Admiral Group plc results for the six months ended 30 June 201914 August 20192019 Interim Results Highlights
30 June 201930 June 2018

% change£220 million£218 million
63.0 pence£212 million£211 million
61.6 pence

+4%
+4%
+2%

63.0p/per share47%

60.0p/per share
54%

+5%
-13%

Group turnover*1
Group net revenue
Group customers*1
UK Insurance customers*1
International Car Insurance customers*1£1.76 billion£0.65 billion
6.74 million
5.32 million
1.36 million£1.66 billion£0.60 billion
6.23 million
5.07 million
1.12 million

+6%
+8%
+8%
+5%
+21%

Group’s share of Comparison profit*1
Statutory Comparison profit£7.4 million£5.4 million£3.5 million£2.6 million

+111%
+108%

190%

196%

Group’s share of profit before tax*1
Group statutory profit before tax
Earnings per share
Interim dividend
Return on equity*1

Solvency ratio (post dividend)*1

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

Around 10,000 staff receive free shares worth up to £1,800 under the employee share scheme based on
the interim 2019 results.
Comment from David Stevens, Group Chief Executive Officer
If it’s a can’t-put-down, read-in-one-go page-turner that you’re after, then I’m afraid our half-year
results don’t fit the bill. Frankly, they are a bit dull. Turnover up mid-single digits, profit up low-single
digits. Hardly “hold the front page”.
However, for dedicated aficionados who look behind the headlines, there’s some reward for reading on.
Profit growth, even if modest, is more exciting considering the £33 million Ogden headwind. Low growthin UK Motor policy count reflects a consciously reduced competitiveness, as we price rationally in theface of any rising claims costs across the market as a whole.
And potentially lost amidst the worthy tome that is the UK, there’s the racier continental novella that is
the European insurance business which has delivered another profitable half year whilst adding a record
209,000 customers over the last year (and 125,000 over the last six months alone).
Plus, there’s a chapter devoted to Admiral’s emerging Loans business – not the fully finished article, but
an encouraging debut from a young talent.

1Dividend
The Board has declared an interim dividend of 63.0 pence, representing a normal dividend of 41.8 pence
per share and a special dividend of 21.2 pence per share. The dividend will be paid on 4 October 2019.
The ex-dividend date is 5 September 2019 and the record date is 6 September 2019.
Management presentation
Analysts and investors will be able to access the Admiral Group management presentation which
commences at 9.00 BST on Wednesday 14 August 2019 by registering at the following link
https://pres.admiralgroup.co.uk/admiral036/vip_connect. A copy of the presentation slides will beavailable at www.admiralgroup.co.uk

H1 2019 Group overview£m

30 June2017
1.45

30 June2018
1.66

30 June2019
1.76

31 Dec2018
3.28

Underwriting profit*1
Profit commission
Net other revenue and expenses*1
Operating profit
Group statutory profit before tax
Group’s share of profit before tax

88.9
30.0
80.1
199.0
193.4
194.5

93.4
29.6
93.3
216.3
210.7
211.7

96.0
36.1
92.3
224.4
218.2
220.2

211.2
93.2
183.1
487.5
476.2
479.3

Analysis of profit:
UK Insurance
International Insurance
Comparison
Admiral Loans
Other
Group’s share of profit before tax*1

225.8(10.1)
3.1(1.6)(22.7)
194.5

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

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

555.6
(1.1)
8.8
(11.8)(72.2)
479.3

Key metrics
Group loss ratio*1*2Group expense ratio*1*2Group combined ratio*1
Customer numbers (million) *1

68.0%
22.0%
90.0%
5.46

65.2%
22.2%
87.4%
6.23

69.1%
23.2%
92.3%
6.74

67.3%
22.9%
90.2%
6.51

Earnings per share
Dividends
Return on Equity*1
Solvency ratio*1

57.3 p56.0 p55%
214%61.6 p60.0 p54%
196%63.0 p63.0 p47%
190%

137.1 p126.0 p56%
194%

Turnover (£bn)*1*1*2

Alternative Performance Measures – refer to the end of the report for definition and explanation.
See notes 13b and 13c for a reconciliation of reported loss and expense ratios to the financial statements.

2

Key highlights for the Group results in H1 2019 include:•

Continued growth with turnover up 6% to £1.76 billion (H1 2018: £1.66 billion) and customer
numbers 8% higher at 6.74 million (30 June 2018: 6.23 million)•

Group share of pre-tax profits of £220.2 million (H1 2018: £211.7 million) and statutory profit before
tax of £218.2 million (H1 2018: £210.7 million) both growing by 4%•

UK Insurance recorded modest growth in turnover to £1.34 billion (H1 2018: £1.32 billion) withcustomer numbers reaching 5.32 million (30 June 2018: 5.07 million)•

Significant underlying profit growth (before Ogden rate impact) of £41.0 million in UK Insurance,
primarily attributable to favourable development in prior year loss ratios for UK Motor. Profit
growth including the Ogden rate impact is £7.7 million•

The adverse impact of the recent announcement of the new Ogden rate of minus 0.25% on the H1
2019 result is £33.3 million. Refer to the UK Motor Insurance section below for further detail•

UK Household result improved in H1 2019 to a profit of £4.2 million (H1 2018: loss of £1.9 million)
with more benign weather experience compared to the prior period•

Losses in International Insurance businesses totalled £2.7 million (£0.6 million loss in H1 2018), with
continued profit in the European operations offset by higher claims costs in the US•

Combined International insurance turnover grew strongly by 23% to £319.5 million (H1 2018:£260.1 million) and customer numbers by 21% to 1.36 million (30 June 2018: 1.12 million)•

The Comparison result improved by £3.9 million to £7.4 million, with notably higher profits from
Confused.com of £8.7 million (H1 2018: £5.8 million) in addition to growth in European profits andlower losses from compare.com.

Earnings per share
Earnings per share is 2% higher than in H1 2018 at 63.0 pence (H1 2018: 61.6 pence), broadly consistent
with the growth in pre-tax profit. The adverse Ogden impact reduced Earnings Per Share by 10.0 pence.
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 63.0 pence per share (approximately £180 million),
split as follows:•

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

A special dividend of 21.2 pence per share

The total 2019 interim dividend is 5% ahead of the 2018 interim dividend (60.0 pence per share), with apay-out ratio of 100% of Earnings per share. The 100% payout is higher than usual and is a result of theGroup’s strong capital position at 30 June 2019. The payment date is 4 October 2019, ex-dividend date
5 September 2019 and record date 6 September 2019.
3

The Group maintained a strong solvency ratio at 190% (post-dividend), which has reduced from 194% at
31 December 2018. Both Own Funds and the SCR increased in the period, with the SCR increasereflecting the one-off change in treatment resulting from the implementation of IFRS 16, the new leases
accounting standard, and an increase in the capital requirement for the Loans business.
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), andElephant (US)•Comparison – including Confused.com (UK), LeLynx (France), Rastreator (Spain), compare.com (US),and Preminen (new markets)

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

30 June2017
1,144.1
1,022.6
241.0
105.7
120.1
225.8

30 June2018
1,319.1
1,167.1
254.6
101.6
145.4
247.0

30 June2019
1,338.8
1,186.0
264.7
106.7
148.0
254.7

31 Dec2018
2,575.7
2,269.8
523.9
227.7
327.9
555.6

*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
2017
224.2
1.6
—

225.8

30 June
2017
3.79m
0.55m
—

4.34m

30 June
2018
249.5
(1.9)
(0.6)
247.0

30 June
2019
251.7
4.2
(1.2)
254.7

31 Dec
2018
561.7
(3.0)
(3.1)
555.6

30 June
2018
4.26m
0.78m
0.03m
5.07m

30 June
2019
4.33m
0.92m
0.07m
5.32m

31 Dec
2018
4.32m
0.87m
0.05m
5.24m

Highlights for the UK insurance business for H1 2019 include:•

Modest growth in Motor resulting from Admiral’s premium rates moving up ahead of thewider market (recent indicators point to evidence of market rates rising)•Continued strong growth in Household, with customers 18% higher than one year ago at 0.92
million (30 June 2018: 0.78 million)4

•

An increase in UK Motor profit to £251.7 million, including an adverse impact of £33.3 million
arising from the change in the Ogden rate to minus 0.25% (0% best estimate assumption at 31
December 2018), with significant favourable development in prior year loss ratios•

Household profit of £4.2 million (H1 2018: £1.9 million loss), with lesser impact of weather events
compared to H1 2018 and positive development on prior year claims.

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 June2017
1,095.7
978.9
214.7
15.8
(100.9)(30.1)
99.5
28.8

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

31 Dec2018
2,423.1
2,132.1
452.5
32.2(189.2)(72.0)
223.5
95.0

128.3
95.9
224.2

129.7
119.8
249.5

134.0
117.7
251.7

318.5
243.2
561.7

*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 andis 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
2017
66.6%
16.5%
83.1%
15.8%
87.5%

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%

31 Dec
2018
63.5%
18.4%
81.9%
17.5%
88.1%

£44.9m£56.5m£50.0m£111.4m£47.4m
£92.3m3.79m£61£35.2m£91.7m4.26m£67£52.8m£102.8m
4.33m£66£109.6m£221.0m
4.32m£67*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 withinclaims costs in the income 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 the start of the underwriting year in question.
*5 Commuted reinsurance shows releases on the proportion of the account that was originally ceded under5

quota share reinsurance contracts but has since been commuted and hence reported throughunderwriting profit and not profit commission.

UK Motor profit was broadly flat for the first six months of 2019 at £251.7 million (H1 2018: £249.5
million). Whilst the reported combined ratio rose to 86.5% (H1 2018: 78.2%), this was offset by a higher
level of claims reserve releases from commuted reinsurance and profit commission. Net other revenue
was also broadly consistent with the prior period, though includes a number of offsetting movements.
Highlights for the period were as follows:•

Net insurance premium revenue was just under 2% higher than H1 2018 at £225.4 million (H1
2018: £221.1 million), mainly resulting from the larger portfolio•

Investment income was £15.9 million, in line with H1 2018•

The reported combined ratio increased to 86.5% (H1 2018: 78.2%), with movements as follows:
Reported Motor combined ratio

H1 2018
Change in current period loss ratio
Change in claims reserve release – original net share
Change in expense ratio
H1 2019 (excluding Ogden change)
Impact of Ogden change (0% to minus 0.25%)
H1 2019 (including Ogden change)

Loss
ratio
60.3%
+2.2%
-1.5%
—

+61.0%+6.8%
67.8%

Expense Combined
ratio
ratio
17.9%
78.2%
—
+2.2%
—
-1.5%
+0.8%
+0.8%
18.7%
79.7%
—
+6.8%
18.7%
86.5%

•

The Ogden discount rate changed to minus 0.25% (best estimate assumption of 0% at 31
December 2018) reducing the UK Motor profit by £33.3 million, and increasing the reported
combined ratio by almost 7% points•

Excluding the impact of the Ogden rate change, the underlying current period loss ratio was justover 2% points higher than H1 2018. Whilst large bodily injury experience improved in H1 2019
compared to 2018 (full year), Admiral continued to experience claims inflation at a similar overalllevel to the market. The Group continues to reflect a cautious approach in setting reserves early intheir development•

Reserve releases on original net share of reserves of £50.0 million (H1 2018: £56.5 million),
equating to 22% of premium (H1 2018: 26%). Excluding the impact of the Ogden change, releases
would have been 1.5% points higher than H1 2018 (27% of premium; £61.0 million) following
favourable development of prior year claims•

The written basis expense ratio is consistent with 2018, at 17.5%. There are a number ofunderlying factors that influence the net reported expense ratio, including the split of expenses
between acquisition and non-acquisition and the impact of reinsurance expense commissions. The
increase in the period relates to higher non-acquisition cost, including higher levies which ispartially offset by a lower acquisition cost.

6•

As noted above, both claims reserve releases from commuted reinsurance and profit commission
were higher in H1 2019 than H1 2018, as follows:£m

H1 2018
Change in underlying commuted releases
Change in loss on commutation
Change in underlying profit commission
H1 2019 (excluding Ogden change)
Impact of Ogden change (0% to minus 0.25%)
H1 2019 (including Ogden change)

Reservereleases –commutedreinsurance
35.2
-0.3
+27.0

Profitcommission

Total

30.8

—

+13.1
43.9
-8.9
35.0

66.0
-0.3
+27.0
+13.1
105.8
-18.0
87.8

61.9
-9.1
52.8

—
—

•

Releases on reserves originally reinsured but since commuted higher at £52.8 million (v £35.2
million in H1 2018). Excluding the impact of the Ogden change, the variance is larger (£61.9 million,
increased by £26.7 million), primarily as a result of a lower negative impact of commutation (H1
2019: £4.9 million, H1 2018: £31.9 million)•

Underlying profit commission (excluding the Ogden impact) was also higher at £43.9 million (H1
2018: £30.8 million)•

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

Other revenue (including ancillary products underwritten by Admiral) and instalment income
remained relatively flat (£117.7 million v £119.8 million in H1 2018).

There is some evidence that Motor market rates have increased modestly in the latter part of H1 2019,with pressure from claims inflation likely being a driver. Over the last 12 months, Admiral has increased
its rates ahead of the market, prioritising margin over growth. Turnover increased marginally to £1.26
billion (H1 2018: £1.25 billion) whilst net revenue rose 2% to £436.1 million (H1 2018: £425.9 million).
The number of vehicles insured increased by 2% to 4.33 million (30 June 2018: 4.26 million).
Claims and reserves
Notable claims trends for the market in the first half of 2019 include slightly higher overall frequency, aflattening out in injury claims frequency and continuing elevated levels of damage claims costs primarily
as a result of advances in technology. Admiral experienced similar overall claims inflation to the market.
Large bodily injury claims experience (in terms of frequency and total cost) for Admiral was morefavourable in H1 2019 than in 2018.
The Group continues to reserve conservatively, setting claims reserves in the financial statements
significantly above actuarial best estimates to create a margin held to allow for unforeseen adverse
development.

7

As noted above, the Group experienced continued positive development of claims costs on previous
accident years and this led to another significant release of reserves in the financial statements in the
period (£50.0 million on Admiral’s original net share net of the adverse impact of Ogden, H1 2018: £56.5
million). The margin held in reserves remains prudent and at a consistent level to 31 December 2018.
Change in UK discount rate (‘Ogden’)Following the recent announcement by the UK Government, the Ogden discount rate which is used insetting personal injury compensation, was changed to minus 0.25% from the existing minus 0.75% ratethat had been in place since February 2017. The change came into effect on 5 August 2019 and theminus 0.25% rate is likely to remain in place for the next five years.
The minus 0.25% rate is 25 basis points lower than the assumed rate of 0% that was used in setting best
estimate claims reserves at 31 December 2018.
The total impact of the new Ogden rate on profit is expected to be approximately £50-60 million. The
current period impact on profit is £33.3 million and is shown through higher claims incurred and lower
profit commission. The remaining amount is expected to flow through in future periods throughrecognition of unearned premium and lower profit commission.
Co- and reinsurance, commutations and profit commission
Admiral makes significant use of proportional risk sharing agreements, where insurers outside the Group
underwrite 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 which allow 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 thosereported in the 2018 Annual Report and will continue into 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 thebusiness covered by the reinsurance contract.
As at 30 June 2019, all UK car quota share reinsurance contracts for underwriting years up to andincluding 2016 have been commuted, along with the majority of contracts for the 2017 underwriting
year, meaning Admiral assumes a higher net risk for these years than had the reinsurance been left inplace. The 2016 contracts and the remainder of the 2015 contracts were commuted during H1 2018. The
majority of the contracts relating to the 2017 underwriting year were commuted in H1 2019.
In H1 2019 profit commission of £35.0 million was recognised, increased from £30.8 million in the priorperiod. If reserve releases from business that was originally ceded under quota share reinsurance
contracts that have since been commuted are added to profit commission, the total for H1 2019 is £87.8
million compared to £66.0 million in H1 2018, an increase of 33%. This increase is due to positive
development on prior underwriting years and a reduced loss on commutation.
Note 5 to the financial statements analyses profit commission income and reserve
releases by underwriting year.
8Other Revenue and Instalment Income
UK Motor Insurance Other Revenue – analysis of contribution:£m
30 June30 June20172018
Contribution from additional products &
93.4
105.6
fees
Contribution from additional products
underwritten by Admiral*1
6.8
5.9
Instalment income
22.5
37.5
Other revenue
122.7
149.0
Internal costs(26.8)(29.2)Net other revenue
95.9
119.8
*2
Other revenue per vehicle£61£67
Other revenue per vehicle net of internal
costs
£52
£57

30 June2019
102.4

31 Dec
2018
206.5

7.9
42.0
152.3
(34.6)
117.7
£66

13.6
81.4
301.5
(58.3)
243.2
£67

£56

£57

*1 Included in underwriting profit in income statement but re-allocated to Other Revenue for purpose of KPIs.
*2 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 and personal injury covers•

Revenue from other insurance products, not underwritten by Admiral•

Fees such as administration and cancellation fees•

Interest charged to customers paying for cover in instalments

Overall contribution (Other Revenue net of costs plus instalment income) decreased marginally to£117.7 million (H1 2018: £119.8 million). Whilst there were a number of smaller offsetting changes
within the total, the main reason for the slight decrease is reduced optional ancillary contribution, partly
reflecting more transactions completing digitally and changes to the customer journey. This was offset
slightly by increased instalment income primarily arising from growth in the underlying vehicle book.
Other revenue was equivalent to £66 per vehicle (gross of costs; H1 2018: £67) and Net
Other revenue (after deducting costs) per vehicle was £56 (H1 2018: £57).

9

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
2017
48.3
43.7
11.0
(0.6)
2.2
1.6

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

31 Dec
2018
146.0
131.1
31.2
(6.3)
3.3
(3.0)

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

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

30 June
2017
68.7%
36.8%
105.5%—

548,200

30 June 30 June
2018
2019
87.6%
66.8%
32.1%
30.1%
119.7%
96.9%
—
25.3%
778,100 920,900

31 Dec
2018
92.3%
28.1%
120.4%
19.1%
856,800*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
18% to 920,900 (30 June 2018: 778,100), with a similar increase in turnover to £80.0 million (H1 2018:£68.3 million). New business market volumes continued to increase with more customers shopping
around and switching insurer, particularly through the growing comparison channel. Admiral saw anincreasing share of new business volumes through comparison as well as direct and via cross sell toexisting Admiral customers with the Group’s MultiCover product offering.
The first half of 2019 experienced better weather than the previous period, resulting in a profit of £4.2
million (H1 2018: £1.9 million loss). Claims inflation continues albeit with milder weather andsubsidence at more normal levels compared to the same period in 2018.
This resulted in a better reported loss ratio of 66.8% (H1 2018: 87.6%) which was also positively
impacted by favourable emerging experience on the 2018 accident year. Admiral’s expense ratio also
continued to improve (30.1%, down from 32.1%) and similar to the motor business, significantly
outperforms the market expense ratio of around 45%.

10

International Car 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
2017
221.9
197.2
58.2
0.2
(47.3)(28.1)(17.0)
6.9(10.1)

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)

31 Dec
2018
538.7
484.3
141.7
1.3
(104.0)(55.8)(16.8)
15.7(1.1)

30 June
2017
77.6%
45.4%
123.0%
111.2%
0.96m

30 June
2018
77.8%
39.4%
117.2%
105.8%
1.12m

30 June
2019
75.5%
38.4%
113.9%
103.3%
1.36m

31 Dec
2018
76.0%
40.0%
116.0%
105.0%
1.22m

Key performance indicators

Loss ratio*2
Expense ratio*2
Combined ratio*3
Combined ratio, net of Other revenue*4
Vehicles insured at period end*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 impact of reinsurer caps. Including the impact of reinsurer caps the reported combined
ratio would be H1 2019: 115%; H1 2018: 113%; H1 2017: 130%.
*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 2019: 104%; H1 2018: 102%; H1 2017: 118%.

Geographical analysis*1
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

30 June 2018
Vehicles insured at period end
Turnover (£m)

Spain
0.23m
33.8

Italy
0.54m
86.8

France
0.15m
39.1

US
0.20m
100.4

Total
1.12m
260.1

31 Dec 2018
Vehicles insured at period end
Turnover (£m)

Spain
0.25m
67.6

Italy
0.59m
176.8

France
0.17m
80.5

US
0.21m
213.8

Total
1.22m
538.7

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

11

International Insurance financial performance
Admiral’s international insurance businesses continued to grow strongly, with customer numbers 21%
higher than a year earlier. Turnover grew by 23% to £319.5 million (H1 2018: £260.1 million).
The combined ratio, net of other revenue improved to 103.3% (H1 2018: 105.8%). Higher net insurance
premium revenue together with continued improvement in the European operations’ prior year claims
costs was offset by higher current year claims costs in Elephant. H1 2018 also benefitted from afavourable impact of reinsurer caps. This resulted in a higher loss of £2.7 million for the first six
months of 2019 (H1 2018: loss of £0.6 million).
The expense ratio improved to 38.4% (H1 2018: 39.4%) as all businesses grew and continued to pursue
operational efficiencies.
The European insurance operations in Spain, Italy and France insured 1.13m vehicles at 30 June 2019 –23% higher than a year earlier (30 June 2018: 0.92m). Turnover was up 23% at £196.8 million (H1 2018:£159.7 million). The consolidated result of the businesses was a profit of £3.5 million (H1 2018: profitof £2.5 million) driven by continued profitability in Italy. The combined ratio net of other revenue(excluding the impact of reinsurer caps) improved materially to 93% from 99% due to the improved
claims experience and expense ratio.
Admiral Seguros (Spain) focused on sustainable growth and increased retention in a competitivemarket during the first six months of 2019, together with improvements in the customer journey anddigital capabilities. The business grew by 18% to 274,600 customers over the past year (30 June 2018:
233,300).
The Group's largest international operation, ConTe in Italy, increased vehicles insured by 22% to656,000 (30 June 2018: 539,600). The company also invested in media spend with the launch of a new
TV advertising campaign which has contributed to brand awareness and subsequent growth.
L'olivier - assurance auto (France) continued to pursue growth and exceeded the 200,000 vehicle mark,growing by 34% to 203,800 at 30 June 2019. L’olivier also focused on brand development andimproving customer experience through digital improvements during the period. The company also
launched a niche household insurance brand, Homebrella, starting with modest volume in line with theAdmiral test and learn approach.
In the US, Admiral underwrites motor insurance in six states (Virginia, Maryland, Illinois, Texas, Indiana
and Tennessee) through its Elephant Auto business, which increased vehicles insured by 11% to221,900 at 30 June 2019. Turnover was up 22% to £122.7 million (H1 2018: £100.4 million). Elephant
had a higher loss of £6.2 million (from £3.1 million in H1 2018) due to deterioration in loss ratio in H1
as a result of higher claims inflation. Elephant has increased rates materially in response.
Elephant continues to focus on cost control and improving customer service through the digitalchannel, which has contributed to continued improvement in the expense ratio. Overall, the combined
ratio net of other revenue increased slightly to 116% (115% in H1 2018).

12

Comparison£m

30 June2017

30 June2018

30 June2019

31 Dec2018

Revenue
Car insurance comparison
Other
Total Revenue
ExpensesProfit before tax

55.2
17.3
72.5
(70.1)
2.4

57.0
19.6
76.6
(74.0)
2.6

59.0
24.4
83.4
(78.0)
5.4

110.1
40.9
151.0
(144.4)
6.6

Confused.com profit
International comparison result
Statutory profit before tax

4.5
(2.1)
2.4

5.8
(3.2)
2.6

8.7
(3.3)
5.4

14.3
(7.7)
6.6

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

4.5
(1.4)
3.1

5.8
(2.3)
3.5

8.7
(1.3)
7.4

14.3
(5.5)
8.8

*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 2019, Confused.com
performed very strongly, with turnover increasing by 14% to £54.2 million (H1 2018: £47.7 million) as aresult of growth in market share in both motor and household insurance. Confused.com continued to
improve the customer and product proposition, and also saw increases in brand awareness and media
effectiveness. Profit increased to £8.7 million (H1 2018: £5.8 million). The business also continued toinvest in technology to support current projects and future growth opportunities.
Admiral operates several comparison businesses outside the UK including Rastreator (Spain), LeLynx(France), and compare.com (US). In addition, the 2019 comparison result includes Preminen, theGroup’s newest comparison operation, which was previously included in business development costsin ‘Other Group items’. The Group owns 75% of Rastreator, with the remaining 25% owned by Mapfre.
The Group owns 59.25% of compare.com, with the remaining 40.75% owned by minority interests.
The Group owns 50% of Preminen, with the other 50% owned by Mapfre.
Admiral announced in April 2019 the proposed acquisition of Acierto, a digital insurance broker inSpain, by Rastreator in partnership with Oakley Capital. The joint venture is still subject to approval by
the EU antitrust authorities, and hence the acquisition and subsequent accounting for the joint
operation will be completed after approval.
Combined revenue for the European operations in the first half of 2019 increased by 9% to £25.0
million (H1 2018: £23.0 million). The Group’s share of the combined result for Rastreator and LeLynx
was a profit of £2.1 million (H1 2018: £0.9 million). The result shows an improvement in bothbusinesses whilst they continued to invest in a more diversified product range in the context of acompetitive market environment.
During the first half of 2019 in the US, Admiral’s share of compare.com’s loss reduced to £2.8 million
before tax (H1 2018: £3.2 million), partly as a result of Admiral’s reduced shareholding (from 71% to59.25%) with the total result being broadly flat. compare.com continued to experience challenging
13

market conditions and the business subsequently downsized to a smaller team and more agile approachto adapt to these market conditions.
A non-cash impairment charge of £25.7 million was recognised in the first half of 2019 by the parent
company in respect of its investment in compare.com. This followed the regular review of the carrying
values of subsidiary companies and a review of the long-term strategy of compare.com, and reflects an
impairment to the current net asset value of the business to reflect the considerable uncertainty over
the timing and level of future profitability of the business. The impairment charge is recognised in theincome statement of the parent company and has no impact on the Group’s consolidated profit for theperiod or the Group’s current regulatory capital position.
Preminen continues to explore the potential of comparison in new markets overseas, in partnership with
Mapfre. Current operations include Rastreator.mx in Mexico, Tamoniki.com in Turkey, and GoSahi.com
in India.
The combined result for International Comparison was therefore a loss of £1.3 million (H1 2018: loss
£2.3 million) – driven by an improvement in the performance of the European comparison businesses.
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 June2017(16.9)
(1.6)
7.3
(4.3)
(3.2)
(5.6)
(24.3)

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)

31 Dec2018(49.0)(11.8)
2.9(4.3)(10.5)(11.3)(84.0)

Share scheme charges relate to the Group’s two employee share schemes (refer to note 9 in thefinancial statements). The increase in the charge is driven by an improvement in the vesting assumptions
for variable awards in general due to strong financial performance and shareholder return, and a higher
share price period on period.
Other interest and investment income in H1 2017 included a £5.4 million realised gain from the sale ofinvestments held by the Group which was not repeated in H1 2018 or H1 2019. The increase in income in
H1 2019 compared to H1 2018 relates to a lower level of unrealised losses on forward contracts in H1
2019.
Business development costs include costs associated with potential new ventures. The costs associatedwith Preminen have been included within the Comparison segment above for the first time in 2019,
explaining the decrease in business development costs in the period.
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, the Brexit restructure and IFRS17. The
increase in the period is due to a higher adverse impact of foreign exchange movements.
14

Finance charges of £5.5 million (H1 2018: £5.6 million) primarily relate to interest on the £200 million
subordinated notes issued in July 2014 (refer to note 7 to the financial statements).
Admiral Loans£m
Total interest income
Interest expense*1
Net interest income
Other fee income
Total income
Expenses
Admiral Loans Result*1

30 June
2017
0.2
(0.1)
0.1

30 June
2018
5.1
(1.2)
3.9

—

—

0.1
(1.7)
(1.6)

3.9
(10.3)(6.4)

30 June
2019
13.3
(4.1)
9.2
0.9
10.1
(14.4)(4.3)

31 Dec
2018
15.0
(4.3)
10.7
0.4
11.1
(22.9)(11.8)

Includes £1.2 million intra-group interest expense (H1 2018: £0.3 million)

Background
Admiral Loans launched in 2017, and currently distributes unsecured personal loans and car financeproducts through the comparison channel and also direct to consumers via the Admiral website.
The Group employs a prudent test and learn approach regarding growth in customers and loan
advances, consistent with other new business launches. Initial results are encouraging, and thebusiness has grown significantly since launch, with loan balances increasing to £421 million in the firsthalf of 2019 (H1 2018: £214m, H2 2018: £300 million). The Group continues to expect the business tomake losses in its early phase as a result of the upfront accounting for acquisition costs as opposed tointerest income earned on loans which is spread over the life of the loans. Admiral continues to be
encouraged by the performance of the business and the credit quality of the loans portfolio.
Admiral Loans is currently funded through a combination of internal funding and further externalfunding. The external portion funds approximately 60% of the current loans balance through thesecuritisation of certain loans via transfer 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 of risk from the Group.
ResultAdmiral Loans recorded a pre-tax loss of £4.3 million in the first half of 2019 (decreased from £6.4
million in H1 2018). The lower loss predominantly reflects the increased interest income in the period,
offset to an extent by increased provisions against the loan book due to its growing size.
Capital structure and financial position
Admiral’s capital-efficient and profitable model led to a return on equity of 47% (H1 2018: 54%) withthe reduction in the ratio due to the impact of the Ogden change. A continuing key feature of thebusiness model is the extensive use of co- and reinsurance across the Group. The Group’s co-insurance
and quota share reinsurance arrangements for the UK Car insurance business are in place until at least
the end of 2020. The Group’s net retained share of that business is 22%. Munich Re will underwrite
40% of the business (through co-insurance and reinsurance arrangements) until at least the end of
2020.
15

Similar long-term arrangements are in place in the Group’s International Insurance operations and UK
Household and Van Insurance business.
The Group continues to manage its capital to ensure that all entities within the Group are able tocontinue as going concerns and that regulated entities comfortably meet regulatory capitalrequirements. Surplus capital within subsidiaries is paid up to the Group holding company in the formof dividends.
The Group continues to develop its partial internal model to form the basis of calculation of its capitalrequirement in the future, although does not expect to submit the application during 2019 andpossibly not in 2020. In the interim period before submission, the Group will continue to use thecurrent standard formula plus capital add-on basis to calculate its regulatory capital requirement.
The estimated (and unaudited) Solvency II position for the Group at the date of this report was asfollows:
Group capital position (estimated and unaudited)
Eligible Own Funds (pre 2019 interim dividend)2019 interim dividend
Eligible Own Funds (post 2019 interim dividend)
Solvency II capital requirement*1
Surplus over regulatory capital requirement
Solvency ratio (post dividend)

£bn
1.34
(0.18)
1.16
0.61
0.55
190%

*1 Solvency capital requirement includes updated capital add-on which remains subject to regulatory approval.

The Group maintained a strong solvency ratio at 190% (post-dividend), which has reduced from 194%
at 2018 year end (H1 2018: 196%). Whilst the surplus over the regulatory capital requirement has
increased since 31 December 2018, increases in both Own Funds and SCR of a similar order result in amodest reduction in solvency ratio. The increase in Own Funds is the result of the strong generation of
economic profit, in particular due to favourable movements of ultimate outcomes on priorunderwriting years. The SCR increase is primarily due to the implementation of the new leasing
standard, IFRS 16 as well as an increase in the capital requirement for the loans business.
The Group’s capital includes £200 million ten year dated subordinated bonds. The rate of interest isfixed at 5.5% and the bonds mature in July 2024. The bonds qualify as tier two capital under the
Solvency II regulatory regime.
Estimated sensitivities to the current Group solvency ratio are presented in the table below. Thesesensitivities cover the two most material risk types, insurance risk and market risk, and within theserisks cover the most significant elements of the risk profile. Aside from the catastrophe events,
estimated sensitivities have not been calibrated to individual return periods.

16

Solvency ratio sensitivities
30 June
2019
-22%
-1%
-2%
-8%
-8%
-4%
-7%

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%

30 June
2018
-27%
-2%
-2%
-12%
-5%
-3%
-10%

Investments and cash
Admiral’s investment strategy was unchanged in H1 2019 and the Group continued to invest in the sameasset classes as previous years.
The main focus of the Group’s strategy is capital preservation, with additional priorities including low
volatility of returns and high levels of liquidity. 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

30 June2017
1,496.4

30 June2018
1,542.5

30 June2019
1,827.6

31 Dec2018
1,568.6

968.8
130.0
348.6
2,943.8

1,203.8130.0
309.5
3,185.8

1,029.3
88.7
461.4
3,407.0

1,301.1
100.0
376.8
3,346.5

Total investment return in the first half of 2019 was £18.3 million (H1 2018: £17.2 million), which
includes unrealised losses of £4.9 million (H1 2018: £1.4 million). The underlying rate of return,excluding unrealised losses, on the Group’s cash and investments was 1.4% (H1 2018: 1.3%). Somerebalancing has taken place across some items to maximise portfolio outcomes in line with theinvestment strategy.
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.
Taxation
The tax charge reported on a statutory basis is £37.0 million (H1 2018: £34.8 million), which equates to
16.9% (H1 2018: 16.5%) of profit before tax.
UK Exit from the European Union (‘Brexit’)
Admiral adopted a prudent approach to Brexit and has set up new entities in Europe under which theEuropean operations have traded since 1 January 2019. All of the Group’s European insurance businessis now underwritten by a regulated entity in Spain, Admiral Europe Compania Seguros (AECS). The
Group’s European comparison businesses Rasterator and LeLynx have successfully been merged into
17

comparison companies established in Spain (Comparaseguros Corredia de Seguros) and France (LeLynx
SAS) respectively.
Brexit continues to bring risks, particularly the possibility of a ‘no deal’ Brexit, to the Group including:•

The potential for market volatility, and the potential for the uncertainty or the emerging terms ofexit to trigger or exacerbate less favourable economic conditions in the UK and other countries inwhich Admiral operates (though it is worth noting that car insurance has tended to be resilient toeconomic downturns; and Admiral Loans has adopted a cautious approach to volumes and credit
quality in advance of Brexit)
As part of the Own Risk and Solvency Assessment (“ORSA”) process, the Group has performed astress testing exercise for its Brexit assessment of the impact of a recession through 2019 on the UK
insurance business, including the increase in claims costs following a spike in inflation. This includes
negative movement in interest rates, currency, investment yields, inflation, unemployment andGDP, which could be experienced under a ‘hard’ Brexit scenario (i.e. no deal outcome). Given the
results of the stress testing the Group is comfortable that it is able to manage the potential
outcomes of such scenarios should they occur.
Also as part of the ORSA process, a specific economic stress test scenario which captures thepotential outcomes from a ‘no deal’ Brexit has been applied to the Admiral Loans business in order
to assess the potential impact. The stress results in an increase in the loss provision that would be
required as a result of the deterioration in economic environment. As for the UK insurance
business, the Group is comfortable that it is able to manage the potential outcomes based on the
results of the stress test and relevant management actions.

•

Potential changes to the rules relating to the free movement of people between the UK and theremaining EU member states. The Group has followed external advice on planning for the small
number of EU citizens working within the UK and UK citizens working in the EU, for the Group;•

Potential for impact on the import of car parts with potential impact on claims costs. A working
group is in place to manage and review this risk, with commercial negotiations ongoing to mitigate
risks arising from a “no deal” Brexit;

At present, the Group does not foresee a material adverse impact on day-to-day operations (including
customers or staff). The Group recognises the potential economic disruption that may arise from a ‘nodeal’ Brexit. Whilst the Group is comfortable that it is able to manage potential outcomes following thereview of the stress testing noted above, it recognises the uncertainties that exist in relation to Brexit
and the potential for adverse impacts to the Group’s capital position and future dividend payments.
Sensitivities to the Group’s regulatory solvency ratio are presented earlier in this report, including a
number of specific market risk sensitivities. The cost of the restructuring activity has not been material
to the Group.

Principal Risks and Uncertainties
Admiral has performed a robust assessment of the principal risks facing Admiral, including those which
would threaten its business model, future performance, liquidity and solvency. The result of this18

assessment is that the principal risks and uncertainties are consistent with those reported in theGroup's 2018 Annual Report and Accounts, pages 52-57.
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.
Unless otherwise required by applicable law, regulation or accounting standard, the Group does notundertake to update or revise any forward-looking statements, whether as a result of new information,
future developments or otherwise.

19

Condensed consolidated income statement (unaudited)
6 months ended

Note

Insurance premium revenue
Insurance premium ceded to reinsurers

Year ended

30 June2019£m

30 June2018£m

31 December
2018£m

1,080.4(731.2)

1,002.6(678.9)2,079.6(1,407.8)

Net insurance premium revenue
Other revenue
Profit commission

5
8
5

349.2
233.1
36.1

323.7
223.4
29.6

671.8
449.2
93.2

Interest income
Interest expense

6

13.3
(2.9)

5.1
(0.9)

15.0
(3.6)

10.4

4.2

11.4

Net interest income from loans
Investment return

18.3

17.2

36.0

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

6

647.1
(788.3)598.1(717.5)

1,261.6(1,513.8)

588.3

537.3

1,163.7

Net insurance claims
Operating expenses and share scheme charges
Operating expenses and share scheme charge recoverable from co- andreinsurers(200.0)(437.9)(180.2)(429.1)(350.1)(842.8)

9

215.2

227.5

418.8

Net operating expenses and share scheme charges(222.7)(201.6)(424.0)Total expenses(422.7)(381.8)(774.1)

Operating profit
Finance costs
Finance costs recoverable from co- and reinsurers
Net finance costs

224.4
(7.5)
1.3
(6.2)

216.3
(5.6)
(5.6)

487.5
(11.3)(11.3)

218.2(37.0)

210.7(34.8)

476.2(85.7)

Profit after tax

181.2

175.9

390.5

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

183.2
(2.0)

177.2
(1.3)

395.1
(4.6)

181.2

175.9

390.5

Profit before tax
Taxation expense

9

6
6

10

Earnings per share
Basic

12

63.0p

61.6p

137.1p

Diluted

12

62.9p

61.5p

136.8pDividends declared and paid (total)
Dividends declared and paid (per share)

12
12

188.0
66.0p

163.3
58.0p

332.7
118.0p20

Condensed consolidated statement of comprehensive income (unaudited)
6 months ended
30 June2019£m

30 June2018£mYear ended
31 December
2018
£m

181.2

175.9

390.5

29.6
(1.4)
(0.7)
(1.3)

(15.1)
0.4(0.8)—(24.0)
0.7
2.2
(0.3)

Other comprehensive income for the period, net of income tax

26.2(15.5)(21.4)

Total comprehensive income for the period

207.4

160.4

369.1

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

209.5
(2.1)

161.8
(1.4)

373.7
(4.6)

207.4

160.4

369.1

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 reserve21Condensed consolidated statement of financial position (unaudited)
30 June
2019
£m

As at
30 June2018£m

31 December
2018
£m

11
11
10
5
7
7
7
7

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

28.1
162.8
4.4
1,608.5
1,124.8
214.2
2,876.3
309.5
6,328.6

28.1
162.0
0.2
1,883.5
1,082.0
300.2
2,969.7
376.8
6802.5

12

0.3
13.1
57.7
740.0
811.1
11.5
822.6

0.3
13.1
37.0
620.0
670.4
8.3
678.7

0.3
13.1
31.4
713.5
758.3
12.8
771.1

5
7
7,11
7
10

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

3,543.5
404.0
1,664.0—
38.4
5,649.9

3,736.4444.2
1,801.5—
49.3
6,031.4

7,233.3

6,328.6

6,802.5

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
Current tax liabilities
Total liabilities
Total equity and total liabilities

22

Condensed consolidated cash flow statement (unaudited)
6 months ended

Year ended

30 June2019£m

30 June2018£m

31 December
2018
£m

181.2

175.9

390.5

12.3
8.2
6.0
26.5
(13.3)
11.6(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

6.1
7.5
4.0
21.9
(5.1)
4.2
(17.2)
6.5
34.8
229.6
29.1
(188.1)(152.0)22.4
179.6(538.2)
358.7
4.0
4.1
(21.0)(16.9)

12.0
15.5
8.9
49.8
(15.0)
13.6(36.0)
14.9
85.7
422.5
(245.9)(145.0)(242.9)159.9488.5(1,830.2)
1,573.4
8.0
239.7(55.6)
184.1

Cash flows from investing activities:
Purchases of property, equipment and software
Net cash used in investing activities(13.5)(13.5)(11.0)(11.0)(23.9)(23.9)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
Principal elements of lease payments
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

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

—
—
180.0
(6.1)
—
(163.3)
10.6(17.3)
326.8
—
309.5

19.3
168.3
51.9
(14.1)—(332.7)(107.3)
52.9
326.8
(2.9)
376.8

Note

Profit after tax
Adjustments for non-cash items
Depreciation
Amortisation of software
Movement in provision for loans and advances to customers
Share scheme charges
Loans: interest income receivable
Loans: interest income received
Investment return
Finance costs, including interest expenses on funding for loans
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 financials 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

12

7

23

Condensed consolidated statement of changes in equity (unaudited)
For the half year ended 30 June 2019
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 2018
Profit/(loss) for the period
Other comprehensive income
Movements in fair value reserve
Deferred tax charge in relation to
movement in fair value 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
Total transactions with equity
holders
As at 30 June 2018

0.3
—

13.1
—

36.4
—

—
—

16.0
—

580.3
177.2

646.1
177.2

9.7
(1.3)

655.8
175.9

—

—

(15.1)———(15.1)—(15.1)

—
—

—
—

0.4
—

—
—

—
(0.7)

—
—

0.4
(0.7)

—
(0.1)

0.4
(0.8)

—

—

(14.7)

—

(0.7)

177.2

161.8

(1.4)

160.4

—
—

—
—

—
—

—
—

—
—

(163.3)24.9(163.3)24.9——(163.3)
24.9

—
—

—
—

—
—

—
—

—
—

0.9
—

0.9
—

—
—

0.9
—

—
0.3

—
13.1

—
21.7

—
—

—
15.3

(137.5)620.0(137.5)
670.4

—
8.3

(137.5)678.7

At 1 January 2018
Initial application of IFRS 9
Adjusted balance at 1 January 2018
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
Total transaction with equity
holders
As at 31 December 2018

0.3
—
0.3
—

13.1
—
13.1
—

36.4
0.4
36.8
—

—
—
—
—

16.0
—
16.0
—

580.3
(0.4)
579.9
395.1

646.1
—
646.1
395.1

9.7
—
9.7
(4.6)

655.8
—
655.8
390.5

—

—

(24.0)———(24.0)—(24.0)

—
—
—

—
—
—

0.7
—
—

—
(0.3)
—

—
—
2.2

—
—
—

0.7
(0.3)
2.2

—
—
—

0.7
(0.3)
2.2

—

—

(23.3)

(0.3)

2.2

395.1

373.7

(4.6)

369.1

—
—

—
—

—
—

—
—

—
—

(332.7)56.7(332.7)
56.7

(0.4)
—

(333.1)
56.7

—
—

—
—

—
—

—
—

—
—

3.3
11.2

3.3
11.2

—
8.1

3.3
19.3

—
0.3

—
13.1

—
13.5

—
(0.3)

—
18.2

(261.5)713.5(261.5)
758.3

7.7
12.8

(253.8)771.1

24

Condensed consolidated statement of changes in equity (unaudited) (continued)
For the half year ended 30 June 2019

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 sharescheme credit
Contributions by NCIs
Changes in ownership interests
without a change in control
Total transactions with equity
holders
As at 30 June 2019

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
—

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

25

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 2019 and the comparative periods forthe six-months ended 30 June 2018 and the year ended 31 December 2018. 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 2018 (“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 2018, 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 2018 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 2018, other than for the adoption of IFRS 16 as outlined
below.

26

A number of other IFRS and interpretations have been endorsed by the EU in the period to 30 June 2019
and although they have been adopted by the Group, none of them has had a material impact on theGroup’s financial statements.
The Group’s assessment of the impact of standards that have yet to be adopted remains consistent withthat reported on page 129 of the Group’s 2018 Annual Report.
The accounts have been prepared on a going concern basis. In considering this requirement, theDirectors have taken into account the following:•••

The Group’s projections for the next 12 months and beyond, in particular the profit forecasts,
regulatory capital surpluses and levels and sources of liquidity;
The risks included on the Group’s risk register that could impact on the Group’s financial
performance, levels of liquidity and solvency over the next 12 months; andThe risks on the Group’s risk register that could be a threat to the Group’s business model andcapital adequacy.

The Group’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report in the 2018 Annual Report. An update to
the Group’s principal risks and uncertainties since the 2018 year end is included in the review precedingthese financial statements. In addition, the Governance Report in the 2018 Annual Report includes the
Directors’ statement on the viability of the Group over a three year period.
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 not less than 12 months
from the date of this report, and that it is therefore appropriate to adopt the going concern basis inpreparing the 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 Group and Company financial statements are presented in pounds sterling, rounded to the nearest£0.1 million.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The acquisition date is the date on which control istransferred 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.

27

The preparation of financial statements requires management to make judgements, estimates andassumptions 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 experienceand various other factors that are believed to be reasonable under the circumstances, the results ofwhich form the basis of making the judgements about carrying values of assets and liabilities that are
not readily apparent from other 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.
Adoption of new accounting standards: IFRS 16
During the year the Group has adopted IFRS 16 Leases with a date of initial application of 1 January
2019.
IFRS 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, asa lessee, has recognised right-of-use assets representing its rights to use the underlying assets andlease liabilities representing its obligations to make lease payments.
As permitted by the transitional provisions of IFRS 16 the Group has elected to use the modified
retrospective approach, and as such has not restated prior year comparatives (which are presented, as
previously reported, under IAS 17 and related interpretations).
The adjustments arising from transition are recognised in the opening balance sheet on 1 January 2019,
and are set out below along with details of the changes in accounting policies relating to IFRS 16 as
applied in the period.
a)Definition of a lease and practical expedients applied

Previously, the Group determined at contract inception whether an arrangement was or contained alease under IFRIC 4 Determining Whether an Arrangement contains a Lease. The Group now assesses
whether a contract is or contains a lease based on the new definition of a lease, which under IFRS 16
is where a contract conveys a right to control the use of an identified asset for a period of time inexchange for consideration.
The Group has also used the following practical expedients permitted by the standard:• the use of a single discount rate to a portfolio of leases with reasonably similar
characteristics;• the use of hindsight in determining the lease term where the contract contains options toextend or terminate the lease;• the exclusion of initial direct costs for the measurement of the right-of-use asset at the dateof initial application.
b) Impact of transition
On adoption of IFRS 16, the Group recognised additional right-of-use assets, and additional lease28

liabilities in relation to leases which were previously classified as ‘operating leases’ under IAS 17 Leases.
The liabilities were measured at the present value of the remaining lease payments, discounted using
the Group’s incremental borrowing rate as of 1 January 2019. The weighted average incremental
borrowing rate (discount rate) applied is 2.4%.
A reconciliation of the Group’s lease liabilities to the operating lease commitment at 31 December
2018 as disclosed in the Group’s consolidated financial statements is shown below.

Operating lease commitments disclosed as at 31 December 2018
Impact of extension options exercised before the date of initial application *1
Impact of changes in relation to IFRS 16 treatment*1
Adjusted operating lease commitments under IFRS 16
Impact of discount at the date of initial application
Lease liability recognised at 1 January 2019
Current
Non-current

2019
£m
185.9
12.7
(24.0)
174.6(25.4)
149.2
10.5
138.7

*1 Following a review of lease extension options and variable lease payments during the IFRS 16 transition process, theoperating lease commitments disclosed as at 31 December 2018 have been amended to reflect the impact of a different
treatment of inflation and VAT within lease agreements, and lease extensions that had occurred before the transition date
but were not previously disclosed.

The associated right-of-use assets have been measured retrospectively, at an amount equal to thelease liability, adjusted by the amount of any prepaid or accrued payments relating to that leaserecognised in the statement of financial position as at 31 December 2018. There were no onerous lease
contracts that would have required an adjustment to the right-of-use asset at the date of initial
application.
All right-of-use assets relate to property leases held by the Group.
The following adjustment was recognised on the date of initial application:

ROU Lease Assets
Trade and other payables- invoice accrual
Trade and other payables- rent free accrual
Lease Liability

1 January 2019
£m
136.7
1.1
11.4
(149.2)c)
Accounting Policies
The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years
although these may have extension options. Lease terms are negotiated on an individual basis andcontain a wide range of different terms and conditions. The lease agreements do not impose any
covenants, but leased assets may not be used as security for borrowing purposes.
Under IAS 17, all Group leases were classified as operating leases. Operating lease payments, including
the effects of any lease incentives, were recognised in the income statement on a straight-line basis
over the lease term.
From 1 January 2019, for each lease a right-of-use asset and corresponding lease liability arerecognised at the date at which the leased asset becomes available for use by the Group.
29

The lease liability is initially measured at the present value of remaining lease payments, which include
the following:• fixed payments (including in-substance fixed payments), less any lease incentives receivable• variable lease payment that are based on an index or a rate
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercisingthat option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
determined, the Group’s incremental borrowing rate is used, being the rate that the Group would haveto pay to borrow the funds necessary to obtain an asset of a similar value in a similar economic
environment, with similar terms and conditions. Generally, the Group uses its incremental borrowing
rate as the discount rate.
Subsequently, lease payments are allocated to the lease liability, split between repayments of principle
and interest. A finance cost is charged to the profit and loss so as to produce a constant period rate ofinterest on the remaining balance of the lease liability.
The right-of-use asset is measured at cost, which comprises the following:• the amount of the initial measurement of lease liability• any lease payments made at or before the commencement date less any lease incentives
received• any initial direct costs, and• restoration costs.
The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset’s
useful life on a straight-line basis.
The Group does not have any significant leases which qualify for the short term leases or leases of lowvalue assets exemptions.

3.

Critical accounting judgements and estimates

The Group’s 2018 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. Note 5 provides further information as to the changes in theestimates with respect to the calculation of insurance reserves.

4.

Operating segments

The Group has four reportable segments; UK Insurance, International Car Insurance, Comparison andOther, as set out on page 132 of the Group’s 2018 Annual Report.

30

Segment income, results and other information
An analysis of the Group’s revenue and results for the period ended 30 June 2019, by reportablesegment, is shown below. The accounting policies of the reportable segments are consistent withthose presented in the notes to the 2018 Group financial statements.
Half-year ended 30 June 2019
UK
Insurance£mInternational
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
Net revenue
Net insurance claims
Expenses*3
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*3
Consolidated profit before tax
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 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 £0.7m 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.

31

Revenue and results for the corresponding reportable segments for the period ended 30 June2018 are shown below.
Half-year ended 30 June 2018
UK
Insurance£mInternational
Car
Insurance£mComparison
£m

Other
£m

Eliminations*2
£m

Total
£m

Turnover*1

1,319.1

260.1

76.6

6.2

(10.5)

1,651.5

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

254.6
176.7
15.8
447.1
(129.0)(70.5)
247.6

69.1
9.0
0.6
78.7
(51.2)(28.1)
(0.6)

—
76.6
—
76.6
—
(74.0)
2.6

—
5.1
—
5.1
—
(13.1)(8.0)—(10.2)(0.3)(10.5)
—
10.5
—

323.7
257.2
16.1
597.0
(180.2)(175.2)
241.6

Other central revenue and expenses, including share scheme charges
Investment and interest income
Finance costs
Consolidated profit before tax
Taxation expense
Consolidated profit after tax(26.4)
1.1
(5.6)
210.7
(34.8)
175.9*1 Turnover is an Alternative Performance Measure 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.

Revenue and results for the corresponding reportable segments for the year ended 31 December
2018 are shown below.

UK Insurance£mYear ended 31 December 2018
International
Car
Insurance
Comparison
Other
£m
£m
£m

Eliminations*2
£m

Total
£m

Turnover*1

2,575.7

538.7

151.0

17.5

(19.3)

3,263.6

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

523.9
389.5
32.3
945.7
(242.5)(146.5)
556.7

147.9
18.6
1.3
167.8
(107.6)(61.3)
(1.1)

—
151.0
—
151.0
—
(144.4)
6.6

—
13.3
—
13.3
—
(26.9)(13.6)—(18.6)(0.7)(19.3)
—
19.3
—

671.8
553.8
32.9
1,258.5(350.1)(359.8)548.6

Other central revenue and expenses, including share scheme charges
Investment and interest income
Finance costs
Consolidated profit before tax
Taxation expense
Consolidated profit after tax(64.2)
3.1(11.3)
476.2(85.7)
390.5*1 Turnover is an Alternative Performance Measure 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.

32

Segment revenues
The UK and International Car Insurance reportable segments derive all insurance premium income
from external policyholders. Revenue within these segments is not derived from an individual
policyholder that represents 10% or more of the Group’s total revenue.
The total of Comparison revenues from transactions with other reportable segments is £9.7 million(H1 2018: £10.5 million, FY 2018: £19.3 million) which has been eliminated on consolidation, alongwith £1.2 million of intra-group interest charges (H1 2018: £0.3 million, FY 2018: £0.7 million). There
are no other transactions between reportable segments.
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 Car Insurance reportable segment shown above.
The revenue and results of the four International Comparison businesses; Rastreator, LeLynx,
compare.com and Preminen are not yet material enough to be presented as a separate segment.

33

5.

Premium, Claims and Profit Commissions

5a.

Net insurance premium revenue
30 June2019£m

30 June2018£m

31 December
2018£mTotal insurance premiums written before co-insurance*1

1,474.0

1,401.1

2,754.1

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

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

1,085.7(733.4)352.3(83.1)
54.5
323.7

2,166.7(1,464.3)
702.4(87.1)
56.5
671.8*1 Alternative Performance Measures – refer to the end of the report for definition and explanation, and to note 13afor reconciliation 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 Elephant Insurance
Company. All contracts are short-term in duration, lasting for 12 months or less.

5b.

Profit commission

Underwriting year (UK car only)
2014 & prior
2015
2016
2017
2018
2019
Total UK motor profit commission
Total UK household profit commission
Total profit commission

30 June2019£m

30 June2018£m

31 December
2018
£m

3.8
10.1
9.7
11.4
—
—
35.0
1.1
36.1

13.8
5.9
11.1
—
—
—
30.8
(1.2)
29.6

61.1
11.0
22.9
—
—
—
95.0
(1.8)
93.2

34

5c.

Reinsurance assets and insurance contract liabilities(i)

Analysis of recognised amounts:
30 June2019£m

30 June2018£m

31 December
2018
£m

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

2,851.5
1,077.6
3,929.1

2,556.1
987.4
3,543.5

2,740.5
995.9
3,736.4

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

1,168.9717.0
1,885.9

950.0
658.5
1,608.5

1,220.1
663.4
1,883.5

Net
Claims outstanding*2
1,682.6
1,606.1
1,520.4
Unearned premium provision
360.6
328.9
332.5
Total insurance liabilities - net
2,043.2
1,935.0
1,852.9*1 Gross claims outstanding at 30 June 2019 is presented before the deduction of salvage and subrogation recoveries
totaling £63.3 million (30 June 2018: £50.9 million, 31 December 2018: £56.4 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 areincluded 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 grossand net basis. This data is presented on an underwriting year basis.

Gross

30 June2019£m

30 June2018£m

31 December
2018£mUnderwriting year (UK Motor Insurance):
2014 & prior
2015
2016
2017
2018
Total gross release (UK Motor Insurance)
Total gross release (UK Household Insurance)
Total gross release (International Car Insurance)
Total Gross Release

12.1
20.5
19.0
63.6
24.2
139.4
9.0
23.6
172.0

38.4
35.8
42.1
24.0
—
140.3
4.1
16.3
160.7

123.6
50.9
70.6
25.4
—
270.5
4.6
35.2
310.3

35

-

Net

30 June2019£m

30 June2018£m

31 December
2018£mUnderwriting year (UK Motor Insurance):
2014 & prior
2015
2016
2017
2018
Total net release (UK Motor Insurance)
Total net release (UK Household Insurance)
Total net release (International Car Insurance)
Total net release

12.1
20.5
19.0
43.6
7.6
102.8
2.7
9.0
114.5

38.4
27.3
18.6
7.5
—
91.8
1.2
6.0
99.0

123.4
42.5
47.1
8.0
—
221.0
1.4
13.5
235.9

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

50.0
52.8
102.8

56.6
35.2
91.8

111.4
109.6
221.0

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

Net

Underwriting year:
2014 & prior
2015
2016
2017
Total releases on commuted quota share reinsurance contracts

30 June2019£m

30 June2018£m

31 December
2018
£m

6.1
11.9
11.1
23.7
52.8

21.7
12.4
1.1
—
35.2

70.6
21.3
17.7
—
109.6

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

30 June

UK Car Insurance loss ratio development

2015

2016

2017

2018

2019

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

87%
—
—
—
—

87%
88%
—
—
—

83%
84%
87%
—
—

77%
77%
83%
92%
—

75%
76%
78%
88%
95%

36

(iii)

Reconciliation of movement in claims provision
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

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)
1,682.6

Gross£m

30 June 2018
Reinsurance
£m

Net
£m

2,403.2
858.7(160.7)—(545.1)2,556.1(1,028.8)(585.5)
61.7
310.4
292.2
(950.0)1,374.4
273.2(99.0)
310.4(252.9)1,606.1

Gross£m

31 December 2018
Reinsurance
£m

Net
£m

2,403.2
1,786.2(310.3)—(1,138.6)
2,740.5(1,028.8)(1,212.0)
74.4
310.4
635.9
(1,220.1)

1,374.4
574.2(235.9)310.4(502.7)
1,520.4

37

(iv)Reconciliation of movement in net unearned premium provision
30 June 2019
Gross
£m

Reinsurance
£m

Net
£m

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

Gross
£m

30 June 2018
Reinsurance
£m

Net
£m

910.7

(608.8)

301.9

Written in the period

1,085.7(733.4)

352.3

Earned in the period(1,009.0)

683.7(325.3)987.4(658.5)

328.9

Gross
£m

31 December 2018
Reinsurance
£m

Net
£m

Unearned premium provision at start of period

Unearned premium provision at start of period

Unearned premium provision at end of period

Unearned premium provision at start of period

910.7(608.8)

301.9

Written in the period

2,166.7(1,464.3)

702.4

Earned in the period(2,081.5)

1,409.7(671.8)995.9(663.4)332.5

30 June2019£m

30 June2018£m

31 December
2018£m

On assets classified as Fair Value Through Profit and Loss (FVTPL)

4.3

1.8

6.3

On debt securities classified as Fair Value through Other Comprehensive
Income (FVOCI)*3

14.9

13.0

23.8

On deposits with credit institutions*1

0.9

1.3

3.0

On government gilt assets*1

2.1

2.0

4.1

Unrealised losses on forward contracts

(0.4)

(1.4)

(2.3)

Notional accrual for reinsurers share of investment return

(4.5)

—

—

Interest receivable on cash and cash equivalents*1

1.0

0.5

1.1

Total investment and interest income*2

18.3

17.2

36.0

Unearned premium provision at end of period

6.

Investments

6a.

Investment return

Investment return

Net unrealised losses*1 – Interest received during the period was £8.6 million (30 June 2018: £4.0 million, 31 December 2018: £8.0 million)*2 – Total investment return excludes £1.2 million of intra-group interest (30 June 2018: £0.3 million, 31 December 2018: £0.7
million)*3 - Realised gains/losses on sales of debt securities classified as FVOCI are immaterial

38

6b.

Finance costs
30 June2019£m

30 June2018£m

31 December
2018£mInterest payable on subordinated loan notes

5.5

5.6

11.3

Interest payable on Lease Liabilities

2.0

—

—

Interest recoverable from co and re-insurers

(1.3)

—

—

Total finance costs*1

6.2

5.6

11.3

*1 - Interest paid during the year to date was £7.3 million (30 June 2018: £5.5 million, 31 December 2018: £11.0 million)

Finance costs include interest payable on the £200 million (30 June 2018: £200 million, 31 December 2018:£200 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. Further detail on the transition to IFRS 16 is included in note 2.

6c.

Interest expense
30 June2019£m

30 June2018£m

31 December
2018£mInterest payable on Loan backed securities

2.6

—

1.7

Interest payable on revolving credit facility

0.3

0.9

1.9

2.9

0.9

3.6

Total finance costs*1*1 Interest paid in total during the year to date was £3.1 million (30 June 2018: £0.6 million, 31 December 2018: £3.1 million)

Interest expense represents the interest payable on funding for the Admiral loans business, in the form of acredit facility of £200 million, of which £25.0 million (H1 2018: £200 million; FY 2018: £71.5 million) was drawn
down at 30 June 2019 and loan backed securities issued by an SPE with funding up to £400 million, of which£253.4 million (H1 2018: £nil; FY 2018: £168.3 million) was drawn down at 30 June 2019.

39

7.

Financial assets and Financial Liabilities

7a.

Financial assets and liabilities

The Group’s financial instruments can be analysed as follows:
30 June2019£m

30 June2018£m

31 December
2018£m

1,029.3—
1,029.3

1,200.4
0.9
1,201.3

1,301.1—
1,301.1

1,645.1
174.8
7.7
1,827.6

1,371.6
170.9
2.5
1,545.0

1,389.9
170.9
7.8
1,568.6

88.7

130.0

100.0

Total financial investments

2,945.6

2,876.3

2,969.7

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

930.9
261.5
1,192.4

865.6
259.2
1,124.8

842.3
239.7
1,082.0

Loans and advances to customers

420.8

214.2

300.2

Cash and cash equivalents

461.4

309.5

376.8

Total financial assets

5,020.2

4,524.8

4,728.7

Financial liabilities
Subordinated notes

204.1

204.0

204.1

Loan backed securities
Other borrowings

253.4
25.0

—
200.0

168.3
71.8

Financial investments mandatorily measured at Fair Value through Profit and Loss
Money market and other similar funds
Derivative financial instruments
Financial investments classified as Fair Value through Other Comprehensive Income
Debt securities
Government gilts
Equity investments
Financial assets measured at amortised cost
Deposits with credit institutions

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

2.0
484.5
1,811.1
143.0

—

—

404.0
1,664.0444.2
1,801.5——

2,438.6

2,068.0

2,245.7* Lease liabilities of £149.2m were recognised on transition on 1 January 2019. The movement to the balance presented of £143.0m
reflects cash payments in the period offset by the lease interest expense recognised in the Income Statement.

40

All investments held at fair value at the end of the period are invested in AAA-rated or AA-rated money
market liquidity funds.
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 2019.
Deposits are held with well rated institutions; as such the approximate fair value is the book value ofthe investment as impairment of the capital is not expected. There is no quoted market for theseholdings and as such a level two valuation is used. The book value of deposits is £83.0 million (H1 2018:£130.0 million; FY 2018: £100.0 million).
The amortised cost carrying amount of receivables is a reasonable approximation of fair value.
The fair value of subordinated notes (level one valuation) at 30 June 2019 is £219.8 million (H1 2018:£219.3 million, FY 2018: £211.3 million).

7b.

Cash and cash equivalents
30 June2019£m

30 June2018£m

31 December
2018£mCash at bank and in hand*
Short-term deposits

461.4
—

308.9
0.6

376.0
0.8

Total cash and cash equivalents

461.4

309.5

376.8

* £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.

7c.

Insurance and other receivables

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

30 June2019£m

30 June2018£m

31 December
2018
£m

930.9
245.3
16.2

865.6
246.9
12.3

842.3
227.0
12.7

1,192.4

1,124.8

1,082.0*1 – Insurance receivables at 30 June 2019 include £63.3 million in respect of salvage and subrogation recoveries (H1
2018: £50.9 million, FY 2018: £59.3 million).

41

7d.

Loans and advances to customers
30 June2019£m

30 June2018£m

31 December
2018£mLoans and advances to customers – gross carrying amount
Loans and advances to customers – provision

437.0(16.2)

219.5
(5.3)

310.4
(10.2)

Total loans and advances to customers

420.8

214.2

300.2

*1 – Loans and advances to customers at 30 June 2019 include £34.1 million in respect of secured car finance loans (H1
2018: £6.6 million, FY 2018: £16.7 million).

Loans and advances relate to the Admiral Loans business. The table below shows the grosscarrying value of loans in stages 1 – 3 and the corresponding credit loss allowance. There havebeen no significant changes to the expected credit loss methodology since the 2018 Annual Report.
30 June2019

30 June 31 December
2018
2018

Gross carrying
amount£m

Expected credit loss
allowance£m

Other loss
allowance£m

Carrying
amount£m

Carrying
amount£m

Carrying
amount£m

Stage 1
Stage 2
Stage 3

420.3
7.2
9.5

(5.3)
(1.6)
(8.8)

(0.5)
—
—

414.5
5.6
0.7

206.1
6.6
1.5

292.2
7.5
0.5

Total

437.0

(15.7)

(0.5)

420.8

214.2

300.2

An expense of £6.0 million has been recognized in the Income Statement in relation to the movement in thecredit loss allowance (H1 2018: £4.1 million; FY 2018: £9.0 million).

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 £269.2 million (HY 2018: £253.0
million, FY 2018: £542.4 million) represents total other revenue and profit commission and isdisaggregated into the segments included in note 4.
UK
Insurance£m

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

Other
£m

Total
£m

—
—

73.7

Major products/service line

—

—

73.7

Instalment income

42.7

1.5

Fee and commission revenue

83.8

8.7

0.9

93.4

Revenue from law firms

15.6
5.9
148.0

—
0.3

15.6

Other
Total other revenue

—
—

—
—
—
—

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

48.6
269.2

Other
£m

Total
£m

66.1

Comparison*1

UK
Insurance£m

Half-year ended 30 June 2018
International
Car Insurance
Comparison
£m
£m

44.2

6.2
233.1

Major products/ service line

—

—

66.1

Instalment income

38.1

1.3

Fee and commission revenue

88.3

7.7

Revenue from law firms

15.8

Other
Total other revenue

5.0
147.2

—
—

—
—
—
—

—
—
—
—
1.1

9.0

66.1

1.1

Profit commission
Total other revenue and profit commission

29.6
176.8

—

—

—

9.0

66.1

1.1

29.6
253.0

Timing of revenue recognition
Point in time

122.7

7.7

66.1

1.1

197.6

Over time

17.2

—

36.9
176.8

1.3
9.0

—
—

17.2

Revenue outside the scope of IFRS 15

—
—
66.1

1.1

Comparison*1

39.4
96.0
15.8
6.1
223.4

38.2
253.0

43

Year ended 31 December 2018
UK
Insurance£mInternational
Car Insurance£mComparison
£m

Other
£m

Total
£m

—

—

131.7

131.7

Instalment income

82.6

2.7

Fee and commission revenue

172.4

15.9

Revenue from law firms

30.5

Other
Total other revenue

10.8
296.3

—
—

—
—
—
—

—
—
1.9
—
0.7

18.6

131.7

2.6

Profit commission
Total other revenue and profit commission

93.2
389.5

—

—

—

18.6

131.7

2.6

93.2
542.4

Timing of revenue recognition
Point in time

275.3

15.9

131.7

2.6

425.5

Over time

33.4

—

80.8
389.5

2.7
18.6

—
—

33.4

Revenue outside the scope of IFRS 15

—
—
131.7

2.6

Major products/ service line
Comparison*1

85.3
190.2
30.5
11.5
449.2

83.5
542.4

*1 – Comparison revenue excludes £9.7 million (30 June 2018: £10.5 million, 31 December 2018: £19.3 million) of
income from other Group companies.

Instalment income and profit commission from reinsurers is not within the scope of IFRS 15 Revenue
from Contracts with Customers due to the nature of the income.

9.

Expenses

9a.

Operating expenses and share scheme charges
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
135.9
40.5

(201.2)—(14.0)

60.3
135.9
26.5

Total expenses and share scheme charges

437.9(215.2)222.7

30 June 2018

Gross
£m

Recoverablefrom co- andreinsurers
£m

Net
£m

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

62.1
209.5

(49.3)(166.3)12.8
43.2

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

271.6
123.7
33.8

(215.6)—(11.9)

56.0
123.7
21.9

Total expenses and share scheme charges

429.1(227.5)201.6

44

31 December 2018

Gross
£m

Recoverablefrom co- andreinsurers
£m

Net
£m

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

135.1
381.6

(103.8)(287.9)31.3
93.7

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

516.7
249.2
76.9

(391.7)—(27.1)

125.0
249.2
49.8

Total expenses and share scheme charges

842.8(418.8)424.0*1 – Acquisition of insurance contracts expense excludes £9.7 million (H1 2018: £10.5 million, FY 2018: £19.3 million) ofcomparison fees from other Group companies.

The £44.3 million (H1 2018: £43.2 million, FY 2018: £93.7 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 June2019£m

30 June 31 December
2018
2018
£m
£m

Expenses relating to additional products and fees
Comparison operating expenses
Loans expenses (including movement on expected credit loss provision)
Other expenses

37.4
78.0
14.4
6.1

32.1
74.0
10.3
7.3

63.4
144.4
22.9
18.5

Total

135.9

123.7

249.2

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 201930 June 201831 December 2018

Total
£m

Net
£m

Total
£m

Net
£m

Total
£m

Net
£m

SIP charge (i)DFSS charge (ii)

9.4
31.1

6.5
20.0

8.6
25.2

5.9
16.0

18.1
58.8

12.3
37.5

Total share scheme charges

40.5

26.5

33.8

21.9

76.9

49.8

The total share scheme charges of £40.5 million (H1 2018: £33.8 million; FY 2018: £76.9 million) can beanalysed between share scheme charges calculated in line with IFRS 2 of £28.7 million (H1 2018: 25.1
million; FY 2018 £57.3 million) and other share scheme related costs of £11.8 million (H1 2018: £8.7
million; FY 2018 £19.6 million). Net share scheme charges are presented after allocations to coinsurers and reinsurers in line with contractual arrangements.
The consolidated cash flow statement also shows the gross charge in the reconciliation between ‘profit
after tax’ and ‘cash flows from operating activities’. The co-insurance share of the charge is included inthe ‘change in trade and other payables’ line.

45

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 June2019£m

30 June2018£m

31 December
2018
£m

41.0
—
41.0

37.2
0.4
37.6

81.4
0.2
81.6

(4.0)
—
37.0

(2.8)
—
34.8

3.8
0.3
85.7

30 June2019£m

30 June2018£m

31 December
2018
£m

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

210.7
40.0
—
(2.7)
(0.6)
0.4
(4.1)
1.9
(0.1)
34.8

476.2
90.5
0.7
(6.0)
0.5
0.6
(8.2)
4.7
2.9
85.7

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
Movement on deferred tax asset on US losses
Total tax charge for the period as above

The outstanding corporation tax payable as at 30 June 2019 was £43.0 million (HY 2018: £38.4 million;
FY 2018: £49.3 million).

46

10b.

Deferred income tax asset
Tax treatmentof shareschemes

CarriedCapitalallowances

forwardlossesFair value
reserveOther
differences

£m

£m

£m

£m

£m

Total £m

Balance brought forward at 1 January 2018

6.1

(4.5)

2.9

—

(4.2)

0.3

Tax treatment of share scheme charges throughincome or expense

3.2

—

—

—

—

3.2

Tax treatment of share scheme charges throughreserves

0.9

—

—

—

—

0.9

Capital allowances

—

0.1

—

—

—

0.1

Other difference

—

—

—

—

(0.1)

(0.1)

Balance carried forward at 30 June 2018

10.2

(4.4)

2.9

—

(4.3)

4.4

Balance carried forward at 1 January 2018

6.1

(4.5)

2.9

(4.6)

0.4

0.3

Tax treatment of share scheme charges throughincome or expense

(2.2)

—

—

—

—

(2.2)

Tax treatment of share scheme charges throughreserves

3.3

—

—

—

—

3.3

Capital allowances

—

0.9

—

—

—

0.9

Carried forward losses

—

—

(2.9)

—

—

(2.9)

Movement in fair value reserve

—

—

—

0.7

—

0.7

Other differences

—

—

—

—

0.1

0.1

Balance carried forward at 31 December 2018

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 differences

—

—

—

—

0.1

0.1

13.7

(3.7)

—

(5.3)

0.6

5.3

Balance carried forward 30 June 2019

The UK corporation tax rate reduced from 20% to 19% on 1 April 2017. The average effective rate of tax for2019 is 19.0% (2017: 19.25%). A further reduction to the main rate of corporation tax to 17% (effectivefrom 1 April 2020) was enacted on 15 September 2016. This will reduce the Group’s future current tax
charge accordingly.
The deferred tax asset at 30 June 2019 has been calculated based on the rate at which each timing
difference is most likely to reverse.
At 30 June 2019 the Group had unused tax losses amounting to £229.0 million (H1 2018: £173.7 million, FY
2018: £217.5 million), relating to the Group’s US businesses Elephant Auto and compare.com, for which nodeferred tax asset has been recognized.

47

11.

Other Assets and Other Liabilities

11a.

Property and equipment

Cost
At 1 January 2018
Additions
Disposals
Transfers
Foreign exchange movement
At 30 June 2018
Depreciation
At 1 January 2018
Charge for the year
Disposals
Foreign exchange movement
At 30 June 2018
Net book amountAt 1 January 2018
Net book amountAt 30 June 2018
Cost
At 1 January 2018
Additions
Disposals
Transfers
Foreign exchange movement
At 31 December 2018
Depreciation
At 1 January 2018
Charge for the year
Disposals
Foreign exchange movement
At 31 December 2018
Net book amountAt 31 December 2018
Cost
At 1 January 2019
Initial application of IFRS 16
Additions
Disposals
Transfers
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 30 June 2019

Improvements
to short
leaseholdbuildings£mComputerequipment£m

Officeequipment
£m

28.7
0.2
—
(0.5)
(0.1)
28.3

57.2
2.3
(0.1)
—
—
59.4

14.9
1.2
—
(0.1)
16.0

Furnitureand fittings£m

ROU
Asset –
Leaseholdbuildings
£m

Total
£m

19.7
0.9
(0.1)
—
(0.1)
20.4

9.8
—
—
—
—
9.8

—
—
—
—
—
—

115.4
3.4
(0.2)
(0.5)
(0.2)
117.9

45.9
3.3
(0.1)
—
49.1

15.2
1.1
(0.1)
—
16.2

8.1
0.4
—
—
8.5

—
—
—
—
—

84.1
6.0
(0.2)
(0.1)
89.8

13.8

11.3

4.5

1.7

—

31.3

12.3

10.3

4.2

1.3

—

28.1

28.7
3.1
(0.7)
(1.2)
(0.1)
29.8

57.2
4.9
(0.1)
—
0.1
62.1

19.7
1.9
(0.2)
—
—
21.4

9.8
0.1
(0.2)
—
0.1
9.8

—
—
—
—
—
—

115.4
10.0
(1.2)
(1.2)
0.1
123.1

14.9
2.8
(0.7)
(0.2)
16.8

45.9
6.5
(0.1)
—
52.3

15.2
1.9
(0.1)
—
17.0

8.1
0.8
(0.1)
0.1
8.9

—
—
—
—
—

84.1
12.0
(1.0)
(0.1)
95.0

13.0

9.8

4.4

0.9

—

28.1

29.8
—
3.1
—
—
0.1
33.0

62.1
—
6.4
—
—
0.1
68.6

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

16.8
—
1.6
—
—
18.4

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

14.6

13.1

3.9

1.0

130.4

163.0

48

11b.

Intangible assets

Goodwill£mDeferredacquisition
costs
£m

Software*1
£m

Total
£m

62.3
—
—
—
—
—
62.3

20.6
26.3
(23.3)
—
—
—
23.6

76.5
7.4
(6.4)
(1.1)
0.5
—
76.9

159.4
33.7
(29.7)
(1.1)
0.5
—
162.8

At 1 January 2018
62.3
20.6
Additions—53.1
Amortisation charge—(50.5)
Disposals——
Transfers——
Foreign exchange movement—
0.2
At 31 December 2018
62.3
23.4
Additions—27.2
Amortisation charge—(25.5)
Disposals——
Transfers——
Foreign exchange movement——
At 30 June 2019
62.3
25.1
*1 – Software additions relating to internal development are immaterial in both 2019 and 2018

76.5
13.9
(15.5)
—
1.2
0.2
76.3
3.4
(8.2)
—
—
—
71.5

159.4
67.0
(66.0)
—
1.2
0.4
162.0
30.6
(33.7)———
158.9

At 1 January 2018
Additions
Amortisation charge
Disposals
Transfers
Foreign exchange movement
At 30 June 2018

Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance
Services Limited) in November 1999. It is allocated solely to the UK Car Insurance segment. 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 the estimated 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 2018 financial statements for further
information.

49

11c.

Trade and other payables

30 June2019£m

30 June 31 December
2018
2018
£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

44.0
149.4
1,093.9
82.8
180.9
260.1

34.3
169.8
967.5
74.4
198.6
219.4

37.9
153.2
1,122.7
60.4
196.0
231.3

Total trade and other payables

1,811.1

1,644.0

1,801.5

Of amounts owed to reinsurers, £963.7 million (H1 2018: £873.7 million, FY 2018: £1,022.7 million)
is held under funds withheld arrangements.

11d. Contingent liabilities
Rastreator Comparador Correduria Seguros (“Rastreator Comparador”), the Group’s Spanish Comparison
business, has recently undergone a tax audit in respect of the 2013 and 2014 financial years. As a result of
the audit, the Spanish Tax Authority has denied the VAT exemption relating to insurance intermediaryservices which Rastreator Comparador has applied. Rastreator Comparador will appeal this decision via
the Spanish Courts and is confident in defending its position which is, in its view, in line with the EU
Directive and is also consistent with the way similar supplies are treated throughout Europe.
The potential liability for the financial years currently subject to audit is approximately €5m, and, as
identified in note 7, a bank guarantee has been provided to the Spanish Tax Authority for this amount. If
the exemption is also disallowed in respect of later years, the liability could increase to €19m. No
provision has been made in these financial statements in relation to this matter.

50

12.

Dividends, Earnings and Share Capital

12a.

Dividends

Dividends were declared and paid as follows.

30 June2019£m

30 June2018£m

31 December
2018£mMarch 2018 (58.0 pence per share, paid June 2018)
August 2018 (60.0 pence per share, paid October 2018)
March 2019 (66.0 pence per share, paid June 2019)

—
—
188.0

163.3

163.3
169.4

Total

188.0

—
—
163.3

—
332.7

The dividend declared in March 2018 represented the final dividend paid in respect of the 2017 financial
year (August 2018 - interim dividend for 2018). The dividend proposed in March 2019 was the final dividend
paid in respect of the 2018 financial year.
An interim dividend of 63.0 pence per share (£179.5 million) has been declared in respect of the2019 financial year.

12b.

Earnings per share
30 June2019£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 June2018£m

31 December
2018
£m

183.2

177.2

395.1

290,734,955

287,551,161

288,197,247

63.0p

61.6p

137.1p291,401,887

288,172,467

288,845,845

62.9p

61.5p

136.8pThe difference between the basic and diluted number of shares at the end the period (being 666,932; H1
2018: 661,306, FY 2018: 648,598) relates to awards committed, but not yet issued under the Group’s shareschemes.

12c.

Share capital
30 June2019£m

30 June 31 December
2018
2018
£m
£m

Authorised
500,000,000 ordinary shares of 0.1 pence

0.5

0.5

0.5

Issued, called up and fully paid
290,502,737 ordinary shares of 0.1p
287,741,113 ordinary shares of 0.1p
290,949,880 ordinary shares of 0.1p

—
—
0.3

—
0.3
—

0.3
—
—

0.3

0.3

0.3

During the first half of 2019, 447,143 (30 June 2018: 526,851; 31 December 2018: 3,288,475) new ordinary
shares of 0.1p were issued to the trusts administering the Group’s share schemes.
51447,143 (30 June 2018: 526,851; 31 December 2018: 988,475) of these were issued to the Admiral Group
Share Incentive Plan Trust for the purposes of this share scheme.
No shares (30 June 2018: nil; 31 December 2018: 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 2018 Annual Report. Key management
personnel are able to obtain discounted motor insurance at the same rates as all other Group staff,
typically at a reduction of 15%.
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 2018 Annual Report.

52

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 thefinancial statements

Gross premiums written after co-insurance per note 5a of financial statements
Premiums underwritten through co-insurance arrangements and true up of 2018gross written premium
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

30 June2019£m

30 June2018£m

31 December
2018£m

1,161.1

1,085.7

2,166.7312.9
1,474.0
233.1
13.3
1,720.4
26.1
1,746.5
9.7
1,756.2

315.4
1,401.1
223.4
5.1
1,629.6
21.9
1,651.5
10.5
1,662.0

587.4
2,754.1
449.2
15.4
3,218.7
44.9
3,263.6
19.3
3,282.9*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.

53

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

June 2019

UK Motor£m

UK Home£m

UK
Other*1£m

UK Total£mInt. Car£m

Int.
Other*1£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 (netoriginal 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%

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

June 2018

UK Motor£m

UK Home£m

UK Other£m

UK Total£mInt. Car£m

Int. Other£mInt. Total
£m

Group
£m

104.1
(5.8)

13.1
(0.2)

11.8
—

129.0
(6.0)

49.7
—

1.5
—

51.2
—

180.2
(6.0)

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

56.5

1.2

—

57.7

6.1

—

6.1

63.8

35.2
—
—
190.0

—
—
(3.7)
10.4

—
—
—
11.8

35.2
—
(3.7)
212.2

—
1.8
—
57.6

—
—
—
1.5

—
1.8
—
59.1

35.2
1.8
(3.7)
271.3

Net insurance premium revenue

221.1

14.7

18.8

254.6

66.2

2.9

69.1

323.7

85.9%

70.7%

—

—

87.0%

—

—

83.8%

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

—

25.3%

—

—

—

—

—

1.1%

(25.6%)(8.4%)——(9.2%)——(19.7%)

Loss ratio – reported

60.3%

87.6%

—

—

77.8%

—

—

65.2%

54

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

189.2(11.3)

29.3
(0.5)

24.0
—

242.5
(11.8)

104.1
—

3.5
—

107.6
—

350.1
(11.8)

111.4

1.4

—

112.8

13.5

—

13.5

126.3

109.6
—
—
—
398.9

—
—
(3.5)
(2.5)
24.2

—
—
—
—
24.0

109.6
—
(3.5)
(2.5)
447.1

—
4.5
—
—
122.1

—
—
—
—
3.5

—
4.5
—
—
125.6

109.6
4.5
(3.5)
(2.5)
572.7

Net insurance premium revenue

452.5

31.2

40.2

523.9

141.7

6.2

147.9

671.8

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)

88.1%

77.6%

—

—

86.1%

—

—

85.2%

—

11.2%

—

—

—

—

—

0.5%

—

7.9%

—

—

—

—

—

0.4%

(24.6%)(4.4%)——(9.5%)——(18.8%)

Loss ratio – reported*

63.5%

92.3%

—

—

76.6%

—

—

67.3%

December 2018

*The group reported loss ratio has been represented at H1 2019 to include the impact of weather events, in linewith June 2018.

55

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

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%

June 2018

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

27.0
5.8
6.9
—
—
39.7

4.0
0.2
0.4
—
—
4.6

1.5
—
—
—
—
1.5

32.5
6.0
7.3
—
—
45.8

22.1
—
3.2
0.8
—
26.1

1.4
—
—
—
(1.4)
—

23.5
—
3.2
0.8
(1.4)
26.1

56.0
6.0
10.5
0.8
(1.4)
71.9

Net insurance premium revenue

221.1

14.7

18.8

254.6

66.2

2.9

69.1

323.7

Expense ratio – reported

17.9%

32.1%

—

—

39.4%

—

—

22.2%

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

59.7
11.3
12.3
—
—
83.3

7.4
0.5
0.8
—
—
8.7

5.6
—
—
—
—
5.6

72.7
11.8
13.1
—
—
97.6

49.7
—
6.2
0.2
—
56.1

2.6
—
—
—
(2.6)
—

52.3
—
6.2
0.2
(2.6)
56.1

125.0
11.8
19.3
0.2
(2.6)
153.7

Net insurance premium revenue

452.5

31.2

40.2

523.9

141.7

6.2

147.9

671.8

Expense ratio – reported

18.4%

28.1%

—

—

39.6%

—

—

22.9%

June 2019

December 2018

*1 – The intra-group expenses elimination amount relates to aggregator fees charges by the Group’s
comparison entities to other Group 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.

56

13d.

Reconciliation of reported profit before tax to adjusted profit before tax

Reported profit before tax per the condensed consolidated
income statement
Non-controlling interest share of profit before tax
Group’s share of profit before tax

30 June2019£m

30 June2018£m

31 December
2018
£m

218.2
2.0
220.2

210.7
1.0
211.7

476.2
3.1
479.3

14. Statutory Information
The financial information set out above does not constitute the company's statutory accounts. Statutory
accounts for 2018 have been delivered to the registrar of companies, and those for 2019 will be delivered indue course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did notinclude a reference to any matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act
2006.

57

Glossary
Alternative Performance Measures
Throughout this report, the Group uses a number of Alternative Performance Measures (APMs);
measures that are not required or commonly reported under International Financial ReportingStandards, the Generally Accepted Accounting Principles (GAAP) under which the Group preparesits financial statements.
These APMs are used by the Group, alongside GAAP measures, for both internal performance
analysis and to help shareholders and other users of the Group’s financial statements to better
understand the Group’s performance in the period in comparison to previous periods and theGroup’s competitors.
The table below defines and explains the primary APMs used in this report. Financial APMs areusually derived from financial statement items and are calculated using consistent accounting
policies to those applied in the financial statements, unless otherwise stated. Non financial KPIs
incorporate information that cannot be derived from the financial statements but provide further
insight into the performance and financial position of the Group.
APMs may not necessarily be defined in a consistent manner to similar APMs used by the Group’s
competitors. They should be considered as a supplement rather than a substitute for GAAP measures.
TurnoverTurnover is defined as total premiums written (as below), other revenue andincome from Admiral Loans. It is reconciled to financial statement line items innote 13a to the financial statements.
This measure has been presented by the Group in every financial report since it
became a listed Group in 2004. It reflects the total value of the revenue
generated by the Group and analysis of this measure over time provides a clear
indication of the size and growth of the Group.
The measure was developed as a result of the Group’s business model. The core
UK Car Insurance business has historically shared a significant proportion of therisks with Munich Re, a third party insurance Group, through a co-insurance
arrangement, with the arrangement subsequently being replicated in some of
the Group’s International Insurance operations. Premiums and claims accruingto the external co-insurer are not reflected in the Group’s income statement andtherefore presentation of this metric enables users of the financial reports to see
the scale of the Group’s insurance operations in a way not possible from taking
the income statement in isolation.

58

Total premiums written

Total premiums written are the total forecast premiums, net of forecast
cancellations written in the underwriting year within the Group, including coinsurance. It is reconciled to financial statement line items in note 13a to thefinancial statements.
This measure has been presented by the Group in every financial report since it
became a listed Group in 2004. It reflects the total premiums written by theGroup’s insurance intermediaries and analysis of this measure over time provides
a clear indication of the growth in premiums, irrespective of how co-insurance
agreements have changed over time.
The reasons for presenting this measure are consistent with that for the
Turnover APM noted above.

Group’s share of profit
before tax

Group’s share of profit before tax represents profit before tax, excluding theimpact of non-controlling 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 theexpenditure incurred in starting up new businesses and demonstrates the ‘testand-learn’ strategy employed by the Group to expansion into new territories.

Underwriting result (profit For each insurance business an underwriting result is presented showing theor loss)
segment result prior to the inclusion of profit commission, other income
contribution and instalment income. It demonstrates the insurance result, i.e.
premium revenue and investment income less claims incurred and insurance
expenses.

59

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 calculation in 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 andexplanation is as follows.
UK reported car insurance loss ratio: Within the UK Insurance segment theGroup separately present motor ratios, i.e. excluding the underwriting of otherproducts that supplement the car insurance policy. The motor ratio is adjusted
to i) exclude the impact of reserve releases on commuted reinsurance contracts
and ii) exclude claims handling costs that are reported within claims costs in theincome statement.
International Insurance loss ratio: As for the UK motor loss ratio, theInternational Insurance loss ratios presented exclude the underwriting of otherproducts 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 theimpact of reserve releases on commuted reinsurance contracts, ii) exclude claims
handling costs that are reported within claims costs in the income statement andiii) exclude the claims element of the impact of international reinsurer caps.

60

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 calculation in 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 andexplanation is as follows.
UK reported car expense ratio: Within the UK Insurance segment the Groupseparately present motor ratios, i.e. excluding the underwriting of otherproducts 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 car loss ratio, theInternational Insurance expense ratios presented exclude the underwriting ofother products that supplement the car insurance policy. The car ratio isadjusted 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 theunderlying performance of the business and ii) include intra-group aggregatorfees 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 international ratios noted above. Adjustments are made to i) include
claims handling costs that are reported within claims 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 theexpense 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 of these figures is noted above and reconciliation of thecalculations are provided in notes 13b and 13c.

Return on equity

Return on equity is calculated as profit after tax for the period attributable toequity holders of the Group divided by the average total equity attributable toequity holders of the Group in the year. This average is determined 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 in equity.

Group customers

Group customer numbers are the total number of cars, households and vans oncover at the end of the year, 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 baseand analysis of this measure over time provides a clear indication of the growth.
It is also a useful indicator of the growing significance to the Group of thedifferent lines of business and geographic regions.

61Effective tax rate

Effective tax rate is defined as the approximate tax rate derived from dividing theGroup’s profit before tax by the tax charge going through the income statement.
It is a measure historically presented by the Group and enables users to see how
the tax cost incurred by the Group compares over time and to current
corporation tax rates.

Additional Terminology
There are many other terms used in this report that are specific to the Group or the markets inwhich 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

A probability-weighted average of all future claims and cost scenarios
calculated using historical data, actuarial methods and judgement.

ASHE‘Annual Survey of Hours and Earnings’ – a statistical index that is typically used
for calculating inflation of annual payment amounts under Periodic Payment
Order (PPO) claims settlements.

Claims reserves

A monetary amount set aside for the future payment of incurred claims that have
not yet been settled, thus representing a balance sheet liability.

Co-insurance

An arrangement in which two or more insurance companies agree to underwrite
insurance business on a specified portfolio in specified proportions. Each coinsurer is directly liable to the policyholder for their proportional share.

Commutation

An agreement between a ceding insurer and the reinsurer that provides for thevaluation, payment, and complete discharge of all obligations between theparties under a particular reinsurance contract.
The Group typically commutes UK car insurance quote share contracts after 24months from the start of an underwriting year where it makes economic sense to
do so. Although an individual underwriting year may be profitable, the margin
held in the financial statement claims reserves may mean that an accounting loss
on commutation must be recognized at the point of commutation of thereinsurance contracts. This loss on commutation unwinds in future periods as thefinancial statement loss ratios develop to ultimate.

Insurance market cycle

The tendency for the insurance market to swing between highs and lows ofprofitability over time, with the 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 underreinsurance contracts. It includes both claims payments and movements inclaims reserves.

Net insurance premium
revenue

Also referred to as net earned premium. The element of premium, lessreinsurance premium, earned in the period.

Ogden discount rate

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

62

Periodic Payment Order(PPO)

A compensation award as part of a claims settlement that involves making aseries of annual payments to a claimant over their remaining life to cover thecosts of the care they will require.

Premium

A series of payments are made by the policyholder, typically monthly or annually,for part of or all of the duration of the contract. Written premium refers to thetotal amount the policyholder has contracted for, whereas earned premiumrefers 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 theinsurance risk accepted to another insurer. This can be on a quota share basis (apercentage share of premiums, claims and expenses) 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 the issuance of new securities. A company transfer assets
to a special purpose entity (SPE) which then issues securities backed by theassets.

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 orunderwriting year.

Underwriting year

The year in which an insurance policy is incepted.

Underwriting year basis

Also referred to as the written basis. Claims incurred are allocated to thecalendar year in which the policy was underwritten. Underwriting year basis
results are calculated on the whole account (including co-insurance andreinsurance shares) and include all premiums, claims, expenses incurred andother revenue (for example instalment income and commission income relating
to the sale of products that are ancillary to the main insurance policy) relating topolicies incepting in the relevant underwriting year.

Written/Earned basis

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

63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
13 August 201964

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 2019 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.
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.
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 2019is 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.

Deloitte LLP
Statutory Auditor
London, United Kingdom
13 August 201965