, following
actions taken in 2019, contributed to the reduced expenses and improved result.
Preminen continues to explore the potential of comparison in new markets overseas, in partnership with Mapfre.
Current operations include Rastreator.mx in Mexico and, GoSahi.com in India with a decision taken during the firsthalf of 2020 to cease operations through Tamoniki.com in Turkey.
Other Group Items£m
Share scheme charges
Admiral Loans loss before tax
Other interest and investment income
Business development costs
Other central overheads
Finance charges
Group’s share of other group items

30 June2018(21.6)
(6.4)
1.1
(2.0)
(3.7)
(5.6)
(38.2)

30 June2019(26.2)
(4.3)
2.7
(0.4)
(5.5)
(5.5)
(39.2)

30 June2020(22.8)
(9.4)
3.0
(0.5)
(11.2)(5.8)(46.7)

31 Dec2019(52.7)
(8.4)
6.0
(2.1)
(20.0)(11.2)(88.4)

Share scheme charges relate to the Group’s two employee share schemes (refer to note 9 in the financial
statements). The decrease in the charge is driven by a reduced number of awards following changes made in 2019,
along with a reduced “DFSS bonus” charge due to the lower dividend paid in H1 2020.
Business development costs include costs associated with potential new ventures. The costs associated with
Preminen were included within the Comparison segment above for the first time in 2019. Business development
costs have remained consistent with H1 2019.
Other central costs consist of Group-related expenses and include the cost of a number of significant Group projects,
such as the development of the internal model and preparation for the significant new insurance accounting
standard, IFRS17. The increase in the period is primarily due to the Covid relief fund of £6.0 million provided in the
UK to help support individuals and organisations in need as a result of the pandemic.
Finance charges of £5.8 million (H1 2019: £5.5 million) primarily relate to interest on the £200 million subordinatednotes issued in July 2014 (refer to note 6 to the financial statements), along with notional finance charges
recognized on leases in accordance with IFRS 16.

13

Admiral Loans£m
Total interest income
Interest expense
Net interest income
Other fee income
Total income
Movement on provision for expected credit
lossesOperating expenses
Loss before tax*1

30 June
2018
5.1
(1.2)
3.9
—
3.9

30 June
2019
13.3
(4.1)
9.2
0.9
10.1

30 June
2020
19.8
(5.1)
14.7
0.9
15.6

31 Dec
2019
30.8
(9.1)
21.7
1.9
23.6

(4.1)
(6.2)
(6.4)

(6.0)
(8.4)
(4.3)

(16.2)(8.8)(9.4)(13.8)(18.2)(8.4)

Includes £1.5 million intra-group interest expense (H1 2019: £1.2 million)

Admiral Loans distributes unsecured personal loans and car finance products through the comparison channel andalso direct to consumers via the Admiral website.
In mid-March 2020, following the rising number of cases of Covid and lockdown in a number of other European
countries, the Group made the decision to pause the writing of new loans. Management focused on intensemonitoring of the loan portfolio performance and ensuring collection processes were robust and prepared for thestrong likelihood of increased arrears experience resulting from increased unemployment. Admiral also extended
payment holidays and reduced payment arrangements to some customers according to their needs and in line withregulatory guidance.
Gross loan balances totalled £495.5m at the end of June 2020, with a £40.2 million provision, thereby meaning a
net loans balance of £455.3 million at the end of the first half of 2020 (net loans balance at 30 June 2019: £420.8
million, 31 December 2019: £455.1 million).
At the balance sheet date, Admiral Loans had not yet seen any significant increase in the level of defaults nor beenrequired to make any significant specific provisions in relation to the impact of the pandemic. It has updated its
IFRS9 models with a more cautious set of economic assumptions and refined management overlays to reflect
expectations in respect of the behaviour of customers on payment holidays. Admiral Loans uses a probabilityweighted combination of scenarios primarily driven by unemployment assumptions.
The IFRS9 probability-weighted model outputs supplemented by the payment holiday assumption overlays requireda net additional impairment provision of £16.2 million (H1 2019: £6.0 million). For further information, refer to note
7 in the financial statements.
Management continues to monitor the market and UK economy closely and has re-entered the market in thesecond half in a very cautious manner.
Admiral Loans is currently funded through a combination of internal funding and further required external funding.
The external portion funds approximately 60% of the current loans balance through the securitisation of certain
loans via transfer of the rights to the cash-flows to a special purpose entity (“SPE”) which remains under thecontrol of the Group. The securitisation and subsequent issue of notes does not result in a significant transfer ofrisk from the Group.
ResultAdmiral Loans recorded a pre-tax loss of £9.4 million in the first half of 2020 (increased from £4.3 million in H12019). The higher loss predominantly reflects the increased provision recognised in the period as noted above.
14

Group capital structure and financial position
Admiral’s capital-efficient and profitable model led to a return on equity of 50% (H1 2019: 47%). A continuing key
feature of the business model is the extensive use of co- and reinsurance across the Group which reduces the levelof capital the Group is required to maintain.
The Group continues to manage its capital to ensure that all entities within the Group are able to continue as going
concerns and that regulated entities comfortably meet regulatory capital requirements. Surplus capital withinsubsidiaries is paid up to the Group holding company in the form of dividends.
The Group continues to develop its partial internal model to form the basis of calculation of its capital requirementin the future, and expects to submit the formal application in 2021. In the period before submission, the Group willcontinue to use the current standard formula plus capital add-on basis to calculate its regulatory capitalrequirement.
The estimated Solvency II position for the Group at the date of this report was as follows:
Group capital position (estimated)

Eligible Own Funds (pre dividend)
Dividend
Eligible Own Funds (post dividend)
Solvency II capital requirement*1
Surplus over regulatory capital requirement
Solvency ratio (post dividend)

30 June 2020£bn
1.47
(0.20)
1.27
0.68
0.59
186%

31 Dec 2019£bn
1.42
(0.22)
1.20
0.63
0.57
190%

Although slightly reduced from the 2019 year- end position, the Group maintained a strong post-dividend solvency
ratio at 186% (FY 2019: 190%). Whilst the surplus over the regulatory capital requirement has increased since 31
December 2019, increases in both Own Funds and SCR of a similar order result in a modest reduction in the ratio.
The increase in Own Funds reflects economic profit generated in the period partially offset by adverse movements
in credit spreads.
The solvency capital requirement includes an updated capital add-on which remains subject to regulatory
approval. The solvency ratio based on the previously approved capital add-on that is calculated at the balance
sheet date rather than the date of this report, and will be submitted to the regulator within the Q2 Quantitative
Reporting Template (QRT) is as follows:
Regulatory solvency ratio (estimated)
Solvency ratio as reported above
Change in valuation date
Other (including impact of updated, unapproved capital add-on)
Solvency ratio (QRT basis)

30 June 2020

31 Dec 2019

186%
(7%)
(10%)
169%

190%
(10%)
(10%)
170%

The Group’s capital includes £200 million ten year dated subordinated bonds. The rate of interest is fixed at 5.5%
and the bonds mature in July 2024.
Estimated sensitivities to the current Group solvency ratio are presented in the table below. These sensitivities
cover the two most material risk types, insurance risk and market risk, and within these risks cover the mostsignificant elements of the risk profile. Aside from the catastrophe events, estimated sensitivities have not been15

calibrated to individual return periods.
Solvency ratio sensitivities
30 June 2020
-23%
-1%
-2%
-3%
-9%
-3%
-3%
-1%

UK Motor – incurred loss ratio +5%
UK Motor – 1 in 200 catastrophe event
UK Household – 1 in 200 catastrophe event
Interest rate – yield curve down 50 bps
Credit spreads widen 100 bps
Currency – 25% movement in euro and US dollar
ASHE – long term inflation assumption up 0.5%
Loans – 100% weighting to severe scenario

31 Dec 2019
-23%
-1%
-2%
-5%
-8%
-3%
-3%
-3%

The reduced sensitivity to interest rates reflects changes in asset allocations to better match durations of PPO claims.
For further detail on Loans sensitivities refer to note 7a to the financial statements.
Investments and cash
Admiral’s investment strategy was unchanged in H1 2020. The main focus of the Group’s strategy is capitalpreservation, with additional priorities including low volatility of returns, high levels of liquidity and matching ofasset durations with PPO and non-PPO liability durations. All objectives continue to be met. The Group’s Investment
Committee performs regular reviews of the strategy to ensure it remains appropriate.
Cash and investments analysis£mFixed income and debt securities
Money market funds and other fair value
instruments
Cash deposits
Cash
Total
Investment return£m
Investment return
Movement on accruals held for reinsurers
Unrealised (gains)/losses
Movement in provision for expected credit
lossesNet Investment income

30 June2018
1,542.5

30 June2019
1,827.6

30 June2020
2,024.1

31 Dec2019
1,957.8

1,203.8130.0
309.5
3,185.8

1,029.3
88.7
461.4
3,407.0

1,243.4
85.0
396.3
3,748.8

1,160.2
116.5
281.7
3,516.2

30 June2018
18.6

30 June
2019
23.3
(4.5)
(0.4)

30 June
2020
21.3
12.9
0.2

31 Dec2019
48.6(12.9)
(0.1)

(0.1)
18.3

(2.4)
32.0

(0.3)
35.3

—

(1.4)
—

17.2

Net investment income for the first half of 2020 was £32.0 million (H1 2019: £18.3 million).
The investment return on the Group’s investment portfolio excluding unrealised gains and losses, the release of theinvestment income accruals held in relation to reinsurance contracts and the movement in provision for expectedcredit losses, was £21.3 million (H1 2019: £23.3 million), with the annualised rate of return being 1.2% (H1 2019:1.4%). The lower return in the period was reflective of the lower yield environment.

16

Net investment income in the period is positively impacted by the release of the £12.9 million investment income
accrual (H1 2019: £4.5m accrual) held in relation to UK motor quota share reinsurance arrangements. These
reinsurance contracts typically operate on a ‘funds withheld’ basis, meaning that Admiral retains the reinsurers’
share of premiums, and pays the reinsurers’ share of claims and expenses out of the withheld amounts. Investment
income on the withheld fund is accrued and typically released once the projected best estimate loss ratio for the
relevant underwriting year results in a profitable outcome.
In H1 2020, accruals held in relation to the 2019 underwriting year were released following an improvement in the
projected best estimate loss ratio for the underwriting year.
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 the end of H1 2020 was£3,748.8 million (FY 2019: £3,516.2 million). The increase in the period includes a draw down on the Group’s
revolving credit facility of £86.5 million.
Taxation
The tax charge for the period, reported on a statutory basis is £43.1 million (H1 2019: £37.0 million), which equates
to 15.1% (H1 2019: 16.9%) of profit before tax. The reduction in effective tax rate (as defined in the glossary) isdriven primarily by an increase in non-taxable income and a lower impact of unrecognised deferred tax due to lower
losses in the Group’s US businesses.
Principal Risks and Uncertainties
Admiral has performed a robust assessment of its principal risks and uncertainties, including those which
would threaten its business model, future performance, liquidity and solvency. The result of this assessment
has concluded that Admiral’s principal risks and uncertainties are consistent with those reported in theGroup's 2019 Annual Report (pages 67-73).
Covid-19
The impact of Covid on Admiral’s principal risks and uncertainties, as well as the steps taken to appropriately manage
these risks is overseen by the Group Risk Committee. The most significant impacts are set out below.
Operational, Regulatory and Strategic Risks
Admiral is exposed to an increased level of operational risk through the implementation of business continuity plans,in addition to regulatory and strategic risks.
•

All but a very small number of essential staff worked from home from the point at which lockdown restrictions
were imposed in the Group’s various locations. As restrictions have eased, the Group is adopting a very
cautious approach to reopening offices. Potential impacts to staff physical and mental health have been
carefully managed through the pandemic.

•

The rollout of hardware and software to support remote working has impacted systems and processes, withappropriate adjustments made in order to mitigate changes or increases in specific risks•

Regulatory risk has increased during the pandemic, with a significant amount of new regulatory guidanceissued across the Group’s businesses. Admiral has, and continues to closely monitor this guidance, and hasprioritised initiatives for customers (particularly for vulnerable customers) as set out earlier in this report.

17•Strategic risks, including the impact on significant Group projects and product developments andenhancements, have been closely monitored, with appropriate focus and resource dedicated to ensuring thatsignificant projects continue to progress.

Market and Credit Risks
The Group’s investment portfolio has been impacted by the market volatility and wider economic uncertainty
associated with Covid. Robust stress tests have been regularly completed, with the Group continuing to show strong
solvency and liquidity positions. This is supported by close monitoring of market movements, with regular reviews by
the Group’s Investment Committee, and daily monitoring of underlying exposures by the Group’s Asset Managers.
Admiral is also exposed to an increased level of risk of default by personal lending customers as a result of theeconomic environment and anticipated increases in unemployment. Further information is included in the section
headed ‘Admiral Loans’ earlier in this report and in note 7 to the financial statements.
Insurance Risk
The Group has experienced competing effects as a result of Covid, specifically in relation to premium volumes andclaims. Early in the period of lockdown restrictions, new business volumes, along with other revenue, initially reduced,
though as restrictions have begun to ease, volumes have increased. The impact of these initially reduced volumes has
been offset by a reduction in insurance claims frequency during the lockdown period. This reduction in claims
frequency and volume has been particularly evident in the UK, leading to the Stay at Home premium rebate as referred
to earlier in this report.
Admiral is taking appropriate mitigating steps with respect to these risks, including continuing to ensure that there issufficient capacity in the relevant operational areas in order to sell, renew and service policies, and settle claims,
increasing the number of options for customers to access and service polices on-line, and through relevant pricing
actions.
UK Exit from the European Union (‘Brexit’)
To date Admiral has adopted a prudent approach to Brexit to help mitigate the potential risks associated with a ‘nodeal’ scenario, including the restructuring of the European insurance and price comparison businesses, as well as
establishing procedures to monitor and manage potential supply chain changes and communications to customers.
The UK exited the EU on 31 January 2020, with the transition period due to end on 31 December 2020. At the date ofthis report, there remains uncertainty in the trading arrangements between the UK and the EU that will be
implemented after the end of the transition period. This along with any associated economic volatility may give rise
to impacts across a number of the Group’s principal risks and uncertainties. The Group closely monitors and manages
these risks through its Brexit Steering Committee, reporting into the Group Risk Committee at appropriate intervals.
Audit Tender
The Group’s 2019 Annual Report referenced that the Group’s Audit Committee had made a decision to conduct anexternal audit tender process during 2020. Whilst the timelines for the initiation of this process were extended
beyond the end of Q2 2020 in order to ensure that a robust and effective process could be run in the current
remote working environment, the process has now commenced and is still expected to be completed before theend of 2020. The appointment, or re-appointment of the successful firm will be made with effect from the 2021
financial year, coinciding with the rotation of the current audit partner. The Group’s major shareholders wereconsulted ahead of the initiation of the process.

18

Disclaimer on forward-looking statements
Certain statements made in this announcement are forward-looking statements. Such statements are based on
current expectations and assumptions and are subject to a number of known and unknown risks and uncertainties
that may cause actual events or results to differ materially from any expected future events or results expressed or
implied in these forward-looking statements.
Persons receiving this announcement should not place undue reliance on forward-looking statements. Unlessotherwise required by applicable law, regulation or accounting standard, the Group does not undertake to updateor revise any forward-looking statements, whether as a result of new information, future developments orotherwise.

19

Condensed consolidated income statement (unaudited)
6 months ended

Year ended

Note

30 June2020£m

Insurance premium revenue
Insurance premium ceded to reinsurers
Net insurance premium revenue
Other revenue
Profit commission

58
5

1,063.4(712.6)
350.8
243.9
44.6

1,080.4(731.2)
349.2
233.1
36.1

2,198.4(1,489.0)
709.4
469.9
114.9

Interest income
Interest expense

7
7

19.8
(3.8)

13.3
(2.9)

30.8
(6.3)

16.0

10.4

24.5

Net interest income from loans
Investment return

31 December
2019
£m

34.4

18.4

35.6

Net revenue
Insurance claims and claims handling expenses
Insurance claims and claims handling expenses recoverable fromreinsurers

689.7(611.6)647.2(788.3)

1,354.3(1,568.1)

470.3

588.3

1,208.8

Net insurance claims
Operating expenses and share scheme charges
Operating expenses and share scheme charges recoverable fromco- and reinsurers
Net operating expenses and share scheme charges(141.3)(460.7)(200.0)(431.9)(359.3)(886.9)9223.2(237.5)215.2(216.7)441.2(445.7)6(18.6)(397.4)(6.1)(422.8)(14.1)(819.1)

292.3
(7.3)
1.1
(6.2)

224.4
(7.5)
1.3
(6.2)

535.2
(14.6)
2.0(12.6)

286.1(43.1)

218.2(37.0)

522.6(94.2)

Profit after tax

243.0

181.2

428.4

Profit after tax attributable to:Equity holders of the parent
Non-controlling interests (NCI)

243.7
(0.7)

183.2
(2.0)

432.4
(4.0)

243.0

181.2

428.4

Changes in the expected credit loss provision
Total expenses
Operating profit
Finance costs
Finance costs recoverable from co- and reinsurers
Net finance costs
Profit before tax
Taxation expense

630 June
2019
£m

9

6
6

10

Earnings per share
Basic

12

82.9p

63.0p

148.3p

Diluted

12

82.8p

62.9p

148.0pDividends declared and paid (total)
Dividends declared and paid (per share)

12
12

162.3
56.3p

188.0
66.0p

367.8
129.0p20

Condensed consolidated statement of comprehensive income (unaudited)

Profit for the period
Other comprehensive income
Items that are or may be reclassified to profit or loss
Movements in fair value reserve
Deferred tax charge in relation to movement in fair value reserve
Exchange differences on translation of foreign operations
Movement in hedging reserve

6 months ended
30 June2020£m

30 June2019£mYear ended
31 December
2019
£m

243.0

181.2

428.4

17.7
(1.5)
11.7
(3.6)

29.6
(1.4)
(0.7)
(1.3)

34.6
(1.5)
(8.9)
(0.9)

Other comprehensive income for the period, net of income tax

24.3

26.2

23.3

Total comprehensive income for the period

267.3

207.4

451.7

Total comprehensive income for the period attributable to:Equity holders of the parent
Non-controlling interests

267.5
(0.2)

209.5
(2.1)

456.1
(4.4)

267.3

207.4

451.7

21

Condensed consolidated statement of financial position (unaudited)
30 June
2020
£m

As at
30 June2019£m

31 December
2019
£m

11
11
10
5
6
7
6
6

150.7
162.2
2.1
1,891.6
1,227.7455.3
3,352.5
396.3
7,638.4

163.0
158.9
5.3
1,885.9
1,192.4420.8
2,945.6
461.4
7,233.3

154.4
160.3
—
2,071.7
1,227.7455.1
3,234.5
281.7
7,585.4

12

0.3
13.1
78.9
947.4
1,039.7
11.2
1,050.9

0.3
13.1
57.7
740.0
811.1
11.5
822.6

0.3
13.1
55.1
840.9
909.4
9.2
918.6

5
6
6, 11
6
10
10

4,022.6644.2
1,777.8
132.6
—
10.3
6,587.5

3,929.1
484.5
1,811.1
143.0
—
43.0
6,410.7

3,975.0
530.1
1,975.9
137.1
0.4
48.3
6,666.8

7,638.4

7,233.3

7,585.4

Note

ASSETS
Property and equipment
Intangible assets
Deferred income tax
Reinsurance assets
Insurance and other receivables
Loans and advances to customers
Financial investments
Cash and cash equivalents
Total assets
EQUITY
Share capital
Share premium account
Other reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
LIABILITIESInsurance contracts
Subordinated and other financial liabilities
Trade and other payables
Lease liabilities
Deferred income tax
Current tax liabilities
Total liabilities
Total equity and total liabilities

22

Condensed consolidated cash flow statement (unaudited)
6 months ended

Year ended

30 June2020£m

30 June2019£m

31 December
2019
£m

243.0

181.2

428.4

12.8
8.9
16.2
22.9
(0.2)
1.3
(34.4)
6.2
43.1
47.6
180.1
(1.7)
(16.4)(198.1)331.3(1,170.7)
1,106.1
6.6
273.3(87.0)
186.3

12.3
8.2
6.0
26.5
(1.7)
—
(18.3)
9.1
37.0
192.7
(2.4)
(112.1)(126.6)9.6
221.5(905.9)
985.2
8.6
309.4
(47.4)
262.0

23.8
18.7
13.8
53.4
(0.6)
—
(35.3)
12.6
94.2
238.6
(188.2)(147.0)(168.7)174.4
518.1(2,048.2)
1,847.9
11.6
329.4(92.8)
236.6

Cash flows from investing activities:
Purchases of property, equipment and software
Net cash used in investing activities(15.3)(15.3)(13.5)(13.5)(33.6)(33.6)Cash flows from financing activities:
Non-controlling interest capital contribution
Proceeds on issue of loan backed securities(Repayment)/proceeds from other financial liabilities
Finance costs paid, including interest expense paid on funding for loans
Repayment of lease liabilities
Equity dividends paid
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Effects of changes in foreign exchange rates
Cash and cash equivalents at end of period

2.2
24.1
86.5
(6.7)
(4.3)
(162.3)(60.5)
110.5
281.7
4.1
396.3

1.6
85.1
(46.5)(10.4)(5.5)(188.0)(163.7)
84.8
376.8
(0.2)
461.4

1.6
136.2
(50.3)(14.0)(10.6)(367.8)(304.9)(101.9)
376.8
6.8
281.7

Note

Profit after tax
Adjustments for non-cash items
Depreciation of property, plant and equipment and right-of-use assets
Amortisation and impairment of intangible assets
Movement in provision for loans and advances to customers
Share scheme charges
Accrued interest income from loans and advances to customers
Accrued interest expense from loans and advances to customers
Investment return
Finance costs, including unwinding of discounts on lease liabilities
Taxation expense
Change in gross insurance contract liabilities
Change in reinsurance assets
Change in insurance and other receivables
Change in loans and advances to customers
Change in trade and other payables, including tax and social security
Cash flows from operating activities, before movements in investments
Purchases of financial instruments
Proceeds on disposal/ maturity of financial instruments
Interest and investment income received
Cash flows from operating activities, net of movements in investments
Taxation payments
Net cash flow from operating activities

11
11
7
9

6
6
10
5
5
6, 11
7
11

6

6
12

6

23

Condensed consolidated statement of changes in equity (unaudited)

Attributable to the owners of the Company
Fair
Foreign
Retainedvalue
Hedgingexchange
profitreserve
reserve
reserveand loss
£m
£m
£m
£m

Share
Capital£mSharepremium
account£m

Total £m

Noncontrollinginterests£m

Total
equity£m

At 1 January 2019
Profit/(loss) for the period
Other comprehensive income
Movements in fair value reserve
Deferred tax charge in relation to
movement in fair value reserve
Movement in hedging reserves
Currency translation differences
Total comprehensive income forthe period
Transactions with equity holders
Dividends
Share scheme credit
Deferred tax credit on share scheme
creditContributions by NCIs
Changes in ownership interests
without a change in control
Total transactions with equity
holders
As at 30 June 2019

0.3
—

13.1
—

13.5
—

(0.3)
—

18.2
—

713.5
183.2

758.3
183.2

12.8
(2.0)

771.1
181.2

—

—

29.6

—

—

—

29.6

—

29.6

—
—
—

—
—
—

(1.4)
—
—

—
(1.3)
—

—
—
(0.6)

—
—
—

(1.4)
(1.3)
(0.6)

—
—
(0.1)

(1.4)
(1.3)
(0.7)

—

—

28.2

(1.3)

(0.6)

183.2

209.5

(2.1)

207.4

—
—

—
—

—
—

—
—

—
—

(188.0)28.0(188.0)28.0——(188.0)
28.0

—
—

—
—

—
—

—
—

—
—

2.5
—

2.5
—

—
2.2

2.5
2.2

—

—

—

—

—

0.8

0.8

(1.4)

(0.6)

—
0.3

—
13.1

—
41.7

—
(1.6)

—
17.6

(156.7)740.0(156.7)
811.1

0.8
11.5

(155.9)822.6

At 1 January 2019
Profit/(loss) for the period
Other comprehensive income
Movements in fair value reserve
Deferred tax charge in relation to
movement in fair value reserve
Movement in hedging reserve
Currency translation differences
Total comprehensive income forthe period
Transactions with equity holders
Dividends
Share scheme credit
Deferred tax credit on share scheme
creditContributions by NCIs
Changes in ownership interests
without a change in control
Total transaction with equity
holders
As at 31 December 2019

0.3
—

13.1
—

13.5
—

(0.3)
—

18.2
—

713.5
432.4

758.3
432.4

12.8
(4.0)

771.1
428.4

—

—

34.6

—

—

—

34.6

—

34.6

—
—
—

—
—
—

(1.5)
—
—

—
(0.9)
—

—
—
(8.5)

—
—
—

(1.5)
(0.9)
(8.5)

—
—
(0.4)

(1.5)
(0.9)
(8.9)

—

—

33.1

(0.9)

(8.5)

432.4

456.1

(4.4)

451.7

—
—

—
—

—
—

—
—

—
—

(367.8)58.8(367.8)58.8——(367.8)
58.8

—
—

—
—

—
—

—
—

—
—

3.2
—

3.2
—

—
2.2

3.2
2.2

—

—

—

—

—

0.8

0.8

(1.4)

(0.6)

—
0.3

—
13.1

—
46.6

—
(1.2)

—
9.7

(305.0)840.9(305.0)
909.4

0.8
9.2

(304.2)918.6

24

Condensed consolidated statement of changes in equity (unaudited) (continued)

At 1 January 2020
Profit/(loss) for the period
Other comprehensive income
Movements in fair value reserve
Deferred tax charge in relation to
movement in fair value reserve
Movement in hedging reserve
Currency translation differences
Total comprehensive income forthe period
Transactions with equity holders
Dividends
Share scheme credit
Deferred tax credit on sharescheme credit
Contributions by NCIs
Total transactions with equity
holders
As at 30 June 2020

Attributable to the owners of the Company
Fair
Foreign
Retainedvalue
Hedgingexchange
profitreserve
reserve
reserveand loss
£m
£m
£m
£m

Share
Capital£mSharepremium
account£m

Total £m

Noncontrollinginterests£m

Total
equity
£m

0.3
—

13.1
—

46.6
—

(1.2)
—

9.7
—

840.9
243.7

909.4
243.7

9.2
(0.7)

918.6
243.0

—

—

17.7

—

—

—

17.7

—

17.7

—
—
—

—
—
—

(1.5)
—
—

—
(3.6)
—

—
—
11.2

—
—
—

(1.5)
(3.6)
11.2

—
—
0.5

(1.5)
(3.6)
11.7

—

—

16.2

(3.6)

11.2

243.7

267.5

(0.2)

267.3

—
—

—
—

—
—

—
—

—
—

(162.3)24.9(162.3)24.9——(162.3)
24.9

—
—

—
—

—
—

—
—

—
—

0.2
—

0.2
—

—
2.2

0.2
2.2

—
0.3

—
13.1

—
62.8

—
(4.8)

—
20.9

(137.2)947.4(137.2)
1,039.7

2.2
11.2(135.0)1,050.925

Notes to the financial statements (unaudited)
1.

General information

Admiral Group plc (the “Company”) is a company incorporated in the United Kingdom and registeredand domiciled 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 2020 and the comparative periods forthe six-months ended 30 June 2019 and the year ended 31 December 2019. This condensed set offinancial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted
by the EU, and should be read in conjunction with the Group’s last annual consolidated financial
statements as at and for the year ended 31 December 2019 (“last annual financial statements”). 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 anunderstanding 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 2019, 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 havebeen eliminated on consolidation are not reported as related party transactions.
The comparative figures for the financial year ended 31 December 2019 are not the Company's statutory
accounts for that financial year. Those accounts have been reported on by the Company's auditors anddelivered 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 ofemphasis without qualifying their report; andiii.

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 thisassumption, the Board have reviewed the Group’s projections for the next twelve months and beyond.
Further information is given in note 2 below.

2.

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 2019.

26

A number of other IFRS and interpretations have been endorsed by the EU in the period to 30 June
2020 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 standards that have yet to be adopted remains consistent
with that reported on page 148 of the Group’s 2019 Annual Report.
The Directors have made an assessment of going concern, taking into account both current
performance and the Group’s outlook. This considered in detail the impact of the Covid-19 pandemic,
and a review of projections for the next 12 months and beyond, incorporating the impact of the Covid19 pandemic on the Group’s profit forecasts, regulatory capital surpluses and sources of liquidity.
In particular, as part of this assessment the Board considered:
•

•

•
•

•
•
•

The impact of the pandemic on the Group’s profit projections. As part of this analysis, theBoard considered the impacts arising from:o A significantly reduced UK motor claims frequency during the lockdown period as
customers stayed at home and were driving lesso The ‘Stay at Home’ premium rebate to UK motor insurance customers announcedin April 2020 to reflect the lower claims frequency during the lockdown periodo Changes in premium volumes both through the lockdown period and expected in
the future, along with anticipated changes to average premiums across the Group’s
insurance businesseso Potential impacts on the cost of settling claims across all insurance businesses
o Projected trends in other revenue generated by the Group’s insurance businessfrom fees and the sale of ancillary products
o The impact of elevated credit losses in the Group’s Loans business arising fromhigher unemploymento Impacts on the projected growth on the Group’s Loan book following a temporary
closure to new businesso A potential increase in ongoing costs arising from the implementation andmaintenance of business continuity plans
The Group’s solvency position, which has been closely monitored through the period ofmarket volatility experienced to date. Although impacted by market movements, and inparticular widening credit spreads, the Group maintains a strong solvency position above
target levels
The adequacy of the Group’s liquidity position after considering all of the factors notedabove
The results of business plan scenarios and stress tests on the projected profitability,
solvency and liquidity positions including the impact of severe downside scenarios thatassume further periods of lockdown and the impact of severe economic, credit and trading
stresses.
The operational resilience of the Group’s critical functions, including the ability of theGroup to provide continuity of service to its customers through a prolonged period of stress
The stability and security aspects of the Group’s IT systems.
Impacts on the Group’s strategic priorities including re-prioritisation of significant Groupprojects.

27

•

•
•

The regulatory environment, in particular focusing on regulatory guidance issued by the
FCA and the PRA in the UK and ongoing communications between management and theregulator.
A review of the Company’s principal risks and uncertainties and how the assessment of risk
may have changed in light of the pandemic.
A review of an ad-hoc Covid-specific ‘Own Risk and Solvency Assessment’ (ORSA).

Following consideration 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 interim 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 fair value through other comprehensive income.
The 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. The preparation offinancial statements requires management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factorsthat are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent fromother sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is reviewed if this revision affects onlythat period, or in the period of the revision and future periods if the revision affects both current andfuture periods. To the extent that a change in an accounting estimate gives rise to changes in assets
and liabilities, it is recognised by adjusting the carrying amount of the related asset or liability in the
period of the change.

3.

Critical accounting judgements and estimates

The Group’s 2019 Annual Report provides full details of significant judgements and estimates used in
the application of the Group’s accounting policies.
There have been no additional critical judgements or estimates applied in the period.

28

Note 5 provides further information as to the changes in the estimates with respect to the calculationof 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 Loans business, following the impact of Covid on
management’s key judgements and the sources of estimation uncertainty.

4.

Operating segments

The Group has four reportable segments; UK Insurance, International Insurance, Comparison andOther, as set out on page 153 of the Group’s 2019 Annual Report.
Segment income, results and other information
An analysis of the Group’s revenue and results for the period ended 30 June 2020, by reportablesegment, is shown below. The accounting policies of the reportable segments are consistent withthose presented in the notes to the 2019 Group financial statements.
Half-year ended 30 June 2020
UK
Insurance£mInternational
Insurance£mComparison
£m

Other
£m

Eliminations*2
£m

Total
£m

Turnover*1

1,248.4

329.5

90.7

21.0

(10.0)

1,679.6

Net insurance premium revenue
Other revenue and profit commission
Investment return*5
Net revenue
Net insurance claims
Expenses*3*5
Segment profit/(loss) before tax

251.7
191.8
30.6
474.1
(76.2)(83.9)
314.0

99.1
14.8
(0.1)
113.8
(65.1)(42.2)
6.5

—
90.7
—
90.7
—
(78.2)
12.5

—
15.9
—
15.9
—
(25.3)
(9.4)

—
(8.7)
(1.5)
(10.2)
—
10.0
(0.2)

350.8
304.5
29.0
684.3
(141.3)(219.6)323.4

Other central revenue and expenses, including share scheme charges
Investment and interest income
Finance costs*3*5
Consolidated profit before tax*4
Taxation expense
Consolidated profit after tax(34.5)
3.0
(5.8)
286.1
(43.1)
243.0*1 Turnover is an Alternative Performance Measure presented before intra-group eliminations and consists of total premiums
written (including co-insurers’ share) and Other revenue. Refer to the glossary and note 13 for further information.
*2 Eliminations are in respect of the intra-group trading between the Group’s comparison and UK and International insurance
entities and intra-group interest.
*3 £0.4 million of IFRS 16 interest expense (being the Group’s net share of IFRS 16 interest expense) included within Finance
Costs in the Income Statement has been reallocated to individual segments within expenses, in line with management
segmental reporting.
*4 Profit before tax above of £286.1 million is presented on a statutory basis, being 100% of the result for each entity. That
increases to Group’s share of profit before tax of £286.7 million. See note 13f for a reconciliation of the UK Insurance,
International Insurance and Comparison turnover and profit before tax to the Strategic Report.
*5 Investment return is reported net of impairment on financial assets, in line with management reporting.

Revenue and results for the corresponding reportable segments for the period ended 30 June 2019 areshown below.

29

Half-year ended 30 June 2019
UK
Insurance£mInternational
Car
Insurance£mComparison
£m

Other
£m

Eliminations*2
£m

Total
£m

Turnover*1

1,338.8

319.5

83.4

14.5

(9.7)

1,746.5

Net insurance premium revenue
Other revenue and profit commission
Investment return*5
Net revenue
Net insurance claims
Expenses*3*5
Segment profit/(loss) before tax

264.7
184.1
15.9
464.7
(130.1)(79.7)
254.9

84.5
10.1
0.9
95.5
(69.9)(28.3)
(2.7)

—
83.4
—
83.4
—
(78.0)
5.4

—
10.5
—
10.5
—
(14.3)
(3.8)

—
(8.5)
(1.2)
(9.7)
—
9.7
—

349.2
279.6
15.6
644.4
(200.0)(190.6)
253.8

Other central revenue and expenses, including share scheme charges
Investment and interest income
Finance costs*5
Consolidated profit before tax*4
Taxation expense
Consolidated profit after tax(32.8)
2.7
(5.5)
218.2
(37.0)
181.2*1 Turnover is an Alternative Performance Measure presented before intra-group eliminations and consists of total premiums
written (including co-insurers’ share) and Other revenue. Refer to the glossary and note 13 for further information.
*2 Eliminations are in respect of the intra-group trading between the Group’s comparison and UK and International insurance
entities and intra-group interest.
*3 £0.7 million of IFRS 16 interest expense (being the Group’s net share of IFRS 16 interest expense) included within Finance
Costs in the Income Statement has been reallocated to individual segments within expenses, in line with management
segmental reporting.
*4 Profit before tax above of £218.2 million is presented on a statutory basis, being 100% of the result for each entity. This
increases to Group’s share of profit before tax of £220.2 million. See note 13f for a reconciliation of the UK Insurance,
International Insurance and Comparison turnover and profit before taxi to the Strategic Report.
*5 Investment return is reported net of impairment on financial assets, in line with management reporting.

Revenue and results for the corresponding reportable segments for the year ended 31 December
2019 are shown below.

UK Insurance£mYear ended 31 December 2019
International
Car
Insurance
Comparison
Other
£m
£m
£m

Eliminations*2
£m

Total
£m

Turnover*1

2,635.0

623.6

171.6

33.3

(19.4)

3,444.1

Net insurance premium revenue
Other revenue and profit commission
Investment return*5
Net revenue
Net insurance claims
Expenses*3*5
Segment profit/(loss) before tax

533.2
407.6
30.4
971.2
(215.8)(157.5)
597.9

176.2
22.5
1.5
200.2
(143.5)(57.6)
(0.9)

—
171.6
—
171.6
—
(156.9)
14.7

—
24.2
—
24.2
—
(31.5)(7.3)—(16.6)(2.8)(19.4)
—
19.4
—

709.4
609.3
29.1
1,347.8(359.3)(384.1)
604.4

Other central revenue and expenses, including share scheme charges
Investment and interest income
Finance costs*5
Consolidated profit before tax
Taxation expense
Consolidated profit after tax(76.6)
6.2(11.4)
522.6(94.2)
428.4*1 Turnover is an Alternative Performance Measure presented before intra-group eliminations and consists of total premiums
written (including co-insurers’ share) and Other revenue. Refer to the glossary and note 13 for further information.
*2 Eliminations are in respect of the intra-group trading between the Group’s comparison and UK and International insurance
entities and intra-group interest.
*3 £1.2 million of IFRS 16 interest expense (being the Group’s net share of IFRS 16 interest expense) included within the30

Finance Costs in the Income Statement has been reallocated to individual segments within expenses, in line withmanagement segmental reporting.
*4 Profit before tax above of £522.6 million is presented on a statutory basis, being 100% of the result for each entity. That
increases to Group’s share of profit before tax of £526.1 million. See note 13f for a reconciliation of the UK Insurance,
International Insurance and Comparison turnover and profit before tax to the Strategic Report.
*5 Investment return is reported net of impairment on financial assets, in line with management reporting.

Segment revenues
The UK and International Insurance reportable segments derive all insurance premium income fromexternal policyholders. Revenue within these segments is not derived from an individual policyholderthat represents 10% or more of the Group’s total revenue.
The total of Comparison revenues from transactions with other reportable segments is £10.0 million(H1 2019: £9.7 million, FY 2019: £19.4 million) which has been eliminated on consolidation, alongwith £1.5 million of intra-group interest charges (H1 2019: £1.2 million, FY 2019: £2.8 million) related
to the UK Insurance and Other segment. There are no other transactions between reportablesegments.
Revenues from external customers for products and services is consistent with the split of reportablesegment revenues as shown above.
Information about geographical locations
All material revenues from external customers, and net assets attributed to a foreign country relating
to car insurance are shown within the International Insurance reportable segment shown above. The
revenue and results of the international Comparison businesses; Rastreator, LeLynx, compare.com
and Preminen entities are not yet material enough to be presented as a separate segment.

31

5.

Premium, Claims and Profit Commissions

5a.

Net insurance premium revenue
30 June2020£m

30 June2019£m

31 December
2019£mTotal insurance premiums written before co-insurance*1

1,399.3

1,474.0

2,884.4

Group gross premiums written after co-insurance
Outwards reinsurance premiums
Net insurance premiums written
Change in gross unearned premium provision
Change in reinsurers’ share of unearned premium provision
Net insurance premium revenue

1,119.8(741.3)378.5(56.4)
28.7
350.8

1,161.1(784.5)376.6(80.7)
53.3
349.2

2,273.7(1,541.4)
732.3(75.3)
52.4
709.4*1 Alternative Performance Measures – refer to the end of the report for definition and explanation, and to note 13a forreconciliation to Group gross premiums written

The Group’s share of its insurance business was underwritten by Admiral Insurance (Gibraltar)
Limited, Admiral Insurance Company Limited, Admiral Europe Compania Seguros, and ElephantInsurance Company LLC. All contracts are short-term in duration, lasting for 12 months or less.

5b.

Profit commission
30 June2020£m

30 June2019£m

31 December
2019£mUnderwriting year (UK car only)
2015 & prior
26.4
13.9
48.3
2016
7.7
9.7
27.5
2017
6.2
11.4
36.4
2018
0.8
—
—
2019
—
—
—
2020
—
—
—
Total UK motor profit commission*1
41.1
35.0
112.2
Total UK household profit commission*1
3.5
1.1
2.7
Total profit commission
44.6
36.1
114.9
*1 Of the total UK motor profit commission recognised of £41.1 million (H1 2019: £35.0 million, FY 2019 £112.2 million),£39.6 million (H1 2019: £31.7 million, FY 2019 £95.4 million) relates to co-insurance arrangements and £1.5 million (H1
2019: £3.3 million, FY 2019 £16.8 million) to reinsurance arrangements. The UK Household and International profit
commission relates solely to reinsurance arrangements.

No profit commission has yet been recognised on the 2019 – 2020 underwriting years as the
combined ratios calculated from the financial statement loss ratios on these years sit above thethreshold for profit commission recognition.

32

5c.

Reinsurance assets and insurance contract liabilities(i)

Analysis of recognised amounts:
30 June2020£m

30 June2019£m

31 December
2019
£m

Gross
Claims outstanding*1
Unearned premium provision
Total gross insurance liabilities

2,872.7
1,149.9
4,022.6

2,851.5
1,077.6
3,929.1

2,899.4
1,075.6
3,975.0

Recoverable from reinsurers
Claims outstanding
Unearned premium provision
Total reinsurers share of insurance liabilities

1,137.0
754.6
1,891.6

1,168.9717.0
1,885.9

1,354.2717.5
2,071.7

Net
Claims outstanding*2
1,735.7
1,682.6
1,545.2
Unearned premium provision
395.3
360.6
358.1
Total insurance liabilities - net
2,131.0
2,043.2
1,903.3*1 Gross claims outstanding at 30 June 2020 is presented before the deduction of salvage and subrogation recoveries totaling£68.6 million (30 June 2019: £63.3 million, 31 December 2019: £71.7 million).
*2 Admiral typically commutes quota share reinsurance contracts in its UK Car Insurance business 24-36 months following
the start of the underwriting year. After commutation, claims outstanding from these contracts are included in Admiral’s
net claims outstanding balance. Refer to note (ii) below.

(ii)

Analysis of gross and net claims reserve releases:

The following table analyses the impact of movements in prior year claims provisions on a gross andnet basis. This data is presented on an underwriting year basis.

Gross

30 June2020£m

30 June2019£m

31 December
2019£mUnderwriting year (UK Motor Insurance):
2015 & prior
2016
2017
2018
2019
Total gross release (UK Motor Insurance)
Total gross release (UK Household Insurance)
Total gross release (International Car Insurance)
Total Gross Release

47.4
15.8
22.4
22.2
71.3
179.1
9.4
34.1
222.6

32.6
19.0
63.6
24.2
—
139.4
9.0
23.6
172.0

91.2
50.6
110.6
83.2
—
335.6
8.3
39.1
383.0

Net

30 June2020£m

30 June2019£m

31 December
2019£mUnderwriting year (UK Motor Insurance):
2015 & prior
2016
2017
2018
2019
Total net release (UK Motor Insurance)
Total net release (UK Household Insurance)
Total net release (International Car Insurance)

47.4
15.8
21.8
17.0
22.2
124.2
2.8
11.7

32.6
19.0
43.6
7.6
—
102.8
2.7
9.0

91.2
50.6
75.8
25.8
—
243.4
2.5
14.4

33

-

Total net release

138.7

114.5

260.3

Analysis of net releases on UK Motor Insurance
Net releases on Admiral net share (motor)
Releases on commuted quota share reinsurance contracts
Total net releases as above

64.2
60.0
124.2

50.0
52.8
102.8

121.7
121.7
243.4

Releases on the share of reserves originally reinsured but since commuted are analysed byunderwriting year as follows:

Net

Underwriting year:
2015 & prior
2016
2017
2018
Total releases on commuted quota share reinsurance contracts

30 June2020£m

30 June2019£m

31 December
2019
£m

27.7
9.2
13.0
10.1
60.0

18.0
11.1
23.7
—
52.8

50.7
29.5
41.5
—
121.7

The table below shows the development of UK Car Insurance loss ratios for the past six financial
periods, presented on an underwriting year basis.
31 December

30 June

UK Car Insurance loss ratio development

2015

2016

2017

2018

2019

2020

Underwriting year (UK Car only)
2015
2016
2017
2018
2019
2020

87%
—
—
—
—
—

87%
88%
—
—
—
—

83%
84%
87%
—
—
—

77%
77%
83%
92%
—
—

72%
73%
75%
81%
92%
—

70%
71%
74%
80%
82%
70%

34

(iii)

Reconciliation of movement in claims provision
30 June 2020

Claims provision at start of period
Claims incurred (excluding releases)
Reserve releases
Movement in claims provision due to commutation
Claims paid and other movements
Claims provision at end of period

Gross
£m

Reinsurance
£m

Net
£m

2,899.4
801.8(222.6)—(605.9)2,872.7(1,354.2)(533.1)
83.9
352.7
313.7
(1,137.0)

1,545.2
268.7(138.7)352.7(292.2)
1,735.7

30 June 2019

Claims provision at start of period
Claims incurred (excluding releases)
Reserve releases
Movement in claims provision due to commutation
Claims paid and other movements
Claims provision at end of period

Claims provision at start of period
Claims incurred (excluding releases)
Reserve releases
Movement in claims provision due to commutation
Claims paid and other movements
Claims provision at end of period

Gross
£m

Reinsurance
£m

Net
£m

2,740.5
928.3(172.0)—(645.3)2,851.5(1,220.1)(623.9)
57.5
257.1
360.5
(1,168.9)

1,520.4
304.4(114.5)257.1(284.8)
1,682.6Gross£m

31 December 2019
Reinsurance
£m

Net
£m

2,740.5
1,886.6(383.0)—(1,344.7)
2,899.4(1,220.1)(1,287.6)
122.7
257.1
773.7
(1,354.2)

1,520.4
599.0(260.3)257.1(571.0)1,545.2

35

(iv)Reconciliation of movement in net unearned premium provision
30 June 2020
Gross
£m

Reinsurance
£m

Net
£m

Unearned premium provision at start of period

1,075.6(717.5)

358.1

Written in the period

1,119.8(741.3)

378.5

Earned in the period(1,063.4)

712.6(350.8)

17.9

(8.4)

9.5

1,149.9(754.6)

395.3

Gross
£m

30 June 2019
Reinsurance
£m

Net
£m

Exchange differences on translation of foreign operations
Unearned premium provision at end of period

Unearned premium provision at start of period

995.9(663.4)

332.5

Written in the period

1,161.1(784.5)

376.6

Earned in the period(1,079.4)

730.9(348.5)

Unearned premium provision at end of period

1,077.6(717.0)360.6

31 December 2019
Gross
£m

Reinsurance
£m

Net
£m

995.9

(663.4)

332.5

Written in the period

2,273.7(1,541.4)

732.3

Earned in the period(2,194.0)

1,487.3(706.7)

Unearned premium provision at end of period

1,075.6(717.5)

358.1

Unearned premium provision at start of period(v)

Sensitivity of recognised amounts to changes in assumptions:

The following table sets out the impact on equity and post-tax profit or loss at 30 June 2020 thatwould result from a 1%, 3% and 5% deterioration and improvement in the UK Car insurance loss
ratios used for each underwriting year for which material amounts remain outstanding.
Underwriting year
2016

2017

2018

2019

Booked loss ratio - 30 June 2020

71%

74%

80%

82%

Impact of 1% deterioration in booked loss ratio (£m)
Impact of 3% deterioration in booked loss ratio (£m)
Impact of 5% deterioration in booked loss ratio (£m)
Impact of 1% improvement in booked loss ratio (£m)
Impact of 3% improvement in booked loss ratio (£m)
Impact of 5% improvement in booked loss ratio (£m)

(14.2)(42.6)(70.4)
14.2
42.6
71.0

(15.2)(45.7)(75.8)
15.5
46.9
78.3

(10.5)(30.9)(51.1)
12.0
39.1
70.7

(3.2)
(9.7)
(16.2)
3.2
12.0
21.2

36

6.

Investments income and costs

6a.

Investment return
30 June2020£m

30 June2019£m

31 December
2019£mInvestment return
On assets classified as FVTPL

3.3

4.3

11.4

On debt securities classified as FVOCI*1,*3

17.0

17.1

34.8

On assets classified as amortised cost*1

0.7

0.9

1.6

Unrealised gains/(losses) on forward contracts

0.2

(0.4)

(0.1)

Change in accrual for reinsurers share of investment return*4

12.9

(4.5)

(12.9)Net unrealised losses

Interest receivable on cash and cash equivalents*1

0.3

1.0

0.8

Total investment and interest income*2

34.4

18.4

35.6

*1 – Interest received during the period was £6.6 million (30 June 2019: £8.6 million, 31 December 2019: £11.6 million)*2 – Total investment return excludes £1.5 million of intra-group interest (30 June 2019: £1.2 million, 31 December 2019:£2.8 million)*3 - Realised gains/losses on sales of debt securities classified as FVOCI are immaterial*4 – Refer to “Cash and investments analysis” for further detail

6b.

Finance costs
30 June2020£m

30 June2019£m

31 December
2019£mInterest payable on subordinated loan notes*1

5.5

5.5

11.4

Interest payable on credit facilities*2

0.3

—

—

Interest payable on Lease Liabilities

1.5

2.0

3.2

Interest recoverable from co and re-insurers

(1.1)

(1.3)

(2.0)

Total finance costs

6.2

6.2

12.6

*1 - Interest paid during the year to date was £6.7 million (30 June 2019: £7.3 million, 31 December 2019: £14.0 million)*2 – See note 7c for details of credit facilities

Finance costs include interest payable on the £200.0 million (30 June 2019: £200.0 million, 31
December 2019: £200.0 million) subordinated notes and other financial liabilities.
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.

Changes in Expected Credit Loss (‘ECL’) provision

Note

30 June2020£m

30 June2019£m

31 December
2019£mChanges on Financial investments ECL provision

6d

2.4

0.1

0.3

Changes on Loans and advances to customers ECL provision

7a

16.2

6.0

13.8

18.6

6.1

14.1

Total changes in ECL provision

37

6d.

Financial assets and liabilities

The Group’s financial instruments can be analysed as follows:
30 June2020£m

30 June2019£m

31 December
2019£m

1,243.4

1,029.3

1,160.2

1,833.6
180.0
2,013.6
10.5
2,024.1

1,645.1
174.8
1,819.9
7.7
1,827.6

1,776.3
174.0
1,950.3
7.5
1,957.8

85.0

88.7

116.5

Total financial investments

3,352.5

2,945.6

3,234.5

Other financial assets measured at amortised cost
Insurances receivables
Trade and other receivables
Insurance and other receivables

971.6
256.1
1,227.7

930.9
261.5
1,192.4

948.9
278.8
1,227.7

Loans and advances to customers (note 7)

455.3

420.8

455.1

Cash and cash equivalents

396.3

461.4

281.7

Total financial assets

5,431.8

5,020.2

5,199.0

Financial liabilities
Subordinated notes

204.2

204.1

204.2

Loan backed securities
Other borrowings

328.6
106.5

253.4
25.0

304.5
20.0

4.9
644.2
1,777.8
132.6

2.0

1.4

484.5
1,811.1

530.1
1,975.9

143.0
2,438.6

137.1

Financial investments measured at FVTPL
Money market and other similar funds
Financial investments classified as FVOCI
Debt securities
Government gilts
Equity investments (designated FVOCI)
Financial assets measured at amortised cost
Deposits with credit institutions

Derivative financial instruments
Subordinated and other financial liabilities
Trade and other payables*1
Lease liabilities
Total financial liabilities

2,554.6

2,643.1*1 Trade and other payables total balance of £1,777.8 million (30 June 2019: £1,811.1 million, 31 December 2019:£1,975.9 million) above includes £1,286.1 million (30 June 2019: £1,371.2 million, 31 December 2019: £1,472.1 million)
in relation to tax and social security, deferred income and reinsurer balances that are outside the scope of IFRS 9.

All investments held at fair value at the end of the period are invested in money market and bondfunds.
The measurement of investments at the end of the period, for the majority investments held at fairvalue, is based on active quoted market values (level one). Equity investments held at fair value aremeasured at level three of the fair value hierarchy. No further information is provided due to theimmateriality of the balance at 30 June 2020.
Deposits are held with well rated institutions; as such the approximate fair value is the book valueof the investment as impairment of the capital is not expected.
38

The amortised cost carrying amount of receivables is a reasonable approximation of fair value.
During the period, an impairment charge of £2.4 million has been recognized in relation to theGroup’s assets held at FVOCI (H1 2019: £0.1 million, FY 2019; £0.3 million). The credit rating of theGroup’s financial assets with an external rating is shown below.
FVTPL
£m

FVOCI
£m

Amortised Cost
£m

Total
£m

AAA- AAA
BBB
Sub BBB

403.9
577.8
46.5
29.1

1,008.3
635.7
323.3
—

58.9
373.4
48.9
—

1,471.1
1,586.9
418.7
29.1

Not rated*1

186.1

56.8

—

242.9

Total financial investments
1,243.4
2,024.1
481.2
3,748.7*1 The majority (£174.1 million) of the unrated exposure stems from money market funds, which are rated AAA, but theunderlying securities are not. These specific exposures are re-purchase agreements. The remaining unrated exposure is a
mixture of private debt (£55.5 million) and other holdings (£13.3 million).

The fair value of subordinated notes (level one valuation) at 30 June 2020 is £224.4 million (H1
2019: £219.8 million, FY 2019: £225.1 million).

6e.

Cash and cash equivalents
30 June2020£m

30 June2019£m

31 December
2019£mCash at bank and in hand*

396.3

461.4

281.7

Total cash and cash equivalents

396.3

461.4

281.7

* £4.4m (H1 2019 and FY 2019: £4.4m) of cash is ring-fenced via a bank guarantee. See note 11d for further details.

Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other shortterm deposits with original maturities of three months or less.

6f.

Insurance and other receivables

Insurance receivables
Trade and other receivables
Prepayments and accrued income
Total insurance and other receivables*1

30 June2020£m

30 June2019£m

31 December
2019
£m

971.6
237.4
18.7

930.9
245.3
16.2

948.9
262.8
16.0

1,227.7

1,192.4

1,227.7*1 – Total insurance and other receivables at 30 June 2020 include £68.6 million in respect of salvage and subrogation
recoveries (H1 2019: £63.3 million, FY 2019: £71.7 million).

39

7.

Loans and Advances to Customers

7a.

Loans and advances to customers
30 June2020£m

30 June2019£m

31 December
2019£mLoans and advances to customers – gross carrying amount
Loans and advances to customers – provision

495.5(40.2)

437.0(16.2)

479.1(24.0)

Total loans and advances to customers

455.3

420.8

455.1

30 June2020£m

30 June2019£m

31 December
2019
£m

463.7

402.0

445.8

Loans and advances to customers are comprised of the following:

Unsecured personal loans
Finance leases

31.8

35.0

33.3

Total loans and advances to customers, gross

495.5

437.0

479.1

The table below shows the gross carrying value of loans in stages 1 – 3.
30 June
2020

30 June 31 December
2019
2019

Gross carrying
amount£m

Expected credit loss
allowance£m

Other loss
allowance*1£m

Carrying
amount£m

Carrying
amount£m

Carrying
amount£m

Stage 1
Stage 2
Stage 3

451.5
22.5
21.5

(13.7)(7.2)(18.8)

(0.5)
—
—

437.3
15.3
2.7

414.5
5.6
0.7

450.0
3.1
2.0

Total

495.5

(39.7)

(0.5)

455.3

420.8

455.1

*1 Other loss allowance covers losses due to a reduction in current or future vehicle value or costs associated with recovery
and sale of vehicles.

As a result of Covid, a number of adjustments have been made to the key judgements and sources of
estimation uncertainty for the calculation of the ECL provision, as explained below.
The response to customers who are strained due to Covid related circumstances has been to grant
payment holidays. These customers will be unable to go further into arrears as no payments are being
called whilst they are on the payment holiday. For the time being these customers are being held
within the up-to-date provision, but the provision in the downturn and severe downturn scenarios has
been materially increased to reflect their sensitivity to changing economic conditions. Customers who
have become unemployed or are considered exceptionally stressed due to Covid have been placed
into stage 2, to reflect a recognized significant increase in credit risk.
The IFRS 9 provision must reflect an unbiased and probability-weighted amount that is determined byevaluating a range of possible outcomes. In line with the accounting policy at the year end, the meansby which the Group has determined this is to run scenario analyses. The key economic driver of thelosses from the scenarios is the likelihood of a customer entering hardship through unemployment.
Management judgement is used to define the weighting and severity of the different scenarios basedon available data without undue cost or effort. The weightings and scenarios used have changed since
the year end, with revised assumptions as set out below.
40Movement
Base
UpturnDownturn
Severe31 Dec 2019
50%
25%
20%
5%

-15%
+5%
+10%

30 Jun 2020
50%
10%
25%
15%

Unemployment
rate
10%
8.8%
12.3%
15.0%

The average probability of defaults (PDs) underlying the base scenario have been increased to reflect
an economic environment with a 10% unemployment rate. This is a more cautious assumption thanthe Bank of England’s latest forecast for the end of 2020 of 7.5%, which is considered appropriate given
the high level of uncertainty in economic forecasts at the current time.
The downturn scenario reflects a 12.3% peak unemployment rate. The customers most impacted by achange in the unemployment rate within the provision are those that are currently up to date.
The severe scenario reflects a 10% increase in the monthly inflow to unemployment, resulting in a peak
unemployment rate of 15%.
The PD by stage has moved since the year end as shown below. The gross balance of loans in stage 2
is now 249% higher than it was at year-end, with 87% relating to up to date customers, resulting in a
reduction in overall probability of default in the stage. Stage 3 is consistent with year-end.
PDStage 1
Stage 2
Stage 331 Dec 2019
1.8%
58.7%
100%

30 June 2020
3.6%
35.7%
100%

Sensitivities to key areas of estimation uncertainty

Base
UpturnDownturn
Severe31 Dec 2019
50%
25%
20%
5%

Sensitivity (£m)
-1.2
2.5
30.0

30 Jun 2020
50%
10%
25%
15%

Sensitivity (£m)
-4.0
1.8
6.4

At H1 2020, the implied weighted unemployment rate is 11.2%. A downturn only scenario, of a 12.3%
unemployment rate, would increase the provision by £1.8m, whilst the upturn scenario would createa reduction of £4m and the severe downturn would increase the ECL allowance by £6.4m.
The sensitivity to the severe scenario has reduced since FY 2019, reflecting the assumption of anarrower distribution of economic outcomes following recalibration of the forward-looking elementof the provision. At FY 2019, the severe scenario reflected extreme possibilities, with a lower likelihoodof occurrence and therefore lower weighting applied.
At H1 2020, the near-term impacts of Covid have been considered alongside the resulting impacts on
unemployment. The forward-looking element of the provision is now more closely linked to
unemployment assumptions with the scenarios deviating less from the base assumption of a 10%
unemployment rate. This 10% unemployment assumption is significantly higher than that implicit in
the base case at FY 2019 (c. 4%). The more equal weighting across the upturn and severe scenarios
41

within the calculation of the provision reflects the narrower range of outcomes captured.
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 as at 30 June 2020 is as follows:
30 June2020
Stage 112- month ECL£mStage 2Lifetime ECL£mStage 3
Lifetime ECL
£m

Total
£m

323.6
109.3
18.6
—

11.6
9.0
1.9
—

—
—
—
21.5

335.2
118.3
20.5
21.5

337.1
114.7
10.9
16.4

451.5

22.5

21.5

495.5

479.1

Credit Grade
HigherMediumLower
Credit Impaired
Gross carrying amount7b.

31 December
2019
Total
£m

Interest income

Loans and advances to customers

30 June2020£m

30 June2019£m

31 December
2019
£m

19.8

13.3

30.8

Interest receivable on loans and advances to customers is recognised in the Income Statement using
the effective interest method, which calculates the amortised cost of the financial asset and allocatesthe interest income over the expected product life.

7c.

Interest expense
30 June2020£m

30 June2019£m

31 December
2019£mInterest payable on Loan backed securities

3.2

2.6

5.6

Interest payable on other credit facilities

0.6

0.3

0.7

3.8

2.9

6.3

Total interest expense*1*1 Interest paid in total during the year to date was £2.5 million (30 June 2019: £3.1 million, 31 December 2019: £6.3 million)

Interest expense represents the interest payable on funding for the Admiral loans business, in the formof credit facilities of £220.0 million (H1 2019 £200.0 million, FY 2019 £220.0 million), of which £106.5
million (H1 2019: £25.0 million; FY 2019: £20.0 million) was drawn down at 30 June 2020 and loan
backed securities issued by an SPE with funding up to £400.0 million (H1 2019: £400.0 million, FY 2019£400.0 million), of which £328.7 million (H1 2019: £253.4; FY 2019: £304.5 million) was drawn down
at 30 June 2020.

42

8.

Other Revenue

8a.

Disaggregation of revenue

In the following tables, other revenue is disaggregated by major products/service lines and timing ofrevenue recognition. The total revenue disclosed in the table of £288.5 million (H1 2019: £269.2 million,
FY 2019: £584.8 million) represents total other revenue and profit commission and is disaggregated into
the segments included in note 4.
UK
Insurance£m

Half-year ended 30 June 2020
International
Car Insurance
Comparison
£m
£m

Other
£m

Total
£m

—
—

80.7

Major products/service line

—

—

80.7

Instalment income

48.4

2.0

Fee and commission revenue

78.6

12.8

0.9

92.3

Revenue from law firms

17.2
3.0
147.2

—
0.3

17.2

Other
Total other revenue

—
—

—
—
—
—

14.8

80.7

1.2

Profit commission
Total other revenue and profit commission

44.6
191.8

—

—

—

14.8

80.7

1.2

44.6
288.5

Timing of revenue recognition
Point in time

120.7

12.8

80.7

1.2

215.4

Over time

17.7

—

53.4
191.8

2.0
14.8

—
—

17.7

Revenue outside the scope of IFRS 15

—
—
80.7

1.2

55.4
288.5

Other
£m

Total
£m

73.7

Comparison*1

UK
Insurance£m

Half-year ended 30 June 2019
International
Car Insurance
Comparison
£m
£m

50.4

3.3
243.9

Major products/ service line

—

—

73.7

Instalment income

42.7

1.5

Fee and commission revenue

83.8

8.7

Revenue from law firms

15.6

Other
Total other revenue

5.9
148.0

—
—

—
—
—
—

—
—
0.9
—
0.3

10.2

73.7

1.2

Profit commission
Total other revenue and profit commission

36.1
184.1

—

—

—

10.2

73.7

1.2

36.1
269.2

Timing of revenue recognition
Point in time

120.0

8.7

73.7

1.2

203.6

Over time

17.0

—

47.1
184.1

1.5
10.2

—
—

17.0

Revenue outside the scope of IFRS 15

—
—
73.7

1.2

Comparison*1

44.2
93.4
15.6
6.2
233.1

48.6
269.2

43

Year ended 31 December 2019
UK
Insurance£mInternational
Car Insurance£mComparison
£m

Other
£m

Total
£m

—

—

152.2

152.2

Instalment income

85.3

2.9

Fee and commission revenue

162.0

18.7

Revenue from law firms

32.9

Other
Total other revenue

13.4
293.6

—
—

—
—
—
—

—
—
1.9
—
0.6

21.6

152.2

2.5

Profit commission
Total other revenue and profit commission

114.0
407.6

0.9

—

—

22.5

152.2

2.5

114.9
584.8

Timing of revenue recognition
Point in time

267.8

18.7

152.2

2.5

441.2

Over time

35.9

—

103.9
407.6

3.8
22.5

—
—

35.9

Revenue outside the scope of IFRS 15

—
—
152.2

2.5

Major products/ service line
Comparison*1

88.2
182.6
32.9
14.0
469.9

107.7
584.8

*1 – Comparison revenue excludes £10.0 million (30 June 2019: £9.7 million, 31 December 2019: £19.4 million) of
income from other Group companies.

Instalment income is recognised applying the effective interest rate over the term of the policy, and isoutside the scope of IFRS 15. Profit commission from reinsurers is recognised under IFRS 4, and isdiscussed further in note 5 to the financial statements.

9.

Expenses

9a.

Operating expenses and share scheme charges
30 June 2020

Gross
£m

Recoverablefrom co- andreinsurers
£m

Net
£m

Acquisition of insurance contracts*1
Administration and other marketing costs (insurance contracts)

70.2
217.9

(52.6)(158.2)

17.6
59.7

Insurance contract expenses
Administration and other marketing costs (other)
Share scheme charges

288.1
137.3
35.3

(210.8)—(12.4)

77.3
137.3
22.9

Net expenses and share scheme charges

460.7(223.2)237.5

30 June 2019

Gross
£m

Recoverablefrom co- andreinsurers
£m

Net
£m

Acquisition of insurance contracts*1
Administration and other marketing costs (insurance contracts)

67.6
193.9

(51.6)(149.6)16.0
44.3

Insurance contract expenses
Administration and other marketing costs (other)
Share scheme charges

261.5
129.9
40.5

(201.2)—(14.0)

60.3
129.9
26.5

Net expenses and share scheme charges

431.9(215.2)216.7

44

31 December 2019

Gross
£m

Recoverablefrom co- andreinsurers
£m

Net
£m

Acquisition of insurance contracts*1
Administration and other marketing costs (insurance contracts)

138.0
398.8

(104.9)(307.2)

33.1
91.6

Insurance contract expenses
Administration and other marketing costs (other)
Share scheme charges

536.8
267.6
82.5

(412.1)—(29.1)

124.7
267.6
53.4

Net expenses and share scheme charges

886.9(441.2)445.7*1 – Acquisition of insurance contracts expense excludes £10.0 million (H1 2019: £9.7 million, FY 2019: £19.4 million) ofcomparison fees from other Group companies.

The £59.7 million (H1 2019: £44.3 million, FY 2019: £91.6 million) administration and marketing costs
allocated to insurance contracts is principally made up of salary costs.
Analysis of other administration and other marketing costs:
30 June2020£m

30 June 31 December
2019
2019
£m
£m

Expenses relating to additional products and fees
Comparison operating expenses
Loans expenses
Other expenses

38.4
78.2
8.7
12.0

37.4
78.0
8.4
6.1

70.1
156.8
18.1
22.6

Total

137.3

129.9

267.6

Refer to note 13 for a reconciliation between insurance contract expenses and the reported expense
ratio.

9b.

Staff share schemes

Analysis of share scheme costs (per income statement):
30 June 2020
SIP charge

DFSS charge

Total charge

Gross
£m

Net
£m

Gross
£m

Net
£m

Gross
£m

Net
£m

IFRS 2 charge for equity settled share schemes
IFRS 2 charge for cash settled share schemes

8.8
—

6.0
—

16.1
1.3

10.6
0.8

24.9
1.3

16.6
0.8

Total IFRS 2 charge
Social security costs on IFRS 2 charge
Discretionary bonus on shares allocated but unvested

8.8
0.8
—

6.0
0.5
—

17.4
2.8
5.5

11.4
1.8
3.2

26.2
3.6
5.5

17.4
2.3
3.2

Total share scheme charges

9.6

6.5

25.7

16.4

35.3

22.9

45

30 June 2019
SIP charge)

DFSS charge

Total charge

Gross
£m

Net
£m

Gross
£m

Net
£m

Gross
£m

Net
£m

IFRS 2 charge for equity settled share schemes
IFRS 2 charge for cash settled share schemes

8.5
—

5.9
—

19.4
0.8

13.0
0.4

27.9
0.8

18.9
0.4

Total IFRS 2 charge
Social security costs
Discretionary bonus on shares allocated but unvested

8.5
0.9
—

5.9
0.6
—-

20.2
4.3
6.6

13.4
2.7
3.9

28.7
5.2
6.6

19.3
3.3
3.9

Total share scheme charges

9.4

6.5

31.1

20.0

40.5

26.5

31 December 2019
SIP charge

DFSS charge

Total charge

Gross
£m

Net
£m

Gross
£m

Net
£m

Gross
£m

Net
£m

IFRS 2 charge for equity settled share schemes
IFRS 2 charge for cash settled share schemes

17.3
—

11.9
—

41.5
1.9

26.5
1.0

58.8
1.9

38.4
1.0

Total IFRS 2 charge
Social security costs on IFRS 2 charge
Discretionary bonus on shares allocated but unvested

17.3
1.6
—

11.9
1.2
—

43.4
7.1
13.1

27.5
4.8
8.0

60.7
8.7
13.1

39.4
6.0
8.0

Total share scheme charges

18.9

13.1

63.6

40.3

82.5

53.4

For equity settled schemes, the charge, which reflects the fair value of the employee services received
in exchange for the grant of the free shares, is recognised as an expense, with a corresponding
increase in equity, as shown in the Consolidated Statement of Changes in Equity of £24.9 million (H1
2019: £28.0 million, FY 2019: £58.8 million).
For the cash settled schemes, the expense recognised for the fair value of services received results in acorresponding increase in liabilities.
Net share scheme charges are presented after allocations to co-insurers (in the UK and Italy) andreinsurers (in the International Insurance businesses). The proportion of net to gross share scheme
charges would be expected to be consistent in each period, at approximately 65%.

46

10.

Taxation

10a.

Taxation

Current tax
Corporation tax on profits for the year
Under provision relating to prior periods
Current tax charge
Deferred tax
Current period deferred taxation movement
Under provision relating to prior periods
Total tax charge per Consolidated Income Statement

30 June2020£m

30 June2019£m

31 December
2019
£m

46.9
—
46.9

41.0
—
41.0

91.3
0.5
91.8

(3.8)
—
43.1

(4.0)
—
37.0

2.8
(0.4)
94.2

30 June2020£m

30 June2019£m

31 December
2019
£m

286.1
54.4
—
(5.8)
(0.6)
—
(5.8)
0.9
43.1

218.2
41.5
—
(2.2)
(1.0)
—
(3.7)
2.4
37.0

522.6
99.3
1.8
(4.9)
0.3
0.1
(8.8)
6.4
94.2

Factors affecting the total tax charge are:Profit before tax
Corporation tax thereon at effective UK corporation tax rate of 19.0% (2018: 19.0%)
Expenses and provisions not deductible for tax purposes
Non-taxable income
Impact of change in UK tax rate on deferred tax balances
Adjustments relating to prior periods
Impact of different overseas tax rates
Unrecognised deferred tax
Total tax charge for the period as above

The outstanding corporation tax payable as at 30 June 2020 was £10.3 million (H1 2019: £43.0 million;
FY 2019: £48.3 million).

47

10b.

Deferred income tax asset/ (liability)
Tax treatmentof shareschemes

CarriedCapitalallowances

forwardlossesFair value
reserveOther
differences

£m

£m

£m

£m

£m

Total £m

Balance brought forward at 1 January 2019

7.2

(3.6)

—

(3.9)

0.5

0.2

Tax treatment of share scheme charges throughincome or expense

4.0

—

—

—

—

4.0

Tax treatment of share scheme charges throughreserves

2.5

—

—

—

—

2.5

Capital allowances

—

(0.1)

—

—

—

(0.1)

Movement in fair value reserve

—

—

—

(1.4)

—

(1.4)

Other difference

—

—

—

—

0.1

0.1

Balance carried forward at 30 June 2019

13.7

(3.7)

—

(5.3)

0.6

5.3

Balance carried forward at 1 January 2019

7.2

(3.6)

—

(3.9)

0.5

0.2

Tax treatment of share scheme charges throughincome or expense

(4.6)

—

—

—

—

(4.6)

Tax treatment of share scheme charges throughreserves

3.3

—

—

—

—

3.3

Capital allowances

—

1.5

—

—

—

1.5

Carried forward losses

—

—

—

—

—

—

Movement in fair value reserve

—

—

—

(1.5)

—

(1.5)

Other differences

—

—

—

—

0.7

0.7

Balance carried forward at 31 December 2019

5.9

(2.1)

—

(5.4)

1.2

(0.4)

Tax treatment of share scheme charges throughincome or expense

3.6

—

—

—

—

3.6

Tax treatment of share scheme charges throughreserves

0.2

—

—

—

—

0.2

Capital allowances

—

0.2

—

—

—

0.2

Movement in fair value reserve

—

—

—

(1.5)

—

(1.5)

Other differences

—

—

—

—

—

—

Balance carried forward 30 June 2020

9.7

(1.9)

—

(6.9)

1.2

2.1

The average effective rate of tax for 2020 is 19.0% (2019: 19.0%).
The deferred tax asset at 30 June 2020 has been calculated based on the rate at which each timing
difference is most likely to reverse.
At 30 June 2020 the Group had unused tax losses amounting to £233.6 million (H1 2019: £229.0 million,
FY 2019: £231.3 million), relating to the Group’s US businesses Elephant Auto and compare.com, forwhich no deferred tax asset has been recognized.

48

11.

Other Assets and Other Liabilities

11a.

Property and equipment

Cost
At 1 January 2019
Initial application of IFRS 16
Additions
Disposals
Foreign exchange movement
At 30 June 2019
Depreciation
At 1 January 2019
Initial application of IFRS 16
Charge for the year
Disposals
Foreign exchange movement
At 30 June 2019
Net book amountAt 1 January 2019
Net book amountAt 30 June 2019
Cost
At 1 January 2019
Initial application of IFRS 16
Additions
Disposals
Transfers
Foreign exchange movement
At 31 December 2019
Depreciation
At 1 January 2019
Initial application of IFRS 16
Charge for the year
Disposals
Foreign exchange movement
At 31 December 2019
Net book amountAt 31 December 2019
Cost
At 1 January 2020
Additions
Disposals
Foreign exchange movement
At 30 June 2020
Depreciation
At 1 January 2020
Charge for the year
Disposals
Foreign exchange movement
At 30 June 2020
Net book amountAt 30 June 2020

Improvements
to short
leaseholdbuildings£mComputerequipment£m

Officeequipment
£m

29.8
—
3.1
—
0.1
33.0

62.1
—
6.4
—
0.1
68.6

16.8
—
1.6
—
—
18.4

Furnitureand fittings£m

ROU
Asset –
Leaseholdbuildings
£m

Total
£m

21.4
—
0.3
—
—
21.7

9.8
—
0.3
—
—
10.1

—
136.7
—
—
0.4
137.1

123.1
136.7
10.1
—
0.6
270.5

52.3
—
3.1
—
0.1
55.5

17.0
—
0.7
—
0.1
17.8

8.9
—
0.2
—
—
9.1

—
—
6.7
—
—
6.7

95.0
—
12.3
—
0.2
107.5

13.0

9.8

4.4

0.9

—

28.1

14.6

13.1

3.9

1.0

130.4

163.0

29.8
—
4.2
—
(0.4)
(0.2)
33.4

62.1
—
9.7
(0.2)
0.1
(0.3)
71.4

21.4
—
1.8
(0.6)
—
(0.2)
22.4

9.8
—
0.9
(0.2)
0.3
(0.2)
10.6

—
136.7
—
—
—
(2.3)
134.4

123.1
136.7
16.6
(1.0)
—
(3.2)
272.2

16.8
—
3.2
—
(0.2)
19.8

52.3
—
6.7
(0.1)
(0.2)
58.7

17.0
—
1.5
—
(0.1)
18.4

8.9
—
0.5
(0.2)
(0.1)
9.1

—
—
11.9
—
(0.1)
11.8

95.0
—
23.8
(0.3)
(0.7)
117.8

13.6

12.7

4.0

1.5

122.6

154.4

33.4
1.5
—
0.3
35.2

71.4
5.4
—
0.5
77.3

22.4
0.2
(0.4)
0.4
22.6

10.6
0.7
(0.1)
0.2
11.4

134.4
0.3
(0.8)
1.5
135.4

272.2
8.1
(1.3)
2.9
281.9

19.8
1.7
—
0.2
21.7

58.7
3.4
—
0.3
62.4

18.4
1.1
(0.2)
0.1
19.4

9.1
0.6
(0.1)
0.1
9.7

11.8
6.0
(0.1)
0.3
18.0

117.8
12.8
(0.4)
1.0
131.2

13.5

14.9

3.2

1.7

117.4

150.7

49

11b.

Intangible assets

At 1 January 2019
Additions
Amortisation charge
Disposals
Transfers
Foreign exchange movement
At 30 June 2019

Goodwill£mDeferredacquisition
costs
£m*2

Software*1
£m

Total
£m

62.3
—
—
—
—
—
62.3

23.4
27.2
(25.5)
—
—
—
25.1

76.3
3.4
(8.2)
—
—
—
71.5

162.0
30.6
(33.7)———
158.9

At 1 January 2019
62.3
23.4
76.3
162.0
Additions
—
54.8
17.0
71.8
Amortisation charge—(52.8)(17.4)(70.2)
Disposals
—
—
(0.3)
(0.3)
Impairment
—
—
(1.2)
(1.2)
Transfers————
Foreign exchange movement
—
(0.6)
(1.2)
(1.8)
At 31 December 2019
62.3
24.8
73.2
160.3
Additions
—
28.5
7.5
36.0
Amortisation charge—(27.7)(8.9)(36.6)
Disposals————
Transfers————
Foreign exchange movement
—
0.9
1.6
2.5
At 30 June 2020
62.3
26.5
73.4
162.2
*1 – Software additions relating to internal development are immaterial in both 2020 and 2019*2 - The gross deferred acquisition costs balance at the end of H1 2020 is £73.1 million (H1 2019: £75.9 million, FY 2019 £74.6
million), with gross additions in the period of £77.9 million (H1 2019: £81.5 million, FY 2019: £163.1 million); grossamortisation of £81.8 million (H1 2019: £77.3 million, FY 2019: £158.5 million) and foreign exchange movements of £2.4
million (H1 2019: £0.1 million, FY 2019: -£1.6 million)

Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance
Services Limited) in November 1999. The amortisation of this asset ceased on transition to IFRS on 1
January 2004. All annual impairment reviews since the transition date have indicated that theestimated recoverable value of the asset is greater than the carrying amount and therefore no
impairment losses have been recognised. Refer to the accounting policy for goodwill in the 2019financial statements for further information.

50

11c.

Trade and other payables

30 June2020£m

30 June 31 December
2019
2019
£m
£m

Trade payables
Amounts owed to co-insurers
Amounts owed to reinsurers
Other taxation and social security liabilities
Other payables
Accruals and deferred income

30.9
198.3
1,067.6
79.6
201.7
199.7

44.0
149.4
1,093.9
82.8
180.9
260.1

37.5
220.8
1,221.3
79.6
188.1
228.6

Total trade and other payables

1,777.8

1,811.1

1,975.9

Of amounts owed to reinsurers, £949.2 million (H1 2019: £963.7 million, FY 2019: £1,129.6 million) is
held under funds withheld arrangements.

11d. Contingent liabilities
The Group’s legal entities operate in numerous tax jurisdictions and on a regular basis are subject toreview and enquiry by the relevant tax authority.
During 2019, Rastreator Comparador Correduria Seguros (“Rastreator Comparador”), the Group’s
Spanish Comparison business, underwent a tax audit in respect of the 2013 and 2014 financial years.
As a result of the audit, the Spanish Tax Authority denied the VAT exemption relating to insuranceintermediary services which Rastreator Comparador has applied. Rastreator Comparador is appealing
this decision via the Spanish Courts and is confident in defending its position which is, in its view, inline with the EU Directive and is also consistent with the way similar supplies are treated throughout
Europe.
The potential liability for the financial years currently subject to audit is approximately €5 million,
and, as identified in note 6, a bank guarantee has been provided to the Spanish Tax Authority for thisamount. If the exemption is also disallowed in respect of later years, the liability could increase to €19
million.
The Group is also in early stage discussions on various corporate tax matters with tax authorities in
the UK, Italy and Spain. To date, these discussions have focused on the transfer pricing arrangements
in place between the Group’s intermediaries and insurers, including between entities in the UK and
Gibraltar, and Spain and Italy.
No provision has been made in these Financial Statements in relation to the matters noted above.

51

12.

Dividends, Earnings and Share Capital

12a. Dividends
Dividends were proposed, approved and paid as follows.
30 June2020£m

30 June 31 December
2019
2019
£m
£m

Proposed March 2019 (66.0 pence per share, approved April 2019, paid June 2019)
Declared August 2019 (63.0 pence per share, paid October 2019)
Proposed, March 2020 (77.0 pence per share, 56.3p approved April 2020 and paid June2020)*1

—
—

188.0
—

188.0
179.8

162.3

—

—

Total

162.3

188.0

367.8

*1 –56.3 pence of proposed 2019 final dividend of 77.0 pence was approved in April 2020 and paid in June 2020, with theremaining special dividend of 20.7 pence per share being deferred.

The dividends proposed in March (approved in April) represent the final dividends paid in respect ofthe 2018 and 2019 financial years. The dividends declared in August are interim distributions in respectof 2019 and 2020.
An interim dividend of 91.2 pence per share (approximately £263 million) has been declared in respectof the 2020 financial year. This includes the 20.7 pence deferred 2019 special dividend.

12b.

Earnings per share
30 June2020£mProfit for the financial year after taxation attributable to equity shareholders
Weighted average number of shares – basic
Unadjusted earnings per share – basic
Weighted average number of shares – diluted
Unadjusted earnings per share - diluted

30 June2019£m

31 December
2019
£m

243.7

183.2

432.4

293,877,486

290,734,955

291,513,714

82.9p

63.0p

148.3p294,464,776

291,401,887

292,094,797

82.8p

62.9p

148.0pThe difference between the basic and diluted number of shares at the end the period (being 587,290;
H1 2019: 666,932, FY 2019: 581,083) relates to awards committed, but not yet issued under the Group’s
share schemes.

12c.

Share capital
30 June2020£m

30 June 31 December
2019
2019
£m
£m

Authorised
500,000,000 ordinary shares of 0.1 pence

0.5

0.5

0.5

Issued, called up and fully paid
293,686,329 ordinary shares of 0.1p
290,949,880 ordinary shares of 0.1p
294,037,749 ordinary shares of 0.1p

—
—
0.3

—
0.3
—

0.3
—
—

0.3

0.3

0.3

During the first half of 2020, 351,420 (30 June 2019: 447,143; 31 December 2019: 3,183,592) new52

ordinary shares of 0.1p were issued to the trusts administering the Group’s share schemes.
351,420 (30 June 2019: 447,143; 31 December 2019: 883,592) of these were issued to the AdmiralGroup Share Incentive Plan Trust for the purposes of this share scheme.
No shares (30 June 2019: nil; 31 December 2019: 2,300,000) were issued to the Admiral Group
Employee Benefit Trust for the purposes of the Discretionary Free Share Scheme.

12d. Objectives, policies and procedures for managing capital
The Group manages its capital to ensure that all entities within the Group are able to continue as going
concerns and also to ensure that regulated entities comfortably meet regulatory requirements. Excess
capital above these levels within subsidiaries is paid up to the Group holding company in the form of
dividends on a regular basis.
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 or buffers.
Refer to the financial review for further information about the Group’s capital structure and financial
position.

12e.

Related party transactions

Details relating to the remuneration and shareholdings of key management personnel are set out in
the Directors’ Remuneration Report within the Group’s 2019 Annual Report. Key management
personnel are able to obtain discounted motor insurance at the same rates as all other Group staff.
The Board considers that Executive and Non-Executive Directors of Admiral Group plc are key
management personnel. Aggregate compensation for the Executive and Non-Executive Directors isdisclosed in the Directors’ Remuneration Report in the 2019 Annual Report.

53

13.

Reconciliations

The following tables reconcile significant KPIs and Alternative Performance Measures included in thefinancial review above to items included in the financial statements.

13a. Reconciliation of turnover to reported total premiums written and other revenue as
per the financial statements

Gross premiums written after co-insurance per note 5a of financial statements
Premiums underwritten through co-insurance arrangements
Total premiums written before co-insurance arrangements
Other Revenue
Admiral Loans interest income and other fee income
Other*1
Turnover as per note 4 of financial statements
Intra-group income elimination*2
Total turnover*3

30 June2020£m

30 June2019£m

31 December
2019£m

1,119.8
279.5
1,399.3
243.9
19.8
1,663.0
16.6
1,679.6
10.0
1,689.6

1,161.1
312.9
1,474.0
233.1
13.3
1,720.4
26.1
1,746.5
9.7
1,756.2

2,273.7610.7
2,884.4469.9
30.8
3,385.1
59.0
3,444.1
19.4
3,463.5*1 – Other reconciling items represent co-insurer and reinsurer shares of Other Revenue in the Group’s Insurance
businesses outside of UK Car Insurance.
*2 – Intra-group income elimination related to comparison income earned in the Group from other Group
companies.
*3 – See note 13g for the impact of the “Stay at home” premium refund issued to UK motor insurance customers
on Turnover in H1 2020.

54

13b.
Reconciliation of claims incurred to reported loss ratio, excluding releases oncommuted reinsurance

June 2020

UK Motor£m

UK Home£m

UK
Other*1£m

UK Total£mInt. Car
£m

Int.
Other
£m

Int. Total
£m

Group
£m

48.9
(5.9)

15.0
(0.6)

12.3
—

76.2
(6.5)

63.3
(4.8)

1.8
—

65.1
(4.8)

141.3
(11.3)Net insurance claims
Deduct claims handling costs
Prior year release/strengthening –net original share
Prior year release/strengthening –commuted share
Impact of reinsurer caps
Impact of weather events
Attritional current period claims

64.2

2.8

—

67.0

11.7

—

11.7

78.7

60.0
—
—
167.2

—
—
(2.3)
14.9

—
—
—
12.3

60.0
—
(2.3)
194.4

—
1.8
—
72.0

—
—
—
1.8

—
1.8
—
73.8

60.0
1.8
(2.3)
268.2

Net insurance premium revenue

208.5

20.9

22.3

251.7

95.5

3.6

99.1

350.8

80.2%

71.3%

—

—

75.4%

—

—

76.4%

Loss ratio – current period
attritional
Loss ratio – current period
weather events
Loss ratio – prior year
release/strengthening (net original
share)

—

11.1%

—

—

—

—

—

0.7%

(30.8%)(13.4%)——(12.2%)——(22.4%)

Loss ratio – reported

49.4%

69.0%

—

—

63.2%

—

—

54.7%

*1 ‘Other’ includes travel insurance (UK) and underwritten ancillaries.

June 2019

UK Motor£m

UK Home£m

UK Other£m

UK Total£mInt. Car£m

Int. Other£mInt. Total
£m

Group
£m

106.2
(6.1)

12.6
(0.5)

11.3
—

130.1
(6.6)

66.0
(3.6)

3.9
—

69.9
(3.6)

200.0
(10.2)Net insurance claims
Deduct claims handling costs
Prior year release/strengthening –net original share
Prior year release/strengthening –commuted share
Impact of reinsurer caps
Impact of weather events
Attritional current period claims

50.0

2.7

—

52.7

9.0

—

9.0

61.7

52.8
—
—
202.9

—
—
—
14.8

—
—
—
11.3

52.8
—
—
229.0

—
(1.5)
—
69.9

—
—
—
3.9

—
(1.5)
—
73.8

52.8
(1.5)
—
302.8

Net insurance premium revenue

225.4

18.1

21.2

264.7

80.6

3.9

84.5

349.2

Loss ratio – current period
attritional
Loss ratio – prior year
release/strengthening (net original
share)

90.0%

81.7%

—

—

86.7%

—

—

86.8%

(22.2%)(14.9%)——(11.2%)——(17.7%)

Loss ratio – reported

67.8%

66.8%

—

—

75.5%

—

—

69.1%

55

UK Motor£m

UK Home£m

UK Other£m

UK Total£mInt. Car£m

Int. Other£mInt. Total
£m

Group
£m

Net insurance claims
Deduct claims handling costs
Prior year release/strengthening –net original share
Prior year release/strengthening –commuted share
Impact of reinsurer caps
Impact of weather events
Impact of subsidence
Attritional current period claims

164.7(11.8)

26.8
(1.1)

24.3
—

215.8
(12.9)

137.2
(7.6)

6.3
—

143.5
(7.6)

359.3
(20.5)

121.7

2.5

—

124.2

14.4

—

14.4

138.6

121.7
—
—
—
396.3

—
—
—
—
28.2

—
—
—
—
24.3

121.7
—
—
—
448.8

—
(0.1)
—
—
143.9

—
—
—
—
6.3

—
(0.1)
—
—
150.2

121.7
(0.1)
—
—
599.0

Net insurance premium revenue

452.6

37.2

43.4

533.2

168.6

7.6

176.2

709.4

87.6%

75.8%

—

84.2%

85.3%

—

—

84.4%

—

—

—

—

—

—

—

—

December 2019

Loss ratio – current period
attritional
Loss ratio – current period weather
eventsLoss ratio – current period
subsidence events
Loss ratio – prior year
release/strengthening (net original
share)

—

—

—

—

—

—

—

—

(26.9%)(6.7%)—(23.3%)(8.5%)——(19.5%)

Loss ratio – reported

60.7%

69.1%

—

60.9%

76.8%

—

—

64.9%

56

13c.

Reconciliation of expenses related to insurance contracts to reported expense ratio
UK Motor£m

UK Home£m

UK Other£m

UK Total£mInt. Car£m

Int. Other£mInt. Total
£m

Group
£m

Net insurance expenses
Claims handling costs
Intra-group expenses elimination*1
Impact of reinsurer caps
Net IFRS 16 finance costs
Other adjustment*2
Adjusted net insurance expenses

32.6
5.9
5.8
—
0.2
—
44.5

5.8
0.6
0.8
—
—
—
7.2

2.1
—
0.7
—
—
—
2.8

40.5
6.5
7.3
—
0.2
—
54.5

35.0
4.8
2.7
0.3
—
—
42.8

1.8
—
—
—
—
—
1.8

36.8
4.8
2.7
0.3
—
—
44.6

77.3
11.3
10.0
0.3
0.2
—
99.1

Net insurance premium revenue

208.5

20.9

22.3

251.7

95.5

3.6

99.1

350.8

Expense ratio – reported

21.3%

34.2%

—

—

44.8%

—

—

28.3%

UK Motor£m

UK Home£m

UK Other£m

UK Total£mInt. Car£m

Int. Other£mInt. Total
£m

Group
£m

Net insurance expenses
Claims handling costs
Intra-group expenses elimination*1
Impact of reinsurer caps
Net IFRS 16 finance costs
Other adjustment*2
Adjusted net insurance expenses

30.1
6.1
5.7
—
0.3
—
42.2

4.5
0.5
0.4
—
—
—
5.4

2.6
—
—
—
—
—
2.6

37.2
6.6
6.1
—
0.3
—
50.2

23.0
3.6
3.6
0.6
0.1
—
30.9

0.1
—
—
—
—
(0.1)
—

23.1
3.6
3.6
0.6
0.1
(0.1)
30.9

60.3
10.2
9.7
0.6
0.4
(0.1)
81.1

Net insurance premium revenue

225.4

18.1

21.2

264.7

80.6

3.9

84.5

349.2

Expense ratio – reported

18.7%

30.1%

—

—

38.4%

—

—

23.2%

December 2019

UK Motor£m

UK Home£m

UK Other£m

UK Total£mInt. Car£m

Int. Other£mInt. Total
£m

Group
£m

Net insurance expenses
Claims handling costs
Intra-group expenses elimination*1
Impact of reinsurer caps
Other adjustment*2
Adjusted net insurance expenses

63.4
11.8
10.8
—
0.5
86.5

9.3
1.1
0.4
—
—
10.8

4.9
—
1.1
—
—
6.0

77.6
12.9
12.3
—
0.5
103.3

45.8
7.6
7.1
2.9
0.1
63.5

1.3
—
—
—
—
1.3

47.1
7.6
7.1
2.9
0.1
64.8

124.7
20.5
19.4
2.9
0.6
168.1

Net insurance premium revenue

452.6

37.2

43.4

533.2

168.6

7.6

176.2

709.4

Expense ratio – reported

19.1%

28.9%

—

19.4%

37.6%

—

—

23.7%

June 2020

June 2019*1 The intra-group expenses elimination amount relates to aggregator fees charges by the Group’s comparison entities to otherGroup companies.
*2 Other adjustments relate to additional products underwritten in the Group’s International Car Insurance businesses. The
contribution from these products is reported as ancillary income and as such the amounts are excluded for the purpose of
calculation of expense ratios.

57

13d.

Reconciliation of reported profit before tax to adjusted profit before tax
30 June2020£m

30 June2019£m

31 December
2019£mReported profit before tax per the condensed consolidated income
statement
Non-controlling interest share of profit before tax

286.1
0.6

218.2
2.0

522.6
3.5

Group’s share of profit before tax

286.7

220.2

526.1

13e.

Reconciliation of share scheme charges in Strategic report to Consolidated income
statement and Consolidated statement of changes in equity

30 June2020£m

30 June2019£m

31 December
2019£m

Net share scheme charges included in Group’s share of profit before tax
Non-controlling interest share of net share scheme charges

22.8
0.1

26.2
0.3

52.7
0.7

Net share scheme charges included in Group profit before tax

22.9

26.5

53.4

13f.

Reconciliation of note 4 to Strategic Reporti)

UK Insurance
Motor
£m

Household£m

Travel
£m

Total
£m

1,158.3

87.0

3.1

1,248.4

UK Insurance profit before tax – Strategic reportNon-controlling interest share of PBT

310.4
0.2

5.5
—

(2.1)
—

313.8
0.2

Statutory profit/(loss) before tax

310.6

5.5

(2.1)

314.0

30 June 2019

Motor
£m

Household£m

Travel
£m

Total
£m

30 June 2020
TurnoverTurnover

1,255.2

80.0

3.6

1,338.8

UK Insurance profit before tax – Strategic reportNon-controlling interest share of PBT

251.7
0.2

4.2
—

(1.2)
—

254.7
0.2

Statutory profit/(loss) before tax

251.9

4.2

(1.2)

254.9

31 December 2019

Motor
£m

Household£m

Travel
£m

Total
£m

Turnover2,455.3

171.3

8.4

2,635.0

UK Insurance profit before tax – Strategic reportNon-controlling interest share of PBT

591.5
0.5

7.5
—

(1.6)
—

597.4
0.5

Statutory profit/(loss) before tax

592.0

7.5

(1.6)

597.9

58

ii)

International Insurance
30 June 2020

Spain
£m

Italy
£m

France
£m

US
£m

Total
£m

Turnover

40.8

106.2
9.8

64.1

118.4

329.5

(3.3)

6.5

Spain
£m

Italy
£m

France
£m

US
£m

Total
£m

40.2

105.2
3.5

51.4

122.7
(6.2)

319.5
(2.7)

Spain
£m

Italy
£m

France
£m

US
£m

Total
£m

78.2

204.2
8.7

108.1

233.1
(9.6)

623.6
(0.9)

Other
£m

Total
£m

Profit/(loss) before tax – Strategic Report and Statutory

30 June 2019
Turnover
Profit/(loss) before tax – Strategic Report and Statutory

31 December 2019
Turnover
Profit/(loss) before tax – Strategic Report and Statutoryiii)

Comparison
Confused£m

European£m

Turnover

63.7

23.2

3.1

0.7

90.7

Group’s share of profit before tax – Strategic ReportNon-controlling interest share of profit/(loss) before tax

13.5
—

0.7
0.3

(0.5)
(0.3)

(0.6)
(0.6)

13.1
(0.6)

Statutory profit/(loss) before tax

13.5

1.0

(0.8)

(1.2)

12.5

Confused£m

European£mCompare
£m

Other
£m

Total
£m

Turnover

54.2

25.0

3.6

0.6

83.4

Group’s share of profit before tax – Strategic ReportNon-controlling interest share of profit/(loss) before tax

8.7
—

2.1
0.5

(2.8)
(1.9)

(0.6)
(0.6)

7.4
(2.0)

Statutory profit/(loss) before tax

8.7

2.6

(4.7)

(1.2)

5.4

Confused£m

European£mCompare
£m

Other
£m

Total
£m

Turnover

112.7

50.1

7.3

1.5

171.6

Group’s share of profit before tax – Strategic ReportNon-controlling interest share of profit/(loss) before tax

20.4
—

3.5
1.0

(4.3)
(2.9)

(1.6)
(1.4)

18.0
(3.3)

Statutory profit/(loss) before tax

20.4

4.5

(7.2)

(3.0)

14.7

30 June 2020

30 June 201931 December 2019

Compare£m

13g. Reconciliation of Impact of “Stay at Home” premium refund issued to UK motor
insurance customers on Turnover, Total written premiums, Gross written premiums and net
insurance premium revenue
30 June2020£m

Total “stay at home” premium refund issued to UK motor insurance customers
Insurance premium tax
Impact of premium refund on turnover and total written premium
Co-insurer share of premium refund
Impact of premium refund on gross written premium
Reinsurer share of premium refund
Impact of premium refund on net insurance premium revenue

110.0(12.7)
97.3(27.3)
70.0(48.9)
21.1

59

14. Statutory Information
The financial information set out above does not constitute the company's statutory accounts. Statutory
accounts for 2019 have been delivered to the registrar of companies, and those for 2020 will bedelivered in due course. The auditors have reported on those accounts; their reports were (i)unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by wayof emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2)or (3) of the Companies Act 2006.

60

Glossary
Alternative Performance Measures
Throughout this report, the Group uses a number of Alternative Performance Measures (APMs); measures thatare 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 tohelp shareholders and other users of the Annual Report and financial statements to better understand theGroup’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 thefinancial statements, unless otherwise stated. Non-financial KPIs incorporate information that cannot bederived from the financial statements but provide further insight into the performance and financial positionof 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.

TurnoverTurnover is defined as total premiums written (as below), other revenue and income from Admiral Loans. It
is reconciled to financial statement line items in note 13a 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 overtime 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 core UK Car insurance businesshas 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 theGroup’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.
In 2020 a “Stay at Home” premium rebate of £25 per vehicle was issued to UK motor insurance customers.
The total refunded was £110 million. Of this total, £97 million has been reflected within the 2020 total
premiums written, and therefore, turnover metric, with the remaining amount reflecting insurance
premium tax.

Total Premiums Written Total premiums written are the total forecast premiums, net of forecast cancellations written in theunderwriting year within the Group, including co-insurance. It is reconciled to financial statement line
items in note 13a 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 thismeasure 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.
As noted in the Turnover metric above, in 2020 a reduction of £97 million has been reflected within 2020
total premiums written, to reflect the “Stay at Home” premium rebate.

61

Group’s share of Profit Group’s share of profit before tax represents profit before tax, excluding the impact of Non-controlling
before Tax
Interests. It is reconciled to statutory profit before tax in note 13d to the financial statements.
This measure is useful in presenting the limit of the Group’s exposure to the expenditure incurred instarting up new businesses and demonstrates the ‘test-and-learn’ strategy employed by the Group to
expansion into new territories.

Underwriting result(profit or loss)

For each insurance business an underwriting result is presented showing the segment result prior to theinclusion of profit commission, other income contribution and instalment income. It demonstrates theinsurance result, i.e. premium revenue and investment income on insurance assets less claims incurred andinsurance expenses.

Loss Ratio

Reported loss ratios are expressed as a percentage of claims incurred divided by net earned premiums.
There are a number of instances within the Annual Report where adjustments are made to this calculationin order to more clearly present the underlying performance of the Group and operating segments within
the Group. The calculations of these are presented within note 13b to the accounts and explanation is asfollows.
UK reported motor loss ratio: Within the UK insurance segment the Group separately presents motor
ratios, i.e. excluding the underwriting of other products that supplement the car insurance policy. The
motor ratio is adjusted to i) exclude the impact of reserve releases on commuted reinsurance contracts andii) exclude claims handling costs that are reported within claims costs in the income statement.
International insurance loss ratio: As for the UK Motor loss ratio, the international insurance loss ratiospresented exclude the underwriting of other products that supplement the car insurance policy. The motor
ratio is adjusted to exclude the claims element of the impact of reinsurer caps as inclusion of the impact of
the capping of reinsurer claims costs would distort the underlying performance of the business.
Group loss ratios: Group loss ratios are reported on a consistent basis as the UK and international ratios
noted above. Adjustments are made to i) exclude the impact of reserve releases on commuted reinsurance
contracts, ii) exclude claims handling costs that are reported within claims costs in the income statement
and iii) exclude the claims element of the impact of international reinsurer caps.

Expense Ratio

Reported expense ratios are expressed as a percentage of net operating expenses divided by net earned
premiums.
There are a number of instances within the Annual Report where adjustments are made to this calculationin order to more clearly present the underlying performance of the Group and operating segments within
the Group. The calculations of these are presented within note 13c to the accounts and explanation is asfollows.
UK reported motor expense ratio: Within the UK insurance segment the Group separately presents motor
ratios, i.e. excluding the underwriting of other products that supplement the car insurance policy. The
motor ratio is adjusted to i) include claims handling costs that are reported within claims costs in theincome statement and ii) include intra-group aggregator fees charged by the UK comparison business to
the UK insurance business.
International insurance expense ratio: As for the UK Motor loss ratio, the international insurance expense
ratios presented exclude the underwriting of other products that supplement the car insurance policy. The
motor ratio is adjusted to i) exclude the expense element of the impact of reinsurer caps as inclusion of the
impact of the capping of reinsurer expenses would distort the underlying performance of the business andii) include intra-group aggregator fees charged by the overseas comparison businesses to the international
insurance businesses.
Group expense ratios: Group expense ratios are reported on a consistent basis as the UK and internationalratios noted above. Adjustments are made to i) include claims handling costs that are reported withinclaims costs in the income statement, ii) include intra-group aggregator fees charged by the Group’s
comparison businesses to the Group’s insurance businesses and iii) exclude the expense element of the
impact of international reinsurer caps.

Combined Ratio

Reported combined ratios are the sum of the loss and expense ratios as defined above. Explanation ofthese figures is noted above and reconciliation of the calculations are provided in notes 13b and 13c.

62

Return on Equity

Return on equity is calculated as profit after tax for the period attributable to equity holders of the Groupdivided by the average total equity attributable to equity holders of the Group in the year. This average isdetermined by dividing the opening and closing positions for the year by two.
The relevant figures for this calculation can be found within the consolidated statement of changes inequity.

Group Customers

Group customer numbers reflect the total number of cars, households and vans on cover at the end of theyear, across the Group.
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 aclear indication of the growth. It is also a useful indicator of the growing significance to the Group of thedifferent lines of business and geographic regions.

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 Groupand 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, also referred to as the earned basis.

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 calculation inflation ofannual 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, andcomplete discharge of all obligations between the parties under a particular reinsurance contract.
The Group typically commutes UK Car insurance quota share contracts after 24 months from the start ofan 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, withthe potential to influence premium rates (also known as the “underwriting cycle”).
Net claims

The cost of claims incurred in the period, less any claims costs recovered under reinsurance contracts. It
includes both claims payments and movements in claims reserves.

63

Net insurance premium Also referred to as net earned premium. The element of premium, less reinsurance premium, earned inrevenuethe period.
Ogden discount rate

The discount rate used in calculation of personal injury claims settlements. The rate is set by the Lord
Chancellor.

Periodic Payment Order A compensation award as part of a claims settlement that involves making a series of annual payments to(PPO)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 theduration 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 coinsurance agreements that provides for profit sharing.

Reinsurance

Contractual arrangements whereby the Group transfers part or all of the insurance risk accepted toanother insurer. This can be on a quota share basis (a percentage share of premiums, claims andexpenses) or an excess of loss basis (full reinsurance for claims over an agreed value).

Securitisation

A process by which a group of assets, usually loans, is aggregated into a pool, which is used to back theissuance of new securities. A company transfer assets to a special purpose entity (SPE) which then issues
securities backed by the assets.

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 the 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 coinsurance 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

A policy can be written in one calendar year but earned over a subsequent calendar year.

64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 IAS 34
Interim Financial Reporting as adopted by the EU;•

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 ofimportant 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 ofthe year; andb)

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 theentity 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
11 August 2020

65

INDEPENDENT REVIEW REPORT TO ADMIRAL GROUP PLC
We have been engaged by the company to review the condensed set of financial statements in thehalf-yearly financial report for the six months ended 30 June 2020 which comprises the condensed
consolidated income statement, the condensed consolidated statement of comprehensive income,the condensed consolidated statement of financial position, the condensed consolidated cash flow
statement, the condensed consolidated statement of changes in equity and related notes 1 to 14.
We have read the other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the half-yearly financial report in accordance with theDisclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with
IFRSs as adopted by the European Union. The condensed set of financial statements included in thishalf-yearly financial report has been prepared in accordance with International Accounting Standard
34 “Interim Financial Reporting” as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UKand Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditorof the Entity” issued by the Financial Reporting Council for use in the United Kingdom. A review ofinterim financial information consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other review procedures. A review issubstantially 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 awareof all significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
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 2020
is not prepared, in all material respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure Guidance and Transparency Rules of theUnited Kingdom’s Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity” issued by the Financial Reporting Council. 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, forthis report, or for the conclusions we have formed.

Deloitte LLP
Statutory Auditor
London, United Kingdom
11 August 202066