Admiral - IFRS 17 Briefing
An overview of the main impacts of IFRS 17 on
AdmiralGeraint JonesGroup Chief Financial Officer

Rachel Lewis
Director of Group Finance & Chief Actuary

Katie Baggott
IFRS 17 Accounting Lead28th November 20221

Disclaimer
Important cautionary statements concerning preliminary IFRS17 expectations, assessments and illustrations
Admiral’s audited financial statements for 2022 under IFRS 4 will be published in March 2023. On 1 January 2023, IFRS4 will be replaced by IFRS17, which is a new accounting standard applicable to insurance andreinsurance contracts that will result in significant accounting changes, with impacts on Admiral’s consolidated statement of income and balance sheet.

Admiral’s expectations, assessments and illustrations relating to IFRS 17 in this presentation are by their nature preliminary and subject to change in the course of the formal implementation of IFRS 17 in the Group’s
financial reporting through 2023. This presentation reflects the Group’s expectations and illustrative assessments of the impact of the IFRS17 Implementation exclusively as of the date hereof. Undue reliance should
not be placed on such expectations and illustrations, which are qualified in their entirety by the forward-looking statements paragraphs below. Moreover, investors should note that no IFRS 17 related information inthis presentation has been audited or subjected to a limited review by Admiral’s statutory auditors. In addition, the IFRS 17 implementation involves accounting judgment and choices between alternative accounting
approaches.
While this presentation reflects Admiral’s current assessment and expectations regarding these judgments, it is possible that, as the Group and the industry adapt to IFRS17 reporting, the Group might determine that
adjustments to its initial judgments are needed. There can be no assurance that such judgments and, more broadly, the illustrative impacts of the IFRS17 implementation on Admiral’s presentation of its business,
results of operations or financial condition will not differ materially from the illustrative information contained in this presentation.
For the purposes of this presentation, “on transition” or “at transition” are references to forward looking-statements about the Group’s expected opening balance sheet information as of January 1, 2022 ascalculated under IFRS 17.“Post-transition” or similar words refer to forward-looking statements related to the Group’s financial reporting from 1 January 2023 onward, i.e., its ordinary course financial reporting under
IFRS 17 following the effective date of IFRS 17 on 1 January 2023. Any information(financial or otherwise) relating to any of the foregoing terms should be understood exclusively as constituting the Group’s estimatesor assessments as of the date hereof, and, as with the other illustrative information in this presentation, is subject to change and qualified in its entirety by the section below.
Important legal information and cautionary statements concerning forward-looking statements and the use of non-GAAP financial measures
Certain statements contained herein may be forward-looking statements. Such statements are based on current expectations and are subject 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 Admiral does not undertake to update or revise any of these forward-looking statements,
whether to reflect new information, future events or circumstances or otherwise.
In addition, this presentation refers to certain non-GAAP financial measures, or alternative performance measures (“APMs”), used by management in analysing Admiral’s operating trends, financial performance andfinancial position and providing investors with additional information that management believes to be useful and relevant regarding Admiral’s results. These non-GAAP financial measures generally have nostandardized meaning and therefore may not be comparable to similarly labelled measures used by other companies. As a result, none of these non-GAAP financial measures should be considered in isolation from, or
as a substitute for, the Group’s consolidated financial statements and related notes prepared in accordance with IFRS.

2Presentation objectives and content

Objectives of thepresentation

Content●

Provide background to IFRS 17 and expected resulting accounting changes●

Focus on key impacts of IFRS 17 on Admiral Group plc, at transition andbeyond●Timelines and overview●

Main messages for Admiral●

Balance sheet impact at transition●

Earnings profile post transition●

Presentation and reporting3

IFRS 17 Timelines and Overview
28th November 2022

4

IFRS 17 Timeline

1 January 2023: IFRS 17
effective dateAugust 2023: First reporting
under IFRS 17 (H1 2023)●

IFRS 17 mandatory for Group and insurance
subsidiaries in UK and Gibraltar●

Admiral IFRS 17 implementation
programme well progressed, IFRS 9 alreadyadopted●Final reporting under IFRS 4 in March 2023, foryear ended 31 December 2022●

IFRS 17 effective from 1 January 2023●

H1 2023 reporting will include:• Balance sheets prepared under IFRS 17 as
at:

Q4 - 2022

Q1 - 2023

Q2 - 2023

Q3 - 2023

Q4 - 2023

Q1 - 2024•••

28 November 2022:
Admiral IFRS17 briefing
8 March 2023: Final IFRS 4 full year
2022 results. Includes preliminary
IFRS 17 disclosures on impact oftransition•

March 2024: 2023 Full year
results under IFRS 17

1 January 2022 (transition balance
sheet)
30 June 2022
31 December 2022
30 June 2023

• Income statements prepared under IFRS
17 for the periods:•••

H1 2022 (comparative)
FY 2022
H1 2023• No
impact on accounting for non-insurance
businesses

5

IFRS 17 Overview
IFRS 17 Overview
Measurement of
insurance assets
and liabilities

Level of granularity

Gross (direct) businessand Reinsurance

Acquisition costs

Discounting

Presentation••

Based on discounted best estimate cashflows plus risk adjustment, and contractual service margin ('CSM') (whenusing general measurement model ('GMM’)) equal to deferred profits for unearned businessPremium allocation approach ('PAA') simplification available for short term contracts for measuring deferred profits,similar to IFRS 4 unearned premium••

Increased granularity based on line of business and profitability
Prevents offset of profitable contracts against groups of loss making (‘onerous’) contracts••

Gross (direct) and reinsurance accounted for and presented separately
Greater potential for mis-match in timing of recognition of gross (direct) profit and related reinsurance cost•Accounting option to either expense all acquisition costs immediately, or defer more acquisition costs•

Unwind of discounting of claims reserves presented separately in income statement•

Accounting option to take income/charges resulting from changes in discount rates through OCI1•

Significant changes to presentation of income statement•

Enhanced disclosures, particularly in respect of risk adjustment2

Notes: (1) Other Comprehensive Income; (2) See slide 25 for further detail6Admiral IFRS 17 accounting choices aim to reduce complexity andminimise earnings volatility where possible
Simplified approach(PAA1)

Discount rates /OCI2 options taken

Risk adjustment

Expensing of acquisition
costs

Accounting approach for Admiral

Rationale•

All accounting expected to be under simplified approach (PAA1)••

Lower operational complexity
Simplified reporting••

Bottom up approach: Risk free rate (same as Solvency II) plus illiquidity premium
Changes in discount rates disaggregated between P&L and OCI2 to match movement in
the fair value of assets•

Minimise earnings volatility•

Confidence level approach, corridor around 90th percentile•

Conservative reserving
approach aligned to Group risk
appetite and current approach•

All acquisition costs will be expensed, no deferral•••

Simplified reporting
Reduced risk of onerous losses
Conservative, closer to cash

Notes: (1) Premium Allocation Approach: See glossary in the appendix for further detail; (2) Other Comprehensive Income

7

Main Messages for Admiral
28th November 2022

8

Main messages for Admiral
Messages
No impact on ultimate
profitability•

IFRS 17 does not change ultimate profitability of business written

No wider business
impacts•

No impact on Group strategy, solvency, dividend policy, cash generation

One off impact onequity•Reduction in equity at transition, no impact on dividend policy during or post transition•

Continue to maintain conservative reserving policy under IFRS 17•

Accounting will be based on simplified approach (PAA), limiting impact, although IFRS 17 results in somechange in timing of profit recognition•

Enhanced disclosures in respect of claims reserves

Maintaining
conservative reserving
policyChanges to underlying
accounting

Enhanced disclosures9Balance Sheet impact at transition
28th November 2022

10

Balance Sheet1 –Reduction in equity at transition● Expected reduction in equity ontransition

Equity waterfall1
IFRS 4 - IFRS 17
Gross claims reserves, net of XoL5

QS6 assets● No adverse impact on dividend capacity● Main drivers of impact are:Other

• Changes in calculation of claims
reserves under IFRS 17• Differences in the recognition of
quota share reinsurance
recoveries
Further explanation: Slide 13• A write-off of deferred acquisition

Slide 15

Slide 14costs
● Further detail on impacts included innext slides

IFRS 4 equity(1-Jan-22)

ENIDs 2

Discounting

Risk
adjustment

Quota sharereinsurance

Onerous loss
component 3

Acquisition
costs

Other revenue

Coins. PC

4

IFRS 17 equity(1-Jan-22)(unaudited)

Notes: (1) Unaudited draft illustration, subject to change; (2) 'Events not in data' that uplift the best estimate to a probability weighted best
estimate under IFRS 17; (3) Onerous loss component shown net of reinsurance recoveries; (4) Coinsurer profit commission (5) Excess of loss
reinsurance recoveries (6) Quota share reinsurance

11Comparison of IFRS 4 and IFRS 17 Balance Sheet items
IFRS 4 Balance Sheet items

Key differences to IFRS 4:• Earned claims reserves

Gross earned claims reserves

Gross unearned claims reserves• Probability weighted best estimate

Claims outstanding

Unearned premium reserve•• Discounting of all claims

Best estimate of claims•

Premiums written less earned•

Discounting only applied to potential
and settled PPOs1•

Plus any unexpired risk reserve•

Management margin• Specific risk adjustment to reflect
non-financial risk

• Unearned reserves - recognition ofloss component more likely relative
to unexpired risk reserve:

IFRS 17 Balance Sheet items• Increased disaggregation e.g. newbusiness and renewals

Gross earned claims reserves

Gross unearned claims reserves

Liability for incurred claims ('LIC')2:

Liability for remaining coverage2 (‘LRC’):•Probability weighted best estimate ofclaims•Premiums written less earned••

Plus loss component

Discounting of all claims••

Minus policy holder debtors

Risk adjustment

Notes: (1) Periodic Payment Orders; (2) See glossary in appendix for further detail• Inclusion of risk adjustment

12

Claims reserves1 – Lower at transition under IFRS172
1.

IFRS 17 best estimate is probability
weighted, therefore includes Events Not
In Data (‘ENID’) allowance similar to
Solvency II

2.

Under IFRS 17, all claims (not justpotential and settled PPOs3) arediscounted, leading to increased
discounting of claims reserves

3.

Risk adjustment set in range around 90th
percentile, in line with conservative
reserving approach; anticipate reserve
position at upper end of range, but lower
than booked margin, at transition date

Gross earned claims reserve1,2
IFRS 4 – IFRS 17
3
1

1

2

IFRS 4
Best estimate

Booked margin

ENID

3

4

2

IFRS 17

Discounting

Risk adjustment

Notes: (1) Claims reserves net of excess of loss reinsurance recoveries; (2) Unaudited draft illustrations, subject to change; (3) Periodic
Payment Orders

13

Reinsurance – Reduction in quota share reinsurance assets at
transition1
1.

Timing difference on recovery of quota
share reinsurer ceded expenses. Under
IFRS 17, expense recoveries earned inline with earning of ceded premium,compared to expense recoveries
earned in line with gross incurred
expenses under IFRS 4.

2.

Lower quota share reinsurance claims
recoveries due to lower gross (net of
XoL3) claims reserves and application of
discounting

Reinsurance assets1
IFRS 4 – IFRS 17

1
2

2

IFRS 4 QS net assets

Phasing of expense
recoveries

Quota share claims
recoveries

2

IFRS 17 QS net assets

Notes: (1) Unaudited draft illustrations, subject to change; (2) QS = quota share (or proportional) reinsurance contracts. Admiral enters into
both quota share and excess of loss (XoL) reinsurance contracts. The above impact is limited to quota share reinsurance contracts; (3) Excess ofloss reinsurance recoveries

14Other drivers of transition impact 1● Onerous loss component2 arises due to:• Inclusion of risk adjustment –Equity waterfall1
IFRS 4 - IFRS 17•

Admiral's conservative reserving
approach with cautious risk
adjustment driving small onerous
loss component
Increased disaggregation e.g. newbusiness and renewals● Write-off of deferred acquisition cost asset
is large driver of transition impact● Change in timing of recognition of otherrevenue: All underwritten ancillary income(including intermediary commissions)recognised as premium and earned

IFRS 4 equity

ENIDs 3

Discounting

Risk
adjustment

Quota sharereinsurance

Onerous loss
component 2

Acquisition
costs

Other revenue

Coins. PC 4

IFRS 17 equity 1

Notes: (1) Unaudited draft illustrations, subject to change; (2) Onerous loss component shown net of reinsurance recoveries; (3) Events Not
In Data; (4) Coinsurer profit commission● Favourable impact on cumulative
coinsurance profit commission
recognised, driven by reduction in claims
reserves at transition

15

Earnings profile post transition
Illustrative examples
28th November 2022

16

Illustrative example under IFRS 4 and IFRS 17● No change to ultimate result: Grossprofits and reinsurance costs are the sameunder IFRS 4 and IFRS 17

Illustrative1 Ultimate Result for individual underwriting year
IFRS 4

Gross

RI2,3 (60%)

Net of RI

Premiums

2,000(1,200)800

Premiums (gross)

2,000

Expenses

(400)

240

(160)

Expenses (gross)(400)

Claims cost

(1,300)

780

(520)

Claims cost (gross)(1,245)•£2,000 written premium

Underwriting result

300

(180)

120

Insurance result

355•

20% expense ratio

Profit commission

-

156

156

Reinsurance result

(24)

•

65% ultimate loss ratio

Finance expense

(55)

•

All claims settled after 5 years

Profit / (Loss)

276

Profit / (Loss)
●

300

(24)

276

IFRS 4 RI2 % share of gross premiums, expenses andclaims recognised and presented separately●

UWY4 combined ratio < 98%: Profit commission
recognised separately●

If UWY4 combined ratio > 100% (ultimate): Recognise
RI2 share of investment income

IFRS 17● Illustrative example of underwriting year
assumptions:● Reinsurance assumption:•

60% quota share funds withheld
contract•

Profit commission: 100%of RI2 profit net of RI2 margin of 2% of
RI2 premium (£1,200)

IFRS 17 Reinsurance result:●●

Expected ceded premium cost●

Expected cash claims recoveries,
including profit commission,
RI2 share of investment income

Claims cost: Split presentation

Notes: (1) Example based on gross illustrative example 1 in the appendix; (2) Quota share reinsurance example assumes 60% quota share funds
withheld contract with 2% margin; (3) For simplicity, illustrative example assumes no excess of loss reinsurance; (4) Underwriting year

● This example will be used as the starting
point for later illustrative examples

17

Illustrative example1: IFRS 17 implies change in the phasing of
profit recognition – gross result3● Loss in year 1 driven by immediate
recognition of majority of costs; offset byhigher profits in year 2

Illustrative1 phasing of gross profit recognition IFRS 4 vs IFRS 17 for individual UW year2
IFRS 4IFRS 17IFRS 4 - cumulative profit

IFRS 17 - cumulative profit

310

300

300

250

● Profits in years 3 to 5 driven by release ofclaims reserves● Change in phasing of profit recognition in
IFRS 17 driven by:

100

80

70

60
30

-150

20

•

Treatment of acquisition costs•

Impact of discounting and risk
adjustment

-170

Y1

Y2

Y3

Y4

Y5

Cumulative

-20

60

- 20

- 10

- 10

0

IFRS 4 vs IFRS 17 Impact – illustrative difference by year

Assumed all claims
settledNotes: (1) Example based on gross illustrative example 1 in the appendix; (2) Underwriting year; (3) Illustrative example assumes no excess ofloss reinsurance, for simplicity

18

Illustration of Quota Share (QS) reinsurance1 earnings profile: IFRS 4
and IFRS 17● IFRS 4 recoveries = reinsurance share ofgross result, plus profit commission

QS earnings profile: Example 23

QS earnings profile: Example 12
Individual UWY4

Year 1

Year 2Cum.(Yr 2)

Gross result

(150)

250

RI1 result IFRS 4

90

RI1 result IFRS 17(12)

Individual UWY4

Year 1

Year 2

Year 3Cum.

100

Gross result

(220)

180

60

100

(114)

(24)

RI1 result IFRS 4

132

(108)

(48)

(24)

(12)

(24)

RI1 result IFRS 17

3

(27)

-

(24)

Example 2: IFRS 4 Income Statement after 24 months Example 2: IFRS 17 Income Statement after 24 months
IFRS 4Gross

RI1

Net of RI

Premiums

2,000(1,200)

Expenses(400)

ClaimsProfit/(loss)

IFRS 17

Gross

800

Premiums

2,000

240

(160)

Expenses(400)(1,640)

984

(656)

Claims5(1,640)

(40)

24

(16)

After 24 months under IFRS 4:•• Year 3 loss in commutation = £48 being difference
IFRS 4 Asset on balance sheet = RI1% gross loss

Underwriting result(40)

Reinsurance result(24)

Profit / (Loss)(64)● Contracts commuted after 24 months
if no further recoveries expected:
Potential loss on commutation IFRS 4● IFRS 17 recoveries = expected
recoveries over full underwriting year
● Cost of reinsurance contract ultimately
the same - but timing differs● Loss on commutation not expected under
IFRS 17 due to:●

Discounting of any potential
recoveries●

Lower gross claims reserves

After 24 months under IFRS 17:• Cost of margin recognised• No further recoveries recognised

between asset and cost of reinsurer margin
Notes: (1) Quota share reinsurance example assumes 60% quota share funds withheld contract with 2% margin; no excess of loss
reinsurance for simplicity; (2) Based on illustrative example 1 in the appendix; (3) Based on illustrative example 2 in the appendix; (4)Underwriting year; (5) Gross claims cost assumed equal to IFRS 4, for simplicity

19

IFRS 17 gives rise to a change in the phasing of earnings: Quota
share reinsurance
IFRS 4: Illustrative phasing of quota share reinsurance1 earnings profile
UWY4 profile

IFRS 4

Year 1

Year 2

Year 3

Year 4

Cumulative

UWY4 1

90

(114)

-

-

(24)

Illustrative example 12

132

(108)

(48)

(24)

Illustrative example 23

90

(114)

(24)

Illustrative example 1290-

Illustrative example 12

UWY4 2UWY4 3UWY4 4
18

(18)

(72)

IFRS 17: Illustrative phasing of quota share reinsurance earnings profile
IFRS 17

Year 1

Year 2

Year 3

Year 4

Cumulative

UWY4 1

(12)

(12)

-

-

(24)

Illustrative example 12

3

(27)

-

(24)

Illustrative example 23

UWY4 3(12)(12)
Cumulative(24)

Illustrative example 12

UWY4 4(12)-

Illustrative example 12

UWY4 2Difference (vs. IFRS 4)

(9)

(39)

(24)

(27)

(21)

48

UWY4 profile● Example shows all UWYs4 performconsistently other than
UWY4 2. Reinsurance cost recognition
based on gross illustrative examples 1 and
2 in appendix● Impact: Timing of reinsurance cost in
financial years 2-4 is different between
IFRS 4 and IFRS 17● Greater inconsistency between
gross performance of underwriting years= greater difference in timing ofrecognition of reinsurance costs● IFRS 17 accelerates recognition ofreinsurance costs relative to IFRS 4-

Notes: (1) Reinsurance, example assumes at 60% of gross, Funds withheld contract with 2% margin; (2) Based on illustrative grossexample 1 in appendix; (3) Based on illustrative gross example 2 in the appendix; (4) Underwriting year

20

Presentation and reporting
28th November 2022

21

Expect significant changes to the way results are presented● Insurance revenue gross of reinsurance;
includes some IFRS 4 “other income”

Condensed income statement
IFRS 4
Revenue

Expenses

ResultIFRS 17
Net earned premium

Insurance service result

Insurance revenue

Other revenue

Insurance service expenses

Profit commission

Reinsurance result

Net investment result-

Net insurance claims

Net investment result

Net investment income

Net insurance expenses

Insurance finance expenses

Other expenses-

Profit before tax

Other income &expensesProfit commission fromcoinsurance

Other net revenue
ResultProfit before tax● Insurance services expenses include
discounted claims costs plus insurance
expense● Reinsurance result includes allreinsurance premiums, discounted
claims and expense recoveries, profit
commission● Net investment result includes cost of
unwinding discounting of claims
reserves at locked-in rate

● Other income and expenses lower than
IFRS 4 - comprised of:• Fees and income fromproducts not underwritten by theGroup• Profit commission
from coinsurance arrangements

22

Insurance revenue under IFRS 17● Net earned premium will no longer bepresented

Insurance revenue1● Insurance revenue will be higher thangross earned premium due to:

IFRS 4 – IFRS 17• The inclusion of all underwritten
ancillaries as premium (this willlead to a corresponding reduction
in other commissions and fees)• Some instalment fees andadministration fees will bepresented as part of insurance
revenue (again leading to a
reduction in other commissions
and fees)

IFRS 4 - Net Earned
Premium

Reinsurer share

Notes: (1) Illustrative impact

Gross Earned Premium

Ancillary Earned
Premium

Other Revenue

IFRS 17 - Insurance
Revenue23

Net investment result components under IFRS 17● Investment and interest income on
assets unaffected by IFRS 17● Movement on investment return
allocated to reinsurers included within
reinsurance result under IFRS 17

Investment result1
IFRS 4 – IFRS 17

Investment and interest
incomeInvestment and interest
incomeMovement on
investment returns
allocated to reinsurers

Insurance financeexpenses
IFRS 4IFRS 17

Notes: (1) Illustrative only; (2) Reflects investment income from cash retained by Admiral related to ceded quota share reinsurance● Introduction of ‘Insurance financeexpenses’ under IFRS 17 representing
unwind of the discounting of insurance
liabilities at locked-in rate
● IFRS 17 net investment result includes
both asset return and unwind of
insurance liability discount which
effectively reflects the investment
margin● Difference between results fromapplying locked-in rates and current
rates for claims liabilities recognised in
Other Comprehensive Income24Disclosures under IFRS 17
Disclosures under IFRS 17•

Confidence level (e.g. xx percentile) disclosed at each reporting period, with explanations of movements
between period

Risk adjustment•

Reconciliation of opening to closing risk adjustment, with additions and releases in period, separately for UK
and international

Best estimate•

Reconciliation of opening to closing position including incurred claims and releases on best estimate, separately
for UK and international•

Claims triangles reconciling undiscounted gross cumulative claims by underwriting year, after each accident
year, separately for UK and international businesses

Discount rates•

Discount rates applied at time intervals e.g. 1 year, 5 years, 10 years, for UK and international businesses separately

Undiscounted liability
for incurred claims•

Undiscounted claims reserves split into claims due in tranches e.g. < 1 year; 1-5 years; > 5 years•

Changes in ultimate loss ratio•

Changes in risk adjustment•

Changes in discount rates

Claims triangles

Additional sensitivities1

Notes: (1) Examples provided of additional sensitivities that may be provided. These will be in addition to sensitivities already disclosed such as those around Solvency II

25

Key performance indicators across our operations1
MetricIFRS 4IFRS 17

CommentaryGroup• Earnings per share• Earnings per share• Measures still relevant under IFRS 17• Return on Equity• Return on Equity• Solvency ratio• Solvency Ratio

Revenue• Turnover• Turnover• No overall change to Turnover composition

Profitability• Profit before tax• Profit before tax• Reported loss ratio• Reported loss ratio• Reported loss, expense and combined ratios no longer
reported net of all reinsurance• Reported expense ratio• Reported expense ratio• Reported combined ratio• Reported combined ratio• Insurance service margin2 reported to incorporate
impact of reinsurance result• Insurance service margin2

Notes: (1) See appendix for detail of other reported metrics under IFRS 17 (2) Further detail on following slide26

Illustrative impact on key ratios
IFRS 4 Income Statement

IFRS 17 Income Statement
Gross netof XoL2QS RI3

Net

Premiums earned

1,000

(600)

400

Claims incurred

(700)

420

(280)

Expenses incurred

(200)

120

(80)

Underwriting result

100

(60)

40

Profit commission1-

30

Underwriting result inc. profit commission

100

Loss ratio

Gross net of
XoL2

QS RI3

Net

Premiums earned

1,000

Claims incurred(700)

Expenses incurred

(200)

30

QS reinsurance result

-

(30)

(30)

70

Insurance service result

100

(30)

70

70%

70%

70%

Loss ratio4

70%

Expense ratio

20%

20%

20%

Expense ratio4

20%

Combined ratio (excluding profit
commission)

90%

90%

90%

Combined ratio4

90%
1000

7%

Insurance service margin●

IFRS 4 Loss and expense ratios reported net of all reinsurance●

Combined ratio is sum of loss and expense ratio●

Profit commission reported as separate metric under IFRS 4

70●

IFRS 17 Loss and expense ratios expected to be reported net of excess ofloss reinsurance●

Expect reported loss and expense ratios to align to IFRS 4 reported ratios●

Insurance service margin includes reinsurance result, so includes RI profit
commission; denominator being gross premiums earned

Notes: (1) Profit commission from reinsurers reported separately under IFRS 4, included in reinsurance result in IFRS 17; (2) Simplified example assumes no excess of loss reinsurance in place; (3) Quota share reinsurance;(4) Loss, expense and combined ratios under IFRS 17 expected to be reported net of the impact of excess of loss reinsurance.

27

Wrap up
28th November 2022

28

Main messages for Admiral
Messages
No impact on ultimate
profitability•

IFRS 17 does not change ultimate profitability of business written

No wider business
impacts•

No impact on Group strategy, solvency, dividend policy, cash generation

One off impact onequity•Reduction in equity at transition, no impact on dividend policy during or post transition•

Continue to maintain conservative reserving policy under IFRS 17•

Accounting will be based on simplified approach (PAA), limiting impact, although IFRS 17 results in somechange in timing of profit recognition•

Enhanced disclosures in respect of claims reserves

Maintaining
conservative reserving
policyChanges to underlying
accounting

Enhanced disclosures29

Appendix
28th November 2022

30

Glossary
TERM

DEFINITION

Annual Cohorts

All contracts within a group originated from the same 12 month period

Coverage period

The period during which the entity provides insurance contract services. This period includes the insurance contract services that relate to all premiums within the boundary of theinsurance contract

Financial risk

The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, currency exchange rate, index of prices or rates, credit rating or
credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract

Fulfilment cash flows

An explicit, unbiased and probability-weighted estimate (ie expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that willarise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk

General measurement model('GMM')

Also known as the building block approach ('BBA') is the IFRS 17 measurement approach that comprises the following:(a) the fulfilment cash flows, which comprise:(i) the best estimates of future cash flows;(ii) an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the
future cash flows; and(iii) a risk adjustment for non-financial risk.
(b) the contractual service margin, which represents the estimated unearned profit the entity will recognise as and when it provides insurance contract services to the policyholder in the
futureGroup of insurance contracts

A set of insurance contracts resulting from the division of a portfolio of insurance contracts into, at a minimum, contracts written within a period of no longer than one year and that, at
initial recognition: (a) are onerous, if any; (b) have no significant possibility of becoming onerous subsequently, if any; or (c) do not fall into either (a) or (b), if any

Insurance acquisition cash flows

Cash flows arising from the costs of selling, underwriting and starting a group of insurance contracts that are directly attributable to the portfolio of insurance contracts to which the groupbelongs. Such cash flows include cash flows that are not directly attributable to individual contracts or groups of insurance contracts within the portfolio

Insurance contract

A contract under which one party (the issuer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain
future event (the insured event) adversely affects the policyholder

31

Glossary
TERM

DEFINITION

Liability for incurred claims ('LIC')

An entity’s obligation to (a) investigate and pay valid claims for insured events that have already occurred, including events that have occurred but for which claims have not beenreported, and other incurred insurance expenses; and (b) pay amounts that are not included in (a) and that relate to insurance contract services that have already been provided

Liability for remaining coverage('LRC')

An entity’s obligation to (a) investigate and pay valid claims under existing insurance contracts for insured events that have not yet occurred (ie the obligation that relates to theunexpired portion of the coverage period) and (b) pay amounts under existing insurance contracts that are not included in (a) and that relate to insurance contract services not
yet provided (ie the obligations that relate to future provision of insurance contract services)
Insurance contracts subject to similar risks and managed together

Portfolio of insurance contracts

Premium Allocation Approach('PAA')

Under the PAA, the general measurement model may be simplified for certain contracts to measure the liability for remaining coverage. Generally the PAA measures the liability
for remaining coverage as the amount of premiums received net of acquisition cash flows paid, less the amount of premiums and acquisition cash flows that have been recognisedin the profit and loss over the expired portion of the coverage period based on the passage of time

Reinsurance contract

An insurance contract issued by one entity (the reinsurer) to compensate another entity for claims arising from one or more insurance contracts issued by that other entity(underlying contracts)

Retrospective approach (full)

An approach at transition whereby as at the transition date the entity will identify, recognise and measure each group of insurance contracts as if IFRS 17 had always applied

Risk adjustment for non-financial
risk

The compensation an entity requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk as the entity fulfils insurance
contracts32

Illustrative example 1
Key assumptions and inputs – illustrative only
ASSUMPTIONS
Written premiums
Expense ratio

ASSUMPTIONSYear 1
Year 2
Year 3
Year 4
Year 5

ASSUMPTIONSYear 1
Year 2
Year 3
Year 4
Year 52,000
20%Earned - Y1
50%
88%

Earned - Y2
50%
13%

Ultimate Loss Ratio
IFRS 42IFRS 172,3
70%
68%
68%
66%
66%
64%
65%
62%
65%
62%

Ultimate Combined Ratio
IFRS 42IFRS 172,3
90%
88%
88%
86%
86%
84%
85%
82%
85%
82%

Booked1 Loss Ratio
IFRS 42IFRS 172,3
80%
77%
75%
72%
70%
67%
67%
63%
65%
62%

Booked1 Combined Ratio
IFRS 42IFRS 172,3
100%
97%
95%
92%
90%
87%
87%
83%
85%
82%

IFRS 4
Premiums
ExpensesClaims incurred/releases
ResultIFRS 4 Cumulative result

Year 1
1,000
(350)
(800)
(150)
(150)

Year 2
1,000
(50)
(700)
250
100

Year 3

Year 4

Year 5

100
100
200

70
70
270

30
30
300

IFRS 17
Premiums
ExpensesClaims incurred/releases
Insurance result
Unwind of discounting3
ResultIFRS 17 Cumulative result

Year 1
1,000
(400)
(770)
(170)

Year 2
1,000

Year 3

Year 4

Year 5

(675)
325
(15)
310
140

104
104
(24)
80
220

72
72
(12)
60
280

24
24
(4)
20
300

(170)
(170)

Notes: (1) Booked loss and combined ratio include management margin under IFRS 4, risk adjustment under IFRS 17; (2) Ratios rounded to nearest whole number; (3) Finance expenses (unwind of discounting)presented separately under IFRS 1733

Illustrative example 2
Key assumptions and inputs – illustrative only
ASSUMPTIONS
Written premiums
Expense ratio

ASSUMPTIONSYear 1
Year 2
Year 3
Year 4
Year 5

ASSUMPTIONSYear 1
Year 2
Year 3
Year 4
Year 52,000
20%Ultimate Loss Ratio
IFRS 42IFRS 172,3
77%
74%
75%
72%
73%
70%
72%
69%
72%
69%
Booked1 Loss Ratio
IFRS 42IFRS 172,3
87%
84%
82%
79%
77%
74%
74%
70%
72%
69%

Earned - Y1
50%
88%

Earned - Y2
50%
13%

Ultimate Combined Ratio
IFRS 42IFRS 172,3
97%
94%
95%
92%
93%
90%
92%
89%
92%
89%
Booked1 Combined Ratio
IFRS 42IFRS 172,3
107%
104%
102%
99%
97%
94%
94%
90%
92%
89%

IFRS 4
Premiums
ExpensesClaims incurred/releases
ResultIFRS 4 Cumulative result

Year 1
1,000
(350)
(870)
(220)
(220)

Year 2
1,000
(50)
(770)
180
(40)

Year 3

Year 4

Year 5

100
100
60

70
70
130

30
30
160

IFRS 17
Premiums
ExpensesClaims incurred/releases
Insurance result
Unwind of discounting3
ResultIFRS 17 Cumulative result

Year 1
1,000
(400)
(840)
(240)

Year 2
1,000

Year 3

Year 4

Year 5

(735)
265
(15)
250
10

104
104
(24)
80
90

66
66
(16)
50
140

30
30
(10)
20
160

(240)
(240)

Notes: (1) Booked loss and combined ratio include management margin under IFRS 4, risk adjustment under IFRS 17; (2) Ratios rounded to nearest whole number; (3) Finance expenses (unwind of discounting)presented separately under IFRS 17

34

Further metrics reported across our operations
MetricIFRS 4IFRS 17

Commentary

Other
insurance
financial
metrics• Other revenue and instalment
income• Other revenue and instalment
Income• Other revenue per vehicle• Other revenue per vehicle• Information on other revenue and instalment income
will continue to be presented separately to enablecalculations of other revenue per vehicle• Written basis expense ratio• Written basis expense ratio• Written basis expense ratio provided• Reported loss ratio before releases• Reported loss ratio before releases• Claims releases – original net share• Claims releases• Claims releases no longer reported net of quota sharereinsurance• Claims releases – commuted share

35

Balance sheet under IFRS 4 and IFRS 171● Removal of DAC2 from intangibles

Liabilities and Equity

Assets● Lower reinsurance assets:●

Other Assets

Equity●Other liabilities
Investments andcash

Trade and otherpayablesInsurance and otherreceivables●

Insurance
liabilities

Intangible Assets

Presentation & Transition impact

IFRS 17

Reduced insurance and other receivables:
Premium debtors presented within insurance
liabilities ('LRC')3 under IFRS 17● Lower insurance liabilities due to:Reinsurance
AssetsIFRS 4

Timing of recovery of ceded expenses,
and lower recoveries arising from lower
gross claims costs
Presentation changes as reinsurance
asset is shown net of amounts owed to
the reinsurer

IFRS 4Presentation impact

Notes: (1) Illustrative impacts; (2) Deferred Acquisition Costs; (3) See glossary in appendix for definition

IFRS 17

No impact●

Transition impacts (discounting, risk
adjustment)●

Presentational changes• LRC is unearned premium net ofpremium debtors• Other insurance liabilities
presented as part of LIC(previously in trade payables)36