Admiral 2019 Full Year Results
5th March 2020
Introduction
David Stevens, Group CEOGroup
Geraint Jones, Group CFO

UK Insurance
Cristina Nestares, UK Insurance CEO

UK Motor Claims Deep Dive
Alistair Hargreaves, UK Insurance COO

Comparison and International Insurance
Milena Mondini, Group CEO Designate

Strategy Update & Wrap-up
David Stevens, Group CEO

Q&A
All

5th March 2020

GroupGeraint Jones – Group CFO

2019 Admiral Managers’ Awards Ceremony

Another year of record profit
Turnover1

Customers

6.98m

9%
7%
11%

9%
5%
11%

2018: 6.51m

Profit before tax2
9%
10%
11%

2%
9%
11%

2018: £479m

52%

190%

8%
9%
11%

148.3p2018: 137.1p

Full year dividend per share
9%
11%
11%

2018: 56%

5th March 2020

Earnings per share2018: 194%

Return on equity
7%
9%
11%

2018: £3.28bn

Solvency ratio£526m£3.46bn

140.0p2018: 126.0p

Note: (1) Turnover comprises total premiums written plus other revenue and income from Admiral Loans; (2) Profit before tax adjusted to
exclude minority interest share.

3

UK Motor largely flat but strong growth continues elsewhere
Turnover
UK Motor
Insurance1

1%

UK
HouseholdInsurance

17%

International
Insurance

16%

Customers£2,455m

1%

2018: £2,423m£171m

2018: 4.32m

17%

2018: £146m

£624m

16%

2018: £151m

5th March 2020

Note: (1) UK Motor includes car and van insurance.

1.42m

2018: 1.22m

Comparison

£172m

1.01m
2018: 0.87m

2018: £539m

14%

4.37m

Loans Balances

52%

£455m

2018: £300m
42019 profit significantly higher, led by positive back year
movements
Group profit before tax1
▪

2019

2018

ChangeUK Insurance£597.4m£555.6m+£41.8m

International
Insurance(£0.9m)(£1.1m)+£0.2mComparison£18.0m£8.8m+£9.2mLoans(£8.4m)(£11.8m)+£3.4mOther Group
Items(£80.0m)(£72.2m)(£7.8m)Total▪

£526.1m£479.3m

5th March 2020+£46.8m

UK Insurance profit £42m (8%) higher:▪

Motor profit +£30m, reflecting very high releases
and profit commission▪

Household +£11m, 2019 benefitting from better
weatherInternational result remains close to break-even despite
very strong growth:▪

Increased profitability in Europe (£9m v £7m), led by
ConTe

▪

US loss ratio and loss higher (-£10m v -£8m)▪

Comparison profit doubled to £18m from £9m, significantly
boosted by very strong result from Confused.com▪

Admiral Loans result in line with expectation▪

‘Other’ up £8m (one-off bonus2 £6m, £4m higher shareschemes costs due to higher share price and better vesting)Note: (1) Profit before tax adjusted to exclude minority interest share; (2) One-off bonus of £500 per employee was paid to staff as a resultof strong 2019 performance.

5Very positive movements in back year loss ratios, though aless positive current year
Admiral projected ultimate loss ratio1
83%

83%

82%

81%

76%

83%
70%, (0%)()

67%, (-2%)

69%, (-3%)

66%, (-3%)▪

Loss ratios on -0.25% Ogden basis▪

More positive loss ratio improvement during 2019
than usual, predominantly driven by favourable
large injury claims settlements and development▪

Underwriting year ratios included in the appendix

73%, (-4%)% movement in 6 months
Current ultimate loss ratio projection
First projection of ultimate loss ratio

2014

2015

2016

2017

2018

Accident year 2018 to 2019

2019

▪

2019 projected to turn out higher than recent
years (based on first projections)▪

Claims contributing to the increase:▪
2

5th March 2020▪

Damage inflation - though more modest in2019▪

Large injury claims - frequency/cost always
uncertain early in development

Projections of most recent years will be prudent,
especially for large injury claims element

Notes: (1) Actuarial projections of ultimate loss ratios on an accident year basis. (2) ‘Other’ includes small bodily injury and premium
impact.

6

Very positive back years = elevated reserve releases andprofit commission
Releases on original Admiral
net shareOgden
impactReserve Releases and Profit
Commission (£m)
+4%

2

(2%)

3

Profit commission
Reserve releases (commuted share)

400

Reserve releases (net share)

350

300

(9%)

1

250

25%

24%

27%

21%

18%

21%

200
150

14%

100
50
0

2014

2015

2016

2017

2018

2019

2014

2015

2016

2017

2018

2019

▪

More positive back year development than normal is the key driver of 2019’s higher profit▪

2019 net releases well above the previous five years’ average (20/21%)4 despite the current year Ogden drag▪

2019 Group profit around £430m to £450m if reserve releases were an average of the previous five years▪

Total releases + profit commission significantly higher than all prior years▪

No change in overall level of conservatism in the reserves over past few periods
5th March 2020

Notes: (1) Ogden rate: Based on a shift of Ogden rate from +2.5% to -0.75%; (2) Based on a shift of Ogden rate from -0.75% to a 0%
assumption; (3) Based on a shift of Ogden rate from a 0% assumption to -0.25%; (4) 20% including Ogden impacts, 21% excluding
Ogden impacts.

7

Strong solvency position maintained
Capital position (£bn)1
190%

190%

194%

£1.07bn£1.16bn£1.20bn

£0.55

£0.57

£0.52

Solvency position:▪ Consistent and strong post-dividend solvency positionof 190% (HY 2019: 190%; FY 2018: 194%)▪ Basis of calculation remains standard formula plus
add-on

£0.55

£0.61

£0.63

FY 2018

HY 2019

FY 2019

Solvency Capital Requirement

Solvency Capital Surplus

19%▪ … but expect to maintain elevated level until model

36%

Internal model:

12%

202%

190%

at 150% …
approval

Solvency ratio movements(HY 2019 to FY 2019)29%▪ Upper level of target solvency coverage range remains

190%▪ Focus during 2019 remediation and further validation▪ Internal model capital surplus broadly in line withcurrent basis▪ Formal application for model approval expected to be
HY 2019
Prior year loss Generation ofSolvency II Ratio
ratio
capital - current
improvements
periodDividend

5th March 2020

Other changes

FY 2019
Solvency II Ratio

during 2021

Note: (1) Estimated (and unaudited) Solvency II capital position at the date of this report.

8

Higher profits lead to significantly higher final dividend
Proposed 2019 final
dividend
Ogden
impact

77.0p
66.0p
11.0p

Dividend policy and guidance▪ Admiral will pay 65% of post-tax profits as
a normal dividend each half-year▪ Admiral expects to continue to distributeall earnings not required to be retained
for solvency and buffers

FY 2018

FY 2019▪ 77.0p split into 56.3p normal dividend and 20.7p special▪ Therefore expect normal plus special
dividend to be in the order of 90-95% of
earnings for foreseeable future

dividend (final dividend 2018: 49.6p, 16.4p)▪ Final dividend: £222m (2018: £188 million)▪ Payment equates to 90% pay-out ratio of H2 earnings▪ No change to policy or guidance

5th March 2020

Dividend dates
Ex-dividend date: 7 May 2020
Record date:

11 May 2020

Payment date:

1 June 20209

Group key messages

Group continues to grow strongly, UK motor businessonly marginally bigger

Very positive 12 months for back year claims was key driverof significantly higher profits

Stable and strong solvency position after accounting forsignificantly higher proposed final dividend

5th March 2020

10

UK Insurance
Cristina Nestares – UK Insurance CEO

Our UK Household business reaches 1,000,000
customers

UK Insurance – an overview
Customers

Turnover

ProfitMotor1 Customers (m)Motor Turnover (£m)

Motor Profit (£m)

4.3

£2,423

£591
£461

£562

2017

2018

£2,2474.0

2017£2,455

4.4

2018

2019

Household Customers (m)

2017

2018

2019

Household Turnover (£m)

2019

Household Profit (£m)

£7.5
0.7

0.9

1.0

£146

£171

£4.1

£107

-£3.0

2017

2018

2019

5th March 2020

2017

2018

Notes: (1) UK Motor includes car and van customers.

2019

2017

2018

2019

12

Market prices continued to increase in H2…
Market average premium1
50%Admiral ‘Times Top’2(YoY change)(Indexed to 100 Jan 2017)
140

40%
120

30%

100

10%

80

0%

60

-10%

40

-20%

20

▪ Confused premium £815: Up 5% YoY3 and up 4% QoQ4
▪ ABI premium £484: Up 1% YoY and up 3% QoQ▪ Admiral continued to increase prices in H2

5th March 2020

Notes: (1) Source: ABI Motor Insurance Premium Tracker Q4 2019 and Confused.com Car Insurance Price index in association with Willis
Towers Watson Q4 2019; (2) ‘Times Top’ represents the percentage of times Admiral brands appear in the top position on an agg regatorsearch; (3) Year on year; (4) Quarter on quarter.

13

Jan-20Nov-19Sep-19Jul-19Mar-19Jan-19

Nov-18

Sep-18

Jul-18Jan-18Mar-18

Nov-17

Sep-17

Jul-17May-19Confused Premiums

May-18

ABI Premiums

May-172008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Mar-17-30%

Jan-1720%

…However, there are still uncertainties that may influencemarket pricing
Pricing uncertainties
FCA Pricing Market Study

Potential pricing decreases

Potential pricing increases

Whiplash reforms

Claims inflation
Excess of loss changes

5th March 202014

Expense ratio driven by levies; investment in online
capabilities for the future
Expense ratio movements
2018 to 20191
0.7%

0.3%

18%

17%

2018

Elephant brand (UK): % of customer
contact via a digital channel2

Levies

Other

2019

Q1 2019

Q4 2019▪ Expense ratio increase due to:▪ Increase in levies▪ Investment in the core: Technology, information security and regulation/governance▪ Investment in online capabilities:▪ Front loaded investment▪ Customers prefer more online servicing

5th March 2020

Notes: (1) UK Motor expense ratio on a written basis; (2) Elephant is one of our UK-based brands; the graph shows the percentage ofcustomers who contact our customer services department through a digital channel (MyAccount, webchat, email and webform).

15

Continued growth in UK Household
Active customer base (m)Household profit/loss (£m)
1.01m

0.87m
0.66m

£7.5

0.47m
£2.7

£4.1

-£3.0

2016

2017

2018

2019

2016

2017

2018

2019

▪ Reached 1 million customers▪ 2019 results improved after adverse weather in 2018
▪ Growth across all distribution channels

5th March 202016

UK Insurance summary
Strong UK Motor profit

Market pricing uncertainty continues

Expense ratio increase due to levies and investment for thelong term

Continued growth in Household

5th March 202017

UK Motor Claims Deep Dive
Alistair Hargreaves – UK Insurance COO

Our Employee Consultation Group (ECG) meets for the
first time

Large BI settlements are the key driver of increased
reserve releases
Large BI claims settled1 as proportion of open large BI claims(Indexed to 100 in H2 2016)2
120

100

March 2017
Ogden rate change
from 2.5% to-0.75%

September 2017
Government
announces that new
Ogden rate willchange to between
0% and 1%

H1 2017

H2 2017

March 2019
Government
review of Ogden
rate begins

August 2019
Ogden rate change
from-0.75% to -0.25%

80

60

40

20

0
H2 2016

H1 2018

H2 2018

H1 2019

H2 2019▪ Cost becomes certain at point of settlement – faster BI settlement has led to increased reserve releases▪ Key drivers of significant reserve releases:▪ Unwinding of Ogden uncertainties ends settlement delays▪ Unusually positive developments on few large BI settlements
5th March 2020

Notes: (1) Large BI refers to claims reserved at >£1m; (2) Large BI settled looks at 12 months of claims settled up to the end of that
half, as a proportion of open large BI claims. Open large BI claims refers to the volume of non-settled large BI claims (‘open claims’) at
the end of each half.

19

Bodily Injury costs remain significant for Admiral despite
market wide increase in damage costs
Admiral claims cost by claim type1

2016

2019

DamageBodily Injury▪ Market claims costs have a higher proportion of damage costs: Split ~40% bodily injury vs ~60% damage2▪ Admiral damage costs are a larger part of claims costs in 2019 than 2016

5th March 2020

Note: (1) Data is based on actuarial projections of accident year ULR at the end of 12 months. 2016 is shown on a -0.75% basis.

20

Early signs that very rapid damage inflation may reduce
despite increased levels of theft
Market repair inflation1

Theft: Market claim cost
per vehicle year2

(YoY)

7%
4%

4%

2014

2015

6%

7%

£15

£15
£11

4%

2016

2017

2018

2019

2008

2010

£8

£8

2012

2014

£9

2016

2018

Top theft models in 2019

▪ Repair inflation is one driver of increased
damage costs▪ Lower rate of repair inflation in 2019

Prestige cars e.g.
Landrover RangeroverMore likely
to be stolen

Audi A3
Other e.g.
Honda Jazz

5th March 2020

Note: (1) Audatex plus management estimate of YoY repair inflation between 2014 and 2018. The 2018 and 2019 shows the YoY
repair inflation from June-June of the respective year; (2) Source: ABI Q4 2019 Quarterly Motor Statistics.

More likely tohave parts
stolen from21

Small BI has remained stable, whiplash reforms will bepositive though uncertainties remain
Volume of market portal
notifications1

Whiplash reforms timeline
Official Injury Claim Portal launch planned
August 2020

900,000

800,000

2019

2020

700,000
Civil Liability Bill
received royalassent 20th Dec

Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct
Jan
Apr
Jul
Oct

600,000

Rules around the reforms and the
Statutory Instrument to be definedahead of portal launch

2014

2015

2016

2017

2018

▪ Small BI frequency remains stable

5th March 20202019

▪ Uncertain benefits: Frequency and injury types▪ Impact will take time to feed throughNotes: (1) Ministry of Justice Claims Portal November 2019. Represents number of small BI notifications created on a rolling 12-month
basis.

22

We provide great claims outcomes for customers
Great Culture▪

Passionate about outcomes▪

Significant experience▪

Embrace test and learn

Proportion of claims settled
within the same accident year1

100

MarketOur
peopleEffective use oftechnology▪

Claims analytics▪

Automation▪

Digital106

AdmiralGood outcomesfor customers
Claim related complaints per1000 policies in force2

MarketAdmiral

95% of claimants likely to renew

5th March 2020

Notes: (1) Source: Management Information, market indexed to 100; (2) Source of market data: ABI.

23

UK Claims Deep Dive summary

Larger reserve releases driven by large BI: Both fastersettlements and a few unusually positive developments

2019 loss ratio: Evidence of slowdown in damage inflation

Whiplash reforms will be positive, but uncertainties remain

5th March 202024

International Insurance and Comparison
Milena Mondini – Group CEO Designate

Penguin Portals, our new home for our Comparison
businesses

Strong performance from Confused.com
Turnover (£m)

£95

£87

Profit before tax (£m)

£20.4

£113
£14.3
£10.1

2017

2018

2019

2017

2018

2019

▪ Strong result with main contributors to
performance:▪ Customer experience improvements▪ Product diversification▪ Improved brand awareness andmarketing efficiency

5th March 202026

European comparison sees increased profits; reduced losses
for Compare.com

Turnover (€m)

Profit before tax (€m)

Admiral share of loss ($m)1($5.6)€ 50.7€ 52.1€ 57.1

€ 6.0

€ 5.3

($9.1)($9.5)

2017

2018

€ 2.8

2017

2018

2019

2017

2018

2019

2019

▪ Good performance at LeLynx:▪ Strong growth in energy vertical▪ Lower loss reflects mid-year downsizing of▪ Rastreator:▪ Reduced volumes partly offset by▪ Price accuracy brings improved conversion

the businessincreased marketing efficiency▪ Focus on digital, product diversification andcustomer experience

5th March 2020

Notes: (1) Result adjusted to exclude minority interest share.

27

Elephant loss ratio under pressure, slightly offset by
expense ratio improvements
Admiral share ofloss ($m)

Turnover ($m)

$286

$298

2018

2019

($10)

2018

($12)

2019

▪ 2019 loss ratio deterioration – Elephant response:▪ Introduced base rate increases, and vehicles on cover flat
▪ Strengthened pricing and underwriting approach▪ Continued focus on fundamentals and strengthening:▪ Product: Increase in MultiCar penetration▪ Digital/online: Launch of new claims portal▪ Further write-down (£66m) of Elephant carrying value in parent company balance sheet (mainly due to use of
shorter-term projections in valuation)
5th March 202028

European Insurance continues togrow profitably
Turnover (€)
ConTe
16%

Customers

€233m

0%
18%

2018 : €201m
Admiral Seguros
16%

€89m

2018 : 585k
0%
16%2018 : €77m
L’olivier
33%

€122m

291k
€ 22

2018 : 250k

0%32%2018 : €92m

688k

2019 EU Result on an Admiralshare1 and whole account basis
(€m)

230k

€ 10

2018 : 174k
Admiral share

Whole account▪ Loss Ratio improvement strongly driven by positive prior year development▪ European Insurance on track for €30-60m gross profit by 20222

5th March 2020

Notes: (1) Represents Admiral share after co-insurance and reinsurance; (2) In the European Investor day in 2018 we communicated thatby 2022 we aim to deliver profit/year in the range of €30-60m on a whole account basis assuming normal market conditions.

29European strategy continues tobuild upon economies of scale
EU written expense ratio1

EU customer base (m)
1.21m
1.01m
0.85m

40%

2016

33%

32%

30%

2017

2018

2019

0.69m

2016

2017

underwriting advantages
646

2016

5th March 20202019

EU active policy base per
FTE▪ Improving economies of scale while leveraging▪ Testing new distribution channels for future growth

2018

719

2017

868

789

2018

2019

Notes: (1) Average of whole account ConTe, L’Olivier and Admiral Seguros expense ratios calculated as written expenses turnover net of
XoL.

30

Comparison and International Insurance summary

Good result for Comparison, led by Confused.com

Elephant result impacted by loss ratio deterioration

Continued growth and strong performance in European operations

5th March 202031

Strategy Update
David Stevens – Group CEO

Participants in the ‘Festival of Rugby’ hosted by
Admiral and Welsh Rugby Union

Admiral continues to deliver on its long term strategy…

UK Insurance

International
Insurance

BeyondInsurance

Ensure that Admiralremains one of thebest insurers in the UK

Demonstrate that
Admiral can be a great
insurer beyond the UK

Develop sourcesof growth and profit
beyond insurance

5th March 202033

…and in 2019 we made good progress on each element

UK Insurance

International
Insurance

BeyondInsurance

Ensure that Admiralremains one of thebest insurers in the UK

Demonstrate that
Admiral can be a great
insurer beyond the UK

Develop sourcesof growth and profit
beyond insuranceMarket-leading car
insurance loss ratio

European insurance
sustained growth on top andbottom line

Rapid growth in loans
business and a move to asecond generation rating
structure

5th March 202034

Loans – improving risk selection as we build experience
Loans stock balances (£m)

Loans profit/loss (£m)

£455

£300

(£8.4)(£11.8)
2018

2018

2019

2019

Cumulative relevant risk
experience
X10 risk
experience▪

Growing scale, increasing cost-efficiency▪

Better data and experience improves risk
selection

5th March 2020

2020-01

2019-122019-112019-10

2019-092019-082019-07

2019-06

2019-05

2019-04

2019-032019-022019-012018-122018-112018-10

2018-092018-082018-072018-06

2018-05

2018-04

2018-032018-022018-01▪

Second generation pricing structure –early signs of increase in margin

Jan 2020:
Secondgeneration
pricing
structure35

…and in 2019 we made good progress on each element

UK Insurance

International
Insurance

BeyondInsurance

Ensure that Admiralremains one of thebest insurers in the UK

Demonstrate that
Admiral can be a great
insurer beyond the UK

Develop sourcesof growth and profit
beyond insuranceMarket-leading car
insurance loss ratio

European insurance
sustained growth on top andbottom line

Rapid growth in loans
business and a move to asecond generation rating
structure

5th March 202036

European insurance demonstrates long term sustained
growth - top & bottom line
European customer growth
1,400,000

1,200,000

1,209k

1,000,000

Controlled growth, driven through operational
and pricing improvements▪

Expansion beyond car insurance (niche householdproduct in France)▪

Created a valuable business

1,009k

800,000

854k

600,000
400,000

▪

696k
533k

200,000
0
2015

2016

2017

2018

2019

European whole accountprofit (€m)
€22m

(€6m)
2019

2015

5th March 202037

…and in 2019 we made good progress on each element

UK Insurance

International
Insurance

BeyondInsurance

Ensure that Admiralremains one of thebest insurers in the UK

Demonstrate that
Admiral can be a great
insurer beyond the UK

Develop sourcesof growth and profit
beyond insuranceMarket-leading car
insurance loss ratio

European insurance
sustained growth on top andbottom line

Rapid growth in loans
business and a move to asecond generation rating
structure

5th March 2020

38

Maturing loss ratios confirm market leading competence
Admiral projected ultimate loss ratio(development by year)
85%
80%
75%

70%
65%
60%
Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Years since first pickYears since
first pick
2014

1

2015

2016

2017

2018

2019

▪

Superior risk selection and claims management drives market beating loss ratio▪

Conservative reserving defers full recognition of superior performance▪

2014 to 2017 all below 70%

5th March 2020

Note: (1) e.g. for the 2014 accident year ultimate loss ratio - Year 1: at the end of 2014; Year 2: at the end of 2015; Year 3: at the end of 2016
etc.

39

Appendix

Staff march in the Pride Cymru’s Big Weekend parade

Group key performance indicators1
KPI
Group Financial
Turnover £mCustomers m
Group pre-tax profit1 £mEarnings per share
Dividend per share

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

1,585
2.7
265.5
72.3p
68.1p

2,190
3.4
299.1
81.9p
75.6p

2,215
3.6
344.6
95.1p
90.6p

2,030
3.7
370.7
104.6p
99.5p

1,971
4.1
356.5
103.0p
98.4p

2,119
4.4
376.8
107.3p114.4p

2,576
5.2
284.3
78.7p
114.4p

2,958
5.7
405.4
117.2p114.0p

3,283
6.5
479.3
137.1p118.0p

3,463
7.0
526.1
148.3p140.0p

UK Insurance
Customers (000)Total premiums £mReported combined ratio
UK insurance pre-tax profit £mOther revenue per vehicle £

2,459
1,238
83.5%
275.8
84

2,966
1,729
91.9%
313.6
84

3,019
1,749
90.0%
372.8
79

3,065
1,562
81.0%
393.7
67

3,316
1,482
80.0%
397.9
67

3,612
1,590
79.0%
444.2
63

4,116
1,863
88.4%
338.5
62

4,616
2,098
79.7%
466.6
64

5,238
2,270
83.6%
556.7
67

5,473
2,322
80.3%
597.4
66

International Car Insurance
Vehicles covered
Total premiums £mReported2 combined ratio

195,000
71.0
173%

306,000112.5
164%436,000148.5
177%515,300168.3
140%592,600
185.4
127%673,000213.3
126%864,200331.3
125%1,034,900
401.4
121%

1,221,600
484.3
116%

1,420,800
562.6
114%

International car insurance result
£m

(8.0)

(9.5)

(24.5)(22.1)(19.9)(22.2)(19.4)(14.3)

(1.1)

(0.9)

Price Comparison
Total revenue £mOperating profit /(loss) 1 £m

75.7
11.7

90.4
10.5

103.5
18.0

112.7
20.4

107.5
3.6

108.1
(7.2)

129.2
2.7

143.6
7.1

151.0
8.7

171.6
18.0

5th March 2020

Note: (1) Profit before tax adjusted to exclude minority interest share; (2) Reported combined ratio is calculated on Admiral’s net share ofpremiums and excludes Other Revenue. It has been adjusted to remove the impact of reinsurer caps. Including the impact of reinsurer caps thereported combined ratio would be H1 2017: 145%; H1 2018: 113%; H1 2019: 115% FY 2018: 113%.

41

Summary Income Statement1£m

UK Insurance
2017
2018

2019

International Car
Insurance
2017
2018
2019

Price Comparison
2017
2018
2019

2017

Other
2018

2019

Admiral Group
2017
2018
2019

143.6

10.8

17.6

33.3

2,958.2 3,283.0 3,463.5

Turnover2,354.0 2,575.7 2,635.0

449.8

538.7

623.6

151.0

171.6

Total premiums written

2,098.0 2,269.8 2,321.8

401.4

484.3

562.6

0.0

0.0

0.0

2.499.4 2,754.1 2,884.4

Gross premiums written
Net premiums written

1,540.3 1,684.0 1,725.1
494.0 538.1
548.3

381.3
128.8

474.1
157.2

548.6
184.0

0.0
0.0

0.0
0.0

0.0
0.0

1,921.6 2,158.1 2,273.7
622.8
695.3 732.3

Net earned premium

491.6

523.9

533.2

123.0

141.7

176.2

0.0

0.0

0.0

614.6

665.6

709.4

Investment income

32.6

32.2

30.4

0.6

1.3

1.5

8.1

1.9

5.3

41.3

35.4

37.2

Net insurance claims(250.1) (242.5) (215.8)(94.1) (104.0) (143.5)

0.0

0.0

0.0

(344.2) (346.5) (359.3)

Insurance related expenses(67.9)(85.9)(90.5)(58.0)(55.8)(54.3)

0.0

0.0

0.0

(125.9) (141.7) (144.8)

Underwriting result

206.2

227.7

257.3

(28.5)(16.8)(20.1)

8.1

1.9

5.3

185.8

Profit commission
Gross ancillary revenue
Ancillary costs
Instalment income
Gladiator contribution
Price comparison revenue
Price comparison expenses
Loans contribution
Interest income
Other (mainly share scheme)
Interest payable

67.0
193.2
(56.5)
56.7

93.3
213.7
(60.6)
82.6

114.0
208.3
(67.0)
85.3

0.0
14.1
(2.4)
2.5

0.0
15.9
(2.8)
2.6

0.9
18.7
(3.3)
2.9

0.0
0.0
0.0
0.0
1.1

0.0
0.0
0.0
0.0
0.3

0.0
0.0
0.0
0.0
1.1

(4.4)
0.4
(48.0)(11.4)(11.8)
1.2(66.3)(11.3)(8.4)
0.9(76.6)(11.4)

67.0
93.3 114.9
207.3
229.6 227.0(58.9) (63.4) (70.3)
59.2
85.2
88.2
1.1
0.3
1.1
143.6 151.0 171.6(138.2) (144.4) (156.9)(4.4) (11.8)
(8.4)
0.4
1.2
0.9
(48.0) (66.3) (76.6)(11.4) (11.3) (11.4)

Profit/(loss) before tax

466.6(54.1)(86.0)(89.1)

403.5

143.6 151.0 171.6(138.2) (144.4) (156.9)

556.7

5th March 2020

597.9

(14.3)

(1.1)

(0.9)

5.4

6.6

14.7

212.8

476.2

242.5

522.6

Note: (1) Financial information not adjusted to exclude minority interests’ share.

42Balance Sheet
Dec-17£m

Dec-18£m

Dec-19£m

ASSETS
Property, plant and equipment
Intangible assets
Reinsurance contracts
Financial assets
Deferred income tax
Insurance and other receivables
Loans and advances to customers
Cash and cash equivalents

31.3
159.4
1,637.6
2,697.8
0.3
939.7
66.2
326.8

28.1
162.0
1,883.5
2,969.7
0.2
1,082.0
300.2
376.8

154.4
160.3
2,071.7
3,234.5
1,227.7
455.1
281.7

Total assets

5,859.1

6,802.5

7,585.4

EQUITY
Share capital
Share premium
Retained earnings
Other reserves
Total equity (shareholders)
Non-controlling interests

0.3
13.1
580.3
52.4
646.1
9.7

0.3
13.1
713.5
31.4
758.3
12.8

0.3
13.1
840.9
55.1
909.4
9.2

Total equity

655.8

771.1

918.6

LIABILITIESInsurance contracts
Subordinated liabilities
Trade and other payables
Deferred income tax
Lease liabilities
Corporation tax liabilities

3,313.9224.0
1,641.6
23.8

3,736.4444.2
1,801.5
49.3

3,975.0
530.1
1,975.9
0.4
137.1
48.3

Total liabilities

5,203.3

6,031.4

6,666.8

Total liabilities and equity

5,859.1

6,802.5

7,585.4

5th March 2020

43

Group profit before tax reconciliation

Reconciliation from statutory to adjusted
profit before tax (£m)
£3.5

▪ Admiral has four operations with sharedownership: Rastreator (Admiral share ofownership 75.0%); Compare.com (59.25%);
Admiral Law (95.0%); Preminen (50.0%)£526.1£522.6£522.6▪ Profit or losses in period accruing to minority
parties reduce or increase the results
respectively

Profit before tax(adjusted)

Minority interest share of
profit

5th March 2020

Profit before tax(statutory)44

Investment update
Dec ‘19: £3,516m

Dec ‘18: £3,347m
Cash
DepositFixed Income Investments
Money Market Funds
GILTS
Equity

AAA
AA
A
BBB
Other 1

5th March 2020(1) ‘Other’ comprises of sub-BBB ratings and unrated securities. Unrated securities consists primarily of an AAA rated money market
fund backed by government securities. Sub-BBB rated securities make up less than 0.01% of the total portfolio.

45

Analysis of Other Group items1

2019

2018

Share scheme charges(52.7)(49.0)

Admiral Loans loss
before tax(8.4)(11.8)

Other interest &investment income

6.0

2.9

Businessdevelopment

(2.1)

(4.3)

Other central
overheads(20.0)(10.8)

Finance charges(11.2)(11.3)UK Commercial
vehicle-0.3(88.4)(84.0)

Total

5th March 2020▪

Share scheme charges increased by £3.7 million reflecting improved
vesting outcomes resulting from the increased level of profit in 2019
and a higher share price.

▪

Other interest and investment income increased to £6.0 million,.
2019 includes a lower level of unrealised losses relating to forward
foreign exchange contracts compared to 2018. The number is also
driven by increased investment return due to the increased cash
holding in the parent company.

▪

Business development costs include costs associated with potential
new ventures. The costs associated with Preminen have now been
included in the Comparison section, contributing to the decrease inbusiness development costs in 2019.

▪

Other central overheads continue to reflect the cost of significant
Group projects. In addition, a £6 million cost relating to a one-off
staff cash bonus of £500 per employee, is included in 2019.

▪ Finance charges of £11.2 million represent interest on the £200
million subordinated notes issued in July 2014.

Note: (1) Profit before tax adjusted to exclude minority interest share.

46

Whiplash reforms: Background information
Proposed Tariff1▪

▪

The whiplash reforms are due to come into
force in August 2020. Once the reforms go live,
most personal injury claims valued at under£5000 will need to be submitted andadministered through a new portal

Whiplash
InjuryDuration

Fixed Tariff
Damages
Post Reform

Current
Industry
Average
Spend

Industry
Saving per
Claim20-3months£235£1,800£1,565The key changes:

3-6months£470£2,250£1,7806-9
months£805£2,700£1,8959-12
months£1,250£3,250£2,00012-15
months£1,910£3,650£1,74015-18
months£2,790£4,150£1,36018-24
months£3,910£4,750£840▪

Ban on whiplash pre-medical offers▪

Introduction of tariff for general damages▪

Change in definition of ‘whiplash’ forpurpose of claims falling within the tariff▪

▪

Rise in small claims track limit from
£1,000 to £5,000

Savings in claims costs made by insurers are
expected to be passed on to the customer

5th March 2020

(1) The tariff has not been finalised yet. Figures in the table are from the draft order when the Bill went through Parliament; (2) The
data used to formulate industry savings has been provided by the Government.

47

UK Car Insurance: Ultimate loss ratio, expense ratio andcombined ratio
Admiral projected ultimate loss ratio1

Admiral expense ratio2
83%

70%

2014

67%

2015

69%

2016

73%
66%

2017

2018

2019

16%

16%

16%

16%

2014

2015

2016

2017

17%

2018

18%

2019

Admiral ultimate combined ratio

86%

83%

85%

82%

2014

2015

2016

2017

5th March 2020

90%

2018

101%

▪ Recent accident year projections tend to be
prudent, particularly when adversely
influenced by large bodily injury

2019

Note: (1) Actuarial projection of ultimate loss ratio on accident year basis; (2) Admiral expense ratio is on a written basis.

48

UK Car Insurance: Booked loss ratio development by
underwriting year
UK car insurance booked loss ratio (%)
Development by financial year (colour-coded)
Split by underwriting year (x axis)

92%
89%

92%

84%
81%

77%

76%
74%

2014

88%
84%

87% 87%
83%

87%
83%

77%

2015

2016
2019

5th March 2020

2018

2017
2017

Ultimate loss ratio by
underwriting year

81%

75%

73%

72%

92%

2016

2015

2018

2019

87%

2018

80%

2017

69%

2016

67%

2015

68%

2019

2014

49

UK Motor profit recognition
Underwriting Year

Prior

2014

2015

2016

2017

2018

2019

Total Written Premium, net of XoL cost (£m)
Total net premium, original share (£m)

1,424
356

1,488
372

1,755
439

1,941
428

2,071
459

2,083
462

Combined Ratio, Booked basis

89%

88%

89%

91%

100%

111%

Profit commission/Releases on commuted RI (£m)

34

69

98

78

-

-

Net Other Revenue, excl. Instalments (£m)
Instalment income, written basis (£m)

159
25

147
29

155
38

148
70

162
80

152
83

Investment income, financial year (£m)

12

26

39

33

32

30

Written basis profit, Booked (£m)

268

316

380

368

276

214

25

72

78

112

94

168

Loss Ratio, Ultimate
Written basis profit, Ultimate (£m)

72%
295

68%
372

67%
471

69%
476

80%
288

87%
234

Pre-tax profit loss ratio sensitivities (to Booked)
1 point improvement (£m)
1 point deterioration (£m)

13
(13)

14
(14)

17
(17)

18
(18)

11
(4)

4
(4)

3 point improvement (£m)
3 point deterioration (£m)

40
(38)

42
(41)

50
(49)

53
(55)

38
(13)

13
(13)

5 point improvement (£m)
5 point deterioration (£m)

66
(60)

70
(68)

83
(81)

89
(83)

70
(22)

22
(22)

7 point improvement (£m)
7 point deterioration (£m)

93
(78)

98
(94)

116
(112)

125
(105)

107
(30)

30
(30)

Profit recognised in current period (£m)

5th March 2020

43

Total

592

50

Solvency Ratio sensitivities
The sensitivities below have been selected to show a range of impacts on the reported base case solvency ratio. They
cover the two main material risk types - insurance risk and market risk. Within each risk type the sensitivities
performed cover the underlying drivers of the risk profile. The sensitivities have not been calibrated to individual
return periods.
0%

50%

100%

150%

200%

Base

190%

Scenario 1

Scenarios

167%

Scenario 2

189%

Scenario 3

188%

Scenario 4

185%

Scenario 5

182%

Scenario 6

187%

Scenario 7

187%

Scenario 8

187%

5th March 2020

1.

UK Motor – incurred loss ratio +5%2.

UK Motor – 1 in 200 catastrophe event

3.

UK Household – 1 in 200 catastrophe event

4.

Interest rate – yield curve down 50 bps

5.

Credit spreads widen 100 bps

6.

Currency – 25% movement in fx rates

7.

ASHE – long term inflation assumption up 0.5%

8.

Loans – 100% worsening in experience51

UK co- and re-insurance arrangements
Motor
Admiral38%

Household

Munich Re

38%

Other

38%

Admiral

Quota share

38%

40%

40%

40%

40%

22%

22%

22%

22%

2017

2018

2019

2020

70%

70%

70%

70%

30%

30%

30%

30%

2017

2018

2019

2020

▪ Fully placed reinsurance arrangements until the endof 2020▪ Similar long term quota share contracts to UK
motor▪ Similar contract terms and conditions▪ Admiral retains 30%▪ Reduction of underwriting share from 25% to 22%
with effect from 2017

▪ Currently in process with negotiation for contracts
beyond 2020
5th March 2020

52

Admiral UK Car co- and re-insurance1

Type

Munich Re Proportional2 co-insurance – 30%

Proportional reinsurance (quota share) – 48%(10% Munich Re, 38% other reinsurers)

Cost to Admiral

Variable, depending on combined ratio

Fixed – c2% of premium

Risk protection

Co-insurance

Starts at 100% combined ratio + Investment Income

Key items in profit commission calculation include premium,claims, expenses, share scheme costs, investment income

Fixed fee to reinsurer, then 100% profit rebate to Admiral thereafter

Profit commission

Below ~98% combined ratio = 100%
Profit share % variable based on combined ratio and calculated intranches with a maximum profit share of ca 65%

Funds withheld

No

Vast majority

Investment income

Munich Re

Admiral (provided combined ratio <100%)

Instalment income

AdmiralAdmiralCommutation

Not applicable

Admiral has option to commute contracts and typically does this 2 years after thestart of the underwriting year

5th March 2020

Note: (1) Admiral Van is on a quota share basis, all 75% with Munich Re. Similar cost to Admiral as the car QS contract, on a funds
withheld basis; (2) In 2016, Munich Re had a 40% co-insurance share which decreased to 30% in 2017.

53

Key definitions
Term

Definition

Accident year

The year in which an accident occurs, also referred to as the earned basis.

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.

Combined ratio

The sum of the loss ratio and expense ratio.

Commutation

An agreement between a ceding insurer and the reinsurer that provides for the valuation, payment, and complete discharge of all
obligations between the parties under a particular reinsurance contract.

Expense ratio

Reported expense ratios are expressed as a percentage of net operating expenses divided by net earned premiums.

Ogden discount rate

The discount rate used in calculation of personal injury claims settlements. The rate is set by the Lord Chancellor, the most recent
rate of minus 0.75% being announced on 27 February 2017. Following royal ascent of Civil Liability Bill in Dec 2018 with future ratedecision expect by August 2019

Loss ratio

Reported loss ratios are expressed as a percentage of claims incurred divided by net earned premiums.

Periodic Payment Order (PPO)

A compensation award as part of a claims settlement that involves making a series of annual payments to a claimant over theirremaining life to cover the costs of the care they will require.

Total / Gross / Net
Premium

Total = total premiums written including coinsurance
Gross = total premiums written including reinsurance but excluding coinsurance
Net = total premiums written excluding reinsurance and coinsurance

Reinsurance

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

Ultimate loss ratio

The projected ratio for a particular accident year or underwriting year, often used in the calculation of underwriting profit andprofit commission.

Underwriting year

The year in which the latest policy term was incepted.

Underwriting year basis

Also referred to as the written basis. Claims incurred are allocated to the calendar year in which the policy was underwritten.
Underwriting year basis results are calculated on the whole account (including co-insurance and reinsurance shares) and include all
premiums, claims, expenses incurred and other revenue (for example instalment income and commission income relating to thesale 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.

5th March 2020

54

Admiral brands

5th March 202055

Disclaimer

The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to,and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of thecompany, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use ofthis document or its contents or otherwise arising in connection with this document. Unless otherwise stated, all financial information contained
herein is stated in accordance with generally accepted accounting principles in the UK at the date hereof.
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. Unless otherwise required by applicable law,regulation or accounting standard, the Group does not undertake to update or revise any forward-looking statements, whether as a result of new
information, future developments or otherwise.
This document is being distributed only to, and is directed at (a) persons who have professional experience in matters relating to investments, being
investment professionals as defined in article 19(5) of the Financial Services And Markets Act 2000 (Financial Promotion) Order 2005, as amended (the"Order") or (b) high net worth entities falling within article 49(2)(a) to (d) of the Order, and other persons to whom it may be lawfully be
communicated under the Order (all such persons together being referred to as "Relevant Persons"). Any person who is not a Relevant Person should
not act or rely on this document or any of its contents. Any investment or investment activity to which this document relates is available only to
Relevant Persons and will be engaged in only with Relevant Persons.
The financial information set out in the presentation does not constitute the Company's statutory accounts in accordance with section 423 Companies
Act 2006 for the full year period ending 31st December 2019.

5th March 202056