We help
more people
to look after
their future
Admiral Group plc
Annual Report andAccounts 2021

Admiral Group plc Annual Report and Accounts 2021

Admiral Group plc is a global financial services company
offering insurance products, including motor, household,travel and pet insurance as well as personal lending
products through Admiral Loans.
Contents

Spotted on the cover

Discover how we’ve helped
more people look after their
future this year

Company Overview

Corporate Governance01

Highlights

130 Governance at a glance

04

Our Business Model

132 Introduction from the Chair

07

Drivers of our success

134 Board of Directors

07 	Operational Excellence

140 Governance Report09	Track Record of Long-Term
Profitable Growth

154 The Nomination and
Governance Committee

10 	Efficient Capital Employment

165 The Audit Committee

12

172 The Group Risk Committee

Simon’s story
Discover how Simon
helps keep all our
employees safe in our
Cardiff head office

See page 21

16

Unique Company Culture

14 	Excellent Customer Service

177 The Remuneration Committee

Creating Value for our
Stakeholders in 2021 – Customers,
People, Business, Society

180 Remuneration at a Glance

204 Directors' Report

22

Chair’s Statement

Financial Statements

27

Chief Executive
Officer’s statement

212 Independent Auditor’s Report

31

Q&A with Milena, Geraint,
Cristina and Costantino

35

Our Strategy

Becky’s story

See page 129

Learn more about how
Adam is engaging withdifferent stakeholders
on the Admiralgraduate scheme
See page 211

38

Diversification

42

Evolution of Motor46

Our Sustainability Approach

61

Key Performance Indicators

62

Chief Financial
Officer’s Statement

66

UK Insurance review

74

International Insurance

79

Admiral Loans Review

81

Other Group Items

86 	Non-Financial Information
87

Adam’s story

190 Annual Report on Remuneration

Strategic Report35 	Admiral 2.0

Read how Becky andher team support ourhousehold customers
at the point of claim

181 Directors’ Remuneration Policy

Section 172: Stakeholder
engagement

101 Principal/non-routine/
significant decisions in 2021

222 Consolidated Income Statement
224 Consolidated Statement ofComprehensive Income
225 Consolidated Statement of
Financial Position
226 Consolidated Cash
Flow Statement
227 Consolidated Statement of
Changes in Equity
228 Notes to the Financial Statements
296 Parent Company
Financial Statements
299 Notes to the Parent Company
Financial Statements
309 Consolidated Financial
Summary (unaudited)

Additional Information
312 Glossary

107 Task Force on Climate Related
Financial Disclosures (TCFD)
114 Streamlined Energy and Carbon
Reporting (SECR)
116 	Principal Risks and Uncertainties
124 	Viability Statement

Download the PDF of
the Annual Report andSustainability Report at
admiralgroup.co.uk

Company overview

Strategic report

Corporate governance

Financial statements

01

Additional information

Our headquarters are in Cardiff, South Wales, and Admiral Group is proud to be Wales’ only FTSE 100
Company. We have a strong international presence, with offices in countries including France, Italy, Spain,
US, Canada, Gibraltar and India.
Our purpose is to help more people to look after their future; always striving for better, together.
At Admiral, we care deeply about our employees, our customers, and the impact we make on
wider society.

Financial and Strategic highlights
Group profit before tax, excluding
restructure costs1

Group profit before tax including
discontinued operations and gain on disposal£769m£1,129m

2021

£769m

2020
2019

£608m

2021

£1,129m

2020

£505m

2019

£638m

EPS1 (pence per share)

212.2p2021

212.2p

2020

£523m

2019

170.7p143.7p

ROE1

Net revenue

Turnover156%£1.55bn£3.51bn

2021

56%

2021

2020

52%

2020

2019

52%

2019

£1.55bn£1.31bn£1.21bn2021£3.37bn2019£3.30bn

Customers (million)

Full year dividend (pence per share)2

Solvency ratio3

8.36m

187.0p

195%

2021
2020
2019

8.36m
7.66m
6.98m

2021

187.0p2020
2019

156.5p140.0p£3.51bn

2020

2021

195 %

2020

187%

2019

190%

Sustainability highlights
Gender split acrossthe Group

Emissions (tonnes C02
per employee)

Net Promoter Score6 (NPS) across allgroup operations

51% Female, 49% Male

0.325 tonnes>50(2020: 53% Female, 47% Male)(2020: 0.21 tonnes)

Donated to communities during Covid

Net Zero5 by

£6m+

2040

1	Alternative performance measure (APM)–refer to theglossary for definition and explanation. Note: Group profit
including restructure costs of £713m (2020: £608m).

3	Unaudited: refer to capital structure and financial
position section on page 75 for further information.

2	2021 full year dividend excludes dividends from sale ofPenguin Portals comparison businesses.

5	Refer to glossary for definition of Net Zero.

4	Refer to the glossary for definition and explanation.

6	Net promoter score (NPS) is a KPI that measures thewillingness of customers to recommend products orservices to a family and friend. It is used to measurecustomers’ loyalty to a brand. NPS at Admiral is currently
measured based on a subset of customer responding toa single question – ‘How likely would you recommend
our company to a friend, family or colleague?’ throughphone, online or email.

02

Admiral Group plc Annual Report and Accounts 2021

Our purpose-led approach
At Admiral, we care about our employees,
our customers, and the impact we make on society.
We strive to do the right thing at every turn. Our purpose defines
the reason we exist, and the way we do things. Our purpose is to:2.

1.

Help more people tolook after their future.

3.

Always striving for
better, together.
5.

4.

1.  We care about people.

We want to be there
to help: to provide
reassurance, relief, andencouragement whenit’s most needed.

2.  From the beginning,

we’ve offered more
people accessto protection bypricing fairly andcompetitively. As
we grow, we seek tocreate products thatprovide more people
with the opportunity
to access goodfinancial services
products.

3.  Our products – carand home insurance,loans and travel, andmore – help people
protect what’s
important to them andenable their dreams,
so they can create abetter tomorrow. In
the wider world, we
act sustainably so we
can all look after ourshared future.

4.  We believe that people
who like what they do,
do it better. We strive
to do better every day.

5.  At Admiral, we strive tocreate opportunities
for all our colleagues –for example, throughour employee sharescheme and our
dedication to ourcommunities. We
believe in the powerof the team, quoting
our founder Henry
Engelhardt, it’s all in‘The Team, The Team,The Team.’

Underpinned by

KPIs*

See page 61

We are aware that our customers, shareholders andemployees care about our goals and objectives. We takepride in sharing both financial and non-financial key
performance indicators, which illustrate how weare progressing against strategic goals.
* Key Performance Indicators.

Financial stability

See page 82

Admiral focuses on building sustainable, profitablebusinesses for the long term. The business follows aprudent reserving philosophy. Admiral also has a strong
capital position, supported by important co-insurance
and re-insurance agreements.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

CultureBusiness model

Prioritising our people is part of Admiral’s DNA.
It’s the foundation of our company’s belief that
happy employees = happy customers = happy
shareholders. We’re determined to always
remain a great place to work.

We build on our core competencies tocreate value for our stakeholders, focusing
on profitable growth, strong risk selection
capabilities, a controlled test-and-learn
approach, the strength of our culture andthe depth of our business relationships.

See our People on page 12

03

See our Business Model on page 04

Strategy

Sustainability

Our strategy remains highly focused onbuilding customer-focused sustainablebusinesses for the long term. We strive tokeep doing what we’re doing well and do it
better year after year.

Our Sustainability approach is aligned with
our purpose framework and considers
our key stakeholders: People, Customers,
Business, Society. We integrate environmental
considerations across our operations.

See our Strategy on page 35

Risk

See page 116

Admiral considers key risks facing the business and our
Risk Committee supports the Board in its oversight of risk
within the Group and reviews the risk strategy and risk
appetite across the Group. Admiral’s principal risks anduncertainties are outlined within the strategic section.

See our Sustainability on page 46

GovernanceSee page 140

We believe that having a robust corporate governanceframework enables effective and efficient decision
making and ensures that there is the right balance ofskills and experience to assess and manage the risks inthe markets in which we operate.

04

Admiral Group plc Annual Report and Accounts 2021

Our Business Model

Admiral Group is one of the UK’s largest
and most recognised personal lines
insurance providers.
About us

Our business sectors

Admiral Group plc is a global financial
services company offering motor,
household, travel and pet insurance,
as well as personal lending products.

UK Motor
Insurance
Admiral is one of thelargest car and van
insurers in the UK.

Our headquarters are in Cardiff, South
Wales, and Admiral Group is proud tobe Wales’ only FTSE 100 company. We
have a strong international presence,with offices in countries includingFrance, Italy, Spain, US, Canada,
Gibraltar and India.

UK Household
Insurance
Admiral has a
growing household
insurance business.

International
Insurance
Admiral has insurance
businesses in Spain, Italy,
France, and the US.

Loans
Admiral offers unsecured
personal loans and car
finance products.

Our drivers of success1	Alternative performance measures (APM) – refer to theglossary for definition and explanation.
2	Alternative performance measures (APM) – refer to note
14 for reconciliation to the financial statements.

Track Recordof Growth

Unique Company
CulturePage 09

Page 12

Company overview

Strategic report

Corporate governance

Financial statements

Additional information05

People employed globally

Customers worldwide>11,000

8.36 million £1.55 billion

Customers

Turnover1,2

Net insurance premium revenue2

4.97 million£2.52 billion£496.5 million

Customers

Turnover1,2

Net insurance premium revenue2

1.3 million£219 million£49.1 million

Customers

Turnover1,2

Net insurance premium revenue2

1.8 million£690 million£221.0 million

Customers

Turnover

Gross Balances

111,900£37.1 million£607.0 million(2020: 4.75 million)(2020: 1.2 million)(2020: 1.6 million)(2020: 84,430)(2020: £2.47 billion)(2020: £194 million)(2020: £649 million)(2020: £38.4 million)

Net revenue (from continuing operations)(2020: £451 million)(2020: £43.1 million)(2020: £204.2 million)(2020: £401.8 million)

Efficient Capital
Employment

Operational
Excellence

Excellent
Customer Service

Page 10

Page 07

Page 14

06

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued

Superior risk
selection, data
analytics & pricings
Efficient claim
management

Effective
customeracquisition1	Weighted average Group Combined Ratio based onearned result excluding commuted releases; booked LRfrom 2017-2021.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Our data driven
approach forms afoundation for ourbusiness decisions.

86%

Average CoRover the last
five years1

07

Cost-conscious
cultureDrivers of Our Success

Operational
Excellence
Providing good value
financial products

Efficient claims
management

We take great pride in providing a
range of financial products and services
that meet customer needs, and aim to
expand our product offering over time.

We maintain our focus on efficient andeffective claims management backed bya culture of continuous improvement,
decades of experience in claims
handling, a cost-conscious culture
and great customer service.

Risk selection anddata analytics
Our unique approach to risk selection
is built upon experience, underwriting
skill, and, increasingly, on insights frombig data and analytics. Our data-driven
approach forms a foundation forbusiness decisions.

Financial discipline and acost-conscious culture
Admiral focuses on bottom line
profitability for sustainable andprofitable businesses over the longterm, and this focus guides decisions
made across our operations. Our costconscious approach translates to acompetitive expense ratio.

08

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued+1.2ppincrease inretention rates+500k

additional custom
ers
beyond UK Car+900k

growth ininternationalcustomers overthe last 5 years

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

09

+9%

growth in group
customer numbers
in 2021

Drivers of Our Success

Track recordof long-term,
profitable
growthTest-and-learn approach
Admiral has a strong culture ofinnovation and organic growth; ourbusinesses have been built from theground up. We identify and understandopportunities; take measured steps totest our understanding of the challenges
and effectiveness of our solutions;and learn from these experiences. We
continue to investigate opportunities
to improve our existing businesses andbuild new businesses.

Our prudent approach informs
our reserving philosophy
Our track record of success is in part due
to our robust reserving approach, andthe impact that has on our insurance
and loans businesses. In addition, we
continuously improve and build on our
key competitive advantages, including
cost efficiency, risk selection, data
analytics, digital capabilities and claims
management effectiveness.

Responsible and sustainable
operations
Central to our approach towards
long-term value creation is ourcontinued commitment to drive positive
outcomes for all our stakeholders.
We appreciate that our stakeholders’needs evolve over time, and we are
seeking to consciously adapt to remaina responsible, sustainable businessfor the long term. We genuinely careabout the impact that we have on
our customers, people, communities,
partners, the environment, and ourshareholders, and how we can best drive
real value for all our stakeholders.

10

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued

Drivers of Our Success

Efficient
Capital
Employment
Managing risk

Shareholder returns

Admiral shares a large proportion ofrisk with co- and reinsurance partners.
Sharing risk allows us to be more capitalefficient and can lead to a superior
return on equity for our shareholders
whilst also whilst also providing
protection for losses.

We are committed to returning excess
capital to shareholders, and we do sowhen we make significant divestments(such as the sale of our comparison
businesses in April 2021). We expect ourbusinesses to make efficient use
of capital resources.

Company overview

Strategic report

Corporate governance

Financial statements

195%
solvency ratio2

51%

Additional information

11

55%

Average group
1
ROE last 5 years

51% growth in Admiral
Gross Loans Balances

19%

increase in DPS

1	5 year 2017-21 weighted average Group ROE forcontinuing operations, excluding restructure cost.
2	Continuing operations only; equity excludes capital heldfrom disposal to be returned to shareholders

Sharing risk allow s usto hold less cap
ital
as it bears lessrisk,
resulting in a su
periorreturn on capit
al forour shareholde
rs.

12

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued

Drivers of Our Success

Unique Company
CultureOur company culture is based on four pillars: Fun, Communication,
Equality, and Recognition and Reward
Fun
Great Place to Work
We strive to create an environment
where people enjoy their work and feel
happy, supported, and valued in theirroles; and believe that our unique culture
is integral to our success. Admiral’s fourpillars help define our unique workplaceculture and have been the basis for someof our greatest achievements, including
being on the Best Companies1 To WorkFor list for 21 years in a row.

Ministry of Fun
We want our people to look forward tocoming to work, celebrate being whothey are, and feel happy and supported togive that little bit extra. Extra resourcesand effort have gone into planning how
we retain and build upon this core pillar in
2021, engaging in different ways toinspire and have fun both in the office
and when working from home.

Communication
We encourage effective and transparent
communication at all levels. This is
aided by accessible management
and opportunities to encourage
feedback across the Company.

There are a wide range of tools usedby the Group to communicate mattersthat are relevant to colleagues to assist
in the understanding of business goals,
objectives, and economic and financial
factors affecting the performance of
the Group. Some of these tools include
our colleague portal Atlas, internal
newsletters, the use of video updates,
team briefings, suggestion schemes,
people forums, updates on the employee
share scheme and the annual Employee
General Meeting.
The transparency of our communication
philosophy extends to Senior Managers
and Directors, who encourage dialogue
between colleagues of all levels ofseniority across all areas of our business.
Our Group Chief Executive Officer
operates an open-door policy andcolleagues can contact her directly
through our ‘Ask Milena’ initiative. Our
senior managers and Directors also
participate in regular face-to-face andonline chats with our people.
In order to ensure that there are effectivemeans by which the views of theworkforce can be heard, the Board
established a UK Employee Consultation
Group (ECG) in 2019. You can read more
about this on page 91.

1	Previously called The Sunday Times Best Companies to Work For.

Equality
We work hard to promote a sense offairness and equality. We want to createa working environment where everyone
has an opportunity to succeed, andwhere everyone supports, and feels
genuinely supported by groups related
to diversity, gender equality, inclusionand social mobility.
We are very proud to be a diverse
workplace and we’re committed tobuilding an inclusive culture where every
individual has a voice and sense of
belonging. We have working groups
focusing on age, disability, gender,
lesbian, gay, bisexual, transgender(LGBTQ+) and social mobility.
The working groups and forums areplatforms for diverse talent and provide
opportunities to help educate, inform andimprove our approach to specific issues
relating to under-represented groups. As
a result, these channels represent thevoices of our colleagues and empower
them to play a role in shaping our
employee propositions and policies.
To find out what our Diversity andInclusion Forums focused on in 2021,
turn to page 54.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

13

88%

of colleagues believethat Admiral is a great3
place to work

Admiral’s ‘Give a Day’scheme allows colleagues
in the UK to volunteer
two days in the local
community each year,with full pay

Recognition and Reward

494

90%

of colleagues feelencouraged by
Admiral’s commitment
to Smart Working.1

career advice sessions
were hosted by our
new Careers Academy

Colleagues complet
edover 192,000 online
courses in 2021
(UK operations)

At the heart of this pillar is our shareownership scheme, which rewards
success with a stake in the Company. We
firmly believe that a job well done should
be appropriately rewarded.

95%

feel
of our people
ed bywell support 2
the businessWe maintain a philosophy that people who
like what they do, do it better, and in doing
so, aim to ensure a work environment
where colleagues are engaged and havea clear purpose. One example is throughour share ownership scheme, which is an
important part of the Admiral culture,
and aims to reward and recognise our
employees for their hard work and theoverall performance of the Group.
Over 10,000 employees working at
Admiral for more than one year received
shares through our Approved Free SharePlan (SIP) or equivalent schemes in 2021.
More than 3,300 employees from acrossthe business receive additional sharesthrough the Discretionary Free Share
Scheme, which is designed to ensurethat decisions are made by management
to support long-term value growth,
reward the right behaviours, and toensure that our people’s interests arealigned with those of our shareholders.
1	Continuing operations only; equity excludes capital held from disposal to be returned to shareholders.
2	June Pulse Survey.
3	GPTW Survey Results 2021.

14

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued

Drivers of Our SuccessExcellent
Customer Service
Our commitment to delivering excellent customer service
remains unchanged, and unaffected by the pandemic.
We are proud of our colleagues as they
continue to work from home and theirability to remain motivated and capableof delivering excellent customer service.
There have been so many uplifting
stories of how our colleagues havecontinued to do what is right by ourcustomers over the course of the last
12 months. Below are just a few
examples of teams who are going thatextra mile every day.

Vulnerable Customers
Our specialist customer support teamhelps some of our most vulnerable
customers compassionately when
they need us the most. This team isdedicated to supporting bereaved
customers and customers facing
financial difficultly, or hardship. The
team was established in July 2021 aspart of our response to the pandemic,
to provide our customers the support
needed as they faced an increasing
number of complex financial difficulties.
During 2021, this small team helped
more than 6,000 customers who had losta loved one, and over 3,000 financiallyvulnerable customers.

Treating Customers Fairly

Key Worker Initiative

In the UK, our Customer Assurance
team were awarded the Gold Awardfor ‘Support Team of the Year 2021’ by
the Welsh Contact Centre Awards, forthe third year running. Our colleagues
in Customer Assurance are passionate
about treating all customers fairly
and ensuring that our customers areprovided with the best service andmost suitable products for their needs.
The assurance team ensures thatclaims are paid promptly and fairly andthat any complaints are resolved as
quickly and thoughtfully as possible.
This team provides support to all
customers, including those customers
who are facing challenges ranging fromthose affected by bereavement, thebreakdown of a relationship or general
affordability issues or concerns.

Disruption caused by the Covid
pandemic caused challenges foreveryone, particularly those working
across the front line and in the NHS.

Team members within Customer
Assurance are equipped with training insoft skills such as empathy and patience,as well as technical knowledge to berobust and resilient problem solvers.

Read more about our operational excellencein our Business Model on page 07

In response to the contributions madeby key workers to help protect the
public, we wanted to offer our thanks
and appreciation in return. In 2021
we launched a Key Worker initiative
to support our customers working in
key roles, a project that resulted inwaiving over 10,000 customer excess
payments, amounting to over £5 million
and covering the cost of almost 1,000
hire cars. Feedback from our customers
relating to this support was positive,
with many customers praising Admiral’sefforts in going that extra mile in such achallenging time.

Company overview

Strategic report

Corporate governance

Financial statements

In 2021, Admiral has
helped 9,000 of its mostvulnerable customers
through dedicatedcustomer initiatives.

Additional information

15

6,000

bereaved customers

3,000

financially vulnerable
customers

Not Another Number
Elsewhere in the UK, the Van teamenjoyed record customer satisfaction
results in 2021, closing the year withan average score of 9.35/10.00 anda net promoter score over 65. These
impressive outcomes were due, inpart, to their ‘Not Another Number’initiative which encourages colleagues
to treat our customers as individuals
with their own needs. We’re proud of our
Van agents for building upon our corevalue of excellent customer service andtailoring it for their business.

16

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued

Creating value forour stakeholders
At Admiral, we are committed to building strong andsustainable businesses that are focused on achieving
positive outcomes for all our stakeholders.

Our Customers
Read more on page 87

Our Business
Read more on page 93

Our People
Read more on page 89

Our Society
Read more on page 96

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

17

Read more about our detailed
approach in our s172 statementon page 100

Our Customers

Our People

Help more people to look after their future.

The Team, The Team, The Team.

As a customer-centric organisation, we seek to create products thatprovide more people with the opportunity to access good financial
services products.

We believe that people who like what they do, do it better. This
attitude creates happier and more productive colleagues, and better
outcomes for our customers and other stakeholders.

Value created in 2021

Value created in 2021

• We continued to provide fair and affordable products acrossthe Group• A wellbeing portal was launched for colleagues• The UK Motor business launched a virtual assistant to better enable
customers to self-serve• We improved our digital offering for our household customers• Members of the Group Board attended Employee Consultation
Group sessions so they could hear directly from colleagues tounderstand their concerns• We launched new and innovative motor products• The Learning and Development team ran training to support
our colleagues in their transition to working from home

• We launched Admiral Essential on price comparison for more pricesensitive customers• An internal careers office, promoting career development,
was launched• Our customer operations teams were restructured around the twocore elements of value and service, to support better customer
experiences• We launched several group talent leadership development
programmes in 2021, attended by a diverse audience from all
operations

Priorities in 2022

• Our Ministry of Fun held monthly competitions for all colleagues
to enterOur priorities in 2022 are to continue delivering great customer
service, and to provide quality products, at fair prices, for a rangeof customers.
Customer satisfaction remains at the centre of our approach tobusiness, and we strive to recognise evolving needs and expectations
and adapt our channels and products in response.

• We provided clear and reassuring communications on returning
to the office• The UK Reward team embarked on a comprehensive review of pay,working hours and employee share schemes

Priorities in 2022
In 2022 we will continue to encourage our people to acquire skills anddevelop their careers, whilst at the same time offering recognition andcompetitive rewards.
The health and wellbeing of our people, both physically and mentally,
along with flexible working practices, will remain paramount.
We will continue to engage with our employees and strive to improvediversity and inclusion across the Group.

18

Admiral Group plc Annual Report and Accounts 2021

Our Business Model continued£6m

invested back into ourcommunities in 2020/2021

Our Business
Partners & Suppliers

Shareholders

Our business stakeholders include partners,
suppliers, co-insurance and reinsurance partners.

Admiral focuses on building long-term sustainablebusinesses for the future.

Our strategic partners and suppliers comprise a mix of financial
partners, reinsurance partners, IT hosting, distribution and claims
management and claims services partners. In 2021, there has beena significant focus on enhancing the Group governance framework
surrounding our procurement controls, looking to create and drive
further alignment across Admiral Group with the ability to tailor to our
local businesses to support their sizes, countries and culture.

The Group maintains a prudent approach in the way we run
our businesses, which informs our investment and reserving
philosophy and attitude to risk. The focus of our underlying
investment strategy is capital preservation and low volatilityof returns.

In addition, management and the Board have placed significant focus
on supplier payment performance during the year and are committed
to ensuring that the Group continues to improve its performance inthis area.

Admiral regularly engages with shareholders through open andtransparent dialogue, as investor engagement fosters long-term
strategic understanding of our business.

Value created in 2021

Value created in 2021

• Continued engagement with partners and suppliers. Made positive
progress towards developing a unique supplier code of conduct• Strong financial performance (ROE/EPS/DPS)• Continued positive progress towards building our supplierrisk registers• We widened our investment portfolio without a material change inmarket risk
• We bought additional inflation protection• Updated the Group Procurement Framework• We enhanced engagement with ESG Indices• Improved procurement processes• We aligned disclosures to the Sustainability Accounting Standards
Board (SASB)• Updated and improved our Modern Slavery policy• Extended our risk sharing partnership with one of our majorreinsurance partners, Munich Re, with the longest contract until
2029. Worked more closely with our suppliers and partners tofurther support our net zero aspirations• Our Chair and Senior Independent Director held a series ofCorporate Governance meetings with our largest investors

Priorities in 2022

In 2022 we commit to maintaining frequent and open dialogue
with our shareholders, and the wider financial markets. Our goal is
to maintain a strong capital position, manage risk and protect ourbusiness for the long term.

In 2022 Group procurement aim to enhance our relationships
with all our partners and suppliers, and further assess risks inthe supply chain, particularly with regard to modern slavery andenvironmental considerations.
In 2022 we aim to roll out enhanced procurement controls and to
improve our current management information and reporting offerings
which will allow us to enhance our engagement with suppliers.

Priorities in 2022

We intend to consistently deliver positive financial performances, andshareholder returns.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

19

Our Society
Communities

Environment

A culture of giving and a sense of responsibility for thecommunity is shared across the whole Group.

Admiral has set targets to reduce its impact on
the environment.

Giving back to our communities is an integral part of our company
culture. Our colleagues play a key role in how we engage with ourcommunities, and we work collectively to drive long-term change.

The main environmental focus in 2021 was on climate change,
both the impact of a changing climate on our businesses, as well as
how we can mitigate our businesses having a negative impact on
climate change.

Value created in 2021

Value created in 2021

• We continued the Admiral Covid Support Fund established in 2020,and have since donated to more than 350 worthy causes• We seek to cut our current emissions by half by 2030 with acommitment to achieve net zero greenhouse gas emissions by 2040

• We donated £1 million to the UNICEF India vaccination programme• We allocated over £1 million to our international businesses to
distribute to their local causes• We obtained assurance for scope 1 and 2 carbon emissions1 fromour operations, becoming fully carbon neutral for the second
year running• In total, we invested more than £6 million back into our communities
during 2020/21• We formalised our Climate Change Steering group, headed up by ourGroup Strategic Risk teamPriorities in 2022

• We aligned our sustainability approach (see pages 46 – 60) with ourGroup purpose, supported by a materiality matrix and group-wide
people engagement (see pages 49 – 50)

In 2022 we will look to build on our long-standing financial andresource-based contributions, and maintain consistency and integrity
relating to our promises.
Our communities approach will consider a number of influences anddemands, including but not limited to topics such as employability,
social mobility, educational opportunities, health and wellbeing for all,and wider financial inclusion.

• Our Investments team refined the portfolio’s climate data set for
better decision-making towards our net-zero commitments• We promoted Green Week and Earth Day, and supported
various recycling initiatives, and clean-up events as part ofeveryday businessPriorities in 2022
In 2022, we aim to enhance the Group governance framework
surrounding our data capture process for emissions reporting,to drive further alignment across Admiral Group. We seek toimprove how we will report against progress made towards thefollowing commitments:• to reach net zero greenhouse gas emissions by 2040
• to cut emissions in half by 2030
• to achieve net zero in directly controlled operational emissions
by 2030
Admiral also aims to complete verification of its scope 3 emissions,and then begin working to set Science-Based Targets, which willcomplement the Group’s overall net zero ambitions.

1	We independently verified our carbon emissions with Carbon Intelligence, who provided
limited assurances as per the industry standard.

20

Admiral Group plc Annual Report and Accounts 2021

Strategic
reportQuick navigation
22

Chair’s statement

27

Chief Executive Officer’s statement

31

Q&A with Milena, Geraint,
Cristina and Costantino

35

Our strategy
35 	Admiral 2.0
38

Diversification

42

Evolution of Motor46

Our sustainability approach61

Key performance indicators

62

Chief Financial Officer’s statement

66

UK Insurance review

74

International Insurance

79

Admiral Loans review

81

Other group items

86

Non-Financial Information

87

Section 172: Stakeholder engagement

101 Principal/non-routine/significant
decisions in 2021
107 Task Force on Climate Related
Financial Disclosures (TCFD)
114 Streamlined Energy and Carbon
Reporting (SECR)
116	Principal Risks and Uncertainties
124	Viability Statement

21

Simon’s
story

4,000
laptops andcomputers
distributed

Spotted on the coverWe sit down with Security Manager Simon as he talks about
how he keeps our people safe in our Cardiff head office.
‘As a Security Manager, I oversee
security operations across all the
Cardiff sites along with a team ofseven others. My role is to keeppeople safe. As part of this I monitor
contracts, issue security clearances,checking building-related equipment
and alarms, and look after themechanical equipment for Tŷ Admiral.
Admiral means a lot to me, and thebest part of working here is thepeople. I can tell that our people
are happy to be here as I sit at thereception desk and let everyone in.
If I was going to describe theculture in three words, I would say‘approachable, supportive, equal’.

I have developed so many long-lasting
friendships here, and the support andkindness that was shown to me whenI lost my Dad a few years back went along way.
The pandemic has directly impacted
my role. My days were a very different
kind of busy when we started smart
working, and everyone began towork from home. We oversaw the
distribution of over 4,000 laptops andcomputers, supporting collections
and couriers, in addition to ourdifferent type of busy usual security
tasks. Now we are establishing a
new kind of normal, and I have to say
it’s nice to see more familiar faces
passing by our desk in the morning!’

If you’ve been to
our Head Office, TŷAdmiral, then you’ll
probably recognise me.
I’ve been working at
Admiral for almost ten
years now, and time
has flown.

22

Admiral Group plc Annual Report and Accounts 2021

Chair’s Statement

We continue tobelieve that if people
like what they do, they
do it better. Our people
feel involved because
they have a voice,they are shareholders
in our business, andthey genuinely care.

Well that was quite achallenging year – again!
Against this backdrop,
Admiral continued to thrive.
Background to the year
Milena Mondini de Focatiis took over as Group CEO backin January 2021 and has provided strong leadership. She
has further built a high-performing team which continues
to take the business from strength to strength, buildingon Admiral’s solid foundations and maintaining the key
ingredients that make Admiral different. We remain focusedon continuously strengthening our core competencies
whilst creating sustainable businesses for the future.
The welfare of our people remains a top priority. I am proudof the way they have responded to the changing Covid
situation in looking after each other, our customers andthe community at large, whilst always remaining true toAdmiral’s values.

Looking back at 2021
Admiral has produced another strong set of results in 2021
in both reported profit and growth. This is once again due
to our people. They make the real difference at Admiral andtake care of all the little things that make that difference;
continuously evolving and improving the business. They
remain true to our purpose to – Help more people to lookafter their future. Always striving for better together – ensuringthat we do the right things in consideration of all of our
stakeholders. The Group has continued to grow withturnover increasing by 4% to £3.51 billion, whilst customer
numbers are 9% higher than 2020 at 8.36 million. Group pretax profit increased by 26% to £769 million. Covid continued
to impact the results in all markets in which we operate.
In the UK, profits were strong due to accident frequency
taking longer to return to more normal historical levels than
expected and strong prior year development, notably inthe first half of the year. We continue to maintain a prudent
approach and, as a result, benefited from strong reserve
releases from past years. Earnings per share rose by 24% andreturn on equity was 56%. The Group’s solvency ratio remains
robust at 195% (187% at the end of 2020).

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

23

Diversity andInclusion Awards
In 2021 we were ranked 26
out of 850 companies in the
Financial Times’ Diversity
Leaders ranking andreceived the highest placing
for insurance companies
and fourth highest in
financial services.
The Diversity Leaders list is a
pan-European survey of more than
100,000 employees which assesses
their perception of companies’
inclusiveness or efforts to promotevarious aspects of diversity.

Over 15,000 companies across 16
European countries were assessed,
so to have made the final shortlist
is a huge achievement that we are
extremely proud of!
In 2021 we also celebrated an amazing
achievement by our colleagues in
Spain. In September, Admiral Seguros
were named as one of the Top 30

In the UK we prepared for the changes
resulting from the Financial Conduct
Authority (FCA) market pricing study for
general insurance that will affect Motorand Household insurance products. The
full changes came into effect in January2022, and we anticipate that they will
have a significant impact on the market.
We see this as an opportunity tocontinue to build on Admiral’s strengths
and desire to do the right thing forcustomers. As a reminder, approximately
80% of Admiral customers shop aroundat renewal, so we are encouraged
that the majority choose to remain
with us; this being an indicator of
our good customer experience andcompetitive pricing.

Read more about
Our International Insurance
on page 74

International insurance delivered good
customer growth but an overall loss
as Covid-related accident frequency
benefits returned to more normal levels
and competitive activity increased inmost markets.
We have continued to grow our Loansbusiness. The loans book remains
resilient despite economic uncertainty,
largely as a result of our prime customer
base and prudent approach.
As I covered last year, we were pleased
to complete the successful sale of ourComparison businesses, although we were
sad to say goodbye to many colleagues.

Read more about
Our Loans on page 79

companies in Diversity & Inclusion
practices by INTRAMA, a network ofcompanies committed to diversity
and equality. Admiral Seguros was
highlighted for having a special
culture that fosters innovation andtrust, and for being a workplace
where differences are celebrated forthe added value they bring.

Dividend
Our dividend policy remains that we pay
a normal dividend of 65% of post-tax
profit and distribute each year as a
special dividend the available surplus
over and above what we retain to meet
regulatory requirements, the future
development needs of our business andappropriate buffers.
As a result of the sale of the Comparison
businesses, we announced thatthe proceeds would be returned
to shareholders as a further special
dividend phased equally over the interim
2021, final 2021 and interim 2022
dividends. Therefore, the Directors haverecommended a final dividend of 118.0
pence per share (2020: 86.0 pence pershare) for the year to 31 December 2021,
representing a distribution of 91% of
our second half earnings (72.0 pence pershare) as well as 46.0 pence per share as
the second of three payments related to
the Penguin Portals disposal proceeds.

24

Admiral Group plc Annual Report and Accounts 2021

Chair’s statement continued

5th best super large
workplace in the UK,
Great Place to Work.

This will bring the total dividend for theyear to 279.0 pence per share, an overall
increase of 78%. This represents a payout ratio of 88% of full year earnings(187.0 pence per share) and 92.0 pence
per share related to the Penguin Portals
disposal. The Group has delivered a Total
Shareholder Return TSR of 577% overthe last ten years (as illustrated in thechart on page 200).

Group Board in 2021
The Board recognises the need for astrong corporate governance frameworkand supporting processes across theGroup and believes that good governance,with the tone set from the top, is a key
factor in delivering sustainable businessperformance and creating value for all theGroup’s stakeholders.
The Group strategy remains
straightforward and highly focused onbuilding customer-centric, sustainablebusinesses for the long term. Within thiscontext, we do not rest on our strengths,
but rather strive to keep doing what
we’re doing well and do it better year
after year.
In our UK Insurance business, we remain
determined to strengthen our corecompetitive advantages and nurture
our culture of innovation via our testand-learn approach. For example, weare continuing to deploy technology
relating to digital and self-service toimprove customer experience andoverall efficiencies.
We also continue to take these corestrengths to new markets and new
products, both in the UK and abroad,which enhances our diversification andthe future growth of the business. We
are agile enough to adapt to evolving
business environments and encourage
entrepreneurial initiatives to solve
challenges and offer the best outcome toour customers, people and investors. One
example is Admiral Pioneer, a businessfocusing on diversification throughnew business areas, that builds on our
traditional test-and-learn approach.

formation
For more invernanceoread our G
age 140pnoreportFrom a governance perspective, we
continue to apply the principles of the
Corporate Governance Code which
ensures that we will continue to take on
board the views of all of our stakeholders
in our discussions and decision making.

As you would expect, we already havestrong links with our people and in 2021,
the Board revisited and enhanced several
areas of focus, including our culture,engagement, diversity, our impact on
the environment and climate change,and how we give back and participate in
the communities in which we operate.

PeopleOnce again Admiral was recognised as agreat place to work in 2021, ranking as
the 17th best workplace in Europe byGreat Place to Work as well as a Diversity
leader in Europe by the Financial Times.
We were awarded fifth position at theBest Big Companies to Work For awards
in the UK and are the only UK company
to be listed for 21 consecutive years.
We were also named the second best
workplace for women in the UK andrecognised for our Wellbeing initiatives.
I could go on!
Of course, this doesn’t happen by
accident. We continue to believe that if
people like what they do, they do it better.
We strive to create a diverse and inclusive
workplace where our people feel thatthey belong and their voices are valued.
Having our people as shareholders
remains a distinctive element of
Admiral’s incentive schemes. These
are designed to ensure that decisions
are made by management to support
long-term value growth, that the rightbehaviours are rewarded and that ourpeople’s interests are aligned withthose of shareholders. Our core belief
is that over the long term, share priceappreciation depends on delivering
great outcomes for our customers.
During the year, I usually visit ouroverseas operations as well as being
present regularly in South Wales. This
year I had the pleasure of visiting ouroperations in the UK, France, Italy,
Spain and the US – a mix of physicaland virtual visits. All Non-Executive
Directors participated in a numberof these visits. We also attended the
Employee Consultation Group meetings.
This allowed us to keep contact with
our people during this difficult period
and directly hear their views and thechallenges they faced. The Admiralculture still shines through.

Company overview

Strategic report#IBelong at Admiral
We recognise that ourpeople are important to thesuccess of the Group andthat attracting and retaining
diverse talent will help us todeliver sustainable growth.
In September 2021 we launched#IBelong, a diversity and inclusionsocial media campaign designed to
attract talent by showcasing ourexisting colleagues to dispel any
misconception prospective talent
may have about the type of people
that thrive at Admiral.

Board
We reviewed the composition of theBoard in 2021 and made two new
appointments: Evelyn Bourke, who
has a wealth of experience in financial
services, risk, capital management
and transformation, now chairs the
Remuneration Committee; and Bill
Roberts, who has extensive insurance,
underwriting and marketing experience,brings valuable knowledge and insighton the US insurance market. Manning
Rountree and Owen Clarke stepped
down from the Board after many
years. We are thankful for the huge
contributions they have made.
The Board and I feel that there is agood balance of experience, skills andknowledge to support and challenge themanagement team, and that operations
are supported by effective governanceand control systems.
The Board remains focused on thefollowing areas:• Continuing to build on the remarkably
special Admiral culture that places ourpeople, customers and wider impact
on the community at the heart ofwhat we do

Corporate governance

Financial statements

Additional information

25

The #IBelong campaign highlights
the careers of 12 UK-based
employees, and includes those thatare neurodiverse, colleagues froman ethnic minority, those who havecaring responsibilities and colleagues
that identify as members of thelesbian, gay, bisexual, or transgendercommunity. The campaign stories
centre around why colleagues join
Admiral, more importantly why they
stay and the advice they would give
to someone considering a role within
the Group.
The campaign is due to run into
2022 to remind Admiral colleagues
that we should all contribute to an
environment where everyone canfeel comfortable as their authentic
selves, and where everyone is given
opportunities to grow.

• Continuing our trajectory of growth,
profitability and innovation• Investing in the development andgrowth of our people• Ensuring excellent governance and thehighest standards• Focusing on all aspects of ESG

Our role in Society
Admiral takes its role in society very
seriously and has an active approach to
Corporate Responsibility by focusing
on all our stakeholders and the wider
impact we have (more information in
the Sustainability Report on the Admiralwebsite). We are proud to be Wales’
only FTSE 100 headquartered company
and employ over 7,000 people in South
Wales. Our people play an active part inthe communities in which we operate.
We carefully consider our impact on thecommunity and environment, including
factors such as the green credentials ofour buildings, raising funds for multiple
charities, and considering the impact ofclimate change across the business.

This year we announced our ambition to
be net zero by 2040 and to be net zeroacross our operations for Scope 1 and2 emissions by 20301. We aim to be an
economically strong and responsible
business over the long term, guided
by a clear purpose, to make a positiveand significant impact not just on ourcustomers and our people, but on theeconomy and society as a whole.

Thank you
On behalf of the Board, I would like tothank everyone at Admiral for theircontinued hard work, their adaptability
and caring behaviour and theircontribution to the Group’s resultsin 2021. I would also like to thank ourshareholders for their support andconfidence. Most of all I would like tothank our customers for placing theirtrust in us.

Annette Court
Group Chair
3 March 2022

1	Refer to HY21 Results presentation on www.admiralgroup.co.uk

26

Admiral Group plc Annual Report and Accounts 2021

PositiveenergyThe team,
the team,
the team

Napoli,Italy

ple
Help more peo
to look after
their future

Striving
for better,
togetherCompany overview

Strategic report

Corporate governance

Financial statements

Additional information

27

Our people and our unique culture are whatmakes Admiral great. All our businesses havecompleted the move to hybrid working this year
and we have worked hard to ensure that Admiralremains a fantastic place to work.

Chief Executive Officer’s statement
My first year as
Group CEO has been
intense and not
short of challenges ...
Admiral has achieved
plenty to be proud of.

We have delivered – yet again – growth,strong financial results and increased
customer loyalty, surpassing 8m
customers and recording exceptional
profits of £769 million1, due to unusual
market conditions and Admiral’s
disciplined approach. This has beenachieved despite turbulent conditions,starting with continued disruption
from Covid and ending with a massive
collective effort to plan and build rate
structures well-adapted to life post
the FCA pricing reforms introduced in
January 2022.
There is no doubt that David left me
big boots to fill… perhaps mine will befancy Italian ones in a much smaller
size! Admiral may have more in common
with a finely crafted pair of shoes than
you might expect. Our strong insurance1	Profit before tax from continuing operations, excluding
impact of restructure cost.

capabilities and technical competences
are the sole on which everything is built,
our strategy is the design in continuous
evolution to meet ever-evolving
customer needs and our people andunique culture are the stitching whichholds everything together. Like anexpert shoemaker, we strive to produce
high quality products by doing thecommon, uncommonly well.
So what do I mean by this? It’s common
to all insurers who survive beyond
infancy that they are competent in thecore insurance disciplines – notably risk
selection, claims handling and effective
digital distribution and servicing. What
sets Admiral apart from most of ourpeers is our ability to deliver on these
consistently well and 2021 has beenno different.

28

Admiral Group plc Annual Report and Accounts 2021

Chief Executive Officer’s statement continued

Group profit before tax, excluding
restructure costs1

£769m
2021

£769m

2020

£608m

2019

£505m

Group profit before tax including
discontinued operations and gain on disposal£1,129m
2021
2020
2019

£1,129m
£638m
£523m

EPS1 (pence per share)

212.2p2021

212.2p2020
2019

170.7p143.7pThis consistent track record is only
possible as we continue to evolve andmodernise our operating model andinvest in innovation for the long term.
The adoption of machine learningmodels has increased our pricing agility,
enabling us to offer customers goodvalue products whilst protecting loss
ratios. This will stand us in good steadfollowing the introduction of the UK
FCA pricing remedies in January. We also
made great progress in the adoption ofscaled agile and our digital acceleration,
deploying, for example, a new claims
system that allows our UK Household
customers to settle claims completely
online if they wish to do so.
Adapting and expanding our proposition
to customers is a strategic priority
for us. We are successfully scaling
UK Household, reaching 1.3 million
customers, and the Loans businessgrew to £607 million gross balancesin 2021. Admiral Pioneer launched its
first product for SMEs last year andcontinues to explore the evolution in
mobility, seeding smaller businesses forthe future. We now have over 1.8 million
customers across our international
businesses and continued to grow thecustomer base by 13% despite themarket being as competitive as ever.

We are also working on building
distribution capabilities outside of pricecomparison to create more optionality
for efficient growth and realise more
economies of scale.
A key feature of 2021 was saying
goodbye to our friends at the Penguin
Portals comparison businesses, andwe wish them the best of luck. We
successfully completed the saleprocess and believe a good outcome
was achieved for all. This will give us the
chance to focus even more on our mainmarkets in the future.
Our people and our unique culture
are what makes Admiral great and willcontinue to do so. All our businesses
have completed the moved to hybrid
working this year. Covid continued
to create uncertainty for both ourbusinesses and colleagues, but wedemonstrated our agility and ability toquickly adapt to meet our customers’
needs and continue to deliver the great
service they expect from us. We haveworked hard to ensure that Admiralremains a fantastic place to work, andthis year we have been named among
the top best places to work in every
country in which we operate, including
the fifth best super large workplace inthe UK and first in Spain.

1	Alternative performance measure (APM)–refer to theglossary for definition and explanation. Note: Group profit
including restructure costs of £713m (2020: £608m).

Our strategy for 2022

Accelerate evolution
towards Admiral 2.0

Product
diversification

The evolutionof motor

Our priority is to accelerate theevolution of our business towards
Admiral 2.0, an organisation thatbuilds and uses historical strengths
but is even more agile. Whilst we
continue to put the customer first,
we aim to focus on our technology
and data to do so.

We view diversification as a key
element in building a sustainablebusiness. Our Group-wide approach
is focused on increasing businessresilience and adapting to theevolving needs and expectationsof our customers.

The way that people move aroundis changing and Admiral’s third pillar
focuses on evolving our proposition
to meet those demands. Admiral
stays close to emerging trends
and continues to apply its test
and learn philosophy to further
develop competencies.

See page 35

See page 38

See page 42Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Cascading Group strategy to colleagues
Our people are key to our success and employee insights
help inform the Admiral Group Board discussions anddecision-making processes.
To protect our colleagues as theCovid pandemic continued, we
supported them to work from homeover extended periods in 2021.
However, it was important for us toensure that colleague engagement
remained possible. Across the Group,
Employee Consultation Group
meetings continued to be held,
albeit virtually.
With colleagues working remotely,
renewed focus was put on ensuringthat they felt connected to Admiral,
our culture, our strategy andunderstood how each colleague’srole played a part in helping theGroup deliver against its strategy.

As part of the Group’s employee
engagement programme, in
addition to regular colleague
communications, in the second
half of the year Milena Mondinide Focatiis attended a virtual UK
Employee Consultation Group.
During the session, Milena reflectedon the fact employees were not
only moving to a smart working
environment but the shift to a moreagile and tech-driven culture wouldchange how customers wanted tointeract and transact with insurers,
and drive up the number of new
entrants to the market.

Milena also set out the Group’s
strategy, the priorities for 2022 andhow both the Group and our people
will need to adapt our customer
propositions and service in order tomeet new expectations. The session
provided colleagues with a chance
to hear directly from Milena in her
first year as Group CEO and with anopportunity for her to hear directlyfrom colleagues from around the UK
business and understand their viewson the direction of the Group.

29

30

Admiral Group plc Annual Report and Accounts 2021

Chief Executive Officer’s statement continued

We also continue totake what we do welland what we learn to
new markets and new
products, in the
UK and abroad.

We have pledged to reach net zero
emissions by 2040 as part of ourcommitment to long-term sustainability
and environmental improvement. We areproud to support our local communities
and in 2020 we established an AdmiralSupport Fund to provide support tothose most impacted by the pandemic,
setting aside £6 million over the past
two years with over 350 organisations
having received support. This includes a£1 million donation we made to UNICEF
to help support our colleagues andcommunities in India. We are excitedabout the continuous evolution of
our sustainability strategy and tocontinue to increase our support toour local communities.

What a roller-coaster of a year! I am
incredibly proud that we are now helping
more customers than ever to look after
their future.
Thank you so much to our enlarged
Admiral family, our customers, Board andshareholders who continue to support
us. And more importantly, thank you to
all my colleagues, our people, who are
the key to Admiral’s success.

Milena Mondini de Focatiis
Chief Executive Officer
3 March 2022

Milena’s reflections from her first full year as CEO

alsr Penguins Port
Farewell to all ou
d!
sa
So
il).
Colleagues (Apr

Announcement of record profitsand dividends to the market and toAdmiral staff! (August). So proud!

Serenade delivered by Group Boardmembers and ‘Grease- revised’musical performed by the executiveteam for David Stevens’ Coviddelayed farewell (October).
So funny!

2021
The generation of 2025: Talking
Group strategy at our first ‘in person
off-site’ with my new team after
a long lockdown (October).
So energising!

We also continue totake what we do welland what we learn to
new markets and new
products, both in the
UK and abroad.

Listening to many fascinating andthattouching stories from colleagues
their
at
s
year
20
15–
us
with
n
have beeer)!
anniversary celebration (Novemb
So emotional!

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

31

Q&A with Milena, Geraint, Cristina and Costantino

AskManagement

Q. Milena, with so many market
changes, a pandemic, andfuture disruption of the motor
insurance sector throughthe sharing economy andautonomous vehicles, how
are you ensuring that Admiral
maintains its competitive edge
and how are you progressing?
Milena: That’s a loaded question! WhenI moved to the UK, I worked closelywith David Stevens who at the time wasGroup CEO, and we challenged ourselveson this very question – ‘how can we
maintain our competitive advantage
and future proof the business for future
disruption?’ That’s how I landed on thecurrent three pillar strategy for Admiralthat I communicated at the 2020 fullyear results, focusing on three key areas– Admiral 2.0 (core transformation),
Product Diversification, Motor Evolution.
I believe the best way to maintainour competitive edge is to keep
doing the common (everyday) things,
uncommonly well whilst continuing toenhance and invest in new capabilities.

The first pillar of Admiral 2.0 isrelated to strengthening our corecompetencies and increasing the speedof delivery on customer expectation,
within the context of a very strong
culture and talent base. In 2021, thebusiness has accelerated investment indigital and technological capabilities,
which we believe will enhance risk
selection and claims management,
as well as making us more agileand quicker to adapt to changing
market trends.
For example, we transitioned tocloud-based technology to enhance
our agility across the Group. We
also invested in machine learning
capabilities to enhance our risk
selection whilst ensuring an ethicalapproach to pricing for all customers
and increasing our footprint,
supporting our ambition to help
more customers secure fairly priced
products. We’ve also hired talented
individuals with vast expertise in digitaland technology to further support ourjourney of being a technology-driven
insurer that evolves according tocustomer needs.

This second pillar focuses on productdiversification – continuing to launch
new products and maintain a testand-learn approach to scale up newofferings, such as tools insurance andgreen fleet insurance. We’re confident
that by offering customers more goodquality products designed to meettheir needs, we’ll encourage them tostay at Admiral for longer, throughgreater levels of customer satisfaction.
Our third pillar focuses on the evolutionof motor insurance, and it remains
a key factor in our consideration as
we evolve our products. Notably, ourVeygo insurance business is actively
investigating new product propositions
for evolving customer needs, andproducts such as short-term insurance
that may have the potential to growand disrupt in the future.

32

Admiral Group plc Annual Report and Accounts 2021

Q&A with Milena, Geraint, Cristina and Costantino continued

These are only a few things that weare doing. Our competitive edge reallylies in our culture and approach toworking collectively. I might be biased,
but Admiral is special – our people areengaged, proactive and encouraged
to innovate. Often, innovation is in
the small everyday things, where
our people try new things, but thenthese small things turn into newprocesses and products, enabling
us to continually improve what
we offer our customers.

Q. Admiral has had anothergood year of profitability.
What have been the key driversof the profit, and what is theGroup outlook?
Geraint: Another strong set of results,
with the key driver of the strong
performance being the UK Motorbusiness. But, before I delve into the
profit story, I’ll just remind you that2020 and 2021 financial years benefited
from current period loss ratios thatwere notably lower than previous years
as a result of less driving and hence
lower frequency due to the pandemic,
which contributes to this set of results
being even more pronounced.
The main reason for the strong UK
Motor profit is the very positive
development of back year claims costs,
leading to large releases of reserves,and increased profit commission
revenue. The prior year claims costs
were significantly more visible in thefirst half of the year, and as the lower
frequency due to Covid began tounwind and frequency levels started
bouncing back to more normal levels,
which is likely to continue into 2022.
Elsewhere in the Group, theinternational insurance businesses
also felt (albeit more painfully!)
the unwind of lower Covid-related
frequency through higher claims
inflation. That, coupled with highly
competitive conditions in mostmarkets and continued investment
in growth and technology anddata capabilities, drove down
profitability for the segment.

Our expectation remains for ourinternational businesses to be
profitable and sustainable businesses
in the long term.
Looking ahead, I think we can also
be confident that our UK Householdbusiness and Loans business willcontinue their growth journeys andincreasingly contribute to Group profit,
over time.

Q. In 2020, the UK car insurance
market saw a material reduction
in claims frequency due topandemic-driven lockdowns.
How did the picture change in
2021, and are we moving backtowards a pre-Covid world as westart 2022?
Cristina: The initial lockdown in March
2020 had a sharp impact on claims
frequency with the number of accidents
dropping by almost 70% at its peak.
The material reduction in claims costs
led us to pay a £110 million Stay atHome Refund to our UK car customers,reflecting the positive impact of
reduced car accidents on UK roads.
In 2021, we started to see anormalisation of claims frequency
trends. Whilst the number of miles
driven on UK roads is returning tomore normal levels, claims frequency
is lagging this trend and remains below
pre-pandemic levels. This is impacted bymore people working from home which
to some extent is likely to persist and areduction in peak hour driving; that is,a structural change in when customers
are choosing to drive.
Looking at 2022, Admiral expects tomaintain pricing discipline, whilst
remaining primed for growth, if theright opportunities arise. In January2022, the FCA pricing regulation
changes have taken effect and will also
have an impact on the pricing cycle in
2022. We believe it will likely take sometime for the impact to flow throughclearly as different players in the market
adapt and adjust prices over time.

Q: How have the international
businesses fared in 2021, andwhat are your expectations
for these businesses
going forward?
Costantino: As Geraint mentioned,
we saw challenging market conditionsin 2021. Within this context, we took
a conscious decision to continue toinvest in these businesses with a focus
on their long-term sustainability.
These investments, together with thecurrent market conditions, resulted inless favourable financial performanceacross the international operations forthis period. At the same time, I’m happy
to report that customer volumes in ourinternational businesses saw continued
strong growth, which is allowing us tobuild greater economies of scale.
Part of this investment, and hence
growth, is related to the expansionof our distribution beyond pricecomparison (which remains ourdominant channel), and to further
grow via the broker channel in Italy andSpain, and the agent channel in the US.
The year ahead will see us adapt to thebenefits that Admiral 2.0 will bring, as
our scaled agile approach beds down
at ConTe, and ramps up at Admiral
Seguros and L’olivier. These businesses
continue to improve their operational
efficiencies and are strengthening theirdigital and data capabilities.
Our expectation remains to build
long-term profitable and sustainableinternational businesses for the
future. We continue to lay strong
foundations in each of thesebusinesses, foundations that are evenstronger in a post-pandemic world.
As we look ahead, we will adapt toemerging trends and align technology
and analytics to deliver improved
performance and synergies acrossthe countries in which we operate.

Company overview

Strategic report

Q. The UK Motor expense ratio
increased in 2021 – what were
the key drivers?
Geraint: Admiral has a culture of
expense efficiency, and this continues
to be the case. At the same time, ourstrategy is to maintain and strengthen
our competitive advantages and adapt
to market trends, which requires somelevel of investment.
The last 12 months saw an overall trendof lower average written premiums,
and together with our various
initiatives to improve and enhance ourdigital offering across the Group, ourexpense ratio was impacted.
In 2021 we increased investment inour digital and technology capabilities,
including moving to the cloud,enhancing the digital customer
journey, and upgrading our internal
claims management system. Thesechanges, we believe, will continue
to strengthen our pricing and risk
selection, operational efficiencies,
claims management and customer
offering over time. In the long term,
this investment both future proof
the business and improve the overall
combined ratio.
We conducted a review of our costbase in 2021 which resulted in an
impairment of technology assets as
we upgrade our technology and digitalassets. Other elements, which had alesser impact, included a voluntary
redundancy program for employees andthe need for less office space as we shift
to hybrid working, which resulted in an
upfront cost to move out of some of ourbuildings in the UK.
Overall, I’m confident that all theseactions and investments have beentaken for the long term benefit of
the business.

Corporate governance

Financial statements

Q. Your household business isperforming well and gaining
momentum, can you provide
an update on the future of
the business?
Cristina: In 2021, the householdbusiness grew its customer base by
14% year-on-year, through both theprice comparison channel as well as
through MultiCover sales. The businessalso maintained good retention rates.
Looking back on the last 12 months,
the household business saw lower
claims inflation during the pandemic,
with fewer escape of water and theftclaims as more people were working
from home and claims were reported
earlier. In addition, 2021 also saw strong
positive development of prior year
claims, and more benign weather (themain notable weather event was storm
Arwen in Q4) compared to 2020.
Overall, UK Household is a strong
business that has the potential togrow whilst maintaining a competitive
expense ratio and an improving loss
ratio. We aim to provide a strong
product proposition for our customers
as a standalone product, and we aretargeting growth via our multiproductoffering. We see MultiCover as asimple, cost-effective proposition that
improves customer satisfaction andhopefully means that our customers
will stay with Admiral for longer.
I’m very pleased with the overall
performance of the UK Householdbusiness, and it’s growing contribution
to Group profits this year. Let’s see
what we can achieve in 2022!

Additional information

33

Q. What is the overall approachto Loans and how big is theopportunity that you see inthis market?
Geraint: Admiral Loans is developing welland with a continued prudent approachin writing loans, we returned to a prepandemic level of growth with a closing
gross loans balance of £607 million, up
from £402 million in 2020. Our approachis to capitalise on a sizable lending
market which generates around £50–60
billion of new business per annum. The
loans business aims to leverage Admiral’scapabilities such as strong analytics
and risk selection, an efficient expensebase, and providing a strong digital andproduct proposition for our customers.
We believe we can have a competitive
advantage in risk selection andpricing – algorithms, decision-making
engines and data pricing. From thisperspective we’ve continued to improve
our risk selection which has resulted
in improved loss ratios, for example
we’ve seen an improvement of over
20ppt in actual loss outcomes as apercentage of net interest income(the loans equivalent of the insurance
loss ratio) from 2018 to 2020. Froman expense perspective, we continue
to invest in growth and expect toachieve economies of scale as we grow,operating at a materially lower expense
ratio relative to legacy competitors. In
addition, the use of the digital channel
also contributes to expense efficiency
both from an acquisition and a customer
service perspective. In particular, thecomparison channel for Loans continues
to grow and we continue to takeadvantage of this to grow our book. The
team has a strong focus on providing astrong digital and product proposition
for customers, and as customer demand
for guaranteed rates and acceptancecertainty increases, Admiral is wellplaced to provide for customer needs.
So, what’s in store for 2022? We’ll
continue to grow the business in a
prudent, cost-efficient way whilst
providing our customers with a great
product and strengthening ourcompetitive advantages!

34

Admiral Group plc Annual Report and Accounts 2021

Q&A with Milena, Geraint, Cristina and Costantino continued

Q: You sold the Penguin Portals
Group comparison businesses
in 2021 – can you explain therationale for this sale?
Milena: (Admiral completed the saleof the Penguin Portals and Preminen
comparison businesses to ZPG Comparison
Services Holdings UK Limited (‘RVU’)
in April 2021). The acceleration ofcustomer preferences for digitalinteractions globally had also
accentuated market interest in
platforms such as Penguin Portals, ournetwork of comparison site businesses.
We believe that RVU will be an
excellent owner and that Penguin’s
insurance comparison strengths,
combined with RVU’s strengths beyond
insurance, as well as their experiencein growth through acquisition, would
provide a solid foundation for the
combined businesses to prosper.
We are hugely proud of what thePenguin team has achieved and how
they have transformed – or evencreated – the markets in which they
operate. Although it was sad for theGroup to part company with thePenguins, we believe they will benefit
from many interesting and worthwhile
opportunities being created going
forward. In addition, comparison
remains the key distribution channel
for insurance, and this opportunity forthe channel to grow would lead to an
ultimate benefit for all businesses.

Q: Climate change continues
to be a key element on
conversations on ESG, could
you tell us a bit more about
Admiral’s commitment to net
zero, and how your electricvehicle offering is evolving?
Milena: With the challenges of climatechange becoming more prominent,
we have continued to step up our
ambitions, taking steps towards agreener future with a target to achieve
net zero carbon emissions by 2040 at
the latest.
Our 2040 ambition covers both ouroperational emissions, that is the
carbon emissions from our offices, aswell as that of our investment portfolio
and business travel. Ultimately, thismeans that we will cover all our scope
1, 2 and 3 emissions to measure anddecrease our carbon emissions as far
as possible, and offset the rest. As partof this journey, we have interim targets
to reduce emissions by 50% by 2030,
and across our investment portfolio to
reduce emissions by 25% by 2025 andby 50% by 2030.
We’ve also expanded our Task
Force on Climate-related Financial
Disclosures reporting this year toreflect our increased commitment
towards transparent climate
disclosure. We are working tooutline a clear decarbonisation plan
as we move forward with our net
zero commitments1.
We are also aiming to help ourcustomers make greener and smarterchoices as we provide a stronger
proposition and product features,with an aim to be a market-leading
underwriter of electric vehicle (EV)insurance. In the UK, we offer insurance
cover for these products and have seen
double digit growth of the EV book.

1 See page 107 for our TCFD disclosures.

We have also been proactively
connecting with customers (our teamhosted interviews with hundredsof customers in 2021) and testing
different product enhancements tofurther engage customers as theytransition to electric vehicle ownership.
We want to provide the assurance tocurrent and prospective customers
that if they choose to go electric, they
will find the right level of cover withus. We are also testing opportunities
in green vehicle fleet insurance as partof our diversification strategy, making
sure we stay close to wider changes inmobility and the evolution of motor.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

35

Our strategy

Part 1: Accelerating towards Admiral 2.0
Competencies:
Customer-CentricInnovation

Digital First

Scaled Agile

Overview
First and foremost, our priority is toaccelerate the evolution of our businesses
toward what we call Admiral 2.0, anorganisation that leverages on Admiral’s
historical strengths but is even more agile
and technology-focused, putting data anddigital first. It also includes having smaller
and more autonomous interdisciplinary
teams, embracing smarter ways ofworking and attracting new talent.
But, above all else, it is a company that
continues to put the customer at theforefront and seeks to leverage evenmore on data and advanced analytics toconstantly improve their experience.
Developments in 2021 within our UK
market include improvements relating to

Smart Working1

Data and Advanced
Analytics• Cost effectiveness: Customers using
MyAccount to self-service almost
doubled between January 2020 and
December 2021
Other developments in 2021 from acrossthe Group include• The adoption of open banking and a
new decision engine to enhance risk
selection for the loans business• Implementation of a scaled agile
approach to operations in the UK and
in Italy• The adoption of smart working, in linewith Admiral’s approach to optimise
hybrid working and maintain a strong
culture• Underwriting agility: we demonstrated
pricing discipline and flexibility bychanging prices ahead of the market toreflect Covid-related claims trends• Strong progress with building cloudbased architecture to support
sophisticated data capabilities andimprove the speed of delivery• Claims efficiency: we more thantripled the total loss claims settled
online – whilst almost halving the timeto settle the average claim overall• The introduction of a new chatbot
and natural language processing toenhance the customer journey1	To read more about our approach to smart working
practices, turn to page 101.

54 million
In 2021 we passed
over 54 million total
online user sessions

36

Admiral Group plc Annual Report and Accounts 2021

Our strategy Accelerate evolution towards Admiral 2.0 continued

A truly digital anddata first businessIn 2021 we’ve made good
strides towards becoming
a truly digital and data
first business.
Admiral’s reputation has historically
been to provide customers withgreat prices and great places for ourpeople to work – translating into
great customer outcomes. And
this year, whilst maintaining our
focus on human interaction,
we’ve continued to enrich thecustomer experience with a setof new digital capabilities.
Within our UK Motor claims
function, we’ve enhanced our claims
management process, and improved
our cross-sell functionalities,

Enhancing our claims
management process
Our reputation is founded on
being there for our customers
when they need us most –at the point of claim.
In April 2019, teams from across the
UK business embarked on a multiyear programme designed to improvethe customer journey through theclaims management process, byharnessing digital technology.
In 2021, a key milestone wasachieved, and the businessrolled out a new claims system,
Guidewire ClaimCentre.

leveraging our digital investments toincrease the proportion of MultiCar
policies sold fully online. These
now account for over a third of all
MultiCar sales and we are taking
steps to replicate this success across
our MultiCover product proposition.
Undeniably, the pandemic rapidly
accelerated customer preferences foreasy and accessible online solutions
and as a testament to the work ourteams have done this year, we’ve seen
more customers interacting with us
online than ever before. In 2021 wepassed over 54 million total online
user sessions1 (2020: 49 million), andour total user sessions increased byover 10% to 1.02 million on an average
weekly basis.
Customer-centricity is at the coreof what we do here at Admiral,and this is reflected in our digital
approach as we aim to give customers
a personalised service experience
anytime, anywhere. Our focus
continues to be providing leading

Guidewire ClaimCenter is designed
to help business resolve claims
faster, by improving automation
and workflows behind the scenes.
The system was introducedwith customer conveniencein mind – customers can now
monitor developments using theirsmartphone or online, rather thanhaving to call us for an update, as
well as upload information such assupporting documents online. Of
course, customers can still speak to
our friendly claims colleagues on thephone when needed and we continue
to provide great service.
Internally the Guidewire ClaimCentre
helps us to manage claims more
efficiently and gather data more
effectively – significantly improving
our digital capabilities and ourability to develop products anddigital services and claims capabilities
that delight our customers, whilst
reducing operational costs andincreasing long-term customer growth.

Our ethical approach to machinelearning and analytics
We know that our customers wantinsurance products to be accessible,
straightforward and jargon free.
We also recognise that for mostof our customers, easy-to-use
digital platforms that offer tailoredproducts suit their requirements
best. To develop the most convenientand competitive customer platforms,
we need to incorporate a range
of insights into our technologicaloffering, including machine-basedlearning. We aim to do the rightthing by our customers and commit
to using the available data that is
generated by the digital economy
in a fair and ethical way.

services that meet the needs ofour customers. Since adopting thesystem we have improved several‘pain points’ identified by ourcustomer facing agents, to deliver
more streamlined and transparent
claims experiences, and often
quicker claims settlements.
As we look to build on the platform,
we are excited about the ability tofurther personalise the experiencesof our customers. In line with ourapproach to Admiral 2.0, we areconfident that our investments
in new technology will result in
reduced costs and improvementsin efficiencies. Following thecompletion of the Household claims
function’s transformation in 2021,
the project’s focus has now shiftedto the Group’s Motor claims system.

1	Total user session is defined as any online session that is completed by a customer. Whilst that customer may have performed many actions, this measures all interactions within that session.

Company overview

Strategic report

Agile transformationin ConTe – Italy
As an organisation we’ve
always focused on our agility
and our ability to make pricing
and other changes rapidly
and effectively.
Qualities which, in the face of a
rapidly changing market – driven
by factors such as the growing
gig economy, shifts in mobility
trends, and the electrification of
the automotive industry – aremore important than ever.

Smart People –Smart Technologies –Smart Spaces – SmartBusiness Practices.
As the scale of the pandemic
became clear in March 2020,
we embraced the challengeof transitioning almost our
entire workforce to a remoteworking model whilst working
to maintain positive customer
outcomes and uphold ourstrong people culture.
Now, almost two years later, weare learning and adapting to thechallenges and opportunities thatcome with hybrid working.

Corporate governance

Financial statements

Additional information

ConTe, our Italian operation,
launched in 2008, and strong
business foundations have been
built. Its hunger for innovationand improvement has led to thesearch for new opportunities tobuild on this success and work ina more collaborative and efficientway. As such, in 2021, an agiletransformation project was initiatedwhich built on its test-and-learn
philosophy, with teams across thebusiness redesigned to better
integrate customer needs.

Since starting, IT productivity1 hasdoubled year-on-year, business agility
has strongly increased, and teams are
better equipped to deliver projects tothe market quickly and efficiently.
Customers are also receiving better
customer service, which is reflectedby an improved net promoter score(NPS2) of high single digits in thesame period. Considering future
growth projections of ConTe, thetime cost savings and benefits
to the bottom line will become
increasingly significant.

To ensure a smooth agile transition,clear objectives were designed, andnew roles were implemented. Leaders
ensured the right level of buy-in
was in place and that teams
were communicating efficiently.

Looking ahead, the team at ConTeis working to integrate additional
departments into the agile
management system, embedding
learnings to continue strengthening
customer outcomes in the future.
Watch this space!

Our Smart Working approach is built
on four key pillars: Smart People –Smart Technologies – Smart Spaces– Smart Business Practices.

the Group can facilitate hybrid
meetings and much of our traditional
office space is being repurposed forshared areas.

Our Smart People pillar ensuresthat our people have the tools andpolicies in place to support them ina hybrid environment. We signpost
useful information to encouragecolleagues to work comfortably andassign budgets for colleagues topurchase equipment for ergonomic
adaptations, for example.

Our approach to Smart Business
Practices will ensure that Admiralremains an attractive andcollaborative space to work. We’revery much aware that global working
trends are evolving, and we arecommitted to remaining ahead of
the curve. Ultimately, we want toprovide colleagues with safe andcollaborative environments, that
supports their development and theneeds of our customers.

Our Smart Technology pillar equips
our people with the tools needed
to be successful and to provide
excellent customer service.
Our employees have access to acomprehensive suite of softwarethat amplifies collaboration athome and the office and adoptionof these practices are cemented
with comprehensive training.
Our Smart Spaces pillar looks at
providing employees with the spaces
they need to work in a smart andagile way. Meetings rooms across37

Under this new Smart Working
umbrella, we’ve been actively
engaging with our people tounderstand their individual needs
and testing new solutions as wetransition out of lockdown.
In 2021, a new suite of content tosatisfy the learning needs of our new
Smart Working environment rolled
out, and the list of training topics willcontinue to expand in 2022.

1	Number of releases/headcount.
2	Net promoter score (NPS) is a KPI that measures the willingness of customers to recommend products or services to a family and friend. It is used to measure customers’ loyalty to a brand.
NPS at Admiral is currently measured based on a subset of customer responding to a single question – ‘How likely would you recommend our company to a friend, family or colleague?’through phone, online or email.

38

Admiral Group plc Annual Report and Accounts 2021

Our strategy continued

Part 2: Diversification
Competencies:
Strengthen
Customer
Proposition

Scale Up Promising
Products

Overview
Admiral views diversification as a key
element in building a sustainable businessfor the future. We want to grow ournon-motor businesses whilst also building
on our continued success in motor
insurance. Our Group-wide approach is
focused on increasing business resilienceand adapting to the evolving needs andexpectations of our customers.

Our approach to product diversification
is to make focused, staged investments
on a select number of new productopportunities across the financial
services sector, as well as strengthening
and complementing existingcustomer propositions.

Leverage Core
Strengths

Admiral Loans accelerating growthInnovate in
Product Design

Over the last three years, Admiral has prudently andcautiously expanded its financial services offering, building aprime loan book and becoming a relevant participant in what
is a large market in the UK. We see our capabilities in thisarea as one way to accelerate further growth in the future.
Admiral Loans offers unsecured personal loans for a wide varietyof reasons, and customers often use this service to make home
improvements, consolidate debts, pay for life events such as a wedding,and educational courses.
Admiral Car Finance provides Personal Contract Purchase and Hire
Purchase options as a way of helping people buy their dream car.
Customers can generate a no-obligation quote, without leaving afootprint on their credit file, so they can compare their options.
Since 2019 we have issued over 175,000 loans and disbursed over£1.3 billion in lending.
Our loans book now stands at over £600 million, demonstrating that UK
customers have embraced a guaranteed rate proposition which Admiral
has been quick to respond to, and that customers value the certainty
and transparency the rate concept offers. Our adoption of open banking
within the Loans business has allowed us to access a wider audience, andcapture and convert more customers.

We were proud to berecognised as winners of
the Moneyfacts Consumer
Awards as Best Personal
Loans Provider and Best Car
Finance Provider.

In 2021 we also made pleasing progress on integrating more closely with
the UK insurance business to access a wider pool of customers, many ofwhom may have existing lending facilities that we can potentially convert.
We were also proud to be recognised as winners of the Moneyfacts
Consumer Awards as Best Personal Loans Provider and Best Car
Finance Provider.

Company overview

Strategic report

Seeding, launching, andscaling new businesses
at Admiral Pioneer
Admiral Pioneer is a strategic
business within the Group,
established to explore andinvest in new ventures andemerging consumer needs.

Corporate governance

Financial statements

The objective of Pioneer is to
identify products and businesses
according to increasingly importantsocietal areas and trends. A key focus
is the commitment to improving
the customer experience, withnew products, business models
and partnerships tested through a
discovery-driven approach.
Our test-and-learn approach steers
the identification process for selecting
viable new products and businesses
which might benefit from the scaleand scope of the wider Group.

Additional information

The products and businesses
identified are expected to become
long-term growth areas for
Admiral, and ultimately sourcesof long-term value.
Pioneer highlights from 2021 include
the impressive growth at Veygo(see more below), and the launchof two new products – Toolbox, atool insurance product for the UK
market, and Koolays, a provider ofsmall fleet insurance, for companies
in France.

Helping the selfemployed andsmall businesses
with Toolbox

Introducing pandemic products
Our team at Veygo quickly recognised that 2021 presented
an uncertain landscape for many customers who were
weighing up the value of a motor insurance policy whenrestrictions impacted regular vehicle use.
As a result, a nimble product approach was adapted to enable customers
to travel for Covid vaccination appointments. The policy offered customers
three hours of car insurance and the premium was refunded if they
provided us with proof of vaccination. Customers were also encouraged topromote this scheme to friends and family, with the goal of helping as many
people within the UK to stay safe as possible.
Veygo demonstrates our commitment to supporting the diversification andevolution of mobility. You can read more about the business on page 42.
Read more about Veygo on page 42

We’re starting to
explore ways to serve
the self-employed andsmall businesses andToolbox by Admiral is
our first endeavour inthis market.
We launched our tools
insurance proposition in
April 2020 and, later inthe year, added public
liability and employers’
liability products for the
tradespeople segment.
We’ll be testing andlearning over the next few
months to develop our
proposition further, basedon customer feedback.

39

40

Admiral Group plc Annual Report and Accounts 2021

Our strategy Product diversification continued

Offering customers
discounts with
MultiCover
Admiral MultiCover isdesigned to make buying
insurance and managing
insurance policies as easy as
possible for our customers.

Products for electricand hybrid vehicles
Admiral provides several
insurance solutions forenergy efficient and low
carbon technology as partof our core motor book.
These include insurance cover forboth electric and hybrid vehicles,
enabling customers to embrace more
flexible driving habits and reduce
their footprint on the environment.

Our MultiCover platform allows
policies relating to vehicles,
buildings and contents cover tobe clearly accessible and in one
place, so that changes can be madesimultaneously, meaning minimal
hassle to the customer. Whilst this
12-month policy fosters better
service and time efficiency within thebusiness, the MultiCover approachallows customers to benefit froma discount each time a new policy
is added.

During 2021 we continued toutilise customer feedback on ourMultiCover offering to further
satisfy the changing needs andpreferences of our customers. In
2021, our MultiCover customer basegrew by 18%, a positive trend that
we hope to further capitalise on in
the future.

+18%

growth in customer
numbers during 2021

Admiral has always been customer
focused and dedicated to providing
suitable products in a practicaland accessible way. We’ll continue
to provide a great service to ourcustomers, regardless of vehicle fueltype or product, and we are ready toembrace a further uptake of polices
relating to electric vehicles. Ourstandard electric and hybrid vehicle
policies cover both batteries andcharging equipment for accidental
damage, fire and theft.
You can read more about our
products relating to electric vehicles
on page 44.

Company overview

Strategic report

Adapting to theevolving needs andexpectations of ourcustomers using
Insight Relay
At Admiral, we want to makesure that it is as easy as
possible for customers to buy
and claim on an Admiral policy
as this is key to growing ourbusiness in a sustainable way.

Customer centric
approachCorporate governance

Financial statements

To further enhance our customer
proposition in 2021, we launcheda tool called Insight Relay for our
frontline agents in the UK. Insight
Relay is an evolution of several
operational feedback schemes
within Admiral and is managed by thecentralised Continuous Improvement
Team, within the operational changearea. Insight Relay complements
our Voice of the Customer projectthat allows call agents to record
customer ‘pain points’ in order toimprove the customer experience.
The goal of Insight Relay is to
identify any process or approachthat could potentially impact acustomer experience negatively. To
roll out the tool, we actively engaged
with our colleagues on the frontline
who have first-hand insight into
the customer experience. Our callagents welcomed the opportunity
to provide feedback, and valuable

Additional information

insights were captured relating to
how we can enhance our services andimprove on those rare occasions that
we fall short.
Getting closer to our customers andunderstanding their evolving needs
will help us ensure that we continue
to deliver high-quality products
and fair propositions that all ourcustomers find valuable.

41

42

Admiral Group plc Annual Report and Accounts 2021

Our strategy continued

Part 3: Evolution of Motor
Competencies:
Evolve Our
Proposition

Understand Changes
in Mobility

DevelopCompetencies
for the Future

Overview
The third pillar of Admiral’s strategy
focuses on evolving our proposition forchanges in mobility.
The way people move around ischanging, with exponential growth indisruptive mobility technology over thelast few years. Different views exist on
future mobility trends and where thegreatest future impact will be. Admiral
stays close to these trends, with anapproach to continue with our test andlearn philosophy, looking at emerging
propositions and further developing
competencies that are relevant for
the future.

Innovate in
Product Design

Veygo: from Start Up
to Scale Up
The journey of Veygo began
in 2017, with a vision to
anticipate future trends inthe short-term insurance
marketplace.

Measureeverythingthat moves.

The temporary cover Veygo offers
helps thousands of customers toborrow a car from friends or family
and allows new cars to be boughtand driven home. In just a few
minutes, customers can be assured
that they are fully covered for as
short or as long a time as they need1.
Our learner driver insurance helps
future drivers, by enabling them topractice their driving skills, without
the risk of impacting the no-claims
bonus of the vehicle’s owner.
Over the last 12 months, Veygo
has seen a 56% uptick in customer
numbers, an achievement thatreflects the provision of quick
and easy policies, and a growing
brand profile.2

1 Up to two months.

One example is our Veygo business,
which has continued to grow, in linewith its ambition to be a market leaderof flexible, temporary, insurance coverin the UK. In 2021, we also launched
Kooalys, a new digital product in France
offering green insurance policies for
professional drivers and fleets.

2 Refer to Introducing pandemic products case study on page 39.

The culture of continuous
improvement, whilst retaining
an innovative core, is an exampleof the Group’s test-and-learn
approach in action. An elementof the Veygo secret sauce ismost certainly a focus on data.
The team motto is to ‘…measure
everything that moves’ and data
provides the business with valuable
insights into customer acquisition,marketing spend, success of various
subscription-based models, channels
and partnerships.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Hanging out on TikTok@VEYGOUKAs a company operating exclusively online,
Veygo is well versed in digital engagement
and engaging a new generation of drivers.
In 2021 Veygo also successfully launched on
the social media platform TikTok with a profile
designed to engage with a younger audience. The
platform was used to publish short videos shot bylearner drivers putting learner plates on their car as
onscreen text explains how Veygo insurance coverworks. In addition to driving brand awareness andattracting 14,000 new followers, the Veygo TikTokplatform has been used to drive down the cost per
customer quote by 96%.

14,000

new followers for
Veygo on TikTok

Launching small
insurance fleet inFrance with Kooalys
The way people movearound is changing.
Growth in disruptive mobility
technology has been exponential
in the last few years and the trend
is expected to continue. Admiralis working hard to stay close tothese trends and apply our testand-learn philosophy to adapt
as customer preferences andexpectations mature.
With disruption in mind, we
began launching trials in 2021 tounderstand where potential could
exist to create viable businessmodels. Using Admiral Pioneer as an

In response to using TikTok and the successgenerated, group marketing has increased theirbudget for spending on this channel. This is anotherexample of how we test-and-learn, and evolve.

innovation hub and initial incubation
platform, we successfully launched
a new French business in the second
quarter of the year, called Kooalys.

innovative operational team werebusy integrating group expertise,relating to underwriting skills andpricing accuracy.

Kooalys is a Paris-based insurtech
with a fully digital insurance service
proposition for the car rental andbusiness fleet sectors. The fleet
insurance offering provides coveracross a fleet of business vehicles,
under one policy. The niche offeringof Kooalys is the ability to provide
customers with premium discounts
based on how eco-friendly thevehicle chosen is. Another benefitof the product provided by Kooalys
is that fleet companies can insure
all drivers to all vehicles, or assign
named drivers depending on theirpreference, without having to takeseparate products.

During the second half of the year,
the team signed its first partnershipto insure the car rental company
Virtuo in France. Virtuo aims to makerenting a car at airports and train
stations hassle free for customers,
via a 100% digital self-service app.
Customers that use Virtuo in France
are provided with insured vehicles,
allowing them to skip the counterand hit the road within minutes.

As 2021 progressed Kooalys focusedon building and developing products
using customer feedback and market
trends. In the background, theirThis strategic partnership is justpart of our ambition to disrupt
the commercial insurance market
in France, and to diversify our
distribution by leveraging our
experience in delivering high-quality
motor insurance propositions.

43

44

Admiral Group plc Annual Report and Accounts 2021

Our strategy Motor evolution continued

BlaBlaCar partnershipwith L’olivier and Swiss Re
L’olivier, our motor insurance
business based in France,
entered a partnership with
Swiss Re and BlaBlaCar in
2021 to launch a digital motor
product in the French market
called BlaBlaCar Coach.

Electric Vehicle trends
At Admiral we want to support
more customers make themove to electric and in doing
so become a leading insurer
for electric vehicles in the UK.
We want to give customers theassurance that if they choose to goelectric, they will continue to findthe right level of cover with us.
2021 was another year of increasing
consumer demand for electriccars, and government policies
aimed at tackling climate change
continued to spur growth in
new electric vehicle sales.

1 Based on management insights.

BlaBlaCar is a leading communitybased travel platform that connects
drivers and passengers looking
to carpool and share the costs oftravel journeys.

them adopt better and safer drivingstyles. The app is available with cobranded annual car insurance coverwith L’olivier to enable savings forcustomers with careful driving habits.

Together with Swiss Re and L’olivier,
BlaBlaCar has created the smartphone
app BlaBlaCar Coach to offer
personalised driver coaching and tips
for road users. The app monitors driver
behaviour such as speed, braking andphone usage without the need for any
additional equipment in the car. At theend of each ride, recommendations
are passed onto drivers to help

The initiative forms part of theGroup’s ongoing diversification
strategy where active steps aretaken to build stronger propositions
for our customers and increase ourengagement capabilities. These
opportunities build on our corestrengths and enable efficientlearning into new and attractive
market opportunities.

Over the course of the year, we
maintained our approach to providing
competitive prices, leveraging ourunderwriting capabilities to growand accelerating growth. As a result,electric vehicle customers on our UK
Motor book grew by double digits.
We estimate, that our share of theelectric car insurance market isone of, if not the, biggest in the UK
motor market.1

The growth in demand for thisproduct has created opportunities
to better understand the needsof our customers and prompted
discussions relating to how Admiralcan best support the wider adoptionof electric vehicles going forwards.

Whilst the proportion of electricvehicles on cover remains verysmall relative to the total book, theincreasing number of policies aredelivering valuable insights for our
future product propositions. For
example, when developing products,
we will need to consider the fact thatelectric cars offer slightly different
claims profiles to traditional vehicles,
and that there are new challenges
around costs and repair.

We continue to actively engage
with our supply chain to ensure
appropriate capabilities are in place
to manage increases in electricvehicles, whilst exploring innovative
new approaches to working tosupport growth in electric vehicles,
and we plan to investigate how
we may support our communities
seeking accessible charging
infrastructure in the future.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

45

2021 Awards
Great Place to Work UK

Best Companies

Great Places to Work UK Best Workplaces, 5thBest Companies To Work For Special Award 2021

Best Workplace for Women, 2ndBest Big Companies to Work For in the UK, 5thBest Big Company for Wellbeing, 1st
Insurances 10 Best Companies To Work For, 2ndGreat Place to Work International

Other Awards

Great Place to Work Best Multinational Workplace inEurope, 17th

Diversity Leader, Financial Times, 26th

Great Place to Work Best Workplaces (France) 2021
– 6th – L'Olivier

Health and Wellbeing Gold Award, Public Health WalesGreat Place to Work Best Workplaces (Spain) 2021
– 1st – Admiral Seguros

Best Car Finance Provider of the Year, Moneyfacts

Financial Wellbeing Award, Credit Unions of WalesBest Personal Loan Provider, Moneyfacts

Great Place to Work Best Workplaces (Canada) 2021
– 5thWelsh Contact Centre of the Year, Customer Assurance,
Welsh Contact Centre Awards

Canada’s Best Workplaces for Today’s YouthArmed Forces Employer Recognition Scheme Silver Award
Best People Focused CEO 2021, HR Magazine
Europe’s most inclusive companies as ranked by
employees, Financial Times, #105th

46

Admiral Group plc Annual Report and Accounts 2021

Our Sustainability Approach
Our purpose as a business is to help more people to lookafter their future; always striving for better, together.
Our purpose has been further enhanced and embeddedby the purpose framework introduced in 2021.

PeopleGreat Place
to Workin Europe% of colleagues feel treatedGreat Place toWork for Women fairly regardless of race,
gender or sexual orientationin the UK

#17

#2

>95%

rk
o
ow
t
ce

Ag
rea
tp

la

Be one of the best places
to work in the world.

Achieve top #25 ranking in the
Great Place to Work awards,
across our businesses

Help
more
peoplelook after
theirfuture.

Society£6m 350+
Achieve Net Zeroby 2040pa
imve

Covid fund to Organisations supported as part
support local of the Admiral Support Fundcommunities

iti
Pos

Make a difference throughpositive impact on society.

ct

on
s

oc
iet
y

Company overview

Strategic report

Corporate governance

Financial statements

Download the PDF of the
Sustainability Report at
admiralgroup.co.uk

Gre
a

47

Additional information

Looking after
our future
Admiral Group plc
Sustainability Report 2021

Customer

tc
us
to
m

Provide great customer
experiences.

er
s
nce
rie
pe
ex

Excess fees waived
for key workers

UK Motor customers likely
to renew after a claim1

£5m+

>90%

To improve NPS scores
across the Group

Alwaysstriving
for better
together.

Business
lb
us
ine
s

s

Build our businesses with
operational resilience.

ss
e
cc
Su

fu

Average GroupROE in past
5 years

MSCI ESG
rating% of investment portfolio
asset managers are
signatories to the PRI2

55%

A

100%

Consistently strong business performanceand shareholder return1	UK Car (excludes UK Van).

2	Principles of Responsible Investment.

48

Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

Sustainability approach
Our approach to sustainability underpins
our corporate strategy and helps
translate our purpose into action. To
help communicate how our approach
drives long-term stakeholder value welaunched a sustainability project in 2021.
The aim of this project was to refine key
Environmental, Social and Governance(ESG) focus areas and outline tangible
ESG ambitions for each of our key
stakeholder groups.
We wanted to ensure that our approach
would capture and address the ESG
issues that matter most to:• Our People• Our Customers• Our Society (Communities, and theEnvironment)• Our Business (Partners and Suppliers,
and Shareholders.)
To do this, we decided to run amateriality project across the group.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Materiality assessment

Survey results were sense checkedat various forums and subsequently
allocated across three areas based on
the feedback received.

A materiality survey was designed
internally with questions relating to theperceived strategic importance to thebusiness, as well as the opportunity tohave a positive impact in these areas.

We were able tooutline what our
immediate priorities
were, based on theirmateriality weighting.

49

Once the sustainability-related
initiatives were categorised, we wereable to outline what our immediatepriorities were, based on theirmateriality weighting.

We interviewed over 500 managers, over
2,000 customers and over 2,000 peoplein our communities. Participants wereasked to rank pre-identified and defined
focus areas, that had been pre-qualified
by the project team and deemed to be inalignment with Admiral culture.

Our approach is likely to evolve overtime, and we will look to conduct further
materiality assessments in future which
will continue to engage with various
stakeholders for input, including ourpeople, customers, partners and suppliers,
shareholders and wider community.

Materiality matrix
The matrix presents an overview of the materiality analysis conducted in 2021 to rank Environmental, Social and Governance (ESG)
priorities of Admiral Group Plc.

Aggregated across all survey responses, workshops,
management discussions and SWG feedback

MonitorManage

Focus

Importance to stakeholders

Community
Health andWellbeing
Strong ethicalpartnerships

Homelessness
and housing
Financialinclusion

Investingresponsibly

Product
quality
People, healthand wellbeing*

Diversity andinclusion*

Smart, green
and safe
mobilitySports, artand culture

Stakeholder key
People*CustomerInnovation

Educational
opportunities

Admiral Impact

Society (Community and Environment)* Actively monitored and maintained as part of our culture.

Employability andsocial mobility

Peopleengagement*

External efforts
to fight climatechangeExecutive
Remuneration

Great
service

Fair andaffordable priceImpact of operations
on climate change

Business

Eco-friendly
products

Governance andbusiness resilience

Long-termshareholder
Talent acquisitionvalue
and development*

50

Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

Definitions

The market will be
informed of ourcommitments via investor
materials, and employees
will be encouraged tolearn more about our
purpose-led approach
via an embedding
purpose project thatwill roll out in 2022.

We commit to Net Zeroby 2040.

Monitor: Topics that fall into the‘Monitor’ section will be added to an ESG
tracker and maintained / updated by the
Sustainability Working Group. The aim isto record information and developments
relating to these topics, with the viewthat they may progress to an area thatwill be actively managed in time.
Manage: Topics that fall into the‘Manage’ section will be prioritised in
the ESG tracker, as an ambition for thebusiness to develop and build on. Topics
in this category are also viewed as things
that we do well, and will be managed
and maintained. All ambitions will
have an assigned owner, and initiatives
will be underway across the businessto maintain and / or enhance these
focus areas.

Focus: The topics that fall into this
‘Focus’ section are the areas that thesustainability approach will focus onin the short term (18–24 months). It
is expected that our ambitions in thissection will evolve over time.
The Sustainability Working group will
review these areas regularly, and refreshthe tracker and matrix as required.
The Board will also be updated onthese during the year. The market will
be informed of our commitments via
investor materials, and employees will
be encouraged to learn more about our
purpose-led approach via an embedding
purpose project that will roll out in 2022.
The below table includes the main areasthat together with our stakeholders wewill focus on for maximum impact.

Focus area

Stakeholder

How we address

Governance of managing risk
and business resilience

Business

Turn to page 90

Talent Acquisition & Development

PeopleTurn to page 89

Great Service

Customer

Turn to page 87

Product Quality

Customer

Turn to page 87

Employability and social mobility

Society (Communities)

Turn to page 96

Long-term shareholder value

Business

Turn to page 93

Read more in our section 172 overview (starting on page 87). To see how thesepriorities feed into our strategy and reinforce our purpose.

Looking after
our future
Admiral Group plc
Sustainability Report 2021

Download the PDF of the
Sustainability Report at
admiralgroup.co.uk

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

51

Admiral’s alignment with the United Nations’ Sustainable Development Goals
The Sustainable Development Goals (SDGs) are a set of 17 global goals developed by the United Nations, which define global
priorities and aspirations for 2030. The goals aim to address major societal and environmental concerns. The most relevant goals
where we believe Admiral contributes are listed below:

SDGs

Priority targets

Examples of our contributions(4.4) Increase the number• Long-standing graduate trainee programmeof youths and adults who• Launched Internal Career Service to support colleagues in career development
have relevant skills, including
and to reach their goals
technical and vocational skills,
for employment, decent jobs • Recognised as one of Canada’s Best Workplaces for youth
and entrepreneurship.
(5.5) Ensure women’s fulland effective participationand equal opportunities forleadership at all levels ofdecision making in political,
economic, and public life.

• Fully gender balanced Group Board(8.6) Substantially reduce theproportion of youth not in
employment, education,
or training.

• £120,000 donated to Jesus College, Oxford to help reach and support underrepresented young people at Oxford and other leading universities.

(10.2) Empower and promote
the social, economic, andpolitical inclusion of all,irrespective of age, sex,
disability, race, ethnicity,
origin, religion or economicor other status.

• Held our first UK-wide Diversity & Inclusion Week focusing on breaking down barriers
to progression• Achieved our target to increase women at senior management level to 40% by 2023
• Provided training on unconscious bias for all international executives and key recruiters• Launched an international mentoring programme to support and empower highpotential women across the Group• Partnered with Cardiff University Aspire program: an eight-week internship forBlack, Asian and Minority Ethnic students and females in science, technology,
engineering, and mathematics• Partnered with the Multiple Sclerosis Society to host a national event called Openthe Door• Partnered with Disability Sport Wales, the leading organisation for the development
of disability sport in Wales(11.2) Provide access to safe,• Provide insurance cover to both fully electric and hybrid vehicles
affordable, accessible andsustainable transport systems
for all.

(12.6) Encourage companies,
especially large andtransnational companies, toadopt sustainable practices
and integrate sustainability
information into theirreporting cycle.

• Actively engaged with ESG1 rating providers – integrating feedback into
sustainability disclosure• Sustainability Accounting Standards Board (SASB) standards integrated into thereporting cycle• Aligned disclosure with all recommendations under the Task Force on ClimateRelated Financial Disclosures (TCFD) framework• Received external verification of carbon emissions data

Our contributions to the above SDGs align with our Sustainability approach and our commitments to the future.

1 Environmental, Social, Governance.

52

Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

Sustainability Governance

The principal
Committees of
the Board – Audit,
Remuneration, Group
Risk, and Nomination
and Governanceplay an importantrole in the Group’s
sustainability-related
decision-making
processes.

To see the Group Governance
Structure, and all Board
Committees please turnto page 108

Group Board: The Admiral Group Board
is responsible for promoting the longterm sustainable success of the Groupand is its principal decision-making
forum. It is the principal governing bodyfor sustainability-related issues andtakes ownership of sustainability andclimate-related topics and associatedstakeholder engagement. The Board
approves the Group’s sustainability
approach and objectives, including
any related Environmental, Social andGovernance (ESG) ambitions which
can have a material impact on Admiral.
Milena Mondini, Group CEO, is theappointed Sustainability representativeon the Group Board.
Board Committees: The Board
has delegated authority to several
permanent Committees that deal
with sustainability-related matterswhere relevant and written Terms ofReference. The Committees of theBoard – Audit, Remuneration, Group
Risk, and Nomination and Governance– play an important role in the Group’s
sustainability-related decision-making
processes. For example, the Group Risk
Committee oversees the managementof climate-related risk and ensuresappropriate oversight is in place.
Sustainability Working Group:
A Sustainability Working Groupwas established in 2020 to help
identify, monitor and facilitate theimplementation of sustainability
ambitions across Group operations.

The working group supports the Group
Board and Admiral’s executive leadershipteam to ensure adequate oversight isin place around sustainability-related
decision-making. This includes monitoring
the latest market developments around
ESG, supporting subsidiary entities with
their sustainability commitments, andsharing best practice ESG management.
In 2021, sustainability champions wereappointed from across the business to
own the newly outlined ESG ambitions
disclosed in this report. Each champion
is required to report progress against
outlined ambitions directly to thesustainability working group on a quarterly
basis. Read more about this on page 104.
Climate Change Steering Group: Given
the impact of climate change and theincreased focus the area has received inrecent years, a subcommittee dedicatedto climate change was created in 2021.
The Climate Change Steering Group
reports directly to the sustainability
working group. Read more about thison page 108.
Forums & Ministries: Several internal
forums and Ministries exist acrossthe business to uphold the pillars of
our culture and monitor areas related
to sustainability such as employee
diversity, happiness, and wellbeing. For
example, the Diversity & Inclusion forum
consists of six working groups and drives
diversity and inclusion initiatives acrossthe Group. Several Ministries such as
the Ministry of Fun and the Ministry of
Health organise regular events to keepcolleagues happy and engaged.

Company overview

Strategic report

Percentage of customer calls(Kudos calls) scoring a 9/10 or 10/10

49%(2020: 45%, 2019: 41.5%)

First Notification of Loss callanswer rate

92%
(2020: 93%)

Customers likely to renew after
a claim (UK)>90%
Growth in UK electric vehicle
customers in 2021

150%

Corporate governance

Financial statements

Our Great Customer Experiences
Satisfied customers
As part of our efforts to integrate
customers at the heart of our products
and processes, we regularly measurecustomer satisfaction across several
benchmarks. Obtaining regularcustomer feedback is core to the way we
do business. It allows us to understandwhat we are doing well and enables
us to identify the priority areas for
improvement and where we should
implement change.
Across our UK and international
insurance operations, the Net Promoter
Score (NPS) forms a key part of ourbusiness strategy and vision. In 2021, we
confirmed our ambition to improve our
NPS score across all businesses – in linewith our sustainability commitment to‘provide great customer experiences’.

Fair and transparent claims
outcomes
As an insurer, we are committed toproviding appropriate claims practices
that deliver fair and just outcomesfor customers in a timely manner. We
communicate with customers aboutclaims through a range of different
channels, including via telephone,on the website via webchat, throughthe MyAccount portal, via email, SMS
message, and by letter.
As part of the claims handling process,colleagues inform customers about
the scope and limits of their coverage.
These details are explained whencustomers take out an insurance policy
and are included in the customer’s
policy booklet or documentation.

Additional information

53

This process allows us to continuallyassess and challenge our knowledgeof the product, and the customers
understanding of what they are buying,to achieve outcomes that are fair forour customers.

Looking to the future(Responsible products)
At Admiral we are actively evolving ourcustomer proposition to meet the needsof our customers, and this includes thepromotion of responsible products.
We currently provide several insurance
solutions related to energy efficiency
and low carbon technology as part ofour core motor book. These include
insurance cover for both electric andhybrid vehicles, telematics insurance,
flexible insurance under the Veygo
brand, and more recently as part ofour new Kooalys small fleet venture
in France.
Veygo also offers temporary car
insurance cover and learner driverinsurance to customers. Temporary
insurance solutions are increasingly
playing an important role in thetransition to the low carbon economy
as customers choose to reduce theiruse of personal vehicles or move awayfrom vehicle ownership completely.
Read more about our UK-based business
Veygo on page 42.
At Admiral we want to support morecustomers to make the move to electricand in doing so become a leading insurer
for electric vehicles in the UK. We want
to give customers the assurance that
if they choose to go electric, they willcontinue to find the right level of coverwith us. Read more about our developing
electric vehicle proposition on page 44.

54Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

Percentage of our group employees
completed the Great Place
to Work Survey

78%
Percentage of colleagues believethat Admiral is a great place to work

88%
Percentage of colleagues
feel encouraged by Admiral’scommitment to Smart Working

A great place to work

Diversity & Inclusion

Engaging our employees

To monitor and strengthen diversity in
the UK, a Diversity & Inclusion Forumwas created in 2018. The forum has
made great progress, and in 2021
launched Admiral’s five-year Diversity
and Inclusion strategy. This forum isheaded up by the Head of Diversity andInclusion for the UK, and consists of six
working groups, all of which consider
and implement ways we can bettersupport a diverse working culture.
Cristina Nestares, CEO of UK Insurance,
is our Diversity and Inclusion executive
sponsor.

The Great Place To Work (GPTW) survey
acts as our annual formal people survey
and is an important mechanism for thebusiness to understand how employees
are feeling and which areas they would
like to see improvement. The survey
forms part of our ongoing commitment
to create an environment where ourpeople feel valued, respected, andlistened to, and we encourage everyone
to give honest feedback.
As part of our 2021 sustainability
commitment to ‘be one of the bestplaces to work in the world’, we’ve set out
the ambition to achieve top 25 rankingsin the GPTW surveys across all businesses
and geographies.

Diversity, ethics and human rights

90%
about our
Read more
to Work
Great Placenedaccola s o
5
4
e
ag
p

Admiral Group
respects and values
the individuality anddiversity of every
employee. The Group’s
Equality, Diversity
and Dignity at Work
policy ensures thatevery employee istreated equally andfairly and that all
employees are awareof their obligations.

Admiral Group respects and values
the individuality and diversity of every
employee. The Group’s Equality, Diversity
and Dignity at Work policy ensures thatevery employee is treated equally andfairly and that all employees are awareof their obligations. The Group is fullycommitted to the health and safety
and the human rights of its employees
regardless of their background. In
addition, the Group maintains a numberof employee codes of conduct regarding
appropriate ethical standards inthe workplace.
The Group’s principles of respect forhuman rights, diversity, health and safety
and workplace ethical standards not only
apply to employees directly employed
by Admiral, but also to colleagues
employed by the Group’s outsourced
partner in Bangalore, India. To meet thiscommitment, Admiral Group maintains
regular contact with its outsourcer’s
management team and the Group’s senior
managers visit the outsourcer on a regularbasis, whilst the Group also provides
training and development to ensurethat the team uphold these principles.
In addition, Admiral Group has appointed
a manager based permanently at theoutsourced operation, who is responsible
for ensuring that the Group’s principles
are adhered to by the outsourced partner,
and that the wellbeing of outsourced
employees is monitored.

Below are some highlights from the UK
over the last year:• Compulsory Diversity and Inclusion
training for all colleagues• Diversity and Inclusion awarenessweek focusing on breaking down
barriers to progression• Increasing the number of women atsenior management level from 34% in2020 to 44%• Partnered with Cardiff University
Aspire programme: an eight-weekinternship for Black, Asian andMinority Ethnic students and womenin science, technology, engineering,and mathematics• Delivered LGBTQ+ Allyship training in
partnership with Pride Cymru, including
a session for our senior leaders• Relaunched the Age Diversity Forumand put together a new steering group
to take our initiatives forward
To monitor and strengthen diversity
across the Group, our International
Diversity and Inclusion Forum is hosted byPeople Services to connect Diversity andInclusion sponsors from across the Group.
The forum is tasked with discussing how
we can support diversity and inclusion
across training and development;
communication and sharing; recruitment;
fun and celebrating success. In 2021 ourInternational Diversity and Inclusion
forum established:• An international mentoring
programme to support and empowerhigh potential womenCompany overview

Strategic report

Corporate governance

Financial statements• Training on unconscious bias for all
international executives and key
recruiters• Include Black, Asian, Mixed Race andother ethnically diverse-led enterpriseowners in supply chains• Introduction of international Diversity& Inclusion awards (to recogniseachievements at a company andindividual level)

We have a zero-tolerance approach toharassment and bullying. Our People
services function also tracks our ethnicity
data to ensure that our colleagues
represent and reflect the communities inwhich we operate. We will be providing an
update on how we are progressing witheach of the key actions in 2022.

• A review of our recruitment processes
to help attract and retain diverse
candidates

Gender diversity
The table below provides a breakdownof the gender of Company Directors
and employees at the end of the 2021
financial year1:

Company Directors1
Other senior managers2
All employees3

Male

Female

6
4
5,722

6
3
5,595

1	Company Directors consists of the Board of Directors, asdetailed on pages 134 – 139.
2	Other senior managers is as defined in the Companies
Act 2006 (Strategic Report and Directors’ Report) andincludes persons responsible for planning, directing
or controlling the activities of the Company, or a
strategically significant part of the Company, otherthan the Company Directors defined in note 1 above.
Any other Directors of undertakings included in
the consolidated accounts that are not consideredstrategically significant have not been included.
3	All employees totalled 11,403 people. Of which 5,722
identify as male, 5,595 identify as female, 22 identify asother and 64 preferred not to say.

We use our strength in analytics anddata to look at diversity and identify
opportunities to improve. Diversity
data is collected from informationquestionnaires on the intranet which
employees are asked to fill out annually.

Disabled employees
Admiral Group’s UK businesses are
Disability Confident Employers. Thismeans they are recognised as going
the extra mile to make sure disabled
people get a fair chance, full and fairconsideration to applications for
employment made by those withdisabilities, having regard to their
particular aptitudes and abilities.

Promoting race equality at Admiral

Admiral has a Disability Forum to help
promote inclusivity in the Group for
those with a disability.

One of Admiral’s founding pillars isequality. We are committed to ensuring
race equality at Admiral and in June 2021
we re-signed up to the Business in theCommunity’s Race at Work charter andits seven key actions.

In 2019, the Company was awarded
Level 2 status of the Disability ConfidentAward and is now aspiring to achieve
the Disability Leader Award. Thereis also a Workplace Support Team toprovide support for those with physical

Additional information

disabilities, neurodiversity and shortterm mental health problems. Training
sessions to help better employees
understand those with neurodiversity
are also available.
The Admiral Group will support any
employee who is disabled or has a lifethreatening illness and help them tocontribute to the Group as long as theirhealth allows. Managers in the Groupare sensitive to health concerns andspecial needs and will not knowingly
allow any employee with a disabling or
life-threatening illness to suffer fromdiscrimination at work.
In June 2021, we ran a Learning Disabilities
week for all colleagues with a number ofworkshops, podcasts and drop-in sessions
with help from an expert in Dyspraxia and
Neurodiversity. The Group also provides
employees with access to the Employee
Assistance Programme Care First
confidential helpline which offers advice
and support on a range of health issues.

Health and wellness across
our operations
We encourage colleagues to actively
communicate how they’re feeling,
especially during the recent periods ofhomeworking, and we provide managers
with the appropriate tools to support
colleague needs. All colleagues havethe right to request flexible working
solutions for any reason, whether thatbe an adjustment in an individual’s
workload, or changes to working hours
due to caring responsibilities.

• Appoint an executive sponsor for race
• Capture ethnicity data and publicise
progress• Commit at Board level to zerotolerance of harassment and bullying• Make equity, diversity and inclusion
the responsibility of all leadersand managers• Take action that supports Black, Asian,Mixed Race and other ethnicallydiverse employee career progression• Support race inclusion allies in
the workplace

55

Diversity partnerships and signatory commitments

56

Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

All colleagues have access to our
Employee Assistance Programmes which
provide free and confidential support. In
cases where colleagues may have been
identified as potentially vulnerable, wetake additional steps to put them intouch with assigned People Services
colleagues who ensure they receive theappropriate level of support.
In 2021 we began establishing several
community groups for parents andcarers to help share best practiceand tips and build internal networks
to support their return to work andensure they can integrate back into theworkforce effectively.
In the UK, Admiral has achieved a gold
status in the annual Healthy Working
Wales awards every year since 2013 – atestament to the work we have done toprioritise communication of health andwellbeing in the business.

Maintaining a diverse talent pipeline
As a signatory of the Women in Finance
Charter, we are committed to supporting
the progression of women into senior
roles in the financial services industry byfocusing on the Executive and mid-tiertalent pipeline. In 2021 we reached our2023 gender diversity target, achieving
44% female representation at a senior
management level across our core UK
functions.
To ensure that we maintain a highproportion of women in senior leadership
positions, in 2021 we created a leadershiptraining course designed to support thedevelopment of future female leaders.
The 18-month training and mentoring
programme, Get Discovered, opened for
applications in January 2022 and will begin
in May 2022. The programme, which isopen to every woman who is a permanent
employee of the Group and aspires tobe a leader, has been developed to run
alongside a candidate’s current role. Get
Discovered is just one of the ways that weare delivering on our promise to ensure
our female colleagues can reach their fullpotential at Admiral.

Our approach to talent development
The Central Learning and Development
department, formerly known as Admiral
Academy, is Admiral’s central training hub
and offers support, learning opportunities
and career advice to all employees.
Additionally, trainers from across theGroup are available to offer a prospectusof training programmes and standalone
courses tailored to individual anddepartment needs.
In 2021, a new Head of Learning andDevelopment was hired within our UK
operations to refresh the wider employee
development team’s purpose and offerings– expanding our training content to better
cater to the needs of the wider business.
A new suite of content aligned with
our new Smart Working environment
was rolled out during the year and willcontinue to expand in 2022.
In 2021,• Over 450 online courses available tocolleagues (UK operations)• Colleagues completed over 187,000
online courses in 2021 (UK operations)• All International CEOs were given
additional training and resources toopen career conversations with theirdirect reports, to better understandemployee aspirations, strengths,
and motivations.
• We established an International
Governance Academy for theEuropean businesses• We designed a framework to facilitate,
support and increase effectiveness ofinternational talent mobility acrossthe Group
In 2021 we also launched a new Internal
Careers Office which incorporates several
different initiatives designed to help
colleagues develop and achieve theirgoals. Some of the services offered focus
on career advice, others with writing
applications and interview prep.

We’ve seen positive results since it was
launched and will continued to build on
learnings in 2022. Since it was set up in
January, we’ve held 494 career advice
sessions, answered over 800 queries andheld 128 interview coaching sessions.

41%(2020: 36%)

UK positions
filled by internal
candidates
Recruiting for diverse talent
Good recruitment practices underpin
our ability to attract the diverse talent
we need at Admiral. We want our online
Careers pages to be fully inclusive and arecontinually considering ways to support
all website visitors. In October 2021, ourRecruitment team implemented theuse of ReciteMe, a website accessibility
tool which allows visitors to our online
Careers pages to adjust the format of thepages, in accordance with their individual
requirements, to make the information
more accessible.
We also encourage prospective
candidates to disclose whether theywould require any adjustments to bemade in advance of their interview,(such as providing an application formin braille, or making changes to thelocation of an interview) so they can beappropriately supported during both therecruitment process and throughout
their career with us.
These initiatives mean that we will beable to attract more job seekers who
have disabilities, learning difficulties
and those for whom English is a second
language, and makes searching for a job
at Admiral an inclusive experience forpotential colleagues.

Company overview

Strategic report

Corporate governance

Financial statements

Recognition and Reward

Positive Impact on societyOver 10,000 employees working at
Admiral for more than one year receive
shares through our Approved Free SharePlan (SIP) or the equivalent thereof. In
addition, more than 3,000 managers
across the business receive additional
shares through the Discretionary Free
Share Scheme, which is designed toensure that decisions are made bymanagement to support long-term value
growth, reward the right behaviours, andto ensure that our people’s interests arealigned with those of our shareholders.

Our net zero commitments

Our core belief is that, over the longterm, share appreciation depends
on achieving great outcomes for ourcustomers. Management feels strongly
that by having involvement in shareownership and receiving regular updates
on business performance from senior
management, employees are provided
with a good understanding of thefinancial and economic factors that could
affect the Company’s performance. Our
share schemes recognise the need tokeep our employees both highly skilled
and motivated.
For information on how the Directors
have engaged with employees during
the financial year and how Directors haveconsidered our employees’ interests
when making strategic decisions,please refer to the Strategic Reporton pages 91 – 92.

Admiral Group has formally committed
to achieving net zero greenhouse gas
emissions by 2040 at the latest acrossall three scopes of emissions and to cut
these emissions in half by 2030. We haveadditionally committed to achieving net
zero in directly controlled operationalemissions by 2030.

Greenhouse Gas Emissions
The annual level of greenhouse gas
emissions, resulting from activities forwhich the Group is responsible, was 3,454CO2e (2020: 2,044 CO2e)1, equivalent
to 0.32 tonnes (2019: 0.21 tonnes) per
employee2. In accordance with Green
House Gas (GHG) Protocol Scope 2
guidance released 20 Jan 2015, Admiral is
exempt from reporting greenhouse gas
emissions from electricity supply to thethree largest UK offices which meets the
GHG Protocol Corporate Standard.
There are no material exclusions fromthis data. The figures for air conditioning
exclude certain sites because theinformation was not available from the
managing agents of the Group’s multiple
office locations.
Detailed information on the Group’s
environmental performance and themethodology for the measurement ofgreenhouse gas emissions is available
in the SECR on page 114.

Responsible Investing

Many of ourcommunity support
initiatives in 2021
centred aroundenabling education,whilst supportingsocial mobility.

In order to manage Environmental,
Social and Governance (ESG) risks acrossAdmiral’s proprietary investments– which stem primarily from thepremiums collected across our insurance
operations – a responsible investment
policy was established in 2019. The
policy requires ESG considerations to be
integrated into each step of investment
decision-making, for ESG risks to bemonitored, and for active engagementwith our asset managers.

Additional information

57

In total, we invest £3.86 billion across avariety of asset classes, with systematic
ESG integration across the entire
investment portfolio3.
Admiral’s investment portfolio weighted
average ESG score has an MSCI ‘A’ rating(6.85 ESG score).
We actively collaborate and engage with
our asset managers to address ESG risks
and opportunities. We conduct regularreviews and ensure all our asset managers
are signatories to the UN Principles for
Responsible Investments (UN PRI). In
2021, 100% of our assets continued tobe managed by UN PRI signatories. This
year our focus has been on refining andstrengthening the portfolio’s climate data
set to enable better decision-making
towards our net-zero commitments. To
support our efforts, Admiral Group becamea member of the Institutional Investors
Group on Climate Change in 2020.
Together with the other signatories, we
are working to enable better investments
in solutions that drive tangible progress
towards a more resilient future.
For further information, refer toour ‘Sustainability Report’ on our
website www.admiralgroup.co.uk/
our-community/environmental-socialgovernance

Giving back to our communities
As a large employer with offices acrossa number of countries, we firmly believe
it is our responsibility to invest in thecommunities around us. In 2021 we
focused on generating meaningful
impacts and reviewing the Group’s
approach to community engagement.
An Admiral Support Fund was set up in2020 to provide community support tothose most impacted by the pandemic.
A combined £6 million was set aside
and, as of the end of 2021, over 350
organisations have received support
from the fund. From this £6 million
commitment, Admiral donated £2
million to the ABI Covid Support Fundand £1 million to UNICEF in March 2021
to help support our colleagues and local
communities in India.

1	Better data collection and reporting of this data from our Group entities has allowed us to report more accurately on our
GHG figures in this reporting period.

Read more about our
TCFD on page 107 and
SECR on page 114

2	Average employee number excludes employees from offices for which data could not be collected. The data has been
prepared with reference to the WRI/WBCSD Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard(Revised Edition) and in accordance with the guidance for corporate reporting issued by the Department for Environment,
Food and Rural Affairs (DEFRA).
3	The responsible investment policy covers all assets under management.

58

Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

Of the remaining £3 million, an additional£1.8 million went to supporting local UK
organisations. This included a £350,000
super-donation in December 2021 to ten
organisations across Wales. One of thecharities benefitting from the donationis Tŷ Hafan, a leading Welsh children’scharity which provides comfort, care,and support to children with life-limiting
conditions. The remaining £1.2 million
was allocated to our international
operations. International community
initiatives focused primarily on support
for Covid protective equipment aswell as organisations that are close to
our colleagues in areas such as social
injustice and natural disaster relief.
One of the focuses of our community
support initiatives in 2021 centredaround enabling education, whilst
supporting social mobility.

In 2021, Admiral also donated £120,000
in support of Oxford University’s Jesus
College’s outreach programmes acrossWales. This will enable the University’s
Access and Outreach team to develop
new access activities, enhanceexisting programmes and reach moreacademically gifted young people inWales. People who are currently underrepresented at Oxford and other leading
universities in the UK.
Employee support: One of the otherways our employees can give back isthrough Admiral’s ‘Give a Day’ scheme.
The scheme was launched in 2021 andexists to help our colleagues support
local communities. As part of thescheme, each member of the Group’s
UK operations are allocated two paiddays off annually to go out and help a
local charity or other organisations of
their choice.

Our Business
Data privacy and cyber security
Admiral’s Data Protection Policy outlines
the Group’s commitment and obligations
regarding the processing of personal
data. The policy applies to all AdmiralGroup users that have access to personal
data and data processing systems,
and applies equally to management,
permanent and temporary employees,
contractors, partners, and suppliers.
In line with the General Data Protection
Regulation, we work to ensure thecorrect, lawful and transparent
handling of personal data and we ensurecolleagues stay informed via regularcompliance training of our commitments
under the Data Protection Policy. Privacy
by design is fundamental within productand process design, and all developments
are subject to robust Privacy Impact
Assessments (PIAs), and continued
compliance is monitored through regularreviews and audit activities carried out
by the Data Protection and Privacy Teamand the Internal Audit function.

Information security

To ensure that we maintain a highproportion of women in senior leadership
positions, in 2021 we created a leadershiptraining course designed to support thedevelopment of future female leaders.

Download the PDF of the Annual Report andSustainability Report at admiralgroup.co.uk

Admiral’s Group information security
team, Infosec, aligns its practices tointernationally recognised information
security and cyber risk management
frameworks and infosec risks aremanaged in line with the GroupEnterprise Risk Management Policy.
Information security policies are in place
to ensure that all employees understandtheir responsibilities when it comes toinformation security, and we provide
all employees and contractors withregular training.
In 2021, Infosec teams regularly engaged
with colleagues to strengthen the Group’s
information security practices and builda resilient cyber risk culture in the newworld of hybrid working. Information
security risk assessments were carriedout regularly across the Group and theresults are monitored, managed, andreported via the appropriate governanceforum, based upon the materiality of
the risk.

Company overview

Strategic report

Investor conferences attended
by management in 2021

14

Corporate governance

Financial statements

For further insights into the principal
risks and uncertainties Admiral has
identified through its Enterprise Risk
Management framework, the impact of
those risks and actions to mitigate them,please refer to the Principal Risks andUncertainties section.

Shareholder Engagement
Investor activities hosted by theInvestor Relations team in 2021

150+

The Investor Relations team oversees
engagement with the Group’s
shareholders and provides regular
updates to the Group Board, as wellas organises meetings between Board
members and management andinvestors. In 2021, all meetings were
held online as the impact of the Covid
pandemic continued to impact face-toface communication. Despite this, theGroup was able to continue its regularshareholder engagement.

Relationship with suppliers
In 2021, we continued to embedsustainable practices across all our
procurement engagements. Our approachis guided by the Group’s Procurement
and Outsourcing Policy, which provides
the framework and policy guidelines
for all procurement activity1. As part ofthese guidelines, employees who engage
in procurement activity are required tomaintain the highest standard of integrityat all times and to fully comply withlaws and regulations. During any tender
process, potential suppliers are asked tocomplete a due diligence questionnaire
which focuses on areas such as financial
crime, data protection, modern slavery,
and environmental accreditation.
Suppliers are grouped into supplier types
based on their strategic importance andrisk profile. Where risks are identified,
we actively engage to understand thecause and take appropriate action basedon the response received. We maintain azero-tolerance approach towards modern
slavery and regularly risk assess suppliers
within our supply chain to ensure
modern slavery is not a feature. Detailed
information about the Group’s approachto mitigate modern slavery risks canbe found in our annual modern slavery
statement on the Admiral website.
1	This excludes the placement of reinsurance (which isgoverned by the Reinsurance Policy).
2	Further detail on the Group’s co-insurance andreinsurance arrangements can be found on page 85 of
this report.

Additional information

59

We’ve also taken steps to improve
technology and automation solutions
within our Group Procurement function
to increase governance oversight andstrengthen relationships with suppliers.
Looking ahead, we are working to fully
embed these procurement controls
in 2022. This will help ensure we cancontinue to effectively assess our supply
chain, engage with suppliers on the mostimportant and relevant topics, and give
appropriate consideration to any risingmodern slavery and environmental risks
in the future.

Co-insurance andreinsurance partners
We consider our co-insurance andreinsurance contracts to be importantto the running of the Group’s business.
As such, we were pleased in the first halfof 2021 to conclude negotiations with
our reinsurance partner Munich Re, toextend our risk sharing partnership in
the UK car insurance business2. These
renewed agreements form part of ourcommitment to mitigate any large claims
losses by ensuring that a diverse range offinancially secure reinsurance partners,
including a long-term relationship with
Munich Re, are in place.

60

Admiral Group plc Annual Report and Accounts 2021

Our sustainability approach continued

ESG Ratings
Admiral began actively engaging with a number of key ESG rating providers in 2020. In 2021 we continued our active engagement,
to provide investors with substantive ESG data that supports transparent decision-making. Following our engagement we saw
improved ESG risk rating performances in the ISS ESG tracker, the Dow Jones Sustainability Index, and in our annual CDP disclosure.
We also continuously look at ways in which we can integrate the feedback received from rating providers, shareholders, regulators,
ESG-related experts and more to ensure our reporting aligns with best practice expectations.

ESG Ratings

MSCI ESG rating assessment1

CDP Climate Score2

Sustainalytics ESG Risk Rating3• 2021: A• 2021: C• 2021: 21.04• 8th percentile industry ranking5

ISS ESG performance• 2021: C• 4th industry decile ranking

6

Dow Jones Sustainability Index

Tortoise Responsability100 index• 2021: 37/100• 2021: 21st out of 100• 53rd percentile industry ranking7

1	The use by Admiral Group of any MSCI ESG research LLC or its affiliates (‘MSCI’) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute asponsorship, endorsement, recommendation, or promotion of Admiral Group by MSCI. MSCI services and data re the property of MSCI or its information providers, and are provided ‘as-is’
and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
2	Average industry score for the financial services industry of B, Admiral continues to enhance disclosures to improve rating and has since made a public commitment to net zero ambitions
and begun our pathway to decarbonisation.
3	Copyright ©2022 Sustainalytics. All rights reserved. This report contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of
Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor aninvestment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.
com/legal-disclaimers.
4	In September 2021, Admiral Group received an ESG Risk Rating of 21.0 and was assessed by Sustainalytics to be at Medium Risk of experiencing material financial impacts from ESG factors.
5	8th percentile score in the property and casualty insurance sub-industry rankings (7th out of 82).
6	A decile rank of 1 indicates high relative performance versus a decile rank of 10 which indicates poor relative performance.
7 Improved result. Average industry score: 40/100, composed of 127 companies.

Company overview

Strategic report

Corporate governance

Financial statements

61

Additional information

Key performance indicators
In order to implement, develop and measure the Group’s strategic performance,
we monitor several financial and non-financial key performance indicators(‘KPIs’) in addition to the Group’s income statement results.

Financial measures
Group Profit

GrowthInternational Growth

+26%

+9%

+13%

Growth in Group share of
profit before tax

Growth in Group customer
numbers

Growth in Internationalcustomers

Diversification

Shareholder Returns

Capital Position

+14%

+24%

+4%

Growth in UK Household
customers

Earnings per share1

Solvency ratio

Customer satisfaction

Customer service

Digital strides

>90%

>50%

of customers would renew
after a claim

Net Promoter score

Customer engagement

Great place to work

Positive impact on society

Net Zero by

5th

£6m+

2040

Non-financial measuresin the UK

GPTW rankings

across all
businesses

donatedFinancially supporting ourcommunities in 2021

1	Alternative performance measure (APM) – refer to the glossary for definition and explanation.

23%

increase in
MyAccount uptake
year-on-year

Pathway to Net Zero

62

Admiral Group plc Annual Report and Accounts 2021

Chief Financial Officer’s statement
I closed my 2020 review hoping for a morecheerful 2021, and whilst the pandemic
again put paid to that and Wales didn’t
win the Euros , Admiral’s financial
performance was strong, with all ourbusinesses growing customer numbers
year-on-year along with a very positive
bottom-line outcome for the Group.
Let me start by giving a brief overview of the results:
£m

2021

2020

ChangeUK Insurance
International Insurance
Admiral Loans
Share scheme cost
Other
Continuing operations pre-tax profit*
Restructure cost
Continuing operations profit after
restructure cost

894
(12)
(6)
(63)
(44)
769
(56)

698
9
(14)
(51)
(34)
608
–

+196
(21)
+8
(12)
(10)
+161
(56)

713

608

+105

*	Continuing operations = excluding results and gain on disposal of the Comparison businesses sold by the Group in 2021.

The standout positive is clearly the big increase in UK Insurance profit – even more
pronounced than in 2020 when the impact of Covid on the results was first seen.
The UK Household business contributed another decent profit (£21m, up from £15m),
though the Motor business profit was nearly £190m higher than 2020 and was thedriver of the year-on-year increase.
The main reason for the step-up v 2020 is very positive development of back year
claims costs, leading to large releases of reserves and increased profit commission
revenue. Both the 2020 and 2021 financial years also benefited from current period
loss ratios that were notably lower than previous years, meaning profit for bothfinancial years was clearly elevated compared to the recent past.
It is important to note that profit in the second half of 2021
was lower than the first half (~£290m v ~£480m) as both theprior year claims movements and Covid frequency benefits
were much more pronounced in the first six months. Withfrequency heading closer to normal levels during H2 (apartfrom the very end of the year) and premium rates having
been discounted beforehand, a lower level of profit was to be
expected. We expect that Group profit in 2022 will be lower
than 2021 and 2020.
You’ll note a £56 million restructure charge in the 2021
numbers which reflects the cost of exiting leases on anumber of the Group’s South Wales offices, impairment ofsome technology assets and costs relating to a voluntary
redundancy programme carried out in late 2021.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

63

We have already started to return £400m of theproceeds to shareholders in the form of special
dividends, split equally over the interim 2021,
final 2021 and interim 2022 dividends.
The move to smart working (reducing
our office space need) and ongoing shiftof technology to the cloud and othersystem upgrades (meaning some older
systems required writing down) were thekey reasons behind the charge. The total
cost of the restructure is around £66
million – £56 million was recognised in
2021 with the balance to flow through in
subsequent years. A large majority of thetotal is not an in-year cash outflow, andthe restructure will result in cost savingsin 2022 and beyond. The strong Groupsolvency position at the end of 2021
means we can ‘look through’ this charge
when proposing the final dividend.
The next biggest change in segment
results year-on-year was the loss fromthe International Insurance businessfollowing the profit in 2020. Whilst we
budgeted a loss for 2021, the actual
result was a little worse than plan.
A number of things contributed to theoutturn, not least quite a big unwindof the lower Covid-related frequency
seen in the 2020 loss ratios and highly
competitive conditions in most markets
which led to reduced average premium
per customer. Consistent with our
objective to continue to scale, ourbusiness continued to grow quite nicely,
adding over 200,000 customers andincreasing turnover by 6%. We also
continued to invest in the technology
and capabilities that we believe set thebusinesses up well for the future.
Other points of note from theresults include:• The Admiral Loans result improved
year-on-year, mainly due to a much
lower credit loss charge resulting
from reduced economic uncertainty.
The business progressed very
nicely and grew its balances to£607 million from £402 million.

We’re planning for further strong
growth in 2022 and hoping fora further improvement in thebottom line
• Share schemes costs moved
higher due to an unusually positive
combination of increased share price,
higher assumed share plan vesting
due to strong financial performanceand also higher staff bonuses resulting
from higher shareholder dividends.
To us this is a good illustration of thealignment between reward for ourpeople and outcomes for shareholders.
In the absence of a material increase in
the share price during 2022, we don’t
expect as high a cost in 2022
• And finally other costs (which include
the results from the Admiral Pioneer
businesses plus central overheads andfinance costs) were also higher, mainly
driven by Admiral Pioneer, where aswell as the results from the existing
Veygo business we started to invest in
new ventures in SME insurance in the
UK and mobility insurance in France

Penguin Portals disposal
Moving away from the results, we
completed the sale of Penguin Portal
Comparison businesses (confused.com in
the UK being the largest member) at theend of April 2021. Cash proceeds wereapproximately £470 million, whilst the gainrecorded in the Group income statementin 2021 was around £400 million.
We have already started to return £400
million of the proceeds to shareholders
in the form of special dividends, split
equally over the interim 2021, final 2021
and interim 2022 dividends. 46 pence pershare of the total final 2021 dividend (of118 pence per share) is in respect of thePenguin sale and the final 45 pence pershare will follow in October 2022.

Very best wishes to our former colleagues
and friends in their new home.

Co-insurance and reinsurance
We were pleased in the first half of 2021
to conclude important negotiations
with our largest reinsurer, Munich Re, toextend our risk-sharing partnership in
the UK car insurance business covering
40% of the total premium. The coinsurance contract which expires at theclose of the 2021 underwriting year has
been in effect in some form for nearly
two decades and we’re delighted to be
renewing the long-term arrangement.
Munich will underwrite 20% of thebusiness via a new co-insurance contract
due to expire at the end of 2029 anda further 10% via a new quota sharereinsurance contract expiring at the endof 2026. The existing 10% quota sharecontract will also remain in effect until
at least the end of 2023. The changes
should result in higher profit commission
income for Admiral from 2022 onwards
compared to the expiring arrangements.

Thank you
It’s been said by my colleagues alreadyin the report, but it can’t be said enough– my most sincere thanks to everyone
across Admiral Group for their huge
efforts – always, but especially overthe past couple of pandemic-impacted
years. I’m very much looking forward togetting back to the office and meetingcolleagues more regularly, asap!

Geraint JonesGroup Chief Financial Officer
3 March 2022

64

Admiral Group plc Annual Report and Accounts 2021

Chief Financial Officer’s statement continued

2021 Group Overview
£m

2021

2020

2019

3.51

3.37

3.30

Underwriting profit including investment income*2

347.0

333.1

238.0

Profit commission

304.5

134.0

114.9

Net other revenue and expenses *2

129.4

153.4

164.7

Operating profit, excluding restructure cost

780.9

620.5

517.6

Group profit before tax, excluding restructure cost

769.0

608.2

505.1

Group profit before tax, including restructure cost

713.5

608.2

505.1

1,129.2

637.6

522.6

UK Insurance

894.0

698.3

597.9

International Insurance(11.6)

8.8

(0.9)

Loans

(5.5)

(13.8)

(8.4)

Other

(107.9)(85.1)(83.5)

Group profit before tax, excluding restructure cost

769.0

608.2

505.1

58.5%

54.4%

64.9%

Group Turnover (£bn)*1*2*3

Continuing operations

Statutory Group profit before tax, including discontinued
operations and gain on disposal
Analysis of profit from continuing operations:

Key metrics:
Group loss ratio*2*4Group expense ratio

26.7%

26.8%

23.7%

Group combined ratio*2*4

85.2%

81.2%

88.6%

Customer numbers (million)

8.36

7.66

6.98

*2*4

Earnings per share*3 continuing operations excluding
restructure cost

212.2p170.7p143.7p

Earnings per share, continuing operations including restructure cost

196.7p170.7p143.7pDividends per share*5

187.0p156.5p140.0pSpecial dividends from sale of Penguin Portals

92.0p

–

–

Return on Equity

56%

52%

52%

Solvency Ratio*2

195%

187%

190%

*2*3

*1	Group Turnover in 2020 includes the impact of the Stay at Home premium refund issued to UK Motor insurance customers, of £97 million. Refer to note 14 to the financial
statements for a reconciliation to the net insurance premium impact of £21 million.
*2	A lternative Performance Measures – refer to the end of this report for definition and explanation.
*3	Group Turnover, Earnings per share, Return on equity presented on a continuing operations basis. 2021 Earnings per share and Return on equity exclude the impact of the UK
Insurance Restructure cost .
*4	See note 14 for a reconciliation of Turnover and reported loss and expense ratios to the financial statements. Ratios exclude the impact of the UK Insurance Restructure cost.
*5	T he 2019 dividend of 140.0 pence per share includes the deferred special element of the 2019 final dividend of 20.7 pence per share that was paid alongside the interim2020 dividend.

Key highlights of the Group’s resultsfor 2021 are as follows:• All parts of the Group grew in 2021
with turnover up 4% and customer
numbers up 9% year-on-year:Ȳ The UK Motor business reported
strong growth in the first halfof the year, though was broadly
flat in the second half as themarket became more competitive

and Admiral increased prices,
whilst the UK Household andInternational Insurance businesses
both continued to grow customer
numbers strongly (at +14% and+13% respectively)
Ȳ Turnover outside the UK increased
at a lower rate (+6%) than customer
numbers due to the impact of very
competitive markets on averagepremiums in those businesses• Group profit before tax (continuing
operations, before restructurecost) increased significantly to£769 million (+26%):
Ȳ The main driver was a near£190 million increase in the UK
Motor Insurance result, mainly
due to improved prior year claims
releases and profit commission

Company overview

Strategic reportȲ The UK Household result (£21 million,+£6 million) benefited from growthin the business and higher profit
commission as well as reduced
levels of extreme weather in 2021
than 2020
Ȳ Outside the UK, the International
Insurance business combined result
was around £20 million worse than2020 resulting from a higher
combined ratio (mainly due to theunwind of the Covid claims frequency
benefits seen in 2020 but also due to
expenses-related to growth)Ȳ Admiral Loans reported an improved
result (2021: £6 million loss v 2020:£14 million loss) as the charge for
expected credit losses reduced
materially with the improved
economic outlook; the businessalso grew its gross loans balances
significantly (£607 million in 2021
from £402 million in 2020)
Ȳ Other Group items increased to£108 million (2020: £85 million) driven
by investment in potential new
ventures, primarily within Admiral
Pioneer, and an increase in shareschemes costs related to a higher
share price and higher share scheme
bonuses linked to the strong dividend

Covid impact
The Covid (‘Covid’) pandemic continued
to impact the 2021 results across theGroup. In most markets, whilst roadtraffic levels started to return towards
normal levels, this was slower than
expected as lockdown restrictions
persisted for longer, particularly inthe first half of the year. This resulted
in continued lower claims frequency
relative to pre-pandemic levels in mostmarkets, although the US saw a more
rapid increase in frequency which has now
returned to pre-pandemic levels.
In light of an improved economic outlook,
Admiral Loans grew more rapidly in 2021
and reported a lower charge for expectedcredit losses than in 2020. Provisions
remain prudent, though reflect the
reduced likelihood of a severe economic
downturn. No significant increase in thelevel of defaults has been experienced
to date.
Admiral remained committed tosupporting its customers, people and local
communities throughout the pandemic.

Corporate governance

Financial statements

Measures in 2021 have included
continued assistance for customers
needing support, continue to prioritise
the safety and wellbeing of our people
and numerous community initiatives tosupport charities in the areas in which
the Group operates.

Earnings per share
Earnings per share from continuing
operations and excluding the impactof the UK Insurance restructure costs,
increased by 24% to 212.2 pence (2020:
170.7 pence), in line with the growth
in pre-tax profit. Earnings per shareincluding the impact of the restructure
cost is 196.7 pence, up 15% on 2020.

Dividends
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 beheld in the Group for solvency capitalrequirements, including appropriate
headroom above the regulatory minimumin line with internal risk appetite.
The Board has proposed a final dividendof 72.0 pence per share (approximately£211 million), split as follows:• 42.2 pence per share normal dividend,
based on the dividend policy of
distributing 65% of post-tax profits(continuing operations, including theimpact of the restructure costs); plus
• A special dividend of 29.8 pence
per share
This final dividend (excluding the further
special dividend referred to below)
reflects a pay-out ratio of 91% for H2
2021, based on earnings per share fromcontinuing operations, excluding theimpact of the restructure cost (113%
including the impact of the restructure
costs). It is 16% below the 2020 final
dividend in line with the lower second
half earnings.
The total dividend from continuing
operations for the 2021 financial year is
187.0 pence per share (approximately£547 million), 19% higher than 2020
(156.5 pence per share), and is equalto 88% of earnings per share for theyear (95% of earnings per share net of
restructure cost).

Additional information

65

The Group also confirmed with its halfyear results announcement in August2021 that the net proceeds of £400
million from the disposal of the Penguin
Portals Comparison businesses will be
returned to shareholders in the formof special dividends phased equally
over the interim 2021, final 2021 andinterim 2022 dividends. The Board has
consequently declared a further special
dividend of 46.0 pence per share toreflect the second of these payments.
Including the dividend from the Penguin
Portals disposal, this brings the total
final 2021 dividend to 118.0 pence pershare, split 42.2 pence per share normal
element and 75.8 pence per sharespecial element.
The total 2021 full year dividend,
including from the Penguin Portals
capital returned to date, is 279.0 pence
per share, approximately £816.0 million.
The final dividend payment is due on
6 June 2022, ex-dividend date 5 May
2022 and record date 6 May 2022.

Return on equity
The Group’s return on equity was 56% in
2021, increasing from 52% in 2020. The
Group’s share of total post-tax profits
from continuing operations grew by 26%,
with this growth higher than the 11%
growth in the Group’s share of average
equity. The significant dividend paymentsin the year (2020 final and 2021 interim
dividends) largely offset the strong 2021
profits and led to the lower growth in theGroup’s share of average equity.
The Group’s results are presented in thefollowing sections as:• UK Insurance – including UK Motor(Car and Van), Household, Travel• International Insurance – including
L’olivier (France), Admiral Seguros(Spain), ConTe (Italy), Elephant (US)• Admiral Loans• Other – including compare.com(US comparison) and Admiral Pioneer• Discontinued operations – Penguin
Portals Group and Preminen Price
Comparison Holdings Limited Group(disposal of which completed in
April 2021)• Group Capital Structure andFinancial Position

66

Admiral Group plc Annual Report and Accounts 2021

UK Insurance review

Admiral’s uniqueculture is one of
the fundamental
cornerstones to our
success over the last
29 years, so it’s a topic
we talk about a lot
internally...and in fact,with anyone else that’s
happy to listen too.

Without doubt, the last couple ofyears have been quite different
to what we’ve been used to.
But reflecting on them now, it
feels (within Admiral at least)that the important things havestayed exactly the same. And it’s
the sameness in our core values
and our approach to our people,
customers and products that hascontributed to yet another strong
year, and which positions us well
for any challenges of 2022.
Focus on the right things, test-and-learn, make incremental
improvements, care about people…all those little things add
up and drive the right outcomes, as they always have done.
A consistent theme in Admiral’s history has been the underwriting
performance of the UK Car insurance business and knowing
how to balance the desire to grow with the discipline andjudgement to do so at the right time. The changing face ofthe pandemic has made it harder than ever to make the rightcall, where lockdowns and varying restrictions have impacted
mobility and claims frequency to make pricing decisions
more complex than usual. We took a more cautious approachthan most in the second half of the year as the backdrop ofincreasing inflation and the anticipated rebound in claims
frequency made growth a little less attractive, and therefore
maintained a stable book size in the final six months of the year.
It’s this sensible approach to underwriting, along with theeffectiveness of our claims teams (whether working from
home, in the office or in face-to-face meetings with claimants)that has continually led to strong current year results, and theconsistent stream of back-year releases. In 2021, the result
has of course benefitted from the exceptional tailwind of
favourable frequency, particularly in the first half of the year,
but at the same time demonstrated the exact same positive
underlying themes as previous years.
Another constant, and a cornerstone of Admiral’s values, isto focus on the customer, the customer, the customer… It’s very
pleasing therefore that we’ve expanded our tiered proposition,that was previously only available for Household insurance.

Company overview

Strategic report

Supplier of theYear Award
Working closely with our
suppliers and partners
means that we build long
lasting business relationshipsthat ultimately feed into
getting the very best inservice provisions forour customers.
At Admirals ‘Manager Awards
2021’ Auxillis, FMG and FMG Repair
Services – Redde Northgate groupcompanies, were collectively
awarded a top honour. The threebusinesses received the Admiral
Supplier of the Year award having
demonstrated their commitment

We now provide four distinct options
for motor customers, ranging from an
Essentials tier aimed at price-sensitive
customers to the Platinum proposition
that provides increased customer
benefits. Whilst continuing to improve
our products and streamlining oursales process is important, what’s evenmore satisfying is that our customercentric approach throughout the life
cycle is valued. A key output of thatis a customer satisfaction that places
our retention rate significantly above
market norms, including for customers
that have made a claim in the year.
We continue to enhance our customer
proposition, and the increasing
investment in new products together
with improvements in our IT platforms
and pricing capability has resulted in
an increase in costs in the year, which ismore apparent given the reduction in
average premiums since the start of thepandemic. However, we’ve also taken theopportunity to restructure some of ourcost base by exiting some buildings andwriting off some of our IT estate.

Read more about our outlook in
Our Q&A on page 32

Corporate governance

Financial statements

in working together and enhancing
the services that Admiral offers tocustomers, ultimately making ourcustomers lives easier following
an incident.
Our business relationship with
Auxillis spans over 20-years andsupports our ability to provide firstclass replacement vehicle solutions
and non-fault vehicle repair services.
More recently, we’ve establishednewer relationships with FMG, whichsees us deliver specialist roadsidesupport as part of Admiral’s accident
breakdown recovery provision, andwith FMG Repair Services, which sees
us guarantee capability and capacity
for all automotive repair solutions.

We expect to continue to invest overthe next several years to maintainstrong foundations for our future, andto allow us to continue to provide amarket-leading service to customers andmarket-leading results for our investors.
A key part of that future is our UK
Household business, which will enterits tenth year in 2022. The business hasgrown by almost 14%, with UK Household
customers reaching 1.3 million by theend of the year. We achieved this whilstdelivering an increased profit of £21.3
million (up 38% vs. 2020) which is agreat result.
It would be remiss to mention the
future without referencing the FCA
pricing reforms that came into force on
1 January 2022. There remains a gooddeal of uncertainty around the market’s
response to what is one of the biggest
pricing changes in recent years, but we’reconfident that the foundation we’ve laid,and particularly our pricing excellence
and customer focus, leaves us very wellplaced to meet the challenges and takeadvantage of the opportunities this brings.

Read more about
Our Awards on page 45

Additional information

67

We recognise the integral workthat Auxillis, FMG and FMG Repair
Services each deliver in supporting
the partnership and we look forward
to continuing the seamless ways ofworking we have adopted to bringour services together.

Finally, I’ll come back to another topic
that we hope will never change. The
way we work has altered dramaticallysince the start of the pandemic andwill continue to evolve in 2022 as we
continue to embrace smart working.
However, Admiral’s culture and theengagement of our team is central to
our success and very close to our heart.
We are therefore delighted to feature in
the Best Companies to Work For awards
for the 21st year in a row, making the
top-5 for the fifth consecutive year. It
was also very rewarding to appear 2nd in
the list of Best Companies to Work for
Women, another indication of Admiral’songoing commitment to its culture.

Cristina Nestares
CEO UK Insurance
3 March 2021

68

Admiral Group plc Annual Report and Accounts 2021

UK Insurance review continued

UK Insurance highlights

UK Insurance financial performanceGroup share of UK Insurance
profit before tax*1£m£840.0m

Total premiums written

2020: £698.3m

UK motor insurance profit
before tax*1£871.7m
2020: £683.6m

Turnover

1

2021

20202

20192

2,751.7

2,672.0

2,635.0

2,453.2

2,373.3

2,321.7

Net insurance premium revenue

612.6

539.7

533.2

Underwriting profit including
investment income1

394.9

346.5

257.4

Profit commission and other income

499.1

351.8

340.5

UK Insurance profit before tax,
excluding restructure cost

894.0

698.3

597.9

Restructure cost

(54.0)––UK Insurance profit before tax,
including restructure cost

840.0

698.3

597.9

1	Alternative Performance Measures – refer to note 14 at the end of this report for definition and explanation.
2	Re-presented to statutory profit before tax from Group share of profit before tax.

Split of UK Insurance profit before tax
UK household insurance profit
before tax£21.3m2020: £15.4m

£m

2021

20201

20191

Motor

871.7

683.6

592.0

Household

21.3

15.4

7.5

Travel

1.0

(0.7)

(1.6)

894.0

698.3

597.9

2021

2020

2019

4.97m

4.75m

4.37m

Households insured at year end

1.32m

1.16m

1.01m

Travel policies insured at year end1

0.15m

0.07m

0.09m

Total UK Insurance customers1

6.44m

5.98m

5.47m

UK Insurance profit before tax,
excluding Strategic Expense Review

1	Re-presented to statutory profit before tax from Group share of profit before tax.

Key performance indicators
Vehicles insured at year end

1
1

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

Key highlights for the UK insurance business for 2021 include:• Overall growth in UK Insurance business customer numbers of 7% to
6.4 million. The Motor business grew 5% year-on-year – mainly in the firsthalf of the year – as Admiral moved prices up ahead of the market in thesecond half in response to increasing claims frequency• The Household business reported strong growth in customers, reflecting
competitive pricing and growth in Admiral’s MultiCover offering• A 27% increase in UK Motor profit to £871.7 million (2020: £683.6 million)
driven by positive development of prior period claims resulting in significantly
higher reserve releases and profit commission, especially in the first half ofthe year• A strong increase in Household profit to £21.3 million (2020: £15.4 million
profit) as a result of growth in the business, higher profit commission andmore benign weather than in 2020

Company overview

Strategic report

Corporate governance

Financial statements

69

Additional information

In addition, a review of the UK Insurance cost base was carried out in the second half of 2021. The outcome was a one-off
restructure cost of £66.0 million, of which £55.5 million is reflected in the 2021 accounts (£54 million within UK Insuranceand £1.5 million of share scheme expenses) and the remaining amount will flow through in future years. The cost is primarily
related to the impairment of technology assets and the cost of exiting a number of buildings in South Wales as a result of
the shift to hybrid working, as well as the cost of a voluntary redundancy programme offered to employees in late 2021.
The majority of the cost is not a cash outflow and Admiral expects the impact of future benefits to be reflected in the
combined ratio in the long term as a result of this restructure. The UK Insurance financial narrative below is focused on the
results excluding the impact of this restructure cost.
The business continued to invest in technology and digital capabilities as part of the Admiral 2.0 strategy to strengthen ourcore competencies and increase the speed of delivery on customer expectations. Investments included the implementationof a new claims management system and continued digital development and modern technology enhancements such as
cloud technology and data analytics, and are expected to have positive combined ratio benefits in the long term.

UK Motor Insurance financial review
£m

2021

2020*52019*52,522.5

2,473.8

2,455.3

2,244.3

2,193.0

2,158.5

Net insurance premium revenue

496.5

451.4

452.6

Investment income*2

40.8

50.8

30.4

Turnover*1
Total premiums written*1

Net insurance claims(86.1)(97.1)(164.7)

Net insurance expenses(95.6)(77.2)(74.7)

355.6

327.9

243.6

Underwriting profit including investment income*3

Profit commission

290.6

124.7

112.2

Underwriting profit and profit commission

646.2

452.6

355.8

*4

Net other revenue

225.5

231.0

236.2

UK Motor Insurance profit before tax

871.7

683.6

592.0

Restructure cost

(49.6)––UK Motor insurance profit including restructure cost

822.1

683.6

592.0

*1	A lternative Performance Measures – refer to the end of this report for definition and explanation.
*2	Investment income includes £2.7 million of intra-group interest (2020: £2.9 million; 2019: £2.8 million).
*3	Underwriting profit excludes contribution from underwritten ancillaries (included in net other revenue).
*4	Net other revenue includes instalment income and contribution from underwritten ancillaries and is analysed later in the report.
*5	Re-presented to statutory profit before tax from Group share of profit before tax.

70

Admiral Group plc Annual Report and Accounts 2021

UK Insurance review continued

Key performance indicators
£m

2021

2020

2019

53.0%

49.2%

60.7%

Reported Motor expense ratio

19.7%

19.8%

19.1%

Reported Motor combined ratio

72.7%

69.0%

79.8%

Written basis Motor expense ratio

19.9%

18.8%

18.5%

Reported Motor loss ratio

*1,*2
*1,*3

Reported loss ratio before releases

78.8%

72.3%

87.6%

Claims reserve releases – original net share*1,*4£128.1m£104.3m£121.7m

Claims reserve releases – commuted reinsurance*1,*5£189.2m£137.3m£121.7m

Total claims reserve releases£317.3m£241.6m£243.4m

Other Revenue per vehicle

£59

£61

£66

Vehicles insured at year end

4.97m

4.75m

4.37m

*1	A lternative 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 14b.
*3	Motor expense ratio is calculated by including claims handling expenses that are reported within claims costs in the income statement. The impact of reinsurer caps is excluded.
Reconciliation in note 14c.
*4	Original net share shows reserve releases on the proportion of the portfolio that Admiral wrote on a net basis at the start of the underwriting year in question.
*5	Commuted reinsurance shows releases, net of loss on commutation, on the proportion of the account that was originally ceded under quota share reinsurance contracts but has
since been commuted and hence reported in underwriting profit rather than profit commission.

UK Motor profit increased by 27% during 2021 to £871.7 million (2020: £683.6 million) with the reported combined ratio
increasing to 72.7% (2020: 69.0%).
Market prices remained depressed throughout 2021. Admiral increased rates ahead of the market in the second half of theyear to reflect claims frequency returning towards more normal pre-pandemic levels as well as increasing claims inflation.
The customer base grew by 5% year-on-year to 4.97 million (2020: 4.75 million) as reduced new business growth was partly
offset by strong retention. Turnover growth was more muted at 2% (£2.52 billion v £2.47 billion) as a result of lower averagepremiums in the Car insurance business in particular.
The results were impacted by a number of factors:• Net insurance premium revenue increased by 10% to £496.5 million (2020: £451.4 million), with the Stay at Home premium
rebate reducing net insurance premium in 2020 by £21.3 million. Excluding this impact, net insurance premium increased by
5% reflecting the growth in both Car and Van books in 2021. The majority of this growth came in the first half of the year.
• Investment income was lower than 2020 at £40.8 million (2020: £50.8 million). The prior period benefitted by £12.9 million
from additional investment income on cash held by Admiral relating to the portion of the portfolio reinsured under quota
share contracts (income that was initially allocated as due to reinsurers in 2019, but subsequently released and recognisedin the 2020 income statement).
• Excluding movements on reinsurer allocations and movements in provisions for asset impairments (£2.6 million charge inthe year, reflecting the growing asset base), underlying investment income was broadly consistent with 2020.
• The 2021 reported loss ratio was higher than the 2020 reported loss ratio at 53% (2020: 49%), the result of a higher current
financial period loss ratio, partially offset by more favourable prior period releases.

Company overview

Strategic report

Corporate governance

Financial statements

71

Additional information

Reported Motor Loss Ratio
Reported loss ratio
before releases

Impact of claims
reserve releases –original net share

Reported
Loss Ratio

2020

72.3%

-23.1%

49.2%

Change in current period loss ratio

+6.5%

–

+6.5%

–

-2.7%

-2.7%

78.8%

-25.8%

53.0%

Change in claims reserve releases – original net share2021• The current accident period loss ratio was just over 6 points worse than 2020 as a result of increased claims frequency as
road usage continued to move closer to pre-pandemic levels, with the trend increasing throughout the year
• The higher current period loss ratio was partially offset by higher reserve releases on Admirals’ original net share of thebusiness, which improved the reported loss ratio by close to 26 percentage points in 2021, 3 percentage points higher
than in 2020. This reflects the strong positive development of claims reserves, in particular during the first half of the year
• The margin held above ultimate outcomes in the financial statement reserves remains both significant and prudent. In
relative terms, it is slightly lower than that held at the end of 2020, reflecting the assessment of a modest reduction in thelevel of uncertainty in the claims reserves than in recent periods• Reserve releases from commuted reinsurance and profit commission were significantly higher in 2021 than in 2020, with a
combined total of £479.8 million (2020: £262.0 million), as follows:
Reserve releases– commuted
reinsurance

Profitcommission

Total

2020

137.3

124.7

262.0

Change in commuted releases

+51.9

–

+51.9

–

+165.9+165.9

189.2

290.6

479.8

£m

Change in profit commission
2021• Releases on reserves originally reinsured but since commuted were higher at £189.2 million (v £137.3 million in 2020),
with underwriting years 2017 – 2019 making a more significant contribution than equivalent years at the same stage ofdevelopment in 2020. This is consistent with the more favourable releases on the original net share and reflects the larger
than usual movements in loss ratios on those underwriting years in H1.
• Profit commission was significantly higher at £290.6 million (2020: £124.7 million). This increase is positively impacted byprofit commission recognised on the 2020 underwriting year. 2020 is more profitable than previous underwriting years at
the same stage of development as a result of the Covid-related claims frequency trends.
• The reported expense ratio was broadly consistent at 19.7% in 2021 (2020: 19.8%) with the written basis ratio showing amodest increase to 19.9% (2020: 18.8%) as a result of lower average premiums and continued investment in technology
and other assets as noted above• Other revenue (including ancillary products underwritten by Admiral) and instalment income decreased to £225.5 million(2020: £231.0 million) primarily resulting from lower contribution from optional ancillaries. Further detail is set out in the
Other Revenue and Instalment Income section below.

Claims and reserves
As noted above, the Covid pandemic and resulting lockdowns led to fewer miles driven, resulting in significantly lower Motor
claims frequency. The lockdown impact was less severe in 2021 compared to 2020, but remained below pre-Covid levels.
Claims inflation continued, in particular driven by higher accidental damage claims due to a substantial increase in secondhand car residual values which was in turn due to a shortage in the supply of new vehicles. Large bodily injury and small bodily
injury claims experience remained benign, with frequency increasing in line with overall road usage trends. As expected thefirst projection of the 2021 accident period loss ratio is higher than 2020 at the same point as a result of these factors.
The Group continues to reserve conservatively, setting claims reserves in the financial statements well above actuarial best
estimates to create a margin held to allow for unforeseen adverse development.

72

Admiral Group plc Annual Report and Accounts 2021

UK Insurance review continued

Other Revenue and Instalment Income
UK Motor Insurance Other Revenue – analysis of contribution:
£m

2021

2020*1

2019*1

Contribution from additional products & fees, including thoseunderwritten by Admiral*2
Instalment income

200.8

203.4

217.6

100.2

100.9

83.9

Other revenue

301.0

304.3

301.5

Internal costs(75.5)(73.3)(65.3)Net other revenue

225.5

231.0

236.2

Other revenue per vehicle*4

£59

£61

£66

Other revenue per vehicle net of internal costs

£47

£50

£56

*3

*1 Re-presented to statutory profit before tax from Group share of profit before tax.
*2 Additional products underwritten by Admiral included in underwriting profit in income statement but re-allocated to Other Revenue for purpose of KPIs.
*3 Internal costs reflect an allocation of insurance expenses incurred in generating other revenue.
*4 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 to £225.5 million (2020: £231.0 million),reflecting lower revenue due to the impact of whiplash reforms on the Motor Legal Protection ancillary.
Other revenue per vehicle was lower at £59 (gross of costs; 2020: £61), as a result of the factors mentioned above. Net Other
Revenue (after deducting costs) per vehicle was £47 (2020: £50).

UK Household Insurance financial performance
£m

2021

2020

Turnover

218.8

193.8

171.3

Total premiums written*1

198.5

175.9

154.9

Net insurance premium revenue

49.1

43.2

37.2

*1

2019

Underwriting profit

3.9

2.5

0.7

Profit commission and other income

17.4

12.9

6.8

UK Household insurance profit/(loss) excluding restructure cost

21.3

15.4

7.5

*1*2

Restructure cost

(4.4)

–

–

UK Household insurance profit/(loss) including restructure cost

16.9

15.4

7.5

*1	A lternative Performance Measures – refer to the end of this report for definition and explanation.
*2 Underwriting profit/(loss) excluding contribution from underwritten ancillaries.

Company overview

Strategic report

Corporate governance

Financial statements

73

Additional information

Key performance indicators
2021

2020

2019

Reported Household loss ratio*1

63.3%

64.8%

69.1%

Reported Household expense ratio*1

30.3%

29.4%

28.9%

Reported Household combined ratio*1

93.6%

94.2%

98.0%

Impact of extreme weather and subsidence*1

2.2%

5.3%

–

Households insured at year end

1.32m

1.16m

1.01m

*1

*1	A lternative Performance Measures – refer to the end of this report for definition and explanation.

The number of households insured increased by 14% to 1.32 million (2020: 1.16 million). Turnover increased by 13% to£218.8 million (2020: £193.8 million). The Household business grew strongly in 2021 within a competitive market withpremium pressure in the second half of the year ahead of the introduction of the FCA pricing reforms. The continued
increase in MultiCover sales supported this growth, particularly as a result of strong retention.
The business continued to improve pricing capabilities in the year, improving loss ratio performance and expanding digital
capabilities to support future growth. Over the year, the impact of weather was relatively benign with some weather impact
from storm Arwen in the final quarter (2 point impact on the loss ratio vs much higher 5 point loss ratio weather impact
in 2020). Claims trends associated with the impact of Covid remained largely unchanged, with favourable experience on
escape of water and theft. The business continued to strengthen its claims capabilities, including the upgrade of its claims
management system which offers improved digital servicing and advanced data capabilities. The reported loss ratio for theperiod improved to 63.3% and included 4 percentage points of favourable development on prior accident years.
A combined ratio of 93.6% (2020: 94.2%) resulted in a net underwriting profit of £3.9 million (2020: £2.5 million), which
was supplemented by profit commission and other income of £17.4 million (2020: £12.9 million). This led to a 38% increasein profit to £21.3 million (2020: £15.4 million), before the impact of the restructure cost. After the restructure costs of£4.4 million are included, the profit for the year is £16.9 million, a 10% improvement on 2020.
The increase in profit commission and other income in the year is attributable to quota share reinsurance and has increased
primarily due to favourable loss ratio performance in the recent underwriting years. Other income is broadly consistent year
on year.

UK Insurance Regulatory environment
The UK Insurance business operates predominantly under the regulation of:• the UK Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) which regulate the Group’s UK
registered subsidiaries, including EUI Limited (an insurance intermediary) and Admiral Insurance Company Limited(AICL; an insurer); and• the Financial Services Commission (FSC), which regulates the Group’s Gibraltar-based insurance company (Admiral
Insurance (Gibraltar) Limited, AIGL), in that territory.
The Group is required to maintain capital at a level prescribed by the lead regulator for Solvency II purposes, the PRA,
and has processes in place to ensure it maintains a surplus above that required level at all times.

74

Admiral Group plc Annual Report and Accounts 2021

International insurance review
We are proud of our performance and look forward to an evenstronger 2022 as we work towards our strategy of building
sustainable, scaled, and profitable businesses in the long term.

Costantino Moretti
CEO, International Insurance

International Insurance
In 2021 our international operations
made strong progress in building
sustainable, long-term businesses
in the context of sophisticatedand complex markets. Despite achallenging year with negative
average premium developmentin Europe pressuring margins,competition in the US increasing
direct acquisition costs, and risingfrequency trends in all markets,
we are proud of the response of
our businesses which exhibit anadaptability we are confident will
propel them to further success.
Turning first to the US, Elephantmade strong headway in its channel
diversification efforts in response
to high cost per sale in directacquisition. The team’s focus on
the agency channel, in particular,
has paid dividends, and this channel
now represents almost 20% of
Elephant’s new business sales,
up from about 12% last year.

This combined with other efforts
on new business sales has enabled
Elephant’s vehicle base to increaseyear-on-year by 10% while keeping
expense ratio flat. Though increasing
frequency impacted loss ratios in
H2, the Elephant team took action
in line with the market to address
this impact.
In Europe, our businesses performed
well despite difficult market
conditions. Each business continued
to grow the customer base despite
continued headwinds from thepandemic, stagnant aggregator
volumes and strong competition.
Distribution diversification has
paid off in all three of our European
businesses: for ConTe and Admiral
Seguros brokers accounted for more
new business sales than ever, and for
L’olivier focus on direct channels has
enabled very strong growth, withturnover up 26%.

Across the International Groupour businesses made further
investments in Admiral 2.0. While
ConTe adopted scaled agile in 2020and saw material benefit in 2021,
Admiral Seguros and L’oliver laid theframework for this methodology in
2021 and are poised to implement
it across all departments in 2022.
Further digitisation of customer
touchpoints across all fourInternational Businesses generated
record percentages of transactions
completed online.
2021 was a successful-butchallenging year in which
our International businesses
continued to adapt to the unusual
circumstances of the Covid
pandemic. We are proud of ourperformance and look forward toan even stronger 2022 as we work
towards our strategy of building
sustainable, scaled, and profitablebusinesses in the long term.

Distribution diversification has paid off in all three of our European
businesses: for ConTe and Admiral Seguros brokers accounted formore new business sales than ever, and for L’olivier focus on directchannels has enabled very strong growth, with turnover up 26%.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Pascal Gonzalvez
CEO, L’olivier

France2021, bis repetita: a very strong
performance despite market
adversity.
L’olivier grew turnover by 26% in
2021, in the context of a challenging
market where price comparison
quotes decreased by 7%. We
managed to double our customer
base in less than 2.5 years, to end theyear with over 360,000 customers.
Our growth was coupled with a highquality of service as we maintained
an excellent Net Promoter Score andwe won an important award for Best
Customer Service of the Year in the
non-life insurance category.
To achieve this level of growth,
L’olivier started to diversify its
acquisition channels and products.
One such example is a newpartnership with BlaBlaCar,
the leading online carpoolingmarketplace and app in France. In
2021 we launched a co-branded
motor insurance product with aninnovative telematics offering, forwhich we are seeing early signs ofgood growth.

Also, we accelerated our multiproduct journey with further
investment in our Household
insurance book and the launch ofelectric scooter insurance.
In parallel, we continued to makeprogress on our mantra to reachour 2023 vision: #3D, Data & Digitalto Double.
I strongly believe we are on the rightpath – with a strong team and clear
strategy – to make it happen!

Antonio Bagetta
CEO, ConTe

Italy
Without a doubt 2021 will be
remembered as a very tough andchallenging year, yet one where theteam continued to work together
to build the business and serve ourcustomers well.

Our business size, cost-conscious
culture, and tech and digital
investments have driven our expense
ratio improvement in a market wherepremiums are shrinking.

Despite fierce competition in
the market and significant pricedecreases during the pandemic,
ConTe ended 2021 with a profit
for the eighth year in a row andwith a 10% increase in our active
customer base.

We always aim for sustainablegrowth. That’s why we evolved ourrisk selection towards a stronger
tech-data-driven approach,digitising underwriting and antifraud
procedures, and whilst continuing
to grow in our largest channel, pricecomparison, we also focused moreon broker channel profitability thanever before.

These results have been possible
thanks to optimising our distribution
channel sales and a significant
improvement in our customers’
digital journey.

ConTe continued to strengthen
its brand in the Italian market
with presence on TV and witha partnership with the national
football team. These strategic

marketing investments resulted
in ConTe being one of the mostrecognised and appreciated brands
among direct insurance companies.
Our people always come first. In
2021, we worked hard to improve
our work-life balance in a postCovid world to retain, attractand develop the best talent. The
new Smartworking4Future team,following close engagement withstaff, launched our new Hybrid Modeltesting various new initiatives suchas Short Friday (shorter work day!).
The ConTe team remains highly
engaged and motivated, continuing
to prioritise our customers and build
a stronger business into 2022.

75

76

Admiral Group plc Annual Report and Accounts 2021

International insurance review continued

Sarah Harris
CEO, Admiral Seguros

Spain
Admiral Seguros grew active policies
in 2021 by 13% against the backdrop
of a challenging market, and at thesame time our people remained highly
engaged and we were ranked #1 Best
Workplace by the Great Place to Work
Institute. This is a testament to thestrong culture of teamwork acrossAdmiral Seguros, especially evident
during the uncertainties of Covid.
In addition, we increased our digital
capabilities, allowing an acceleration
towards a truly omnichannel offering
for our customers.
From a market perspective, carinsurance shopping continued
to be significantly below 2019
levels, particularly affecting
the aggregator market.

Claims driving frequency remained
depressed in the first half of theyear, picking up over the summer
months closer to pre-Covid levels.
Not so for prices, where aggressive
repositioning by several players
led to a soft market throughout
2021. In this context we maintained
a disciplined approach to pricing.
Policy growth was mostly driven bygood renewal performance, together
with continued expansion into thebroker channel, where we continue
to see opportunity. We madegood progress against our digital
objectives, seeing more than a 40%
uplift in customer logins to our
digital portal. The number of claims
registered online doubled over thecourse of the year. We increased ourinvestment in digital capabilities andstarted a transformation to agile

working across the organisation,
which we expect to bear fruit during2022. Loss ratio remained undercontrol across all channels, withpositive development on back years.
And what of the future? In 2022 wewill continue to adapt the way wework together, fully implementing
a hybrid working model. We haveambitious plans to continue
improving in digital and datacapabilities, and to offer an evenbetter service to our customers.

Alberto Schiavon
CEO, ElephantUS2021 was a mixed year for Elephant– on the one hand, we returned to
growth, entered new states (Ohio,
Georgia), and improved our loss ratio
compared to the market; yet at thesame time we reported a higher
loss as claims costs increased acrossthe market. Our continued effort
in improving Elephant’s ease of
doing business, superior technology
stack, advanced risk selection,and competitive prices is showing
some promising results, yet themarket remains quite volatile andstill challenging.

By year end, vehicles in force hadgrown by 10%, with stronger sales
particularly in our agency distribution
channel. Elephant is continuing tolearn how to deploy our competitive
advantages in this new channel, while
we benefit from the endorsementof bigger, more familiar brands
that attract customers we haven’t
traditionally seen.
From a loss experience perspective,
the beginning of the year continued
to see frequency-related benefits
from 2020. By H2, however, Elephantand industry peers saw these benefits
disappear as driving levels returned
to normal. The intensity and speedof this ‘return-to-normality’ wasquite sudden, resulting in higher
overall losses this year. In response,
we increased rates in line with othercarriers, in addition to a stronger
internal focus on data analytics
and technology, risk selection andanti-fraud. While Elephant closed thehistorical loss ratio gap with the restof the market, we remain prudent
on the 2022 outlook, especially inanticipation of inflationary trends.
I am incredibly proud and gratefulto all our Elephant ‘Herd’ members
for their hard work and dedication in
2021 and look forward to the many
exciting projects planned for 2022.

Company overview

Strategic report

Corporate governance

Financial statements

77

Additional information

International insurance review
International Insurance financial performance
£m

2021

2020

2019

Turnover*1

690.3

648.8

623.6

Total premiums written*1

623.8

584.0

562.6

Net insurance premium revenue

221.0

204.2

168.6

Investment income

0.5

–

1.5

Net insurance claims(170.8)(139.3)(137.2)

Net insurance expenses(91.7)(78.8)(53.0)

Underwriting result including investment income*1(41.0)(13.9)(20.1)Net other revenue

29.4

22.7

19.2

International Insurance result(11.6)

8.8(0.9)

Key performance indicators
£m

2021

2020

2019

Reported Loss ratio*2

73.7%

64.3%

76.8%

Expense ratio*2

44.8%

43.9%

37.6%

Combined ratio

118.5%

108.2%

114.4%

Combined ratio, net of Other Revenue*4

106.3%

97.9%

103.7%

Vehicles insured at period end

1.81m

1.60m

1.42m

*3

*1	A lternative Performance Measures – refer to the end of this report for definition and explanation.
*2 Loss ratios and expense ratios have been adjusted to remove the impact of reinsurer caps so the underlying performance of the business is transparent.
*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 thereported combined ratio would be 2021: 119%; 2020: 107%; 2019: 113%.
*4	Combined ratio, net of other revenue is calculated on Admiral’s net share of premiums and includes Other Revenue. Including the impact of reinsurer caps the reported combined
ratio, net of other revenue would be 2021: 107%; 2020: 96%; 2019: 102%.

International Motor Insurance – Geographical analysis
2021

Spain

Italy

France

US

Total

Vehicles insured at period end (m)

0.37

0.85

0.36

0.23

1.81

Turnover*1 (£m)

88.5

212.7

175.7

213.4

690.3

2020

Spain

Italy

France

US

Total

Vehicles insured at period end (m)

0.33

0.77

0.29

0.21

1.60

Turnover*1 (£m)

83.9

213.0

139.3

212.6

648.8

*1	A lternative Performance Measures – refer to the end of this report for definition and explanation.

Split of International Insurance result£mEuropean Motor

2021

2020

2019

4.8

15.3

9.0

US Motor(13.0)

(4.8)

(9.6)

Other

(3.4)

(1.7)

(0.3)

International Insurance result(11.6)

8.8

(0.9)

78

Admiral Group plc Annual Report and Accounts 2021

International insurance review continued

Admiral has several insurance
businesses outside the UK: Spain(Admiral Seguros), Italy (ConTe), US(Elephant Auto) and France (L’olivier).
The key features of the International
Insurance results are:• Positive growth trajectory continued
in 2021 within competitive markets,with customer numbers increasing
by 13% to 1.81 million (2020:
1.60 million) and combined turnoverrising by 6% to £690.3 million(2020: £648.8 million)• An aggregate loss of £11.6
million (2020: £8.8 million profit),consisting of profit in the European
Motor insurance businesses at£4.8 million (2020: £15.3 million) anda deterioration in Elephant Auto’s
result (increased loss from £4.8
million to £13.0 million year-on-year)• A higher combined ratio (net ofother revenue) of 106% (2020:98%), primarily the result of ahigher reported loss ratio across theEuropean and US motor businesses,with the Covid-related frequency
benefits experienced in 2020 almost
fully unwinding by the end of 2021
• An increased investment of£3.4 million for new productdevelopment primarily related
to the new French homeinsurance business• Increase in the combined expense
ratio to 44.8% (2020: 43.9%). In
addition to investments instrengthening business fundamentals
to further build scale towards
long-term sustainable businesses,
the operations invested in someshort-term growth opportunities.
Continued premium pressure in boththe Spanish and Italian markets also
impacted the ratio.

European Motor Insurance

US Motor Insurance

The European insurance operationsin Spain, Italy and France insured
1.58 million vehicles at 31 December
2021 – 14% higher than a year
earlier (31 December 2020: 1.39
million), whilst turnover was up 9% at£476.9 million (2020: £436.2 million).
The aggregate motor insurance
profit of £4.8 million was a result ofcontinued profitability in Italy, which
was offset by losses in France and Spain.

In the US, Admiral underwrites motor
insurance in eight states (Virginia,
Maryland, Illinois, Texas, Indiana,
Tennessee, Ohio, Georgia) throughits Elephant Auto business. Elephantinsured 228,700 vehicles at the end of2021, 10% higher than 2020, and also
saw higher turnover of £213.4 million(2020: £212.6 million).

The European combined ratio net ofother revenue (excluding the impactof reinsurer caps) increased to 99%
from 89%, primarily the result of loss
ratio trends noted above. During theyear, all businesses maintained a focus
on improving core fundamentals,
whilst cautiously expanding into new
distribution channels to enhance
future growth prospects and exploringnew diversification opportunities.
Admiral Seguros (Spain) grewcustomers by 13% to 368,900(31 December 2020: 327,500). The
growth was supported by good
progress in the broker distribution
channel and was achieved despite
strong market competition andpressure on premiums.
ConTe (Italy) faced similar challenging
markets conditions seen in Spain
with some competitors aggressively
discounting premium rates. Despite
market conditions, ConTe still
performed strongly, increasing
vehicles insured by 10% to 853,300(31 December 2020: 776,300).
L’olivier assurance (France)experienced near record growth in
2021. The customer base increased
by 25% to 362,600 at year end(31 December 2020: 291,000).
Investments to strengthen L’olivier’s
market presence drove strong directchannel growth.

Elephant reported a higher loss for theperiod of £13.0 million (2020 loss of£4.8 million), impacted by challenging
market conditions as the US saw amore rapid return to pre-Covid claims
frequency levels than the European
markets together with increasingclaims inflation, particularly in thesecond half of the year. The market
responded by increasing premiums,
and Elephant responded similarly withbase rate increases. Competition in
the market remained strong, withlarge players increasing investment
in advertising which led to higher
acquisition costs. The business
continued to focus on improving
fundamentals such as risk selection
and the digital customer offering,whilst improving persistency andmore efficient acquisition.

International Car Insurance
Regulatory environment
Admiral’s European insurance
operations are primarily regulated by
the Spanish insurance regulator, theDireccion General de Seguros (DGS).
The Group’s US insurer, ElephantInsurance Company, is regulatedby the Virginia State Corporation
Commission’s Bureau of Insurance.
Both insurers are required to maintaincapital at levels prescribed by theregulator and hold a surplus above
these requirements at all times.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

79

Admiral Loans review
2021 has been a fantastic year for Admiral Loans. Strong growth,customer payments performing better than expected and exciting
improvements in our capabilities.

Scott Cargill
CEO, Admiral Financial Services Limited
2021 has been a fantastic year for
Admiral Loans – strong growth,customer payments performing
better than expected and exciting
improvements in our capabilities.
Admiral Loans is now a relevant
participant in what is a large market
in the UK and we’ve issued over
175,000 loans to date. Our loans
book now stands at over £600
million, 50% growth year on year
whilst retaining a focus on prime
lending, proof that UK customers
are ready for a guaranteed rate
proposition, and they value thecertainty and transparency it offers.
Progress in 2021 was particularly
pleasing. The adoption of open
banking drove up new businessconversion. Distribution expansion
allowed us to access morecustomers. Enhancing our selfservice functionality allowed 75%
of transactions to be processed
digitally, enabling future expense
efficiency. A new cloud-based data
platform allows us to remain focusedon analytics.
We also made pleasing progress on
integrating more closely with the
UK insurance business to offer loans
to these customers. In addition, wewere winners of the Moneyfacts
Consumer Awards in both categories
of best personal loans provider andbest car finance provider.
Looking to 2022, we enter withstrong momentum. Monthly revenue
increased 50% through 2021 and
we enter 2022 at an all-time record
level. We expect to benefit fromour strong position in a growing

market as we see a continued
shift to comparison and creditscore marketplaces. I expect tosee continued growth in our loanbalances towards the £800–950
million range during 2022 assuming
current economic conditions.
Combined with a tightly controlled
cost base, we should see improved
economics in the coming years. I am
optimistic for 2022 and am confident
in the team’s ability to execute on
our business plan. Admiral built
successful businesses by doing thecommon things uncommonly welland Admiral Loans enters 2022 ingood shape to achieve the same in
UK lending.
I’d like to finish by thanking ourcustomers and all of my colleagues
and wish everyone the best for 2022.

Loans Financial Review
£m

2021

2020

2019

Total interest income
Interest expense*1

36.6

36.8

30.8

(8.8)

(10.1)(9.1)

Net interest income

27.8

26.7

21.7

Other fee income

1.1

2.1

1.9

Total income

28.9

28.8

23.6

Movement in expected credit loss provision and write-off of Loans(10.7)(25.8)(14.3)

Expenses(23.7)(16.8)(17.7)

Admiral Loans result(5.5)(13.8)(8.4)*1	Includes £2.7 million intra-group interest expense (2020: £2.9 million; 2019: £2.8 million).

80

Admiral Group plc Annual Report and Accounts 2021

Admiral Loans review continued

Gross loans balances£607.0m
2020: £401.8m

Net loans balances£556.8m
2020: £359.8m

Admiral Loans offers a range of
unsecured personal loans and car financeproducts through comparison channels
and also direct to consumers via theAdmiral website.
Gross loan balances totalled £607.0
million (2020: £401.8 million), witha £50.2 million (2020: £42.0 million)
provision, leading to a net loans balanceof £556.8 million (2020: £359.8 million).
Admiral Loans updated its expectedcredit loss models with the latest
economic assumptions and management
overlays to reflect the expectations of
performance. This update reflects an
improved economic outlook comparedto the prior year, but still retaining
caution with uncertainty remaining
in the economy. This update led to an£8.2 million net additional impairment
provision (2020: £18.0 million), with
provision to loan balance coverage ratio
falling to 8.2% (2020: 10.4%). The total
expected credit loss charge including
write-offs was £10.7 million (2020: £25.8
million). For further information, refer tonote 7 in the financial statements.

Admiral Loans recorded a pre-tax lossof £5.5 million in 2021 (improved from
£13.8 million in 2020). The improved loss
predominantly reflects the reduction
in credit loss charge recognised in the
period as noted above.
Expenses have increased to £23.7 million(2020 £16.8 million) as investment wasmade ahead of scale, coupled withhigher loan acquisition costs expensed
as incurred on increased new loan
origination.
Admiral Loans is currently fundedthrough a combination of internal andexternal funding. The external funding
is secured against certain loans via
transfer of the rights to the cash-flows
to two special purpose entities (SPEs),
the second of which was incorporatedin October 2021. The securitisation andsubsequent issue of notes via SPEs does
not result in a significant transfer of risk
from the Group.

Company overview

Strategic report

Corporate governance

Financial statements

81

Additional information

Other Group Items
Other Group items financial review
£m

2021

2020

2019

Share scheme charges, excluding restructure costs(63.3)(50.9)(49.0)

Other central overheads(19.8)(22.9)(20.0)

Finance charges(11.4)(12.1)(11.3)

Admiral Pioneer(10.2)(0.8)–

Other business development costs

(3.7)

(1.0)

(2.1)

Compare.com loss before tax

(3.5)

(2.3)

(7.2)

Other interest and investment return

4.0

4.9

6.1

(107.9)(85.1)(83.5)

Other Group items

Share scheme charges relate to theGroup’s two employee share schemes(refer to note 9 to the financial
statements). Charges increased by£12.4 million (excluding discontinued
operations) in 2021, to £63.3 million.
The increase in the charge is driven
by a combination of the expected
increase of the proportion of sharesthat will eventually vest following
strong Group results, as well as ahigher share price and higher bonuses
linked to the Group’s dividend.
Finance charges of £11.4 million(2020: £12.1 million) primarily
represent interest on the £200 million
subordinated notes issued in July 2014.

Other central overheads totalled£19.8 million and include the cost of anumber of major Group projects, suchas preparation for the significant new
insurance accounting standard, IFRS 17
and the development of the internal
model. Excluding the £6 million costof the Covid relief fund in the prioryear, the overheads are approximately£3 million higher as a result of theseregulatory projects and other mattersthat are unlikely to be repeating.

the Veygo short-term car insurance
business, as well as investment in
new products such as tool insurance
in the UK and small fleet insurance inFrance. The business made a loss of£10.2 million in 2021.

As part of the investment in productdiversification, Admiral launched theAdmiral Pioneer business in 2020 tofocus on new product diversification
opportunities. This currently operates

Other interest and investment income
decreased to £4.0 million in 2021
(2020: £4.9 million).

Compare.com reported a higher
loss of £3.5 million as a result of
increased investment in marketing
and acquisition in a challenging market
environment in the US.

Discontinued Operations (Comparison)
£m

2021

2020

2019

Profit before tax in period

11.3

29.4

21.8

Gain on disposal

404.4

–

–

Total profit before tax from discontinued operations

415.7

29.4

21.8

On the 30 April 2021, the Groupannounced that, following regulatory
and competition authority approvals,
RVU had completed the purchaseof the Penguin Portals Group andAdmiral’s 50% share of Preminen.
MAPFRE also sold its 25% holdingin Rastreator and 50% holdingin Preminen to RVU. The totaltransaction value was settled in cashon completion.
The cash proceeds from the disposal
amount to £471.8 million; with the gain
on disposal being £404.4 million.

The Group has confirmed plans forthe use of the net proceeds from thedisposal and will return £400 million
to shareholders in the form of special
dividends phased equally over theinterim 2021, final 2021 and interim2022 dividends.

82

Admiral Group plc Annual Report and Accounts 2021

Group Capital Structure and Financial Position
The Group will return£400m

to shareholders in the form of special
dividends phased equally over theinterim 2021, final 2021 and interim2022 dividends

The Group’s 2021 solvency ratio

195%

The Group continues to manage its capital to ensure that all entities are able
to continue as going concerns and that regulated entities comfortably meet
regulatory capital requirements. Surplus capital within subsidiaries is paid up
to the Group holding company in the form of dividends.
The Group’s regulatory capital is based on the Solvency II Standard Formula,with a capital add-on to reflect recognised limitations in the Standard
Formula with respect to Admiral’s business (predominantly in respect of profit
commission arrangements in co- and reinsurance agreements and risks arisingfrom claims including Periodic Payment Order (PPO) claims).
The Group continues to develop its partial internal model to form the basis of
future capital requirements. The expected timescale for formal application
has been extended beyond 2021 as a result of a decision by the AdmiralGroup Board to review certain aspects of the model. In the interim period
before submission, the current capital add-on basis will continue to be used
to calculate the regulatory capital requirement.
The estimated and unaudited regulatory Solvency II position for the Group at
the date of this report is as follows:

Group capital position (estimated and unaudited)Group

Eligible Own Funds (post dividend)*1

2021
£bn

2020
£bn

1.36

1.47

Solvency II capital requirement

0.70

0.79

Surplus over regulatory capital requirement

0.66

0.68

Solvency ratio (post dividend)*3

195%

187%

*2

*1	2021 Own Funds includes a deduction for the third tranche of Penguin Portals dividend which is expected to be
paid alongside the 2022 interim dividend in October 2022.
*2	Solvency capital requirement includes updated capital add-on which is subject to regulatory approval.
*3	Solvency ratio calculated on a volatility adjusted basis.

The Group’s 2021 solvency ratio is strong at 195%. The solvency ratio has
increased by eight percentage points from the end of 2020, with surplus capitalremaining at a consistent level. Both Own Funds and the Solvency Capital
Requirement have returned to a more typical level after increasing at theend of 2020 as a result of the strong underwriting profitability of theCovid-impacted periods.
The Solvency Capital Requirement includes an updated capital add-on which
remains subject to regulatory approval. The solvency ratio based on thepreviously approved capital add-on, that is calculated at the balance sheet
date rather than the date of this report, and will be submitted to the regulator
within the Q4 Quantitative Reporting Template (QRT) is as follows:
Regulatory solvency ratio (estimated and unaudited)

2021

2020

Solvency ratio as reported above

195%

187%

(5%)

(5%)

Change in valuation date
Other (including impact of updated, unapproved
capital add-on)
Solvency ratio (QRT basis)

(9%)

24%

181%

206%

Company overview

Strategic report

Corporate governance

Financial statements

83

Additional information

The Group’s capital includes £200 million ten-year dated subordinated bonds. The rate of interest is fixed at 5.5% and the bonds
mature in July 2024. The bonds qualify as tier two capital under the Solvency II regulatory regime.

Solvency ratio sensitivities (estimated and unaudited)
Estimated sensitivities to the current Group solvency ratio are presented in the table below. These sensitivities cover the twomost material risk types, insurance risk and market risk, and within these risks cover the most significant elements of the risk
profile. Aside from the catastrophe events, estimated sensitivities have not been calibrated to individual return periods.
2021

2020

UK Motor – incurred loss ratio +5%

-9%

-10%

UK Motor – 1 in 200 catastrophe event

-1%

-1%

UK Household – 1 in 200 catastrophe event

-3%

-2%

Interest rate – yield curve down 50 bps

-3%

-4%

Credit spreads widen 100 bps

-9%

-6%

Currency – 25% movement in euro and US dollar

-3%

-3%

ASHE – long-term inflation assumption up 0.5%

-5%

-3%

Loans – severe peak unemployment scenario

-1%

-1%

Taxation
The tax charge from continuing operations reported in the consolidated income statement is £130.2 million (2020:£106.2 million), equating to 18.2% of pre-tax profit (2020: 17.5%). The increase in the effective tax charge is the resultof lower non-taxable investment income recognised in the year, and a higher level of unrecognised deferred tax.

Investments and cash
Investment strategy
Admiral Group’s investment strategy remains the same – the focus is on capital preservation and low volatility of returns.
Admiral has an asset liability matching strategy to control interest rate, inflation and currency risk, holds a prudent level ofliquidity and has a high-quality credit profile. All objectives continue to be met. The Group’s Investment Committee performs
regular reviews of the strategy to ensure it remains appropriate.
In 2021, the strategy has continued to focus on delivering efficient and low volatility returns by widening the opportunity setof investments without material change in market risk capital allocated to investments. Additional inflation protection wasbought towards the start of the year. It holds a range of government bonds, corporate bonds, alternative and private credit
assets, alongside liquid holdings in cash and money markets.
Admiral has a responsible investment strategy to reduce Environmental, Social and Governance (ESG) related risks, whilst
achieving sustainable long-term returns. Importantly, ESG criteria are considered within investment decision making andensures all our asset managers are signatories of the UN Principles for Responsible Investment and have strong and credible
practices. The average ESG score in the portfolio is ‘A’ from MSCI.
Admiral is a member of the Institutional Investors Group for Climate Change and has used the Net Zero Investment
Framework to implement a Net Zero strategy. The weighted average carbon intensity of the corporate bonds is below
benchmark and there’s a target in place to reduce this by 50% by 2030. Admiral also ensures the asset managers havesuitable engagement practices and are engaging with climate laggards.

84

Admiral Group plc Annual Report and Accounts 2021

Group Capital Structure and Financial Position continued

Cash and investments analysis£mFixed income and debt securities
Money market funds and other fair value instruments
Cash deposits
CashTotal*1

2021

2020

2019

2,594.3
1,063.0
85.3
372.7
4,115.3

2,101.3
1,339.3
65.4
351.7
3,857.7

1,957.8
1,160.2
116.5
281.7
3,516.2*1	Total Cash and Investments include £147.2 million (2020: £74.8 million; 2019: £58.9 million) of Level 3 investments. Refer to note 6f in the financial statements forfurther information.

Investment and interest income in 2021 (net of impairment charges) was £42.6 million, a decrease of £10.3 million on 2020(£52.9 million). 2020 investment and interest income was impacted by adjustments related to investment income on cash
held by Admiral relating to the portion of the motor insurance business reinsured under quota share contracts. £12.9 millionof income earned in 2019 was recognised in the 2020 income statement as the projection of the result of the 2019
underwriting year improved to a profitable level.
The underlying rate of return for the year (excluding changes in investment income allocated to reinsurers) on the Group’s
cash and investments was 1.1% (2020: 1.3%).
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.

Cash flow£m

Operating cash flow, before movements in investments
Transfers to financial investments
Operating cash flow
Tax payments
Investing cash flows (capital expenditure)
Financing cash flows
Loans funding through special purpose entity
Net contributions from non-controlling interests
Foreign currency translation impact
Net proceeds from sale of Comparison entities
Cash included in the disposal of Comparison entities
Net cash movement
Movement in unrealised gains on investments
Movement in accrued interest
Net increase in cash and financial investments

2021

2020

2019

637.8
(266.5)371.3(126.7)(69.2)(750.7)
185.9
–
(5.3)
457.0
(41.3)
21.0(47.3)
17.4
257.6

959.8
(176.0)783.8(175.0)(43.1)(454.3)(46.2)
2.4
2.4
–
–
70.0
40.7
54.8
341.5

518.1
(188.7)329.4(92.8)(33.6)(392.4)
85.9
1.6
6.8
–
–
(95.1)
34.6
41.5
169.7

The main items contributing to the operating cash inflow are as follows:
£m

2021

2020

2019

Profit after tax

996.7

527.8

428.4

Change in net insurance liabilities
Net change in trade receivables and liabilities
Change in loans and advances to customers
Non-cash income statement items
Taxation expense
Operating cash flow, before movements in investments

40.8(65.3)(205.2)(261.7)
132.5
637.8

94.8
65.3
77.3
84.8
109.8
959.8

50.4
27.4
(168.7)
86.4
94.2
518.1

The net increase in cash and investments in the year is lower at £257.6 million (2020: £341.5 million). The main drivers
include an increase in the funding requirements for the Admiral Loans business and financing cash flows which include theincreased dividend.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

85

Co-insurance and reinsurance
Admiral makes significant use of proportional risk-sharing agreements, where insurers outside the Group underwrite amajority of the risk generated, either through co-insurance or quota share reinsurance contracts. These arrangements
include profit commission terms which allow Admiral to retain a significant portion of the profit generated.
Although the primary focus and disclosure is in relation to the UK Motor insurance book, similar longer-term arrangements
are in place in the Group’s international insurance operations and the UK Household and Van businesses.

UK Motor Insurance
Munich Re and its subsidiary entity, Great Lakes, currently underwrites 40% of the UK Motor business. In 2021, 30% of thistotal is on a co-insurance basis, with the remaining 10% being under a quota share reinsurance agreement. Admiral has agreed
terms for the extension of its contractual arrangements with Munich Re and its subsidiary Great Lakes from 2022. The current
10% quota share contract remains in place until at least 2023. For the remaining 30% share, 20% of this total will be on aco-insurance basis (via Great Lakes) and will extend to 2029. The remaining 10% will be on a quota share reinsurance basis andthese arrangements extend to 2026. These changes should result in higher profit commission income for Admiral from 2022
onwards compared to the expiring arrangements.
The Group also has other quota share reinsurance arrangements confirmed to the end of at least 2023, covering 38% of thebusiness written.
The nature of the co-insurance proportion underwritten by Munich Re (via Great Lakes) in the UK is such that 30% of all Motorpremium and claims for the 2021 year accrue directly to Great Lakes and are not reflected in the Group’s financial statements.
Similarly, Great Lakes reimburses the Group for its proportional share of expenses incurred in acquiring and administering thisbusiness. Based on the above-mentioned change in contractual agreements, this will change to 20% from 2022.
The quota share reinsurance arrangements result in all Motor premiums and claims that are ceded to reinsurers being includedin the Group’s financial statements.
Admiral tends to commute its UK Car Insurance quota share reinsurance contracts 24 – 36 months after inceptionof an underwriting year, assuming there is sufficient confidence in the profitability of the business covered by thereinsurance contract.
After an underwriting year is commuted, movements in financial statement loss ratios result in reserve releases(or strengthening if the loss ratios were to increase) rather than reduced or increased profit commission.
During the first half of 2021, the majority of the 2019 quota share contracts were commuted. At 31 December 2021, quota
share reinsurance contracts remained in place for a small portion of 2017, 2018 and 2019, and the full 2020 underwriting year.
No further contracts were commuted in the second half of 2021 (as is usual).
Refer to note 5d(v) of the financial statements for further analysis of reserve releases on business originally reinsured but
subsequently commuted.

UK Household Insurance
The Group’s Household business is supported by long-term proportional reinsurance arrangements covering 70% of the risk.
The initial contract terms for these arrangements are coming to an end and analysis is ongoing in relation to future quota
share arrangements. In addition, the Group has non-proportional reinsurance to cover the risk of catastrophes stemmingfrom weather events.

International Car Insurance
In 2021 Admiral retained 35% (Italy), 32.5% (France) and 30% (Spain) of the underwriting risk respectively (2020: 35%, 30%
and 30% respectively). In the USA, 45% (2020: 50%) of the risk was retained within the Group.

Excess of loss reinsurance
The Group also purchases excess of loss reinsurance to provide protection against large claims and reviews this cover annually.
The excess of loss cover remained similar to prior years with a marginal increase in rates in the context of a hardening market.

Profit commission
Admiral is potentially able to earn material amounts of profit commission revenue from co- and reinsurance partners,
depending on the profitability of the insurance business underwritten by the partner. Revenue is recognised in the income
statement in line with the financial statement loss ratios on Admiral’s retained underwriting.
Note 5c to the financial statements analyses profit commission income by business, type of contract and by underwriting year.

86

Admiral Group plc Annual Report and Accounts 2021

Non-financial information statement
The non-financial reporting requirements contained in sections 414CA and 414CB of the Companies Act 2006 are addressed within
this section by means of cross reference, to indicate where they are located within the strategic narrative and to avoid duplication.
KPIs
See page 61
Financial stability
See page 82
Responsible Investments
See page 57
Culture & Values
See page 12
Strategy
See page 35
Business ModelSee page 04
Sustainability
See page 46
Community Engagement
See page 57
Risk
See page 116
GovernanceSee page 140
Task Force on Climaterelated Financial
Disclosures
See page 107
Streamlined Energy andCarbon Reporting

We are aware that our customers, shareholders and employees care about our goals and objectives. We take pride in sharing bothfinancial and non-financial KPIs, all of which help us to build a strong business for the future.
Admiral focuses on building sustainable, profitable businesses for the long term. The business follows a prudent reserving philosophy.
Admiral also has a strong capital position, supported by substantial co-insurance and re-insurance agreements.
In order to manage Environmental, Social and Governance (ESG) risks across Admiral’s proprietary investments – which stem primarily
from the premiums collected across our insurance operations – a responsible investment policy was established in 2019.
Prioritising our people is part of Admiral’s DNA. It’s the foundation of our Company belief that happy employees = happy customers =happy shareholders. We’re determined to always remain a great place to work.
Our strategy remains highly focused on building customer-focused sustainable businesses for the long term. We strive to keep doing
what we’re doing and do it better year after year for continuous improvement.
We build on our core competencies to create value for our stakeholders, focusing on profitable growth, strong risk selection
capabilities, a controlled test-and-learn approach, the strength of our culture and the depth of our business relationships.
We integrate environmental considerations across our operations. By taking actions to mitigate our impact on the environment, wedevelop sustainable solutions for the long term.
Our community objectives are focused on supporting the local communities in which we are based and supporting the charities andorganisations directly connected with our employees. These objectives are achieved through long-term community initiatives such as
the Community Chest and the Ministry of Giving.
Our Risk Committee supports the Board in its oversight of risk across the Group including reviewing the Group risk strategy and risk
appetite. Admiral’s principal risks and uncertainties are outlined within the strategic section.
We are aware that our customers, shareholders and employees care about our goals and objectives. We take pride in sharing bothfinancial and non-financial KPIs, all of which are indicators as to progress against strategic goals.
Admiral recognises and acknowledges the risks and opportunities presented by rising temperatures, climate-related policy, andemerging technologies in our changing world. We report against the Task Force on Climate-related Financial Disclosures (TCFD) to
improve and increase reporting of climate-related financial information.
We report energy and carbon emissions in their annual report in line with SECR to make carbon reporting more transparent and to aid
the goal of achieving a carbon net-zero target.

See page 114
Employees Diversity
and Inclusion

Our Equality, Diversity and Dignity at Work Policy outlines that Admiral is committed to ensuring that any type of discrimination is not
accepted. This policy outlines the standards of behaviour that are expected from all members of employees, to ensure that everyone
See page 54 for information at Admiral is treated with dignity and respect. This policy explains that all managers should be alert to potential discrimination andharassment and actively prevent them from occurring, communicate this policy to all employees, and be responsive and supportive toon our Diversity andanyone who makes a complaint.
Inclusion Forums

More information on the following policies can be found in our Sustainability Report, located here on our website atwww.admiralgroup.co.uk for further information
General Standardsof Conduct
Health and Safety
Procurement andOutsourcing
Anti-Bribery

Gifts and Gratuities
Whistleblowing

Financial Crime

Our General Standards of Conduct outline the conduct standards that all colleagues must adhere to regardless of their role.
Our Health and Safety Policy outlines our commitment to ensuring the health and safety of employees and anyone affected by ourbusiness activities, and our commitment to providing a safe environment for those attending our premises.
Our Group Procurement and Outsourcing Policy confirms that all employees who engage in procurement activity are expected toenhance and protect the standing of the business, maintain the highest standard of integrity in all business relationships, promote theeradication of unethical business practices, and ensure full compliance with laws and regulations.
Our Anti-Bribery Policy strictly prohibits the solicitation or acceptance of any bribe, to or from any person or company, by an individual
employee, Board member, agent or other person or body on Admiral’s behalf, in order to gain any commercial, contractual, or regulatory
advantage for Admiral in an unethical way or to gain any personal advantage for the individual or anyone connected with the individual.
Our Gifts and Gratuities Policy recognises that sometimes customers, suppliers or business associates offer gifts or gratuities to
employees and confirms that all such gifts must be made and received openly and fairly.
Our Whistleblowing Policy encourages and enables employees to raise any concerns they have about serious malpractice orwrongdoing. The policy is designed to ensure that an employee can raise their concerns without fear of victimisation, subsequent
discrimination, disadvantage, or dismissal. This policy details internal and external reporting lines for any employee concerns.
Our Financial Crime Policy ensures that robust systems and controls are in place to detect, prevent and deter financial crime across theGroup and ensures we remain compliant with applicable laws and regulations in our operational jurisdictions. All areas of financial crime
are captured by this policy, including money laundering, market abuse & insider trading, sanctions regime, modern slavery, tax evasion
and Bribery & Corruption.

The below policies can be located here on our website at www.admiralgroup.co.uk:
Modern Slavery

Tax

Our Anti-Slavery, Exploitation and Human Trafficking Policy confirms Admiral’s zero tolerance approach to modern slavery, outlines
our ongoing commitment to eliminating unethical working practices, and provides guidance to employees on reporting any problems
identified at work or in the community. We release an annual Modern Slavery Statement in line with the Modern Slavery Act 2015.
Our Tax Strategy Policy documents our approach to taxation. The policy confirms that the Group’s primary objective is to be compliant
with all tax legislation requirements in all the territories in which we operate.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

87

Section 172: Stakeholder engagement

Our customers
Why they matter to us strategically and how they influence the operation of the business‘Help more people to look after their future’
Customers are at the heart of our business, and everything that we do. As a customer-centric organisation, we seek tocreate products that provide more people with the opportunity to access good financial services products. The needs of ourcustomers drive the type of products we deliver and the way we in which we do so.

What matters to them and encourages them to maintain a relationship with Admiral
Taking into account a number of influences, including Admiral’s materiality matrix, key areas identified by our stakeholders
important for customers include• Great service and business resilience
which continue to be our focus
in 2022.

• Fair, affordable pricing and productquality which we will continue toactively manage in 2022.

See our materiality matrix on
page 49

How we engage to confirm what matters to our customers
There are opportunities for us to communicate and engage with our customers, and vice versa, throughout the different points
in the customer life cycle. Some of these mechanisms include:• Discussions with our customer
service teams, new business andrenewals teams, our claims teams
and our complaints teams• Customer focus groups• Customer feedback – comment
forms, surveys, SMS• Social media• Perception studies• Online customer portals

Enabling and improving theengagement mechanisms throughout
our customer journeys, particularly inthe digital customer journey, will help
us to understand what matters mostto them.

Board oversight, training and escalation
The Board continues to receive
updates from management on thetreatment of existing customers andon ensuring fair outcomes throughout
the customer journey. Customer andemployee feedback is fed into Board
discussions which ultimately shapes
strategic decision making, such asplans related to digital investment
and future diversification. The Board
also receives annual feedback on the
Conduct Risk framework throughthe Group Risk Committee.

During 2021, the Board spentsignificant time on understanding the
likely market response and operational
impact of the implementation of the
FCA’s pricing remedies, which aims to:• Ensure that renewing home andmotor insurance consumers arequoted prices that are no morethan they would be quoted as a newcustomer through the same channel.
• Make it simpler for customers tostop automatic renewals if they wish
to do so.

• Enhance the FCA’s productgovernance rules to ensure that
insurers deliver fair value on all theirinsurance products.
The Board also received updates on (i)the progress to deliver the technology
and digital strategies, which have a
direct impact on the improvements
made to customer journeys, and (ii)information security and cyber risk,
including crisis management, bothfrom a customer and reputational
impact perspective.

88

Admiral Group plc Annual Report and Accounts 2021

Section 172: Stakeholder engagement continued

What value is created by us for them?
In 2021, Admiral delivered change
impacting customers for the better.
Some examples of the value delivered
to our customers include:

Continued to deliver fair andaffordable pricing
During 2021, Admiral has continued tooffer fair and affordable pricing, and has
continued to apply its understandingof customers’ needs to product design(e.g. Admiral Essentials).

Admiral virtual assistant(car insurance)
The Admiral virtual assistant (AVA)
was delivered by the team earlier than
expected, to help direct customers
to the best option for their queryor change. This change was brought
forward as a result of the escalating
Covid pandemic. The aim of the launchof the AVA was to better enable
customers to use self-service forconvenience and thus reduce the needfor customers to contact us via ourcall centres. At the time of the launch,
Admiral saw:
• An increase of 15% in customers
going to MyAccount from theHelp & Support page.
• A reduction of 15% of humancontact in respect of Elephantbrand customers.

Launch of household claims
digital journey

Increased focus on Net
Promoter Score (NPS)

Having worked towards this goal forthe last couple of years, our household
customers can now choose to registerand track all types of household claims
online, or continue to be supported byour colleagues on the phone.

Although NPS was already a key metricfor Admiral, the opportunity was taken
during 2021 to provide an introductory
training video to explain why the
metric is important to Admiral, which
all our colleagues were encouraged
to watch. It was recognised that NPS
performance needed to be integrated
at every level in order to improve it andthat the training was the first step toachieving this goal.

Launch of carriage of goods
for hire and reward cover(car insurance)
Due to the increasing trend in people
working as couriers or delivery drivers
due to the Covid lockdowns, Admiralmade this level of cover available
to our car insurance customers in
October 2021 via the call centres. This
ensured customers had the correctclass of cover to receive payment fordelivering parcels and packages onbehalf of third parties.

Launch of Admiral Essential
on price comparison

Modernising operations
Earlier in 2021, the customer
operations teams were restructured
to organise our people around value
and service. This allows the teams to (i)take advantage of new technology toidentify customer groups and get to
the root cause of any customer issues,(ii) increase the value generated,and (iii) increase specialisation
leading to greater consistency andcustomers outcomes.

In November, we launched Admiral
Essential on price comparison website,
Confused.com. Admiral Essential is
our lowest Tier (3* Defaqto rated)
and, therefore, provides more pricesensitive customers with good coverat a competitive price via the pricecomparison website channel.

• A reduction of 47% in customers
contacting us via webchat.

What are the risks and opportunities that could affect the relationship and, therefore, Admiral’s success?
The implementation of the FCA’s pricing remedies will affect general insurance customers on a market-wide basis. Management
and the Board have continued to closely monitor the market position throughout the year, as well as progress its strategy for its
own implementation of the remedies.
There are opportunities that Admiral continues to explore to diversify the product offering by launching products incomplementary markets, to help more people look after their future. Further information is located on pages 38 to 41of the Strategic Report.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information89

How we monitor the impact of our actions and the strength of our relationshipThe following metrics are some of the main tools we use to assess the impact of our actions and the strength of ourrelationship with our customer:• NPS scores• Customer satisfaction scores• Activity levels on the MyAccountPortal• Complaint rates• Call volumes• Policy acquisition and renewal rates• Feedback and insight relating to
products and services from all
customer-facing teams acrossthe business• Ombudsman feedback• Social media

Our people
Why they matter to us strategically and how they influence the operation of the business‘Help more people to look after their future. Always striving for better, together.’
We believe that people who like what they do, do it better. We strive to do better every day because we like what we do. This
attitude enables our test-and-learn culture, operational excellence, happier and more productive employees, and ultimately
better outcomes for our customers and other stakeholders.

What matters to them and encourages them to maintain a relationship with Admiral
Our people want a friendly, funand productive workplace where
they are engaged, and where theirviews are heard and considered.
During the Covid pandemic, flexible
working and health and wellbeing
have continued to be key priorities
for colleagues around the Group.

According to a number of influences,including Admiral’s materiality
matrix, our stakeholders viewed areas
important to our people as:• Talent acquisition and development,
long-term shareholder value (given
the employee share scheme)
and providing great service tocustomers, which each continuing to
be key areas of focus for 2022.

• Diversity and inclusion, people
engagement, and innovation, as
well as health and wellbeing, which
are areas that we will continue toactively manage in 2022.
See our materiality matrix on
page 49

How we engage to confirm what matters to our people
Our people are encouraged to engage across multiple channels, including website chats and face-to-face, where possible.
We also engage via:
• 1:1 meetings with managers• Colleague surveys• Exit interviews• Employee Consultation Group(ECG) meetings• Feedback schemes such as Ask
Milena and Speak Up• Grievances• Participation in the Great Place toWork survey• Friendly Forums

See more on pages 91 – 92

• Whistleblowing channels

90Admiral Group plc Annual Report and Accounts 2021

Section 172: Stakeholder engagement continued

Board oversight, training and escalation
The Board receives updates on
diversity and inclusion, people andculture, particularly in light of themore permanent move to a hybrid
working model, ECG meetings in the
UK and international businesses, Group
health and safety and whistleblowing
throughout the year.

The Group CEO and CFO host our
Staff General Meeting (which allows
for questions to be raised to themas representatives of the Board),
and also host numerous forums with
our people. These have been able toproceed virtually during 2021.

Non-Executive Directors attend
ECG meetings on a rotational basis
and report back to Board. The Board
Chair and other Non-Executive
Directors have also made virtual andin-person visits to different businessdepartments and overseas locations.

What value is created by us for them?
Reward, career development
and wellbeing (Great Place
To Work and Best Companies
survey feedback)Following feedback received via thetwo external annual colleague surveys,
three project workstreams werecreated to identify what we can dobetter in the areas of reward, careerdevelopment and wellbeing. Since then:• The UK reward team has embarked
on a comprehensive review ofpay, working hours and shareawards. This work is ongoing withrecommendations expected in 2022.
• The learning and development
team have created training playlists
based on departmental needs,
offered training to support smart
working and launched an internal
careers office.
• A wellbeing portal has beenlaunched to enable colleagues tomore easily locate information on
the wellbeing support available,
new training and coaching courses
have been launched, and counsellingsessions and wellbeing champions
have been introduced.

• The Group encourages involvementin the performance of the businessthrough the participation by the
majority of the Group’s employees in
the Group’s Share Incentive Plan SIP
under which they are given shares in
the Company. Further information on
the SIP is located in the Remuneration
Report on page 185.

Fun culture (pulse survey
feedback)
During 2021, feedback was received
from our people that the fun culture
had diminished as a result of remote
working. Since them, managers havebeen encouraged to ensure thatteams make time to have fun and theMinistry of Fun has also held monthly
competitions with prizes for all to enter.

Clarity on returning to theoffice (pulse survey feedback)Our people suggested that moreclarity was needed on the return tooffice process and the future of smart
working. Therefore, we provided
further updates and assurance about:• The government guidance for many
continuing to be to work from home,
if possible.
• The fact that the impact of any
changes on colleagues’ working
routines was being considered.
• The fact that there would be a
12-month period, once working
from home guidance was lifted, tofully understand and test the impactthat smart working would have on
our people.
• Frequently asked questions.

Diversity and inclusion (Great
Place to Work survey scores)
Admiral provides a working
environment in which diversity andinclusion is embraced. In 2021, ourpeople scored Admiral highly on the
Great Place to Work survey statements
relating to diversity and inclusion.
Further information on our diversity
and inclusion activities is located on
pages 54 – 56 and 159 – 161.

What are the risks and opportunities that could affect the relationship and, therefore, Admiral’s success?
Hybrid working provides both risks and opportunities in respect of our people. We are able to reach different pools of talent
for critical roles but we risk losing talent, as geography becomes less of a constraint in a hybrid working world. The protectionof Admiral’s unique culture is critical to ensuring that we continue to attract and retain talent. More information about how wemonitor and assess culture, and talent management can be found on pages 145 to 147 (for culture) and pages 56 and 162 (fortalent management).

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

91

How we monitor the impact of our actions and the strength of our relationshipAs well as monitoring the impact of our actions and the strength of our relationships qualitatively through our engagement
mechanisms, we also monitor the following key performance indicators:• Accolades (see page 45)

Ȳ Attrition• Employee feedbackȲ Satisfaction scores from Great
Place To Work survey• Pay gaps

Ȳ Diversity targets• Health and safety incidents

Ȳ Training & development(courses completed)Ȳ Recruitment (e.g. applications
per vacancy)• Culture Dashboard metrics, including:

Employee Consultation
Group
PurposeThe Board recognises theimportance of engaging with its
workforce and does so through a
combination of informal and formal
channels. In order to ensure a
two-way communication platform
and an effective means by which
the views of the workforce canbe heard, the Board established a
UK Employee Consultation Group(ECG) in 2019 with the aim ofenhancing and formalising its preexisting employee engagement
arrangements. For the purposesof Provision 5 of the UK Corporate
Governance Code, the ECG is aformal workforce advisory panel.

Membership and attendance
Membership of the UK ECG
comprises elected colleague
representatives and the remit of
the ECG is to act as a forum for
employee consultation, gatheringcolleague opinion and fostering asafe environment to raise matters ofinterest and generate ideas. Thereis a democratic member election
process and members are provided
with an induction to ensure that
there is clarity about the role andremit of the ECG, as well as their roleas members.
Non-Executive Directors areinvited to attend ECG meetings
on a rotational basis and reportback to the Board on matters
discussed, as well as actions
agreed at the ECG meeting.

Ȳ Sickness

Taking this approach ensures thateach of the Non-Executive Directors
has the opportunity to engage withthe workforce directly and to hearfirst-hand the issues and matters thatare affecting the workforce.
In order to ensure that the meetings
remain a two-way mechanism, NonExecutive Directors are also asked
to comment on any insights fromthe ECG meetings at the following
Board meeting and the Chair of the
UK ECG is regularly invited to attend
Board meetings to report on matters
discussed by the ECG and any areasof concern. Minutes of the ECG
meetings are also published on theintranet for all to view. Non-Executive
Directors also provide an update at
ECG meetings on recent matters
discussed by the Board.

Agenda topics influenced
by our people and upcoming
Board agenda

Feedback from the Board
provided by the ECG Chair

Meet and discuss views of ourpeople on topics and rotating NED
shares Board insights

Summary of meeting provided
to Board by ECG Chair

92

Admiral Group plc Annual Report and Accounts 2021

Section 172: Stakeholder engagement continued

There were four ECG meetings during 2021 with a range of topics discussed, including the common themes of pay, benefits,
IT and workplace services, and mental wellbeing. Presentations on the following topics were also given to the ECG before
they were discussed by the Board:
Meeting

February
2021

May
2021

Presentations and topics discussed

Outcome / impact

The new ways of working

Please see the new way of working section under principal decisions on page 101.

Admiral’s approach to ESG

The importance of the internal communications strategy in respect of the workon ESG factors was emphasised, as was the need to help the community and otherbusinesses. Please see the sustainability approach section under principal decisions
on page 104 for further information.

Sale of the Penguin Portals
businesses (as reported in
the 2020 Annual Report)

Colleague views of the announcement of the sale of the Penguin Portals businesses
were heard from the Confused.com ECG representative, noting that further clarity
was needed in respect of how profits from the sale would be distributed. This wasfollowed up by management after the meeting. This was raised as a specific topic
for discussion at the Board during the year, at which it was reconfirmed that the
majority of the sale proceeds would be returned to shareholders, with a proportion
being retained by the Group to develop other areas of the business.

UK motor insurance
strategy update

The ECG asked questions about the different aspects of the UK motor insurance
strategy, including the impact of autonomous driving and liability, the impact on the
garage network during the lockdowns, tiered products and the rationale given this had
not been a success historically, and the impact of the FCA’s market pricing reforms.

Technology strategy update

The ECG noted that colleagues had raised the fact that there was an increasing
reliance on personal mobile phones to provide two factor authentication in order toaccess their laptops. ECG members were reassured that there were ways of enabling
the two-factor authentication required, without impacting their phone storage.

Diversity and inclusion update

The ECG was updated on the diversity and inclusion strategy, as well as the activity of
the well-established network groups which promote gender, age, LGBTQ+, disability,
Black, Asian and Minority Ethnic and social mobility diversity (see pages 54 – 56).
The importance of data collection from colleagues was noted in order to trackprogress. ECG members challenged the communication of the strategy and updates,
which was noted as a future focus, and agreed to encourage their business areas tocomplete the diversity and inclusion questionnaire.

Admiral Loans strategy update

Having received an update on the Admiral Loans strategy, ECG members asked
questions about the car finance market, including current market dynamics, and thecultural impact of onboarding people remotely.

Pay and benefits update

Following previous updates on pay and benefits, a more comprehensive update wasprovided on the pay and benefits review.

Group strategy and embedding
purpose update

The ECG received a recap of the Group’s strategy and discussed the priorities for 2022,
which include embedding the Group’s purpose and protecting Admiral’s culture given
the transition to hybrid working, amongst other things. The ECG also discussed ways it
could help communicate.

Admiral’s impact on theenvironment

The ECG debated the impact Admiral’s operations had on the environment and theways in which employees could help reduce its carbon footprint.

September
2021

December
2021

The Board continues to believe that, whilst recognising that the mechanism will evolve over time, the operation of the ECG has
been and continues to be an effective means of engaging with the workforce, to help the Board understand the matters thatconcern the workforce and their specific interests, whilst having regard to these in the decisions that are made at Board level.
During the year, it was noted that the membership of the ECG had not been refreshed as a result of the Covid lockdowns.
The Board challenged this and recognised that there was an opportunity to introduce a staggered retirement by rotation
mechanism to ensure that there was an element of continuity of membership, whilst balancing the need for fresh membership.
The Board will ensure that the ECG continues to develop and embed as an effective, formal workforce advisory panel and that
regular interaction between the Board and the ECG is maintained.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

93

Our Business
Partners and Suppliers
Why they matter to us strategically and how they influence the operation of the business
Our partners and suppliers are
considered strategically important
to us either because (i) the supplieror partner is integral to achieving
future strategic goals, (ii) there areparticularly preferential rates orterms in place, or (iii) another factor
which makes the relationship hard to
replicate or replace.
Our strategic partners and suppliers
comprise a mix of financial partners,
reinsurance partners, IT hosting,

distribution and claims management
and claims services partners.
Therefore, it is crucial that the Group
fosters these relationships effectively
in order to mitigate the associatedrisks in the supply chain.

What matters to them and encourages them to maintain a relationship with Admiral
The matters of most importance to our partners and suppliers are:
• Strong ethical partnerships, which
we will continue to actively manage
in 2022.
• Receiving great service andengagement through our suppliersourcing, supplier management,

including payment practices which
has been of increasing focus to
us in 2021, and the governanceof managing risk and businessresilience which will always beimportant in respect of the way wedeliver our strategy.

See our materiality matrix on
page 49

How we engage to confirm what matters to our partners and suppliers
To ensure strong third-party
engagement, there are dedicatedprocesses around the Group to govern
end-to-end relationships. Key parties
have internal relationship managers
responsible for ongoing dialogue, forexample with co- and reinsurance
partners, and strategic partners.

To monitor and support the
governance of procurement, asoftware application is used toprovide tender management, contract
management, supplier managementand due diligence under a single
platform. This information is reported
to the Admiral risk management
committee monthly and helps inform
our engagement with our suppliers.

The Group’s dedicated Regulatory
Relationship teams maintain channelsof communication with the FCA and
PRA in the UK, and all our international
regulated intermediaries and insurers.

Board oversight, training and escalation
The Board receives updates on:• All proportional risk-sharing
agreements, including co-insurance
and reinsurance contracts.
• Matters relating to partnerships
and opportunities• Relationships with key partners andprocurement, including our payment
policies and practices.
• Regulatory, technological andconsumer trends.
• Modern slavery risks in the
supply chain.

The Board takes all updates into
account when considering the longterm consequences of its strategies
and business plan. The CFO provides
updates on the activities related to
the renewal of the Group’s reinsurance
and quota share contracts, including
maintaining the ongoing strategic
relationship with Munich Re.

94

Admiral Group plc Annual Report and Accounts 2021

Section 172: Stakeholder engagement continued

What value is created by us for them?
As part of the tender process, eachsupplier completes an extensive due
diligence questionnaire to ensure
they comply with Group standards.
Our procurement team also manages
contract renewal, including an
updated due diligence assessment
and commercial negotiation.

The selection of suppliers must
follow a documented evaluation
process, considering at a minimum
the tender submission, the business
requirements, the due diligence
carried out, commercial andcontractual terms.

Managing relationships with ourpartners and suppliers in this way
enables us to maintain businessresilience and therefore reduce risk,
ensures that there is a consistentprocess and that they are treatedfairly and paid promptly.

What are the risks and opportunities that could affect the relationships and, therefore, Admiral’s success?
Partner and supplier risk refers to thedegree of risk to the business arisingfrom the potential loss of the supplieror partner, the contract, the criticalityof the service, the size of the supply
market and the complexity to move or
switch suppliers. Each supplier is givena risk score based on these matterswhich is regularly reported to the risk
management committee.
Some of the highest risks in respectof partners and suppliers arise from IT
hosting. The loss or outage of cloudproviders could have a significant

impact on core operations and present
a business interruption risk. To mitigate
the impacts of supplier loss, Admiralengages with other IT hosting suppliers
who could potentially provide capacity
if required.
There are opportunities to improve
the way we manage our partner andsupplier relationship risks which we
intend to progress in 2022. Some ofthe opportunities include reviewing
our procurement framework
applicable to the Group, building
additional capabilities to monitor,

rate and improve ESG performanceof partners and suppliers, enhanced
monitoring for our 10–15 criticalsuppliers and enhanced supplier risk
controls to meet the FCA’s operational
resilience requirements, amongst
other things.

How we monitor the impact of our actions and the strength of our relationship• Successful renewal of risk-sharing
agreements and contracts.

• Feedback from strategic suppliers
and partners.

• Engagement with co-insurance
and reinsurance partners.

• Compliance and audit activities.
• Efficiency/savings and decreased riskin procurement activities.

• Supplier performance against
agreed service levels. If service levels
are outside an agreed tolerance,
fees are refunded from suppliers andthe relationship is reviewed.

There are opportunities to improve the way we manage our partnerand supplier relationship risks which we intend to progress in 2022.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information95

Our Business
Shareholders
Why they matter to us strategically and how they influence the operation of the business
Shareholder engagement fosters understanding of Admiral’s strategy and investment case. It allows us to explain thebusiness and strategic decisions and rationale, whilst providing opportunities for shareholders to provide feedback on thebusiness and priorities.

What matters to them and encourages them to maintain a relationship with Admiral
Our stakeholders deem that the key
areas of importance related to ourshareholders include:• The financial performance of thebusiness, including products andservices that are fit for purpose andprovide solid financial returns.
• Business strategy and viability oflong-term success.

The Group also recognises thegrowing importance of ESG factors ininvestment decision making. Admiral
has always focused on doing theright thing based on building longterm sustainable businesses for the
future. In 2021, we have taken further
action and improved communication
through enhanced disclosures andengaging with indices to improve index

ratings. We have also clarified oursustainability approach (see pages 46 –60), supported by a materiality matrix
and Group-wide people engagement(see pages 49 – 50). The Group has also
taken further action in our approach toclimate change and the environment(see pages 19, 52, 57, 60, 98 – 99, 107 –
113, and 114 – 115).

How we engage to confirm what matters to our shareholders
The Group engages regularly withshareholders through frequentand open dialogue and our Investor
Relations calendar consists of various
activities.
• Results announcements andpresentations• Annual Report• Roadshows (in person where
possible, and remotely)• Annual General Meeting• Conferences• Corporate Governance shareholder
meetings (with Chair and Senior
Independent Director)• Analyst and Investor phone calls• 1:1 meetings• Group meetings• On-site investor visits(where possible)• Employee General Meetings• Also see employee engagement
section on pages 89 and 90
in respect of employees who
participate in the share scheme

Board oversight, training and escalation
The Board receives regular updates on the activities of the Investor Relations team, as well as on meetings held between
Board members and/or management and investors. The Board also receives investor feedback (post roadshows/results/
conferences) and uses it to shape its approach to corporate governance, ensuring that any issues or concerns raised areconsidered and addressed. The Board also receives regular updates on the key elements of ESG.

What value is created by us for them?
• Clarity and insight into operations.
• Responsible for finding out anddeveloping best practice.

• Transparency, so that analysts andshareholders have confidence in thevalue of the stock / can price fairly.

• Assurance of management
intentions / strategy.
• Confidence that views will be heard
and considered.

96

Admiral Group plc Annual Report and Accounts 2021

Section 172: Stakeholder engagement continued

What are the risks and opportunities that could affect the relationship and, therefore, Admiral’s success?
Our principal risks and uncertainties
section outlines the risks andopportunities that could impact
our strategic objectives and affectshareholders views of the business.

No notable change to the principal
risks and uncertainties were identified
throughout 2021, and the principal
risks and uncertainties that could
impact Admiral’s relationship withshareholders have remained stable
over the same period.

To see how we link risks to our pillars ofstrategy, please turn to page 116.

How we monitor the impact of our actions and the strength of our relationship• Broker feedback• ESG indices• Analyst feedback• Investor meetings• Shareholder feedback• Roadshow feedback• Investor Relations material• Rating agency reports• Feedback from proxy advisory firms

Our key financial and non-financial
highlights are on page 61.

• AGM voting results

Details of how we engage with ESG
indices can be found on page 60.
Our website contains all Investor
Relations material and AGM
Voting Results.1

Our Society
Communities
Why they matter to us strategically and how they influence the operation of the business
Giving back to our communities is an
integral part of our company culture.
Our people play a key role in how weengage with our communities, and wework collectively to drive long-termchange both inside and outside of
the Group.

As a large employer across several
countries, we believe it is our
responsibility to provide employment
opportunities for those in the local
areas whilst training and developing
our people. We are committed topromoting and recognising diversity

both within Admiral, and in thecommunities in which we operate.
A culture of giving and a sense of
responsibility for the community isshared across the whole Group.

What matters to them and encourages them to maintain a relationship with Admiral
The material issues for ourcommunities generally relate tosupport and ongoing dialogue,
financial and resource-based
contributions, and consistency andintegrity relating to our promises.

1 www.admiralgroup.co.uk

The Admiral materiality matrix
represents our stakeholders’ views
and highlights the following as
the main areas of importance
related to our communities:• Employability, social mobility andeducational opportunities, which willcontinue to be of focus in 2022.
• Homelessness and housing, financial
inclusion, and sports, arts andculture which will continue to be
actively monitored during 2022

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

97

How we engage to confirm what matters to our communities
Our employees drive our community engagement as they are involved in nominating and choosing which initiatives wesupport. We engage in a number of ways, including:• Colleague volunteering• Partnerships with educational bodies• Charity initiatives• Sponsorship of various community
events• Partnerships with recruitment bodies• Fundraising• Funding projects through our
Community Chest programme• Funding projects through our
Ministry of Giving programme

Board oversight, training and escalation
The Board receives updates on the key community initiatives across the Group and provides direction on how we cancontinue to make a long-lasting, positive impact.

What value is created by us for them?
Admiral Covid Support Fund
The Admiral Covid Support Fund was
set up at the start of the pandemic in
2020 to help local community groups
that have suffered due to the Covid
pandemic. This could be due to theirfundraising activities being curbed
due to lockdown or the services they
provide coming under unprecedented
strain due to the pandemic. All typesof organisations have benefited fromdonations of personal protective
equipment, as well as funds. Over£50,000 worth of fruit that would
normally have been delivered to our
UK offices has been donated to localgroups, iPads have been provided to
local care homes so that residents cankeep in touch with their families, and amultitude of treats to National HealthService workers to say thank you for all
their amazing work.
Overall, Admiral has donated £6 million
through the Admiral Covid Support
Fund since the beginning of 2020.

This included donations totallingover £1.4 million to nearly 400 goodcauses nominated by our colleagues,£1 million donated to the UNICEF India
vaccination programme at a time when
India was struggling at the height ofthe pandemic, and over £1 million
allocated to the overseas businesses
to distribute to their local causes.

Local support
We recognise that there areorganisations that do great work andare very closely aligned to our Groupsustainability goal of ‘supportingorganisations that champion social
mobility and employability, support
educational opportunities, promotehealth and wellbeing for all, provide
help for the homeless and support sport,
art and culture on the community’.
Therefore, during 2021, we made‘super donations’ to support a small
number of local organisations thatwork in these areas.

Partnership with Jesus College
During 2021, we launched a three-year
partnership with the University of
Oxford’s Jesus College on their Welsh
access initiative. Our support will help
enable its Access and Outreach team
to develop new access activities,
enhance existing programmes andreach more academically giftedyoung people in the country, who
are currently under-represented at
Oxford and other leading universities
in the UK. This work will include
outreach partnerships with several
Welsh primary and secondary schools,
careers and interviews advice
workshops for secondary students
and bring additional support to theCollege’s prestigious Seren Summer
School programme and the Universityof Oxford’s Oxford Cymru consortium.

What are the risks and opportunities that could affect the relationship and, therefore, Admiral’s success?
Engaging with our communities provides us with opportunities to give back and actively contribute to society.

Admiral has donated £6 million under the Admiral Covid Support Fundsince the beginning of 2020.

98

Admiral Group plc Annual Report and Accounts 2021

Section 172: Stakeholder engagement continued

How we monitor the impact of our actions and the strength of our relationship• Feedback from charities,
recruitment and educational bodies

its presence on the ground in India todeliver lifesaving essentials in 24 states.

• Feedback from employeesWith Admiral’s help, UNICEF wasable to procure and install 15 oxygen
generation plants, deliver 7,764 oxygen
concentrators and 362 RT-PCR testingmachines to treatment facilities anddistribute 10.5 million items of PPE. The
donation also helped to strengthen cold
chain systems, benefitting 310 million
people.’• Community feedback• Dialogue with organisations• Feedback from the Welsh
Government
Feedback from UNICEF: ‘In March 2021,
India was confronted by a devastating
second wave of the pandemic that put
millions of people at risk and posed ahistoric challenge to the country.
Thanks to the support of generous donors
like Admiral, UNICEF was able to leverage

Dr Matthew Williams, Jesus College
Access Fellow: ‘We are incredibly gratefulto Admiral for their generous supportof our Welsh access programmes. About
seventy percent of the ten thousand

young people we work with annually
through our outreach and accessactivities come from Wales, and we arecommitted to inspiring, encouraging
and enabling academically-giftedyoung Welsh students, regardless ofbackground, to apply to Oxford and otherleading universities in the UK.’
He adds, ‘This new support will open thedoor for more young people across Wales
to explore the opportunities available
through a university education. We’re
excited to be working with Admiral ona range of innovative and informative
access programmes that will have ahugely positive impact on the school
pupils we work with.’

Our Society
Environment
Why it matters to us strategically and how it influences the operation of the business‘Help more people to look after their future. Always striving for better, together.’
At Admiral, we care deeply about ouremployees, our customers, and theimpact we make on the world.
Admiral is mindful that it is increasingly
important to demonstrate responsible
business behaviour with regards tothe environment, because all of our
stakeholders demand it, and because itis the right thing to do:• Our people want to know thatthey work for a company whichis playing its part in tackling theclimate emergency.
• Our customers want to know that
we are not only looking after theirproperty and possessions, but that
we’re looking after their future.

• Our shareholders and regulators wantto know that we are a company which
is robust to the challenges and open
to the opportunities that tackling theclimate emergency will present.
We aim to reduce our environmental
impact, including our carbon footprint,
and encourage responsible behaviour
in our people, customers andother stakeholders.

How we engage to increase awareness and to confirm what matters
Colleague-directed activities include:• Regular updates from the Green
Team, an internal working group.

• Internal promotion of Green Week
and Earth Day.

• Various recycling initiatives across
our offices.

• Engagement with colleagues
at employee forums and via
CEO updates.

• Quarterly meetings of our climate
steering group.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

99

Board oversight, training and escalation
The Board regularly receives updates
on climate and ESG-related topics, aswell as our Responsible Investment
Policy, and provides feedback andtopics for consideration. During theyear, a briefing session was also heldon the Task Force on Climate-Related

Financial Disclosures (TCFD) for
the Audit Committee and the Risk
Committee to provide clarity on therequirements and their respective
responsibilities. Their respective termsof reference were also updated toreflect this.

The Board also had oversight ofAdmiral’s sustainability approach.
Further details on this can befound on page 104.

What value is created by us for the environment?
We recognise that environmental disclosures are increasingly requested by investors, shareholders, customers and otherstakeholders. For 2021, Admiral has made disclosures consistent with the Taskforce on Climate related Disclosures (TCFDs)
and against the Streamlined Energy and Carbon Reporting Framework. (SECR).

What are the risks and opportunities that could affect Admiral’s impact on the environment and,
therefore, Admiral’s success?
The current focus is on climatechange, both the impact of a changing
climate on us, as well as our impact on
climate change.
The former is viewed through the lensof transition risks (risks arising from atransition to a low carbon economy),
physical risks (risks arising from achanging climate), and liability risks(risks arising from people or businesses
seeking compensation for losses
they may have suffered from climatechange), in the short, medium and longterm. More information is includedin the ‘strategy’ section of the TCFD
disclosure on pages 109 – 110.

While the current focus is on
carbon footprint, and plans for
footprint reduction, in the future,
there is likely to be an increasing
focus on biodiversity and otheraspects of environmental
degradation/regeneration.

How we monitor the impact of our actions
To monitor the impact of our actions we report energy and carbon emissions in line with SECR to make carbon reporting
more transparent and to aid the goal of achieving a carbon net zero target. Read more about SECR on page 114.
We also align our reporting with the TCFD’s published recommendations concerning governance, risk management, strategy,
metrics and targets. Read more on page 107.

We aim to reduce our environmental
impact, including our carbon
footprint, and encourage responsible
behaviour in our people, customers
and other stakeholders.

100

Admiral Group plc Annual Report and Accounts 2021

Section 172 Statement
The Board of Directors confirms that during the year under review, it has acted to promote the long-term
success of the Company for the benefit of shareholders, whilst having due regard to the matters set out insection 172(1)(a) to (f) of the Companies Act 2006, being:(a) the likely consequences of any decision in the long term.
(b) the interests of the Company’s employees.
(c) the need to foster the Company’s business relationships with suppliers, customers and others.
(d) the impact of the Company’s operations on the community and the environment.
(e) the desirability of the Company maintaining a reputation for high standards of business conduct.
(f) the need to act fairly between members of the Company

During 2021, the Board reviewed theGroup Stakeholder Map and reaffirmedthat of the six stakeholder groups,(customers, people, suppliers andpartners, shareholders, community, andthe environment), each continued to be
strategically important to the longterm success of the Group’s operations.
As part of the review, the Board
considered the current approach tocorporate governance and engagement
in relation to the interests of each of its
stakeholders.
In preparation for the review, discussions
were held with the internal relationshipowners within Admiral Group, on our key
information feeds, existing engagement
methods, feedback processes and theactivities and plans for the year.
A Board agenda planner sets out
the matters to be considered by the
Board during the year, and this was
subsequently reviewed and updated ateach Board meeting in 2021.
Board papers during the year wereaccompanied by a separate document
outlining which stakeholders could be
affected or impacted by the paper, alongwith an explanation of how stakeholderinterests had been considered prior to
the raising of the matter at the Board
meeting. The accompanying papers
also shared the likely consequence of
any Board decision on each stakeholder
group identified, and how the impact on
stakeholders could be monitored.

S.172 factor

Relevant disclosure

Page

Consequences of decisions in
the long term

Principal decisions

101 – 106

Board appointments

155 and 156

Board activity during the year

144

Different stakeholder sections

87 – 100

Principal decisions

101 – 106

Employee stakeholder section
including employment engagement,
communication89 – 92

Employee Consultation Group91 – 92

Non Financial Information Statement

86

Diversity

54 – 56 and
159 – 161

The need to foster business
relationships with suppliers,
customers and others

Principal decisions

101 – 106

Stakeholder sections

87 – 100

The impact of the Company’s
operations on the communityand environment

Principal decisions

101 – 106

Stakeholder sections

87 – 100

TCFD disclosures

107 – 113

Maintaining a reputation
for high standards ofbusiness conduct

Principal decisions

101 – 106

Stakeholder sections

87 – 100

Culture145 – 147

Group Minimum Standards

176

Diversity & inclusion

54 – 56 and
159 – 161

Health & safety

55 and 86

Conduct risk

122

Whistleblowing

148

CEO statement27

Principal decisions

101 – 106

In the interests of employees

Fairness between members

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Principal/non-routine/significant decisions in 2021
New ways of working/smart working
As reported in our 2020 Annual Report, the Covid pandemic forced many companies toquickly change their ways of working as a result of the onset of national lockdowns acrossthe world.
Following an initial phase of emergency measures to ensurethat the Group could continue to serve its customers
well and ensure the health and safety of our people, thesenior leadership team initiated the next phase of thesmart working project to consider the Group’s longer-term
approach to hybrid or smart working.
We expect that smart working will have a big impact on ourbusiness, our people and the evolution of our culture. How
we respond and act on this continuing transformation will
influence our long-term future success. This is a positivechange that impacts all our Group businesses and is why wecontinue to take a Group-wide and collective approach tounderstand how we all want to work in the future with all
our stakeholders in mind.

March 2020
Emergency response to lockdowns initiatedDifferent workstreams set up
including Culture ProjectMonthly meetings on proposed recommendations

Regular people surveys to inform preferences

International businesses collectively propose initial
draft principles and guidance

January 2021
Draft principles provided to Group Board

The second phase of the smart working project took thelearnings from the ways of working we had adopted during
the onset of the Covid pandemic in 2020 and created a setof Group-wide principles and implementation guidelines, tohelp ensure a level of consistency and to protect Admiral’sunique culture. Alongside the different workstreams, which
considered matters such as technology, communications
and office facilities, a culture project was set up to lookat how we could prevent culture erosion in the new
hybrid working environment. The two projects eventually
brought their learnings together to arrive at the final set ofprinciples to proceed with and implement.

UK ECG & International ECG consulted
on smart working
All entities empowered to communicate andimplement using the principles

Group Board Update

January 2022
Monitor implementation

Phase 1

Phase 2Phase 3101

102

Admiral Group plc Annual Report and Accounts 2021

Principal/non-routine/significant decisions in 2021 continued

The views of our colleagues were sought regularly throughout the initial phases of the projects through focus groups,
one-to-one interviews and surveys, including the Great Place To Work and Best Companies external surveys. The Employee
Consultation Group was also consulted on the proposals and the feedback discussed related to the importance of:Feedback / discussion point

Outcome / impact

Protecting the family feel of Admiral’s culture

The culture project looked into the protection of team time, focus on
customers, the fun environment, amongst other things, which fed into
the implementation principles. The cultural impact will also be monitored
during the next phase of the project in 2022.

Teams being able to share a common space

Although individual allocated desks have been removed, neighbourhoods
for teams have been maintained and a test-and-learn approach has been
adopted by the project.

Flexibility of location of work and the majority preference
for hybrid working in the future

One of the decisions agreed across the Group was that the majority ofour people should spend at least 40% of their time in the office for teamtime, meetings and events, once local Covid restrictions allow.
Communications were made to colleagues to confirm that the
expectation was that people would continue to be based in their existing
countries, unless on an arranged secondment.

The needs of new colleagues

The decision that colleagues should spend at least 40% of their timeworking from the office will help to continue to provide the opportunity
to immerse new colleagues in the culture when they start at Admiral.

Focus on outcomes and productivity, rather than hours
worked or presenceManagement noted that this switch in focus would require a culturalshift that would evolve over time but would be encouraged through theimplementation of the principles, of which this was one.

The Board received two updates on the smart working project during the year which included a discussion of the draft
principles and guidelines, together with an update on Admiral’s culture.
The third phase of the project will commence in 2022 and will involve monitoring the implementation of the new way ofworking across the Group’s entities. A scorecard of key performance indicators has been developed to ensure that indicatorssuch as satisfaction, engagement, productivity and customer satisfaction are closely monitored and discussed each quarterby a new forum and steering committee. The Board will continue to receive updates during 2022.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

103

Changes to offices occupied in South Wales
As part of the move to smart working and following feedback from our people that the
majority wanted to spend less time working from the office and more time working from
home, we launched a review of our future use of our office space.
The aim being to ensure that we are using our office space
effectively and that we can continue to work in a moresustainable way across various sites in line with our purpose‘always striving for better, together’Decisions were reached during 2021 to:• Reduce the amount of space that we occupy in Newportby 50% from January 2022, with an eventual exit of thesite completely by 2023
• Exit one of our sites in Cardiff during 2022
• Exit one of our sites in Swansea
The management team considered how this would affect
Admiral’s stakeholders, including our people based in thoselocations, the impact that a more permanent move to remote
working could have on our customers and the service weprovide them (which had been considered as part of thewider hybrid working proposal), and our shareholders. Senior
management balanced the following risks and opportunities:

On the basis that the majority of our people would be
expected to spend at least 40% of their working time inthe office in the future, the senior management teamconcluded that colleagues located in the offices to be exited
would be supported through the transition to being basedat an alternative office location to limit any impact so far
as possible. Having successfully moved to remote working
during the onset of the Covid lockdowns in 2020, the teamconcluded that there would be a low risk of there being a
detrimental impact on customer service.
The Board reviewed management’s proposals during the year,
noting that the proposed office closures were in the bestinterests of the Company and its stakeholders in the longterm and that the impact would be monitored through theengagement mechanisms highlighted in pages 89 – 92.

Risks

Opportunities• Reputational consequences of closing Admiral office space• Become more sustainable in the way Admiral operates• Employee retention in respect of those located at officesites closing• Reduce associated costs through managing fewer office sites andredeploy those costs to other operational areas• Customer service• Fulfil the preferences of the majority of colleagues to split their time
between the office and their homes

104

Admiral Group plc Annual Report and Accounts 2021

Principal/non-routine/significant decisions in 2021 continued

Sustainability approach
Building a sustainable business that drives positive impacts for our stakeholders is at thecore of who we are, and what we do.
Our approach to sustainability acts as a framework andreference point through which our global businesses
implement appropriate and responsible practices.
Admiral’s Board and management team have always beencommitted to building a responsible, sustainable business,and to safeguarding our long-term commitments toour customers, employees, shareholders, communities,
partners, and the environment.
A Sustainability Working Group (SWG) was established in2020 to provide additional governance support aroundmatters related to Environmental, Social and Governance(ESG) issues. The working group consisted primarily ofmembers of departments including Investments, Risk,
Facilities, and Investor Relations. During 2021, the membersof this group expanded to include senior representatives
from People Services, Product teams and key people fromthe international businesses.
The SWG is responsible for engaging with other departments
across the business, and members are present at bi-monthly
meetings hosted by Group Chief Executive Officer, Milena
Mondini. Milena is the appointed Sustainability Representativeand provides regular updates to the Group Board.
When the SWG was formalised the focus of the group wasto consider climate-change related requirements, sharingof best practice and as a forum to update the wider businesson related initiatives. As 2020 progressed into 2021 the SWG
and the Executive team became increasingly aware of thegrowing need to integrate sustainability commitments, whilst
several internal and external stakeholders expressed interestin learning more about the Group’s sustainability approach.
In 2021, the Board was briefed on the increasing focus on ESG
metrics and topics raised relating to sustainability. Following
which the scope of the SWG was expanded to set a Groupwide sustainability approach, that supported the Purpose
Project, which is detailed on page 105. This approach wastaken to align and prioritise ESG targets and future ambitions
across the Group, which in turn could be allocated external
key performance indicators for enhanced disclosure.
Throughout 2021, the Sustainability Working Group was
responsible for:
• Reviewing the sustainability landscape and guiding theGroup Sustainability Approach• Monitoring developing sustainability trends to determine
how best to manage them
• Reviewing other organisations’ sustainability approaches(through competitor benchmarking exercises andevaluation of ESG indices performance)• Supporting the subsidiary entities with their sustainability
focus and reporting• Supporting Group committees with their sustainability
focus and reporting• Supporting and overseeing the Climate Steering Group(more on this can be found on page 108)
• Selecting Sustainability topics and categorising them into
‘commitments’ and ‘ambitions’As with any Group-wide approach, there were challenges
in setting the priorities of the SWG and deciding the exact
metrics to use and disclose. To incorporate the view ofvarious stakeholders, the SWG used the results of the
purpose project survey and materiality matrix, which isoutlined on page 49, to reflect the importance and impact
of existing business initiatives relating to sustainability.
Initially the long-term targets, short-term milestones andaction plans were compiled and presented to the SWG
by the champion of each area, for group discussion. The
inclusive and open debate at the working group level helped
to facilitate priorities and supported the ability to makerecommendations on which initiatives were priorities, andwhich projects were ambitions to track for the future. Oncethe priorities were agreed upon, and discussed with Milena
and the Executive team, the sustainability approach waspresented to Group Board.
When deciding upon the final commitments, themanagement team and the Board had to decide what toprioritise now versus later, without compromising thedirection of travel already set in motion. The Board alsoneeded to reach a comfort level that by creating a Groupwide approach, and sharing the approach externally, thatthe right long-term metrics and targets had been identified.
As we look to 2022, the scope of the SWG is likely to expand
further and the SWG will play a significant part in how boththe Group’s purpose and sustainability approach is embedded.
For example, ongoing discussions are in place with People
Service departments and Product teams to align future
ambitions with sustainability requirements identified. Admiral
has also recruited a Head of Corporate Communications
and part of their remit is to support effective external
communication of progress against commitments effective
sharing of emerging best practice around the Group.
We believe our approach forms a key part of the Group’s
long-term commercial success, and we are committed tobuilding a sustainable business for the future that considers
all stakeholders.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

105

Group Purpose Project
Following a presentation to the Admiral Group Board in early 2021, an internal purpose
project team sought to develop a Group purpose statement that would formalise existingknowledge and demonstrate insight into the values and culture that is explicitly part ofAdmiral’s DNA.
It was clear from the outset and agreed at the Board, that
this should be done via extensive listening to colleagues
and other stakeholders.
At the initial project kick-off, 96 of Admiral Group’s
management team gathered to share ideas, with the goal toidentify themes that would describe what Admiral’s purpose
might be.
The project team then digested the findings and created ten
purpose statements to be tested for usability and popularity.
Between March and July, ten focus groups were held across all
Admiral Group geographies, with more than 75 participants
attending and representing all functions and levels.
At the focus groups, each statement was given a scorebased on pre-agreed criteria chosen from research relating
to corporate purpose. Participants were asked if eachstatement would be:
1.	Understandable – clear and easily communicated2.	Inspiring – resonate with and inspires internal stakeholders
3.	Inclusive – apply to all geographies and businesses, current
and in the future
4.	Unique – show how Admiral is different (i.e., not be genericto the industry and sector)
5.	Social value – show commitment beyond just financial
performance
Once the statements had been rated, and preferences ranked,
the project team began a process of iterating the statements
and themes at small workshops, supported by key stakeholder
feedback and in-depth interviews. In total, a further eightworkshops and 12 interviews were hosted at this stage,
involving over 60 managers and executives, in addition to NonExecutive Directors from both Admiral and subsidiary boards.
Ahead of such a time-consuming and lengthy process, thepotential challenges of creating a new statement to fit
all businesses across the Group was acknowledged. A risk
register included concerns such as:• Encompassing Admiral’s unique culture within a single
sentence could miss potentially important ideas• Without the right process, a statement might be createdthat felt unfamiliar or inauthentic to employees, which inturn could reduce buy-in; and• Educating stakeholders about the statement, its meaning,
and ways to use it in decision-making would take timeand resource
These concerns were addressed as much as possible within
the process of creating the statement. Additional campaigns
to embed the statement within the organisation were
implemented after the statement was approved by the Board.

By the end of 2021, the revised Purpose statement had been
adopted all over the Group. It is widely considered that the
project has added clarity to our communications, and thatthe rollout has also contributed to greater motivation andalignment in a difficult pandemic period.
Examples of the rollout are detailed below:
Top 10: The annual ‘Top 10 departments contest’ asks all
departments of Admiral Group’s entities to reflect on aquestion, and address in a presentation. This year’s questionwas ‘How does your department represent and demonstrate
Admiral Group’s new purpose statement?’
Highlights included presentations on long-term employee
sustainability within the call centres, energy and innovation
within new products, and adapting our physical officeenvironments for the future.
Learning and Development: Our Learning and Development
team developed an iLearn course to introduce colleagues
to the background and meaning behind the purpose
statement. The course also includes case studies about
taking purpose-led actions at work.
Reward and Talent: Our department for Reward and Talentmade purpose central to the Group’s Reward policy in 2021.
The new reward manifesto for 2022 states ‘Focus on the
future and ‘togetherness’ will guide the structure of our
Reward practices.’
Marketing and Communications: Our Marketing Studiocreated purpose imagery for Facilities, Communications, andother departments to spread the word. Communications
wrote and published stories within their platforms topromote Top 10, the Learning and Development course, andMilena’s monthly employee videos.
Facilities: Facilities made plans to integrate purpose whilerevamping the office for smart working. Purpose posters
and ticker tape were installed around the UK offices, and thefirst purpose wall mural was painted within Tŷ Admiral.
Investor Relations: The purpose-led sustainability approach
driven by Investor Relations sets commitments andprioritises ambitions relating to sustainability. The Purpose
statement was also announced to our shareholders in the
full-year 2020 and half-year 2021 results presentations.
As 2022 unfolds, the purpose project will also evolve toprovide purpose-led education, training, and decisionmaking tools among stakeholder groups. There will be focus
on providing decision-making incentives for managementand decision-making tools for other employees.

106Admiral Group plc Annual Report and Accounts 2021

Principal/non-routine/significant decisions in 2021 continued

Restricting the in-person attendance of shareholders at the 2021 Annual General Meeting
Due to the ongoing Covid pandemic and government
restrictions on public gatherings of more than two people
and non-essential travel, Admiral’s Annual General Meeting(AGM) on 30 April 2021 was held as a closed meeting,with only one Director-shareholder and two employeeshareholders attending physically to ensure that meeting
was quorate. All other Directors attended virtually.
Consideration was given as to how this would impact
shareholders exercising their right to vote on the business ofthe meeting. Shareholders were, therefore, encouraged to:• Vote on each of the resolutions set out in the Notice byappointing the Chair of the meeting as their proxy to act
on their behalf.

• Submit questions to the Board in advance of the AGM on
the basis that a written response would be provided.
• Join the meeting via the audio-only live stream, which also
provided the facility to submit questions relating to the
proposed AGM resolutions during the meeting.
This approach aligned with other AGMs held during thistime and the learnings will inform how we approach future
AGMs which need to be held in this way due to events such as
the pandemic.

Company overview

Strategic report

Corporate governance

Financial statements

107

Additional information

Task Force on Climate-related Financial Disclosures (TCFD)

11

Admiral has made disclosu
resconsistent with all 11 of the
TCFD’s recommendations

Admiral follows
the Institutional
Investors Group on
Climate Change (IIGCC)Net Zero Framework

In 2019, Admiral began to report in line with the Task Force on Climate-related
Financial Disclosures (TCFD), in order to provide better transparency around the ways
in which climate change will impact the Group now and in the future. Since then, theGroup has increased its disclosure to further align reporting with the TCFD’s publishedrecommendations concerning governance, risk management, strategy, metrics andtargets. Alongside increased reporting, Admiral Group has continued to address thechallenges of climate change in a number of other ways, including completing thefull Carbon Disclosure Project (CDP) disclosure, producing a Sustainable AccountingStandards Board report, and continuing its membership of the Institutional Investors
Group on Climate Change.
On the following pages Admiral has made disclosures consistent with all 11 of the
TCFD’s recommendations and recommended disclosures. Further discussion andinformation are included in the relevant sections of the report and are signposted
as such.

Compliance with LR 9.8.6R
Admiral Group plc has complied with the requirements of LR 9.8.6R by
including climate-related financial disclosures consistent with the TCFD
recommendations and recommended disclosures.
Disclosures can be found on the following pages:

In 2022 Admiral aims tocomplete verification of its
begin
scope 3 emissions, and then
gets,
Tar
sed
-Ba
nce
Scie
set
to
g
workinup’s
Grothewhich will complement
overall net zero ambitions.

Pillar

Disclosure

Page

Governancea. Describe the Board’s oversight of climate-related risks
and opportunities

108b. Describe management’s role in assessing and managing
climate-related risks and opportunities
Strategya. Describe the climate-related risks and opportunities theorganization has identified over the short, medium, andlong term

109 –
111

b. Describe the impact of climate-related risks andopportunities on the organization’s businesses, strategy,
and financial planningc. Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
Risk
a. Describe the organisation’s processes for identifying andmanagement
assessing climate-related risks

111 –
112

b. Describe the organisation’s processes for managing
climate-related risksc. Describe how processes for identifying, assessing, andmanaging climate-related risks are integrated into theorganisation’s overall risk management
Metrics
and targets

a. Disclose the metrics used by the organisation to assessclimate-related risks and opportunities in line with its
strategy and risk management processb. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
greenhouse gas (GHG) emissions and the related risksc. Describe the targets used by the organization to manage
climate-related risks and opportunities and performanceagainst targets

Further relevant disclosures are signposted within the TCFD disclosure.

112 –
113

108

Admiral Group plc Annual Report and Accounts 2021

Task Force on Climate-related Financial Disclosures (TCFD) continued

Governance
Board and Board committees
The Admiral Group Board, which is
responsible for promoting the longterm, sustainable success of the Group,
has ultimate oversight of climatechange-related risks and opportunities.
It is responsible for understanding theGroup’s relationship to climate change– its impact on the environment, as wellas the impact of a changing climate
on the Group – and agreeing how thisis considered in the context of theGroup’s strategy, risk management andbusiness outcomes. Climate changerisks and disclosures are reviewed anddiscussed at Group Board and at several
Group Board Committees, including
the Group Risk Committee (GRC) andInvestment Committee.
Whilst the Group Board maintains
ultimate oversight, the GRC has
primary oversight responsibility forclimate change risk, as it has delegatedauthority from the Group Board foroverseeing risk management activities.
It advises the Group Board on Admiral’s
principal risks and uncertainties,
as well as on emerging risks, andreviews the Group’s management ofthese risks. Climate change risks areembedded within the business as
usual risk management approach andare reported at least quarterly within
the Consolidated Risk Report (CRR).
Climate change considerations are also
reported within the annual Own Risk andSolvency Assessment (ORSA) Report,
which is reviewed by the GRC prior to
Board approval.

Management and management
committees
Senior management from across theGroup have various responsibilities
relating to climate change-related issues,
and most sit on appropriate forum, suchas the Sustainability working group (SWG)
and the Climate steering group.
The Group CEO is the appointed
sustainability representative for theGroup, which includes climate change
risk within its remit. The Sustainability
working group reports directly to theGroup CEO.

Working
GroupsManagement
Meetings

Board
Committees

BoardsSustainability
working group

Investmentcommittee

Group Risk
Committee

Admiral Group
Board

Climatesteering group

Executive
committee

Group Audit
Committee

Figure 1 Climate-related governance
The Group CRO has designated Senior
Managers and Certification Regime
responsibilities in relation to climatechange and is a member of the Climate
steering group.
The Group CFO is responsible forinvestments, which includes responsible
investment and climate change
considerations. The CFO is a member of
the Climate steering group.
The Group CEO, Group CRO and Group
CFO, along with the EUI CEO, comprise an
executive committee, which is regularly
appraised of, and provides guidanceon, climate-related initiatives acrossthe three focus areas of operations andsupply chain, investments, and products
and services.
The SWG was established in 2020,
reporting directly to the Group CEO, andprovides updates to the Group Board.
The SWG provides oversight and challenge
to the Climate steering group, which wasestablished in 2021 to provide guidanceon the overall programme of climaterelated work, and to ensure a joined-up
approach across all Group functions andGroup entities. James Armstrong, GroupCRO and SMF accountable for climatechange, and Geraint Jones, Group CFO,
sit on the Climate steering group, whichis also attended by representatives
from businesses around the Group, andby representatives from Risk, Facilities,
Investments, Procurement and Investor
Relations.
On a day-to-day basis the Group
Risk team is responsible for theassessment of climate-related risks andopportunities. The output of this work
is included in the CRR, the ORSA report,
and other regular and ad hoc reports

and papers that are shared with theappropriate committees. Group Risk also
coordinates climate-related work acrossthe Group.
The focus in 2021 has been on
embedding climate change
considerations at a Group level, though
updates have been provided to entity
Boards and other fora (e.g. the CRO
Forum). For example, the Board andGroup Risk Committee received two
formal updates on climate change,whilst the Investment Committee
had four updates and the Group Audit
Committee had one update as wellas committees receiving multiple
additional updates as part of otherpresentations or discussions on ESG
topics. In future entity Boards andexecutive management teams will takemore direct responsibility for managing
climate-related risks and exploiting
any opportunities.

Further information
Read more about
Sustainability working
group on page 52
Read more about
Board leadership andcompany purpose on
pages 142 – 152
Read more about
The Group Risk Committee
on page 171

Company overview

Strategic report

Strategy
In 2020 Admiral articulated its purpose
as being to ‘help more people look after
their future. Always striving for better,
together.’ By setting ambitious, longterm net zero targets for all emissions
across the value chain, discussed further
in the ‘metrics and targets’ pillar below,
Admiral is seeking to minimise its
directly controlled emissions, and to
reduce emissions over which it may havesome influence, if not direct control.
This consideration of the Company’s
impact on the environments is integral
to Admiral’s purpose.
Climate risk is typically disaggregatedinto transition, physical and liability
risks. Transition risks arise from amove towards a low carbon economy,
while physical risks arise from climaticchanges. They are inversely correlated:
physical risks can be mitigated byan aggressive shift to a low carbon
economy, increasing transition risk;
aiming for a low level of transition risk
will increase physical risk. Liability risks
come from people or businesses seeking
compensation for losses they may havesuffered from the physical or transition
risks outlined above.
Climate change is treated as a driver ofrisk, not a risk in and of itself. While thereis the possibility that climate change
will introduce new types of risk to theGroup, not currently captured within therisk universe, the working hypothesis isthat it will primarily impact the Group’s
existing principal risks and uncertainties.
When considering the impacts fromclimate change, Admiral recognises that
there are two components: its impact
on the environment, most clearly via
greenhouse gas emissions, but also via

Corporate governance

Financial statements

waste production and water usage; andthe impact of a changing climate on theGroup, on its revenues, costs and via
other non-financial risks.
Admiral has defined the following time
horizons for climate-related risks andopportunities: short (1–3 years); medium(3–5 years); and long term (5+ years).
The short- and medium-term time
horizons coincide with the businessplanning horizon. Both transition risks
and physical risks are beginning tocrystallise; however, the worst effects
from changing weather and climatic
patterns may materialise in the longterm if a smooth transition to a low
carbon economy is not achieved. Liability
risks are highly uncertain, in scope and inoutcome – the first cases are currently
being brought against oil, gas andenergy companies – therefore, timing isless certain.
Climate-related efforts are aligned
to three focus areas – operations
and supply chain, investments, andproducts and services – each of which
are potentially exposed to the threecomponents of climate change risk. Thisis because climate-related risks may
impact all of Admiral’s business lines,
operations and investments, and may
also impact reinsurance arrangements.
While there are risks from delayed
action, there are also opportunities
from seriously considering thechallenges, including the potential toaccelerate the Group’s transformation,
to build resilience, to drive innovationin core insurance products, and to
gain competitive advantage in newand existing markets. Being a ‘green’
company could help attract andretain talent.

Additional information109

Net zero
Admiral follows the Oxford
Principles for Net Zero Aligned
Carbon Offsetting (the ‘Oxford
Principles’) definition of net
zero, whereby net zero means
substantially reducing emissions
and balancing any residual
emissions with removals on
an ongoing basis. The four
principles are:
1. Cut emissions, use high quality
offsets, and regularly revise
offsetting strategy as bestpractice evolves
2. Shift to carbon removal
offsetting
3. Shift to long-lived storage
4. Support the development of
net zero aligned offsetting

Operations and supply chain
Admiral is a global financial services
provider operating in the UK, Italy,
Spain, France and the US, and has offices
in Canada and India. These operations
are exposed to physical and transition
risks. Climate change may increase
the frequency and severity of weather
events, as well as causing longer-termchanges in weather patterns, which
could directly impact employees,
offices, infrastructure and the broader
operations. Admiral may also be exposed
to increased capital and operating
expenditures, due to legal or regulatory
requirements designed to reducegreenhouse gas emissions, or due toincreasing climate-related expectations
from shareholders, customers, people orother stakeholders.

Climate-related efforts are aligned to three focus areas – operations
and supply chain, investments, and products and services – each ofwhich are potentially exposed to the three components of climatechange risk.

110Admiral Group plc Annual Report and Accounts 2021

Task Force on Climate-related Financial Disclosures (TCFD) continued

Admiral has taken steps over a numberof years to reduce its environmental
impact, including initiatives related
to energy, water, paper and waste.
Consequently, the verified operational
carbon footprint is low, and is offset via
the purchase of Gold Standard carbon
credits. To further mitigate the risk
to operations, Admiral is investigating
initiatives to further reduce emissions,is continuing to invest in the officeestate and is working with its landlordswith the ambition to be net zero acrossoperational emissions by 2030. Further
detail on the transition plan is given in
the ‘metrics and targets’ pillar.
Admiral’s supply chain partners will also,
to a greater or lesser extent, be exposedto the same risks from climate change
as the Group is. Admiral is reviewing andupdating its procurement practices andis working with its supply chain partners
to determine how well positioned they
are likely to be.

Carbon removal offsetting
According to the Oxford Principles‘most offsets available today areemission reductions, which arenecessary but not sufficient toachieve net zero in the long run.
Carbon removals scrub carbon
directly from the atmosphere.’
However, consideration must still
be given to how carbon is stored,
and for how long.
Over several years Admiral has
pursued steps to reduce its
operational emissions, for example
through efficiency improvements,
by purchasing electricity in the
UK from 100% renewable sources(since 2015), and by installing
solar panels on the Cardiff office.
Since 2019 Admiral has offset its
remaining operational emissions(scope 1, 2 and partial scope 3)
via the purchase of Gold Standard
carbon offsets. In addition, Admiralsupports high-quality forestation
projects which provide carbon
sequestration, in Wales andabroad, via charities Stump Up forTrees and Size of Wales.

Investments

Products and services

Climate change may impact the Group’s
investment portfolio via a numberof mechanisms. Some of Admiral’s
investments will be exposed to physicalrisks, as changing climatic conditions
impact businesses, disrupt supply
chains and cause assets to lose value
prematurely. Other investments will
be exposed to transition risks, as themove to a low carbon future causes
products, services and entire businessmodels to become less attractive or,indeed, obsolete. Some investments
may also be exposed to liability risks.
Effects may be company-specific,
sector-specific, or may have an impact
on the broader economy and macro
environment, for example via reduced
economic growth, higher unemployment
or changes in inflation. While climatechange poses a risk to the Group’s
investments, the transition to a low
carbon economy should also present
investment opportunities – Admiral
has already invested in renewableenergy infrastructure, green bonds, andother corporate bonds with credible
transition plans.

The effects of climate change will be
felt across all lines of business, by all
products and services, and will play apart in deciding what future business
opportunities to pursue. The effects will
require a response across the value chain,from pricing to underwriting, and fromclaims management to product design.

To mitigate these risks, ESG
considerations have been embedded
into the investment approach, andAdmiral is following the Institutional
Investors Group on Climate Change(IIGCC) Net Zero Framework to help
guide the decarbonisation of theportfolio. Admiral is also increasing its
investment in climate solutions andensuring that the portfolio invests inmore Paris-aligned firms over time,
where alignment is defined as having acredible plan to align emissions with a
2°C pathway, for example via ScienceBased Targets. Whilst sector limits
and divestment are not key methodsof portfolio alignment, there is no
investment in companies generating
more than 10% of their revenues fromcoal or tar sands, and reinvestment inenergy and mining assets must be Parisaligned or subject to engagement or
stewardship actions.

The most obvious impact from climatechange will be the physical risk to thehousehold lines of business. Climatechange is causing sea levels to rise and isalso causing more frequent and heavier
rainfall, increasing the risk of flooding.
Changes in weather patterns may also
increase the incidence and severity ofstorm and freeze events, and hailstorms.
Together these indicate that an increasein the volume and value of householdclaims is likely.
Admiral is also exposed to transition risk,
most clearly via the motor insurancebooks. Any move to reduce aggregate
greenhouse gas emissions could see a
concerted move away from traditionalmodels of transport reliant on private
petrol and diesel vehicles, to a model ofintegrated and active transport, reliant onelectric and alternatively fuelled vehicles,
both privately owned and shared, andpublic transport. Indeed, sales of new
petrol and diesel vehicles will be bannedin the UK from 2030. The loans businessmay also be affected in the longer term
as reducing demand for petrol and diesel
vehicles may see residual values fall, a risk
factor to which Admiral is exposed via
personal contract purchase loans.
Many initiatives are ongoing to addressthese challenges, seeking to minimise
the downside risk while maximising theupside potential. For example, time andresource has been invested into Admiral’s
electric vehicle proposition, ensuringthat the product meets customer needs,
that pricing is competitive, and thatclaims can be handled effectively andefficiently. Consequently, the numberof electric vehicles on cover is growing
strongly, times top for EVs (a measure of
how competitive pricing is) is positive,
and loss ratios for electric vehicles havenormalised to levels exhibited by petroland diesel vehicles.

Company overview

Strategic report

Corporate governance

Financial statements

The three high-level scenarios
investigated were: (i) Early Action(EA), where the transition to a netzero economy starts in 2021 andglobal warming is limited to 1.8°C by
2050; (ii) Late Action (LA), where theimplementation of policy to drive thetransition is delayed until 2031 andis then more sudden and disorderly,
resulting in material short-term
macroeconomic disruption, but global
warming is still limited to 1.8°C by
2050; and (iii) No Additional Action(NAA), where global temperaturelevels continue to increase, reaching
3.3°C above pre-industrial levels.
For each of the three scenarios(EA, LA, NAA) the pathway offour categories of variables –macroeconomic, financial, physicaland transitional – were employed forthe modelling of assets and liabilities

out to 2050, making use of fixedbalance sheets outside of the businessplanning horizon.
The scenarios performed highlightthe developing nature of climate
scenario modelling and give comfort
that the Group’s business model andstrategy should remain resilient topotential climate-related impacts.
The conclusions of scenario analysis
are that climate change presents astrategic risk to Admiral over the longterm and may require management
and mitigation in the short andmedium term. The risks presented bya transition to a low-carbon economy
are not currently substantial, thougha disorderly transition may impact
the Group’s motor and household
insurance businesses, as well as
increasing the volatility of asset
returns. Physical risks may have thegreatest potential impact on theGroup’s household insurance businessin the long term.
The scenario modelling results
are highly reliant on a range ofassumptions, some of which areconsidered very unlikely to materialise.
Management and mitigating actions(e.g., annual repricing of insurance
policies, greater or different useof reinsurance, changes to asset
allocation in the investment portfolio)
are also not considered. The output of
this scenario analysis has been usedin discussions about future strategic
direction, including the relative
attractiveness of different products
and markets.

Further information
Read more about
Long-term success and our
purpose-led approach on
pages 102 – 106
Read more about
Our environment on
pages19, 53, 57 – 58, 60, 98 –99, 107 and 114

111

Risk management

Scenario testing
While qualitative assessments of
the impact from climate change areuseful, it is also important to quantify
the impact where possible. Stressand scenario testing is conducted
as part of the annual Own Risk andSolvency Assessment (ORSA) process
to understand the robustness of theGroup’s business model and strategy
to the impact of various risks. Admiral
is in the initial stages of implementing
climate scenario analysis and so,in addition to the standard ORSA
scenarios, three exploratory climatechange scenarios were performed thisyear, based on guidance from EIOPA
and the PRA, and linked to the Bankof England’s 2021 Climate Biennial
Exploratory Scenario (CBES).

Additional information

Emerging Risks are identified, assessed
and managed via an internally developed
framework, integrated into the ERMF,
which evaluates the potential impact
to Admiral via existing principal risks
and uncertainties or via new risks. Thismethodology has been extended, utilisingexternal support, to individually assess thepotential impact of climate-related risk
drivers – transition, physical and liability
risks – across three distinct timeframes(1–3 years, 3–5 years, and 5+ years).

Identification
There is no one definitive source
for climate change risks: different
geographical regions, different
industries, and different companies
will have differing expectations of the
impacts that they will face in the future.
Therefore, Admiral Group’s identificationof the way that climate change risks may
impact the business, and any resulting
opportunities, follows a multi-stage
process which attempts to incorporate
internal viewpoints and forecasts (e.g.,
from departmental expertise, insightfrom working groups, committees, andboards) with those from external sources,
both insurance-specific and more broadly.
The assessment is performed at thelevel of transition, physical and liability
risks; however, microeconomic andmacroeconomic transmissions channels– the causal chains linking climate risk
drivers to the financial risks faced (as per
the Bank for International Settlements)– specifically applicable to each businessline are also considered. This allows thepotential impact from climate changeon all current and potential futurelines of business, on operations andinvestments, as well as opportunities,
to be identified. Existing and emerging
regulatory requirements related toclimate change are considered.

Assessment
Read more about Strategic
progress on pages 34 – 35
Read more about
Our strategy in action on
pages 35 – 44
Read more about
Responsible investment on
pages 57

Given the highly uncertain nature ofclimate change risks – the transmission
mechanism of the risks, the magnitudeof their impact, the certainty of theirimpact, the effect of their impact, andthe timing of that impact – they do not sit
naturally in standard risk measurement
and management processes. Instead, ahybrid approach, which comprises both
qualitative and quantitative approaches,must be utilised.

112

Admiral Group plc Annual Report and Accounts 2021

Task Force on Climate-related Financial Disclosures (TCFD) continued

Climate change risks, and any resulting
opportunities, are initially evaluatedqualitatively. A risk matrix approach is
employed, whereby the potential impactof the risk (scored between minor andcatastrophic) is considered alongside
the likelihood of impact (scoredbetween rare and almost certain) in the
short, medium and long term. Where
appropriate a quantitative approachto analysis and evaluation is also taken:
several scenarios, leveraging the Bank ofEngland’s Climate Biennial Exploratory
Scenario methodology, were included aspart of the stress and scenario testing
section of the Group’s ORSA submission.
Key risks and opportunities are discussed
above in the ‘strategy’ pillar.

Management and mitigation
As climate-related risks are treatedas risk drivers, and as the assessment
methodology is based on theexisting Emerging Risk assessment
methodology, integration into the ERMF
is straightforward.
Therefore, climate change risks andopportunities are reported on at least
quarterly to the GRC via the CRR,
and annually as part of the Group’s
ORSA Report submission. They arealso reported on to the Group Board,
management committees, and to
subsidiary Boards and committees.
This monitoring and reporting ensuresthat the highest level of company
management is aware of the risks, canaccount for them in future businessplanning and strategy setting, and candevise management actions to mitigate
their effects or to capture any resulting
opportunities.
The Regulatory Compliance team, part ofGroup Compliance, monitors and reviews
publications and pronouncements fromvarious regulators, supervisors andtransnational bodies, including but notlimited to the FCA, the PRA, the Bankof England and EIOPA. Summaries are
distributed to relevant stakeholders
as and when material is published,a monthly round-up is distributed
more broadly across the Group, and a
representative from the Regulatory
Compliance team is a member of the
Climate steering group.

Admiral is a financial services company,
and therefore it is likely that it has a low
operational footprint when compared toits complete carbon footprint, including
the supply chain and investment
portfolio. This is even more likely to be
the case given the efforts made over the
past decade to improve the efficiency
of its buildings and to reduce its energy
consumption. This is why, in order tomake a meaningful difference in the
global effort to tackle climate change, it
is important to include all emissions in theGroup’s net zero ambitions, including all
scope 3 emissions, which will be verified in
2022 by Carbon Intelligence.

Further information
Read more about
Principal risks anduncertainties on
page 116
Read more about
Emerging risks on
page 123

Metrics and targets
Operations
Admiral recognises that its operations
contribute to climate change, and
the Group takes its responsibility
for reducing this impact, seriously.
Therefore, as discussed above, Admiral
has pursued steps to reduce its
operational emissions and, since 2019,has offset its remaining scope 1, 2 andpartial scope 3 emissions. However,
Admiral also recognises that offsetting
emissions is not enough, and therefore
is working hard to reduce the absolutelevel of its operational emissions: in 2020
the Group’s scope 1 and 2 emissions, asverified by Carbon Intelligence, were3,454 tCO2e, an improvement of 24%
from 20191. Note that scope 2 emissions
have increased due to more accurate
data capture from non-UK entities, while
scope 3 emissions related to businesstravel have reduced, largely due to theeffects of Covid.

Admiral Group has committed to achieve
net zero targets, committing to achieving
net zero greenhouse gas emissions by
2040 at the latest, across all three scopesof emissions, and to cut these emissions
in half by 2030. A commitment was also
made to achieving net zero in directly
controlled operational emissions by 2030.
There is a high level of alignment
between Admiral Group’s announced
targets and the Association of British
Insurers (ABI)’s climate change roadmap,
published in July 2021: intermediatetargets of a 50% reduction in emissions
by 2030 are aligned, both cover all
scopes of emissions; however, Admiralis targeting net zero by 2040, ten years
ahead of the ABI’s roadmap.
In 2022 Admiral aims to complete
verification of its scope 3 emissions, andthen begin working to set Science-Based
Targets, which will complement theGroup’s overall net zero ambitions.

Scope

2020

2019

Scope 1

1,121

1,364

Scope 2 (market-based)

1,798

1,262

Investments

535

1,945

3,454

4,572

As a financial services company, themajority of Admiral’s emissions are likely
to be so-called category 15 emissions(part of scope 3), from the investment
portfolio. Therefore, when the Group set
its net zero targets, it was imperative toinclude these emissions in the emissions
reduction targets. Admiral has therefore
committed to achieving a reduction
in investment-related greenhouse gas
emissions of 25% by 2025, and of 50% by2030, reaching net zero greenhouse gas
emissions by 2040 at the latest – aligned
to the overall target.

Scope 3 (limited2)
Total

Table 2 Verified3 Group greenhouse gas
emissions (ton CO2e)1	Note that 2019 carbon footprint was verified by
Carbon Trust.
2	Limited scope 3 verification performed for transmission
and distribution losses for electricity, business travel,
waste and water.
3	2020 data has been verified by Carbon Intelligence;
2019 data has been verified by Carbon Trust.

Company overview

Strategic report

Corporate governance

Financial statements

Metric2021

Weighted average carbon intensity

71 tCO2e / $m sales1 (vs. 83 tCO2e / $m sales
for benchmark2)

Investment in holdings with confirmed SBTs

£422m

% Allocated to coal and oil sands

0%

Investment in Green bonds£74m

Table 3 Climate-related investment metrics
1	67% portfolio coverage.
2	Benchmark is 1–5 yr GBP corporates.

To ensure that these targets are met,
Admiral has developed an investment
proposal to align its corporate bondmandates to the Paris Agreement,
following the Net Zero Investment
Framework, which is a practical blueprint
for achieving net zero emissions by 2050,
and which has been endorsed by the UN’s
Race to Zero campaign.
The proposal has several features:
reducing emissions through time;increased investment in climate
solutions; and ensuring that the portfolio
invests in more Paris-aligned firms
through time (e.g. those with ScienceBased Targets), starting with the mostmaterial sectors. There will not beblanket divestment rules, but instead anapproach of engagement with companies
with large greenhouse gas footprints will
be taken, which could possibly lead todivestment. Within Admiral’s agreementswith its asset managers is a requirement
for managers to actively engage withhigh impact issuers who are not Parisaligned, as engagement is seen to be
integral in helping Admiral to achieve its
portfolio climate goals.
Several challenges should be noted:
sourcing reliable and consistent data;
avoiding unintentional consequencessuch as high concentration in certain
sectors or investments; and reliably
determining the expected risk and return
impact of such a strategy. There are also
several asset types which Admiral holdwhere a Paris-aligned strategy has not
yet been developed. However, in order toguide and review progress towards overalltargets, a number of metrics are tracked,
shown in Table 3.

Products and services
As discussed above, the effects ofclimate change may impact all of
Admiral’s business lines. Physical risks,
which may be managed via risk selection
and reinsurance protection, might bemore prominent in Admiral’s Householdbusinesses. Transition risks may be felt
more keenly in the motor businesses,
though the creation of the Admiral
Pioneer business in 2020 to focus on
new business opportunities may help
mitigate this impact.

Additional information

113

Admiral tracks a number of climate-related
metrics, such as modelled burn cost per
peril and number and value of weatherevent-related claims, in order to assess its
exposure to climate-related risks.

Transition risks
The move away from petrol and diesel
vehicles is the most obvious transition
risk faced by the Group, and is one which
presents a strategic challenge to us.
Considerable efforts have been made to
mitigate the risk of a transition to electricvehicles (EVs) and alternatively fuelledvehicles (AFVs), both via new business suchas Kooalys, and existing businesses, whichhave invested in developing and testing
new products and product features tomeet developing customer requirements.

Admiral is exposed to both acute andchronic physical risks; however, inthe short to medium term the mostimpactful risk is likely to be increasingly
severe and frequent windstorms, floods
and freeze events.

The transition to a low carbon economy
may see an erosion of Admiral’s traditional
competitive advantages in pricing andclaims handling, as petrol and diesel
cars are replaced with EVs and AFVs.
Admiral monitors market-wide metrics,
such as the proportion of new vehicle
registrations which are EVs or AFVs, aswell as internal metrics capturing theattractiveness and competitiveness of
the EV proposition, the claims experience,and the customer experience more
broadly, in order to ensure that the Groupis developing adequate capabilities inthese new technologies.

To mitigate and manage these risks
Admiral takes a flexible and proactive
approach to risk selection and pricing,ensuring that written business is withinrisk appetite, and that projected loss
ratios and combined ratios lead to
profitability over the cycle.

Admiral’s purpose is to ‘Help more people
look after their future. Always striving for
better, together.’ By developing products
and services which not only help mitigate
the worst effects of climate change, butalso help support a transition to a low
carbon future, Admiral is doing just that.

Physical risks

Admiral participates in the UK the
Flood Re scheme, which is designed toallow insurers to offer more affordable
insurance for homes built before 2009 inareas most at risk of flooding. The volume
and value of policies ceded to Flood Re ismonitored on an ongoing basis.
Admiral also utilises quota sharereinsurance arrangements extensively,
including both catastrophe andaggregate cover for householdlines. These are in place to provide
protection against an accumulationof claims associated with a weather
catastrophe event.

Further information
Read more about
Group carbon emissions
on page 19 and 114
Read more about Our
Streamlined Energy andCarbon Reporting disclosure
on page 114
Read more about Our
Electric vehicle case study
on page 44

114

Admiral Group plc Annual Report and Accounts 2021

Streamlined Energy and Carbon Reporting
This statement has been prepared in accordance with our regulatory obligation to reportgreenhouse gas (GHG) emissions pursuant to the Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon Report) Regulations 2018 which implement the
government’s policy on Streamlined Energy and Carbon Reporting.
During the reporting period January 2021 to December 2021, our measured Scope 1 and 2 emissions (location-based) totalled
4,516 tCO2e.
FY2020
Scope

UK

Scope 1
Scope 2 – location-based
Scope 2 – market-based
Total Scope 1 & 2 (Location-Based)
Total Scope 1 & 2 (Market-Based)
Scope 1 & 2 intensity per FTE (Location-Based)
Scope 3

FY2021

Rest of world

Total

UK

Rest of world

Total

1,712
1,798
1,712
1,798
*
*

1,121
3,786
1,798
4,907
2,919
0.4
535

1,285
1,768
25
3,053
1,310
0.4
435

192
1,272
1,332
1,463
1,523
0.4
517

1,477
3,039
1,357
4,516
2,834
0.4
952

2,074
0
2,074
0
*
*

Overall, our Scope 1 and 2 emissions
have decreased by 8% against last year.
This was due to improved control in our
Building Management Systems in ourlargest locations. We purchase 64% of
our electricity from renewable sources,
meaning our Scope 1 and 2 marketbased emissions were 2,834 tCO2e,a decrease of 3% from last year.

The impact of Covid has resulted inworking from home being adopted
as the norm, with the offices being
kept within statutory and regulatorycompliance requirements. This has
naturally resulted in a reduction of utility
usage and driven a floor space reduction
which has further increased the energy
or utility savings.

• Complete energy data for the whole• New emissions reporting – tracking progressgroup so that verified data isn’t
based on assumptions:Ȳ Fugitives
Ȳ WaterȲ Commuting

towards target.

The building management within the
UK sites Newport, Cardiff and Swansea
are controlled by Building Management
System (BMS) which are actively
monitored for performance optimisationand time schedule efficiency, and withthe requirement to introduce greater
amounts of fresh air into the buildings• 2022–23 Continue toengage with Carbon Trustin verifying the data andexpand into Scope 3.

• Identify carbon heavy and/or identifying
assets and their life cycle for replacement.

• Engage Arup to assist with mapping
the route to net zero carbon.

2021

2022

2023

• A Sustainability Working Group was established2019

in 2020 to provide additional governancesupport around matters related to ESG.

2020
• Environmental Policy put in place to better measure, recordand reduce the company Greenhouse Gas emissions.

2025• Responsible Investment Policy integrated to put in place
the achieve more sustainable long-term returns.

• Admiral Baseline Emission verified by Carbon Trust. To be
re-visited as part of the Science Based Target initiative.

• Continuous and transparent emissions reporting
tracking progress towards the targets.

Action areas

2019

EnergyTravelCompany overview

Strategic reportwhich is achieved via the BMS systems
has resulted in a marginal increase inutility consumption.
During this period, we have taken theopportunity to engage with specialist
consultants to review the building
operation and explore decarbonisation
measures such as the removal of natural
gas in Cardiff and introduction of air
source heat pumps. Equipment and plantmodernisation is also being planned forthe next financial year and includes the
upgrade of the BMS system in Cardiff
and replacement of air-condition plantin Swansea.
We continue to engage our employees
in energy efficiency campaigns and to
explore the use of emerging technology,
such as hydrogen boilers.
Our Scope 3 emission account forbusiness travel, waste and water.

Corporate governance

Financial statements

This year, we have expanded our reporting
boundary to include Category 3: Fuel andEnergy-Related Activities not included in
Scope 1 or Scope 2 (FERA). Our measured
Scope 3 emissions totalled 952 tCO2e.

Institute’s Greenhouse Gas Protocol
Corporate Accounting and ReportingStandard and in alignment with the
Scope 2 Guidance. We consolidate ourorganisational boundary according tothe operational control approach, which
includes all our operations and sites.

During the year, our total fuel andelectricity consumption totalled 18,493
MWh, of which 72% was consumed in the
UK. The split between fuel and electricity
consumption is displayed below:

In some cases, where data is missing,values have been estimated using either
extrapolation of available data or datafrom the previous year as a proxy.

FY2021
Energy consumption(MWh)Electricity
Fuels1

UK

Rest of
world

Total

8,325
5,033

4,606
530

12,931
5,562

115

Additional information

The Scope 2 Guidance requires that
we quantify and report Scope 2
emissions according to two different
methodologies (‘dual reporting’): (i) the
location-based method, using average
emissions factors for the country inwhich the reported operations takeplace; and (ii) the market-based method,which uses the actual emissions factorsof the energy procured.

1	Natural gas and transportation fuels (petrol and diesel).

Methodology
We quantify and report ourorganisational GHG emissions inalignment with the World Resources

The GHG sources that constituted our operational boundary for the year are:Scope 1:

Scope 2:

Scope 3:Natural gas combustion

Purchased electricity – standard

FERA

Water

Diesel vehicle combustion

Purchased electricity – renewable

Waste

Business Travel

Positive Impact on society
Our net zero commitments
We seek to cut our current emissions by half by 2030 with a commitment
to achieve net zero greenhouse gas emissions by 2040. We haveadditionally committed to achieving net zero in directly controlled
operational emissions by 2030.
• Science based target verified by the Science
Based Target initiative.

• Target for AdmiralGroup net zero

2040

Net Zero• Move to fully renewable resources/green
energy to our global businesses.**	Note: all electricity purchased in the UK
originates from 100% green sources.

• Science Based Target 30%
Reduction.

• Commitment to 50%

2030

Waste

Purchasing

reduction on validated
2019 data.

2040

116

Admiral Group plc Annual Report and Accounts 2021

Principal risks and uncertainties
The Board, with support from the Group Risk Committee and the Group Risk function,
undertakes a regular and robust assessment of the principal and emerging risks facing theGroup. These risks have been summarised as those which would threaten its business model,
future performance, liquidity and solvency.
The table overleaf sets out the principal risks which Admiral has identified through its Enterprise Risk Management Framework(ERMF). The impact of those risks and actions taken to mitigate them are explained below. This section also includes a descriptionof Admiral’s approach to identify, manage and govern emerging risks.
Risk Appetite: The Admiral Group risk strategy contains strategic risk statements for the relevant risks which help deliver theGroup’s business objectives. The Group risk appetite is owned and approved by the Admiral Group Board. The responsibility for theGroup risk appetite is delegated to the Group Risk Committee who reviews all components prior to Board approval and monitors
the performance of the business against the approved Group risk appetite through the consolidated risk report.

Identification of risks
Principal risks (A–K)
Insurance Risk:

Group Risk:

Market risk:

A

Reserving risk in the UK andinternational InsuranceE

Erosion of competitive advantage
in UK Car Insurance

I

B

Premium risk andCatastrophe Risk

F

Failure of geographic and / or
product expansion

Operational Risk:

C

Reduced availability of
co-insurance and reinsurance
arrangements

G

Reliance on UK Price Comparison
distribution channelD

Potential diminution ofother revenue

Credit Risk:

H

Market risk

J

Legal and regulatory risk

K

Operational risk

Credit risk

Linking risks to our strategic objectives
1

To protect and maintain our financial
stability, supporting sustainable growthand profitability

3

To invest in future businesses as we build
our international business and add to our
product diversification offering

2

To invest in our core competencies as we
accelerate evolution towards Admiral 2.0

4

To invest and plan for the evolutionof motor

5

To ensure that Admiral remains a greatplace to work

For more information refer to pages 35 – 44

No notable change to the principal risks and uncertainties was identified throughout 2021, and the principal risks anduncertainties have remained stable over the same period.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

117

Insurance Risk
A. Reserving risk in the UK and international insurance

Possible impact on
our strategy

1

3

Risk

Mitigating Factors

Admiral is exposed to reserving risk through its
underwriting of motor, household and other insurance
policies. Claims reserves in the Financial Statements
may prove inadequate to cover the ultimate cost ofclaims which are by nature uncertain.

The Group continues to reserve conservatively, setting
claims reserves in the Financial Statements well above
actuarial best estimates to create a margin held toallow for unforeseen adverse development.

This is a particular risk for motor insurance liabilities,
where the amount payable for bodily injury claims(particularly large claims) can change significantly
during the lifetime of the claim as a result of externalrisks such as changes in Ogden rates, impacts ofincreased levels of Periodical Payment Orders (PPOs)
and claims inflation.
ImpactAdverse run-off leading to higher claims costs in
the Financial Statements. PPO claims are capitalintensive owing to increased uncertainty of the costof significant claims over a longer term.

Best estimate reserves are estimated both internallyand externally by independent actuaries.
For very large claims Admiral purchases excess of loss
reinsurance, which mitigates a portion of the loss.
Regular reviews of both settled and potential PPO
cases are undertaken by the Claims and Actuarial
teams, with independent actuarial analysis provided
as part of the external reserving process.
Admiral’s investment strategy is the result of astructured, disciplined and transparent investment
process. Long-dated inflation linked assets are held
to partly hedge the risks associated with PPO claims.

B. Premium risk and catastrophe risk

Possible impact on
our strategy

1

3 4

Risk

Mitigating Factors

The Group is exposed to the risk that inappropriate
There are a number of aspects which contribute topremiums are charged for its insurance products
Admiral’s strong UK underwriting results, including:leading to either insufficient premiums to cover• Experienced and focused senior management andclaims cost or uncompetitive rates leading to reduced
teams in key business areas including pricing andbusiness volumes.
claims management.
The risk of increased claim costs and/or reduced• Highly data-driven and analytical approach to thebusiness volumes could be driven by potential
regular monitoring of claims and underwriting
economic, social, environmental, regulatory or
performance.
political change such as the Covid pandemic or the• Capability to identify and resolve underperformance
FCA’s pricing practices.
promptly through changes to key performance
Admiral is exposed to the risk of higher losses
drivers, particularly pricing.
than anticipated due to the occurrence of man•Continuous appraisal of and investment inmade catastrophes or natural weather events,
employee, systems and processes.
potentially increased in frequency and severity
due to climate change.
• Monitoring the impact arising from Climate Change
Acute physical climate risks include changes in thefrequency of both large catastrophe events andsevere weather events of the type could increasingly
be seen, where trends are difficult to identify, andwhich have large claims costs associated with them.
ImpactHigher claims costs, reduced business volumes and/or higher loss ratios, resulting in reduced profits orunderwriting losses.
A large flood or windstorm, causing extensive
property damage (both motor and household) to asignificant proportion of the portfolio, could lead to alarger than anticipated total claims cost.

risks, covering both physical and transitional risks,
as well as other Emerging Risks which may impact
premium or catastrophe drivers.
Admiral purchases excess of loss reinsurance, which
is designed to mitigate the impact of very large
individual or catastrophe event claims.

118

Admiral Group plc Annual Report and Accounts 2021

Principal risks and uncertainties continued

Insurance Risk continued
C. Reduced availability of co-insurance and reinsurance arrangements

Possible impact on
our strategy

1

3 4

Risk

Mitigating Factors

Admiral uses proportional co-insurance andreinsurance across its insurance businesses to reduce
its own capital needs (and increase the return on thecapital it does hold) and to mitigate the cost and riskof establishing new operations. There is a risk that
support will not be available or that it will be available
at an uneconomical price in the future if the results
and/or future prospects of either the UK businessesor (more realistically) one or more of the less wellestablished operations are not satisfactory to theco- and/or reinsurers.

Admiral mitigates the risk to its reinsurance
arrangements by ensuring that it has a diverse rangeof financially secure partners.
Admiral continues to enjoy a long-term relationshipwith a number of different reinsurers, some of which
are amongst the world’s largest.
These long-term arrangements are in placethroughout the UK and International businesses.

Climate change could lead to system level shifts
in conditions in the natural environment. A higher
frequency and severity of extreme weather events,
as well as increased chronic physical risks, could
increase the cost of reinsurance protection for
insurers. Climate change could impact reinsurance
structures if more events are hitting reinsurance
layers, potentially leading to changes in terms andconditions or premiums.
ImpactA potential need to raise additional capital to support
an increased underwriting share. Return on capitalmight reduce compared to current levels.
D. Potential diminution of other revenue

Possible impact on
our strategy

1

2 4

Risk

Mitigating Factors

Admiral earns other revenue from a portfolio
of products and services in addition to the core
insurance products. The level of this revenue
could diminish due to: political, regulatory, legal,social/customer behaviour, strategic, market or
economic changes.

Admiral continuously assesses the value to its
customer of the products it offers and makes changes
to ensure the products continue to meet customer
needs and offer good value.

ImpactLower profits from business operations and lower
return on capital.

Admiral seeks to minimise reliance on any single sourceby earning revenue from a range of products. This
would mitigate the impact of regulatory or market
changes, or changes in consumer behaviour, whichmight affect a particular product or income stream.
Admiral works closely with its regulators and otherkey industry bodies.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

119

Group Risk
E. Erosion of competitive advantage in UK Motor Insurance

Possible impact on
our strategy

1

2 4 5

Risk

Mitigating Factors

Admiral typically maintains a significant combined
ratio advantage over the UK market. This advantage
and/or the level of underwriting profit (andassociated profit commission) could be eroded. Thisrisk could be exacerbated by: irrational competitor
pricing, new technologies used within the insurance
market and/or regulatory market intervention. It may
arise from new or existing competitors, or outcomesfrom legal or regulatory change such as the FCA’s
pricing practices.

Admiral’s focus remains on the wide range offactors that contribute to Admiral’s combined ratio
outperformance of the UK Motor market. Some areset out earlier in the Strategic Report, but in addition:• Track record of innovation and ability to react quickly
to market conditions and developments; and• Keen focus on maintaining a low-cost infrastructureand efficient acquisition costs• Experienced and focused management team

ImpactA worse UK Motor Insurance result and lower return on
capital employed.
A sustained and uncorrected erosion of competitive
advantage could affect the ability of Admiral tomaintain its reinsurance arrangements, which might inturn require Admiral to hold more capital.
F. Failure of geographic and/or product expansion

Possible impact on
our strategy

2 3 4 5

Risk

Mitigating Factors

In line with the Group’s diversification strategy,
Admiral continues to develop its other UK insurance
businesses, non-insurance businesses such as Loans,and its international businesses. It has also created
Admiral Pioneer which is the vehicle for developing
and launching of new products and services, otherthan those already covered by existing establishedGroup businesses.

Admiral’s approach to expansion and productdevelopment remains conservative, applying thetest-and-learn philosophy that has proven successful
for previous operations. International insurance
businesses have generally executed cautious launch
strategies and are usually backed by proportional
reinsurance support which provides substantial
mitigation against start-up losses in the early years.

One or more of the operations could fail to becomea sustainable, profitable long-term business.

The Directors are mindful of management stretch andregularly assess the suitability of the infrastructure
and management structure in place for Admiral’s new
UK and international operations.

Product expansion into new areas could lead tounprofitable business, could increase regulatory
risk, and may introduce new risks into the Group.
Growth in developing businesses could exceed thescale of infrastructure of the operation.

The Group has established a number of new
operations in order to mitigate the risk of failure ofindividual new operations.

ImpactHigher than planned losses (and potentially closure
costs) and distraction of key management.
A collective failure of these businesses would threaten
Admiral’s objective to diversify its earnings by
expanding into new markets and products, though
any single failure of product or geography is likely to
be tolerable.
The UK car business, which continues to perform
strongly, is largely unaffected by this risk.

Linking risks to our strategic objectives
1

To protect and maintain our financial
stability, supporting sustainable growthand profitability

3

To invest in future businesses as we build ourinternational business and add to our productdiversification offering

2

To invest in our core competencies as we
accelerate evolution towards ‘Admiral 2.0’

4

To invest and plan for the evolution of motor

5

To ensure that Admiral remains
a great place to work

120

Admiral Group plc Annual Report and Accounts 2021

Principal risks and uncertainties continued

Group Risk continued
G. Reliance on UK Comparison distribution channel

Possible impact on
our strategy

1

2 4

Risk

Admiral contributes materially to the revenues of all
four major UK comparison businesses, and has a strong
Admiral is dependent on the four main UK comparison
brand presence, and therefore it is not consideredwebsites as an important source of new business andprobable that a material source of new business would
growth. Growth in this distribution channel could
be lost.
slow, cease or reverse, or Admiral could lose one ormore of the websites as a source of customers.
Admiral continues to grow its MultiCover and MultiCar
products. It also has a direct offering to new andImpactexisting customers, with continuing investment madeA potentially material reduction in UK insurance
to improve its online/digital offering.
new business volumes, in particular for UK Motor.
However, a more competitive market might
benefit the insurance businesses through lower
acquisition costs.

Credit Risk
H. Credit risk

Possible impact on
our strategy

1

3

Risk

Mitigating Factors

Admiral is primarily exposed to credit risk in theform of: (a) default of reinsurer; or (b) failure of abanking or investment counterparty. One or morecounterparties could suffer significant losses leading
to a credit default.

Admiral only conducts business with reinsurers ofappropriate financial strength. In addition, majorreinsurance contracts are operated on a fundswithheld basis, which substantially reduces credit risk,
as Admiral holds the cash received as collateral.

Admiral Loans exposes the Group to credit risk inrelation to customer defaults on its unsecured
personal loan and car finance business.

Credit risk is managed through diversification andappointing high-quality third-party asset managers.
Limits on counterparties and certain credit ratings
ensure that credit risk is managed within risk appetite,and produces a high quality credit portfolio. The Groupinvests in a range of liquidity funds which hold a wide
range of short duration, high quality securities, andin fixed income funds holding primarily investment
grade assets. Cash balances and deposits are placed
only with highly rated counterparties. Most long-term
investments are held in Government bonds to further
mitigate the exposure to credit risk.

Impact
The impact of a major credit event could be losses
and reduced capital, dependent on its natureand severity.
Admiral would also need to ensure that it continues
to have sufficient liquid assets to meet its claims
and other liabilities as they fell due.
Increased defaults could impact future profitably
and lending capabilities.

Admiral considers counterparty exposure frequently
and in significant detail, and has in place appropriate
triggers and limits to mitigate exposure to individual
investment counterparties.
Admiral continuously monitors the credit quality of
our counterparties within Board approved limits,
adjusting its credit rules and pricing accordingly.
Admiral Loan’s credit risk appetite is set to ensurethat the risk taken is commensurate to the expected
returns. Admiral Loans continuously monitors theperformance of its portfolio and manages borrowers inarrears to achieve the optimal outcome.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

121

Market Risk
I. Market risk

Possible impact on
our strategy

1

Risk

Mitigating Factors

Market risk arises as a result of movement in interest
rates, credit spreads and foreign exchange rates.

The investment strategy focuses on preservationof the amount invested, low volatility of returns
and strong liquidity. The majority of the portfolio isinvested in high quality fixed income and other debt
securities, and money market funds and other similarfunds in order to achieve these objectives.

ImpactMarket volatility (notably very significant reductions
in risk free interest rates or material increases incredit spreads) can adversely impact the value of
the Group’s assets. The Group’s solvency can also be
adversely impacted due to an increased regulatory
valuation of claims liabilities, in particular in relation
to longer-dated potential PPO claims.

The Group’s mitigation for interest rate risk resulting
from long duration PPO liabilities includes reinsurance
cover and a continuing focus on investment strategies.
This includes asset/liability matching, considerationof hedging options for these liabilities, including ofcertain risks associated with PPO claims.

Continued growth of the Group’s businesses outside
the UK has altered the exposure to net assets andRelative to the size of the Group, exposure toliabilities in currencies other than pounds sterling,
non-sterling currency remains small.
increasing the Group’s exposure to Euros in particular.

Operational Risk
J. Legal and regulatory risk

Possible impact on
our strategy

1

2 3 4

Risk

Mitigating Factors

Legal and Regulatory risk may arise where Admiral
fails to fully comply with legal or regulatory
requirements and/or changes in an accurate,
timely manner. Examples include compliance with
the FCA’s UK pricing reform, which may have farreaching consequences for the whole industry. Thisrisk may also arise where previous industry and/ orAdmiral regulatory or legal compliance standards
are revisited with negative consequences, applied
retrospectively, for the industry and/or the Group.
As Admiral operates globally, across business lines
and products, it is exposed to a number of differing
legal jurisdictions and regulators.

Regular review of the Group’s compliance with current
and proposed requirements and interaction withregulators by Executive Management and the Board.
Assurance is gained through external reviews andbenchmarking exercises ensuring Admiral is compliant
with legal and regulatory requirements.
Strong project governance is a key control in managing
regulatory change.

Failing to meet increasing expectations from
regulators, legislators, and shareholders aroundclimate change could potentially lead to exposure
to legal and regulatory risk. In the longer term, theimpact from not meeting increasing expectations
could be serious.
ImpactExposure to regulatory intervention, censure
and/or enforcement action through fines andother sanctions.

Linking risks to our strategic objectives
1

To protect and maintain our financial
stability, supporting sustainable growthand profitability

3

To invest in future businesses as we build ourinternational business and add to our productdiversification offering

2

To invest in our core competencies as we
accelerate evolution towards ‘Admiral 2.0’

4

To invest and plan for the evolution of motor

5

To ensure that Admiral remains
a great place to work

122

Admiral Group plc Annual Report and Accounts 2021

Principal risks and uncertainties continued

Operational Risk continued
K. Operational risk

Possible impact on our strategy

1

2 3 4 5

Risk

Mitigating Factors

Operational Risk arises within all areas of thebusiness. The principal categories of operationalrisk for Admiral are: Conduct Risk; Physical
Security Risk; Technology Risk; Information
Security/Cyber Risk; Business Continuity; Process
risk; Change Risk; People risk; data governancerisk; and, Outsourcing and Procurement Risk.

Admiral operates the three lines of defence
model, and internal controls are in place andare monitored to mitigate risks. The control
framework is regularly reviewed, and the internal
audit function has an agreed cycle of testingof the adequacy and effectiveness of controls.
Specific operational risks are mitigated by:

Impact• Monitoring, managing and reporting on
customer outcomes in order to mitigate
customer detriment.

Potential customer detriment and/or potential
regulatory censure/enforcement and/or
reputational damage as a result of Admiral’saction or inaction.
Admiral being unable to service its customers
or making poor business decisions due to lack ofsystem availability, data integrity and/or data
confidentiality.
The risk of reductions in earnings and/or value,
through financial or reputational loss, frominadequate or failed internal and outsourced
projects, processes and systems, or from people
related, hybrid working or external events.
Risk to Admiral occurs through the losses
that could materialise if the internal control
framework managing business processes fails.

• Regular Executive Management and Board
review of the effectiveness of the Group’s
IT capability.
• Continuing to invest in Information Security inorder to mitigate Information Security risks,
including evolving Cyber risk.
• Staffing a major incident team within IT which
is tasked with maintaining system availability,with business continuity and disaster recovery
plans in place which are regularly tested.
• Backing up data to allow for its recovery in theevent of corruption.
• Employing enhanced project governance andoversight of new systems implementations,with external specialist review and assurance
where required.
• Attracting, retaining and motivating quality
employee to deliver superior customer service
and to achieve business objectives.
• Employing targeted recruitment and identifying
potential leaders through internal development,
talent management and retention processes forthe purposes of succession planning.
• An ongoing commitment to diversity andinclusion.
• Monitoring outsourced and offshore activities
through ongoing supplier relationship andperformance management, and with regulardue diligence reviews.
Admiral also purchases a range of insurance covers
to mitigate the impact of a number of otheroperational risks.

Linking risks to our strategic objectives
1

To protect and maintain our financial
stability, supporting sustainable growthand profitability

3

To invest in future businesses as we build ourinternational business and add to our productdiversification offering

2

To invest in our core competencies as we
accelerate evolution towards ‘Admiral 2.0’

4

To invest and plan for the evolution of motor

5

To ensure that Admiral remains
a great place to work

Company overview

Strategic report

Emerging Risks
Admiral Group monitors Emerging
Risks, issues which may be potentiallysignificant, but may not be fully
foreseen, assessed or allowed for ininsurance terms and conditions, pricing,reserving or capital setting, or strategic
and business decisions. By their very
nature, Emerging Risks are many andvaried, but are considered to havepotentially significant impact to theGroup, with a high degree of uncertainty
around the likelihood of occurrence
and / or severity. The timescale oftheir impact is also uncertain: somerisks may crystallise more quickly thanothers, but frequently the timescale ofimpact is longer than standard businessplanning cycles.
The management of Emerging Risks
is a key element of Admiral’s strategicrisk management. Considering a wide
range of Emerging Risks, and theopportunities that they may present,
provides the Group with the ability
to consider how well-equipped thebusiness is to cope with an uncertain
future. Such consideration may leadto a change in strategy, a change inmanagement behaviour, a change inways of working or risk management,
which may lead to a stronger and morerobust business which delivers on its
commitments to customers, employees,
and shareholders.
Emerging Risks are identified via horizon
scanning. This involves an extensive
literature review, interviews withinternal stakeholders, subject matter
experts and external specialists, andinput from internal working groups,
in order to ensure that as many
Emerging Risks as possible are taken
into consideration. Admiral uses aninternally developed framework forassessing Emerging Risks, which covers
qualitative and quantitative assessmentand evaluation of the potential impact
to Admiral via existing Principal Risks
and Uncertainties or via new risks.
It also covers the precautionary
deployment of management actions
and mitigating controls.

Corporate governance

Financial statements

Emerging Risks are represented
graphically on Admiral’s Emerging Risk
Radar, capturing an assessment of
their potential impact and timescale
to crystallisation, which ranges fromless than one year to greater than
five years. The radar also categorises
Emerging Risks into the following four
broad segments: (a) legal and regulatory
risks, such as ePrivacy; (b) socio-politicaland economic risks, such as consumer
expectations; (c) environmental risks,such as physical and transition climatechange risks; and (d) technology
risks, capturing advances in vehicle
technology. Though most Emerging
Risks are not strictly limited to one
segment or another, plotting them inthis way can indicate the macro trends
behind the emergence of those risks.
Reporting on Emerging Risks, as well as
the opportunities that they present, isprovided to the GRC and relevant Boards,
is incorporated into the Group ORSA
Report, and is discussed with senior
management of Group entities as well as
entity risk teams. Emerging risks werereviewed throughout 2021.
Following Russia’s invasion of Ukraine
in late February 2022, financial markets
volatility increased and a range ofinternational sanctions were imposedon Russia. The Group does not haveany direct exposure to Russia or
Ukraine, either through its operations
or investment portfolios. The Group is
closely monitoring the situation, any
indirect exposures and other risks andimpacts. At the date of this report,
no significant changes to the Group’s
principal risks and uncertainties orsolvency position are noted.

Additional information

123

124

Admiral Group plc Annual Report and Accounts 2021

Viability statement
In accordance with provision 31 of
the 2018 UK Corporate Governance
Code, the Directors have assessed
the prospects of the Company over athree-year period, having referenced
the Group’s Own Risk and Solvency
Assessment (ORSA), risk strategy,
risk appetite, principal risks anduncertainties, and key risk drivers. As
per provision 31, Admiral considers three
years to be a period of assessment overwhich it has a reasonable degree ofconfidence. Although the Group reviews
business plans that extend beyond
the three year time horizon, Admiralconsiders there to be an inherent risk
and uncertainty in the periods beyond
three years as the degree of certaintyof the impact of internal and external
developments reduces greatly.
At least annually, the Group undertakes
an ORSA, which is the main source ofevidence used by the Board to assess
viability. The ORSA sets out a detailed
consideration of the Principal Risks andUncertainties facing the Group andconsiders current and projected levels ofsolvency and liquidity over a 12-monthto three-year period.
In addition to the three year period ofassessment supported by the ORSA, theBoard utilises other relevant reporting,some of which is longer term in nature.
Notably these include five year financial
projections reviewed twice a year, threeyear solvency projections reviewed
at least twice a year, and a one year
financial budget for the forthcoming 12months approved on an annual basis.
Quantitative and qualitative assessmentsof risks are performed as part of the
ORSA process, assessing these risks over
the three-year capital planning time
horizon. This forward-looking approachreflects the alignment of the businessplanning process and the solvency
assessment, referred to within Admiral as
the capital plan; making sure that Admiralis appropriately capitalised at a fixed
point in time as well as over the futureplanning time horizon, while considering
Admiral’s principal risks and uncertainties
as well as potential stressed conditions.
The capital plan is a key consideration forGroup and Subsidiary Boards in assessing
and approving the business strategy,
business plan and key business decisions.
The quantitative assessment
considers how the regulatory capitalrequirements, economic capital needs,
own funds and solvency position of theGroup is projected to change over thethree-year horizon, with a requirement
to maintain a solvency ratio above theapproved capital risk appetite buffer
throughout the projection.
The assessment includes a series ofsensitivity, stress and scenario tests(S&ST) and reverse stress tests (RST)that are examined and quantified
to understand the potential impact
on the Group’s solvency, liquidity
and profitability, as part of the ORSA
process. In addition to these Group
tests, there are also subsidiary entityspecific scenarios considered of lower
materiality to the Group that are
performed by each subsidiary insurance
entity as part of their ORSA processes.
These tests are performed inaccordance with the Group stress andscenario testing framework (SSTF)1 that
describes the underlying stress testing
approach and methodology. The SSTF
is based on the Admiral Enterprise Risk
Management Framework (ERMF) thathas been designed, implemented andembedded across the Group to provide
the Board(s) with oversight of risks,
as well as oversight of how those risks
are managed.
Discussions within Group Risk andwith key stakeholders take place
to identify and propose scenarios;
considering stresses performed inprevious exercises, emerging risks,risk events, regulatory changes andthe external economic landscape.
The S&STs approved by the Board(s),after extensive review and challenge
at Board(s) and Group Risk Committee(GRC), are examined and quantified
using the baseline business and capitalplanning model positions. The scenarios
are discussed in workshops with
relevant subject matter experts
and the Finance modelling teams
from Line 1 and Line 2 who advise on
the key underlying and backgroundassumptions (line of business/entity
impacted, horizon, severity, likelihoodetc), limitations, primary and secondary
assessment along with consideration
for management actions, andrecommendations2; following which
they are reviewed and scrutinised bysenior managers.
The obtained results are examined incomparison to the baseline models,
capturing the change usually withand without the mitigating impact
of potential applicable management
actions. Often, sensitivities to keymodelling inputs and variables are
examined, for instance an uplift to theloss ratio (+/-5% in the underwriting
loss ratio) or spread movements(e.g., 100bps).
To assess the robustness of the Groupto the impact of various risks, 12 S&STs
and two RSTs have been quantified tounderstand the potential impact on theGroup’s solvency ratio. In 2021 different
scenarios have been performed,
capturing a range of insurance andreserve risk scenarios from the annual
reserving cycle, scenarios related to
the FCA Pricing Practices regulatorychanges, with macroeconomic stresses
along with operational risk scenariosand several insurance and market
risk combinations.
The scenarios examined are mapped
against level 1 risks from Admiral’s Risk
Universe with all of Admiral Group’s

1	The SSTF has been updated in 2021 to reflect developments in the underlying regulatory environment and the methodological approach in relation to the quantification of scenarios, toensure a robust process in line with the PRA’s and EIOPA’s expectations and latest guidance. It captures the recent focus on climate change scenario analysis and operational resilience
requirements along with the new resilience planning disclosures set out in the Brydon review.
2	Examples of some of the general management actions the Group could take include implementing pricing rate changes and reducing planned dividend payments. In addition, scenariospecific management actions are considered and included within the scenario quantification where they can reasonably be assessed.

Company overview

Strategic reportprincipal risks and uncertainties
considered, demonstrating
consideration of the key risks facing
the Group. In addition, certain climatechange scenarios have also been
examined as part of the 2021 ORSA
process based on regulatory guidancefrom EIOPA and linked to the Bankof England’s 2021 Climate Biannual
Exploratory Scenario (CBES).
Under all scenarios Admiral Group remains
well capitalised and able to withstandthose extreme and remote scenarios,with a stressed solvency and liquidity
position within the risk appetite. The only
exception is an extreme RST, combining
severe and extreme insurance (reserve/
premium) and market risk scenario
combinations. Note that by design andbased on the derived output, this RST is
considered to be extremely remote, witha return period well in excess of a 1-in200-year event.
The results of the stress tests, inclusiveof the ones captured in the ORSA, form
part of the process to set the Group’s
capital risk appetite, which ensures thata buffer is held on top of the Group’s
regulatory capital requirement toprotect its regulatory capital position
against potential shocks and stresses.
Key strategic decisions including thesetting of dividend payments, consider
the solvency impact against theBoard-approved capital risk appetiteof 130%, which is a key criterion for
the Board in assessing viability. Referto the Strategic Report (pages 82 – 83)
for information on sensitivities to thereported 2021 solvency ratio position.
Risk management is an essential part ofAdmiral’s operations, and successful risktaking is key to the Group achieving its
business objectives. Risk management
is therefore a key consideration whensetting the Group’s strategy, managing
performance, and rewarding success.

Corporate governance

Financial statements

The current risks that are faced by
the Group are captured in the Risk
Universe, with the most notable risks
captured in the Group’s principal
risks and uncertainties (page 116)1. In
addition to these principal risks anduncertainties, the Group also considersa range of emerging risks that could
impact the Group to varying degrees
in the future, but which are not yet
fully understood (page 123).
The Admiral Group Risk Strategy is
considered and approved by the
Board. The strategy is directly linked
to the business plan and seeks toensure that all risks are managed
effectively to allow the Group to meetits strategic aims (pages 35 – 44).
Supporting this is the Admiral Group
Risk Management Policy, whichsets out Admiral’s approach torisk management, as well as thegovernance of risk management
across the Group. This approachensures that there is appropriate
oversight of the Group’s risk profile,and that the Group remains withinrisk appetite in all its operations.
While each of Admiral’s principal risks
and uncertainties could have potentially
impacted the Group’s performance,
during 2021, the following key risk
drivers were of notable importance:
Covid, FCA Pricing Practices,
technology, cyber and operational
resilience, and climate change:

Additional information

125

Covid
The impact of Covid on Admiral’s
principal risks and uncertainties, aswell as the steps taken to appropriately
manage these risks, continues to beoverseen by the GRC. Some of thecurrent trends in risks most impacted
by Covid are highlighted below.

Operational Risk
The impact of Covid on levels of
operational risk continues to reduce
throughout the Admiral Group, largely
as a result of remote-working solutions
becoming more robust and the business
continuously enhancing its approachto hybrid working. Throughout the
pandemic Admiral has prioritised
employee mental and physical health,and the Admiral culture, as well as
excellent customer service, andcontinues to do so.
Early in 2021 there was a rapid risein Covid cases in India, impacting
Admiral support centres, the Group
monitored the situation daily and tookappropriate steps to ensure that thecustomer impact was minimised andthat operations were fully supported.
Examples of support provided include:
Admiral funding vaccine costs forcolleagues and their immediate families;
reimbursing the cost of Covid tests; andoffering financial assistance. Admiral
has also donated £1 million to UNICEF,
to help support the wider community
within India, alongside employee
campaigns to donate money fromfundraising activities and their salaries.
With regards to the emergence of theOmicron variant, the GRC will continue
to monitor newly available information,such as transmissibility and ability tocause serious illness, and the impact thisvariant may have on Admiral’s principal
risks and uncertainties.

1	Please also see note 6 to the financial statements which sets out the Group’s objectives, policies and procedures for managing financial assets and liabilities.

126

Admiral Group plc Annual Report and Accounts 2021

Viability statement continued

Insurance Risk

FCA Pricing Practices

Admiral continues to closely monitor
the impact of Covid on driving
patterns, claims experience and market
positioning, especially in light ofnational lockdowns. Admiral has taken
part in the FCA industry-wide review
of forbearance practices implemented
during the pandemic.

The GRC has received regular updates
regarding the ongoing FCA pricing
practices work. Admiral welcomed the
FCA’s work in this area and is supportiveof a remedy which acts to ban pricewalking1. Admiral views the New Business
Equivalent2 price remedy, as good forboth the market and for consumers.

Market Risk & Credit Risk

Of key importance to Admiral is thatit implemented the Policy Statement
appropriately and in a compliant way,achieving desired customer outcomes,
and remaining competitive in the wider
market. Given the significance andcomplexity of the remedies, Admiral
began its preparation in 2020, theresulting work involving both internaland external expertise.

The impact of Covid on Admiral’s Market
and Credit risk has also decreased in
2021. Financial markets were generally
more stable with companies postingstrong earnings and markets well
supported by central banks, investor
demand and low interest rates. Risk-freerates have risen over 2021 as markets
started to price in base rate rises tocombat inflation. Higher risk-free rates
will reduce the value of investments,
but that movement should be largely
mirrored by movement in liabilities,
and then result in higher income
through time. The increased pressure
on household incomes resulting fromfactors such as the end of furlough,the possible impact of high inflation oninterest rates and increasing utility bills
may impact customers’ ability to repay
Admiral Loans. During the year, there
was a reduction in the level of economic
uncertainty related to the Admiral Loansbusiness. Refer to note 7 in the financial
statements for further detail.

The impact of the Pricing Practices
on Admiral’s principal risks anduncertainties is being overseen by the
GRC. Some of the current trends inrisks most impacted by the FCA Pricing
Practices are highlighted below.

Technology, cyber andoperational resilience
Throughout 2021 Admiral has continued
to enhance its technology, cyber andoperational resilience capabilities, aswell as monitor the related risks as partof its ERMF. Key developments in theseareas include:• The introduction of an enhanced
target operating model for the
management of Group information
security and technology risks.
• The progression of an ongoing cybersecurity programme in the European
insurance businesses, designed tofurther reduce the information
security risk of said businesses,
in line with the Group’s Cyber
Security Framework.
• The Operational Resilience programme
which is utilising both internal
expertise as well as obtaining external
expertise and assurance.

Premium Risk & Catastrophe Risk
The outcomes from the implementationof the FCA Pricing Practices remedies,
as seen within the wider market, areuncertain and will be largely based on
how different insurers interpret theregulation. Admiral has implemented
processes to model, closely monitor and,if necessary, react to this wider market
view going forward.

Legal and Regulatory Risk
Updates have been provided throughout
2021 on when the different aspects of
the regulation are going live and thecurrent status of Admiral in responding.
This has included extensive internaland external engagements to provide
assurance of the appropriatenessof Admiral’s implementation designand execution.

1	Price walking occurs when ‘firms use complex and opaque pricing techniques for home and motor insurance to identify customers who are more likely to renew with them. Firms then increase prices forthese customers each year at renewal, in a process known as ‘price walking’.’ General insurance pricing practices market study Feedback to CP20/19 and final rules.
2	New Business Equivalent: ‘A pricing remedy requiring that when a firm offers a renewal price to a customer, this should be no greater than the equivalent new business price (ENBP) for a new customer.’
General insurance pricing practices market study Feedback to CP20/19 and final rules.

Company overview

Strategic report

Climate change
Admiral remains committed torecognising and understanding thethreats and opportunities posedby climate change to the Group, as
well as to mitigate its impact on theenvironment. Climate-related risks
can impact on all of Admiral’s businesslines, operations, investments,
and reinsurance arrangements.
Admiral Group recognises that while
there are risks from delayed action,
there are also opportunities fromconsidering the challenges, including
the potential to accelerate the Group’stransformation, to build resilience, andto gain competitive advantage in newand existing markets.
As part of this work there is an ongoingGroup focus on:• Ensuring full compliance withregulatory and disclosure
requirements, such as those outlined
in FCA Policy Statement PS20/17,
which confirmed the introductionof a new listing rule LR 9.8;
• Researching climate-change trends
and assessing the risks arising fromclimate change;• Incorporating climate-related risk
drivers into business-as-usual risk
management, such as enhancing
Admiral’s stress and scenario testing
to incorporate climate-change related
financial risks; and• Continuing efforts to further reduce
the Group’s carbon footprint.
Admiral Group’s strategy linked to climatechange is discussed in more detail in the
Task Force on Climate-Related Financial
Disclosures disclosure page 107.

Corporate governance

Financial statements

Based on the results of this analysis, theDirectors have a reasonable expectationthat the Group will be able to continue
in operation and meet its liabilities as
they fall due, for the period up to andincluding December 2024.

Strategic Report approval
The Strategic Report is approved by the
Board of Directors and signed on behalfof the Board.

Milena Mondini de Focatiis
Group Chief Executive Officer
3 March 2022

Additional information

127

128

Admiral Group plc Annual Report and Accounts 2021

Governance

Quick navigation
130 Governance at a glance
132 Chair’s introduction
134 Board of Directors
140 Governance Report
154 Nomination and
Governance Committee
165 Audit Committee Report
172 The Group Risk Committee
177 The Remuneration Committee
180 Remuneration at a glance
181 Directors’ remuneration policy
190 Annual report on remuneration
204 Directors’ report

129

Becky’sstory
14%

Our UK Ho
usehold
Insurancebusinessgrew by almost
14% in 20
21

Spotted on the coverWe sit down with Becky as she talks about helping customers
alongside a developing career and a work/life balance.
Hi I’m Becky
I first joined Admiral in 2012 in theMotor Claims Liability department
and moved to Household Claims in
2021 as a Team Manager. Like a lotof people, I came to work for Admiral
after university as a stopgap and have
loved it here ever since.
The household side of the businessis growing rapidly and so it’s an
exciting and progressive department
to be based in. My team are the firstpoint of contact for our Household
customers when an incident occurs
at their property or they lose an
item outside of their home. We
set up claims, or give advice to ourcustomers and help them as muchas we can.
Now that restrictions have eased I
have recently returned to working
in the office, for around 40% of mytime. I like the fact that Admiral has aflexible working policy, as it supports

a better work-life balance whichmakes childcare arrangements
much easier.
Working for Admiral can open doors
to different careers, and many of
my colleagues and friends have held
various roles around the business. I
have made life-long friends here and it
is great to see our careers flourishing.
The reason I love working here is dueto the famous Admiral culture. This
isn’t just the social side of things
and the office environment (which isfantastic), but also how much Admiralcares for employees, customers andthe local communities, whilst also being
industry leading in a sometimes difficult
environment. How we reacted to Covid
makes me especially proud: providing
our customers with a goodwill Covid
payment; and supporting us all in themassive transition of working fromhome. I cannot wait to see what the
future holds for the company and for
my career at Admiral.

Working for Admiralcan open doors todifferent careers, andmany of my colleagues
and friends have held
various roles aroundthe business.

130

Admiral Group plc Annual Report and Accounts 2021

Governance at a glance
as at 31 December 2021
Our Board continues to keep abreast of the changing corporate governance landscapeand is committed to ensuring that it provides effective leadership.

Board
genderdiversity

Executive /Non-Executive
Directors

Male

Female50%

Executive

Non-executive

50% 2

9

40s (17%)

Age diversity(by bracket)

Total Board
Independence

60s (33%)50s (42%)70s (8%)

IndependentNon-independent

93

The independent Non-Executive Directors have sufficient time available to performtheir duties.

Board
Nationality
UK

67%

Board
Ethnicity
Non-UKWhite

33% 11Ethnicminority1Company overview

Strategic report

Corporate governance

Financial statements

Additional information

The Board remains satisfied that it has the appropriate balance of skills, experience,
independence and knowledge.

Total Board skills

Finance (11)International (9)Risk (10)Tech/Digital/Data (6)Insurance (8)Operations (10)Executive/Strategic
Leadership (12)Entrepreneurial (7)Loans (5)Marketing/Retail (3)Remuneration/People (7)M&A (5)

ESG/Sustainability (4)City (7)Find further detail on
page 159

Board composition and succession planning
Balance of skills
knowledge andexperience

Non-Executive tenure& independence

Board compositionand succession
planning

Annual Board
evaluation& individual
Director appraisals

Time commitment
and external
appointments>9 years

Non-Executive
Director tenure

Board
diversity

6–9 years
3–6 years<3 years

Annette Court

9y 9m

Mike Brierley

3y 3m

Jean Park7y 11mKaren Green

3y

Owen Clarke

6y 4m

JP Rangaswami 1y 8m

Justine Roberts 5y 6m

Evelyn Bourke

8m

Andy Crossley

Bill Roberts

6m

3y 10ms131

132

Admiral Group plc Annual Report and Accounts 2021

Introduction to Governance
Annette Court
Group Chair

Dear Shareholder,

Backdrop

On behalf of the Board, I am pleased
to present the Group’s Governance
Report for the financial year ended 31
December 2021. This report sets out
our approach to effective corporate
governance and outlines key areas offocus of the Board and its activities
undertaken during the year as we
continue to drive long-term value forall our stakeholders.

Our focus continues to be on theimpact of Covid and remote-working
on workplace culture, the Department
for Business, Energy & Industrial
Strategy consultation on ‘Restoring
trust in audit and corporate governance:
proposals on reforms’, diversity andinclusion, succession planning andAdmiral’s impact on climate change.
The Board continues to keep abreastof the changing corporate governancelandscape and is committed to ensuringthat it provides effective leadershipby ensuring that good governanceprinciples and practices are adhered toacross the Group.

This report focuseson the Board and its
activities undertaken
during the year as we
continue to drive
long-term value forall our stakeholders.

Board changes and succession
planning
During the year, Manning Rountree,
who was an independent Non-Executive
Director and a member of the Risk
Committee, notified us of his intention
to step down from the Board at theend of his six-year term in June 2021.
I would like to thank Manning for his
insight, dedication and commitment to
the Board and in his role as a memberof the Risk Committee. As a result of his
intention to step down, JP Rangaswami
was appointed as a member of the Risk
Committee in June 2021, and we took
steps to recruit a new Non-Executive
Director.
We welcomed Evelyn Bourke to
the Board and as a member of theRemuneration Committee in April 2021
and Bill Roberts in June 2021, following
two formal and comprehensive selection
processes. Evelyn and Bill bring different
skills and experience to the Board, with
Evelyn having substantial experiencein life and health insurance, risk andcapital management and Bill having
a wealth of experience in insurance,
underwriting and marketing in
the US. Evelyn was subsequently
appointed as the Chair of theRemuneration Committee in September
2021, following Owen Clarke notifying usof his intention to step down from theBoard towards the end of 2021. Owen
has remained a member of the Board,
Nomination and Governance Committee,
and Remuneration Committee, as wellas in his role as Senior Independent
Director (SID) before stepping down
on 31 December 2021. I would like toalso extend my thanks to Owen forhis contribution, commitment andchallenge during his tenure of almost six
and a half years on the Board.
The Nomination and GovernanceCommittee recommended, and theBoard approved, in October 2021
and December 2021, respectively,that Jean Park be appointed as the
SID and a member of the Nomination
and Governance Committee, witheffect from 1 January 2022. However,in February 2022, Admiral announced
that Jean would be taking a temporary
medical leave of absence withimmediate effect and that she intended
to return to her roles in the second halfof 2022. Several interim appointments
were, therefore, approved to cover Jean’sroles, as follows:• Justine Roberts appointed interim SID.
• Andy Crossley appointed as interimGroup Risk Committee Chair.
• Jayaprakasa (JP) Rangaswami
appointed as interim Group
Remuneration Committee member.
Further information on the succession
planning process that led to these
temporary appointments being madewill be provided in the 2022 Annual
Report.
Jean, together with the interim SID,
Justine Roberts, will play an importantrole in 2022 in leading the Chair
succession process as my extended
tenure as Board Chair comes to an
end at the AGM in 2023.

Company overview

Strategic report

Corporate governance

Financial statements• Our succession planning is set out on
page 161.

Information on how the Directors
discharge this duty, as well as an
update on the work of the Employee
Consultation Groups (ECG), is contained
within the stakeholder sections on pages
87 – 99 of the Strategic Report.

• Our explanations in respect of noncompliance with Provisions 19 and 32
of the Code are on pages 140 – 141.

Environmental, Social,and Governance (ESG)

Further details of:• The respective selection processes are
set out on pages 155 – 156.

Purpose, culture and theimpact of Covid
As reported in our 2020 Annual Report,
the Board approved a revised Grouppurpose statement in January 2021.
The Board is cognisant that it has theultimate responsibility for ensuring that
Admiral has an appropriate company
culture that aligns with the Grouppurpose and considers its impact on allof its stakeholders. Culture continues
to be a topic of close monitoring bymanagement and the Board, following
the workforce spending an extended
time working from home due to theongoing pandemic. The Board received
updates during the year on the proposals
to introduce a more permanent hybrid
working model across the Group andhow this might impact Admiral’s culture.
Further information on the Group’s
purpose and how its culture is monitored
and assessed by the Board is outlined on
page 12, pages 89 – 92 of the Strategic
Report and pages 145 – 147 of thisreport, respectively.

Stakeholder engagement
During the year, the Board revisited its
Stakeholder Map and reaffirmed the
key stakeholder groups, as well as thevarious mechanisms used to engage andcommunicate with each. Consideration
was also given to how Admiralstakeholders’ views were taken into
account in decision making in accordancewith the Board’s duties under s.172
of the Companies Act 2006.

The Board increased its oversight ofenvironmental, social and governancefactors in 2021, with climate change, anddiversity and inclusion being areas ofincreasing focus. Not only did the Board
receive multiple updates on progress
to increase disclosures on ESG matters,
but the Audit and Risk Committees also
increased their respective oversight of
the implementation of the Taskforce for
Climate-related Financial Disclosures(TCFD) and relevant Sustainability
Accounting Standards Board (SASB)
disclosures. The Remuneration
Committee also considered proposals
during the year to link ESG metrics toreward. Further information on TCFD
and climate change can be found on
page 107, and further information on
Admiral’s SASB disclosures can be foundin our Sustainability Report (publishedseparately on our website).
The Nomination and GovernanceCommittee and the Board considered
updates on diversity and inclusion during
the year, including revised targets todemonstrate Admiral’s commitment tocontinue to be a diverse and inclusive
employer. Further information about
the Board’s oversight of diversity andinclusion at Admiral is included in the
Nomination and Committee Report on
pages 159 – 161 and on pages 54 – 55 of
the Strategic Report.

Additional information

133

Cyber risk
Having been highlighted as an areaof focus within the 2020 Board
evaluation, the Board, as well as theGroup Risk Committee, increased
its oversight of cyber risk in 2021.
It received updates on information
security and cyber risk, technology
updates generally and also held acrisis management session basedon IT security and lessons learned
to date. Given the increasing
sophistication of cyber-attacks inthe external environment, the Board
intends to maintain its focus on
improving cyber security defences
and reviewing the Group’s response
plan to a cyber-attack.

Board effectivenessAt the end of the year, the Board andall of its Committees evaluated theirown performance to ensure thatthey continued to operate effectively
and to provide an opportunity tomake any improvements in 2022. The
outcome of the review also fed into
the Board’s objectives which were set
for 2022. A summary of the outcomeof the internally facilitated Board
evaluation, including information on
the Board’s objectives, are on pages
163 – 164.

Annette Court
Group Chair
3 March 2022

134

Admiral Group plc Annual Report and Accounts 2021

Board of Directors
Our diverse Board hasa breadth of skills
and experience.

Annette Court

C

Chair

Current appointments
Non-Executive Director Member of the Audit and Risk
Committee at Sage Group plc

Board skills matrix
Finance

Risk

Insurance

Executive/Strategic
LeadershipMarketing/Retail

M&A

City

International

Technology/
Digital/Data

Operations

Entrepreneurial

Loans

Remuneration/
PeopleESG/Sustainability

Background and experience
CEO of Europe General Insurance for Zurich Financial
Services and a member of the Group Executive Committee
from 2007 to 2010.
Former CEO of Direct Line Group (formerly RBS Insurance)and member of the RBS Group Executive Management
Committee.
Previously a member of the Board of the Association of
British Insurers (ABI).

SkillsAppointed
Appointed to the Board in 2012, appointed to Chair in 2017.

2019 Achievement
Award at The British
Insurance Awards.
Listed in
Insurance
Business UK
30 Womenof Influencein 2016

Honours DegreeinEngineering Scien
ce –Oxford University

Commissioner
for the Covid
RecoveryCommission

Company overview

Strategic report

Corporate governance

Financial statements

135

Additional information

Committee Membership
Audit Committee member

Remuneration Committee member

Committee ChairGroup Risk Committee member

Nomination and Governance Committee member

Senior Independent Director

Milena Mondini de Focatiis

Geraint Jones

Current appointments

Current appointments––

Background and experience

Background and experience

Milena joined Admiral in 2007, she became Chief Executive
Officer of ConTe in 2008 and Head of UK and European
Insurance in 2019. Milena was appointed as Group Chief
Executive Officer in 2021.

Geraint joined Admiral in 2002 and held several seniorfinance positions, including Head of Finance, before being
promoted to Deputy Chief Financial Officer in January
2012 and Chief Financial Officer in August 2014. Geraint is
responsible for finance, investments and investor relations.
A Fellow of the Institute of Chartered Accountants in
England and Wales, Geraint spent the early part of his
career as an external auditor at Ernst & Young and KPMG.

Chief Executive Officer

Before joining Admiral, Milena worked as a consultant for
Bain & Co and Accenture. She holds an MBA from INSEAD.

Chief Financial Officer

SkillsSkillsAppointed

Appointed

Appointed in 2021.

Appointed in 2014.

Group CEOappointed 2021

Passionate
about teamwork, innovationand equality

Best Peoplefocused CEOof the Yearat the HR
ExcellenceAwards.

Appointed CFO in 2014
and is responsible forfinance, investments
and investor relations

Passiona
te abofinance (a ut
ndtriathlons!)Fellow oftheInstitute ofChartered
Accounta
nts inEngland a
nd Wales136

Admiral Group plc Annual Report and Accounts 2021

Board of Directors continued

Mike Brierley

Karen Green

Current appointments

Current appointments

Chair of Admiral Financial Services Limited*

Non-Executive Director, Chair of the Sustainability
Committee; member of the Audit and Remuneration
Committees of Phoenix Group Holdings plc

Non-Executive Director

Non-Executive Director, Chair of Audit Committee
and member of Risk Committee of Nottingham
Building Society
Trustee and Director of the Rose Theatre TrustC

Non-Executive Director

Subject to regulatory approval, Senior Independent Director
designate of Phoenix Group Holdings plc (effective 5 May 2022)
Council Member, Chair of the Investment Committee, memberof the Risk and Remuneration Committees of Lloyd’s of London
Non-Executive Director and Chair of the Risk Committee,
member of the Remuneration Committee at Asta Managing
Agency Ltd
Non-Executive Director, member of the Risk, Audit andRemuneration Committees of Miller Insurance Services LLP
Adviser to Cytora Limited

Background and experience

Background and experience

Mike was CFO of Metro Bank PLC between 2009 and 2018,
helping to lead the business from start-up to listing on the FTSE.
He spent seven years at Capital One Europe in various roles
including CFO Europe, CFO UK and Chief Risk Officer Europe. He
has also served as CFO for Royal Trust Bank, Financial Controller
at Industrial Bank of Japan, London Branch, Director Business
Risk at Barclaycard and was co-founder and Deputy Managing
Director/CFO of Gentra Limited. In 2021 Mike joined the Rose
Theatre Trust as a Trustee and Director. Mike is a Fellow of theInstitute of Chartered Accountants in England and Wales.

Karen Green is the former CEO of Aspen UK, which
comprised the principal UK insurance and reinsurancecompanies of Aspen Insurance Holdings from 2010 to 2017.

SkillsSkillsAppointed

Appointed

Appointed in 2018.

Fellow of theInstitute ofChartered
Accountants in
England and Wales.

35 years + experience in
CFO roles in the financial
services industry

Passionate aboutbusiness growthand developm
ent* Admiral Financial Services Limited is an Admiral Group subsidiary.

Other senior Aspen positions included Group Head of
Strategy, Corporate Development, Office of the Group CEO
and she was a member of the Group Executive Committee
for 12 years.
Prior to that, she held various corporate finance, M&A andprivate equity roles at GE Capital Europe and Stonepoint
Capital, having started her career in investment banking at
Baring Brothers and Schroders.

Appointed in 2018.

Passionate about
grow than d b e stpractice

Council M
ember,
Lloyd’s of
L on donExperience inFinance, M& A
and investmentsCompany overview

Strategic report

Corporate governance

Financial statements

137

Additional information

Committee Membership
Audit Committee member

Remuneration Committee member

Committee ChairGroup Risk Committee member

Nomination and Governance Committee member

Senior Independent Director

Justine Roberts, CBE

1

Non-Executive Director

Jean ParkC

Non-Executive Director

Current appointments

Current appointments

CEO & Founder, Mumsnet.com & Gransnet.com–

Non-Executive Director of The Open Data Institute

Background and experience

Background and experience

Justine founded Mumsnet in 2000 and is responsible forcreation, strategic direction and overall leadership. In May
2011, Justine founded Gransnet, a sister site to Mumsnet,
for the over-50s.
Before that Justine was a freelance football and cricket
journalist for the Times and Daily Telegraph, after working
for Deutsche Bank, managing the South African equity
operation in the US.

Jean was Group Chief Risk Officer at the Phoenix Group
from 2009 until June 2013, during which time she held
responsibility for the Group’s relationship with the regulator
and founded the Board Risk Committee. Previously, she was
Risk Management Director of the Insurance and Investments
division of Lloyds TSB and, before that, Head of Complianceand Audit at Scottish Widows. Jean is a Member of theInstitute of Chartered Accountants of Scotland.

SkillsSkillsAppointed

Appointed

Appointed in 2016.

EU-Startup’s Top
50 Most Influential
Women in Startups
and VC in 2019
Institute of InternalCommunication
Communicator of
the Year in 2014

Passionate aboutcommunication andentrepreneurship

1 Interim Senior Independent Director.

Appointed in 2014.

Appointed 2014

Member of theInstitute of Chartered
Accountants of Scotland

Passiona
te about
Risk & Co
mpliance

138

Admiral Group plc Annual Report and Accounts 2021

Board of Directors continued

Andy CrossleyC1

Non-Executive Director

Jayaprakasa (JP) Rangaswami

1

Non-Executive Director

Current appointments

Current appointments

Non-Executive Director, member of Remuneration
Committee and Chair of Audit Committee at Vitality Health
Ltd and Vitality Life Ltd

Non-Executive Director of Allfunds Bank SA

Chair of EUI Limited*

Non-Executive Director of Allfunds Group PLC
Non-Executive Director of Daily Mail and General Trust
Non-Executive Director of National Bank of Greece
Non-Executive Director of EMIS Group plc
Member, Board of Trustees, Cumberland Lodge

Background and experience

Background and experience

Andy was Chief Financial Officer at Domestic & General
Group from 2014 to 2017. He spent 14 years at Prudential
plc from 2000 as Director, Group Finance; Group Chief Risk
Officer; and CFO and Deputy Chief Executive Officer ofPrudential UK. He previously held senior manager roles at
Legal & General Group plc, where he was Group Financial
Controller, and Lloyds Bank plc. Andy is a Fellow of theInstitute of Chartered Accountants in England and Wales.

JP Rangaswami was Chief Information Officer with Dresdner
Kleinwort from 2001 to 2006. He spent four years as
Managing Director/Chief Scientist at BT Group 2006 to 2010.
JP was Chief Scientist with Salesforce from 2010 to 2014 andwas Chief Data Officer and Group Head of Innovation with
Deutsche Bank from 2015 to 2018. JP is also a former global
CIO of the Year as well as European Innovator of the Year.

SkillsSkillsAppointed

Appointed

Appointed in 2018.

Appointed in 2020.

Chairman of EUI

Fellow ofthe
British Co
mputerSociety

Fellow of the Institute ofChartered Accountantsin England and Wales

Former European
Innovator of
the year

Extensive
experience inFinance and Risk

* EUI Limited is an Admiral Group subsidiary.
1 Group Risk Committee member but temporarily interim Group Risk Committee Chair.

Former Global
CIO of the year

1 Interim Remuneration Committee member.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

139

Committee Membership
Audit Committee member

Remuneration Committee member

Committee ChairGroup Risk Committee member

Nomination and Governance Committee member

Senior Independent Director

Evelyn Bourke

C

Non-Executive Director

Bill Roberts

Non-Executive Director

Current appointments

Current appointments

Non-Executive Director and member of the Audit andNominations Committees at Marks and Spencer Group–

Non-Executive Director Chair of the Audit Committee, andmember of the Risk Committee at Bank of Ireland Group plc
Non-Executive Director and Senior Independent Director at
AJ Bell plc

Background and experience

Background and experience

Evelyn was Bupa’s Chief Financial Officer between 2012 and2016, before becoming Bupa’s Chief Executive Officer from2016 to 2020.

Bill Roberts has a wealth of insurance, underwriting andmarketing experience gained during his time at US insurer
GEICO, which he joined in 1984.

Evelyn has held several senior leadership roles during her
career, including Chief Commercial Officer at Friends LifeUK (2012), Chief Financial Officer at Friends Provident(2009 – 2010), Chief Financial Officer at Standard Life
Assurance (2006 – 2008), and Chief Executive Officer atChase de Vere (2004).

Whilst at GEICO, Bill held several executive appointments,
including Chief Operating Officer and President and Chief
Executive Officer for all GEICO Insurance Companies, aposition he held from 2018 until he was promoted to Vice
Chairman, GEICO Insurance Companies in 2020. Bill held thisrole until he retired from GEICO in December 2020.

SkillsSkillsAppointed

Appointed

Appointed in 2021.

Ranked 16th in the Financial
Times annual HERoes listof female global leaders
committed to driving
workplace genderequality in 2018
Extensiveexp
in financia eriencel services,risk and capitalmanagement

Transformativechange leader

Appointed in 2021.

Passionate
about insu
rance,
underwriti
ng and ma
rketing

Vast experience in the
United States

140

Admiral Group plc Annual Report and Accounts 2021

Governance ReportCompliance with the UK
Corporate Governance Code
Implementing best practice corporate
governance contributes to thesuccessful delivery of strategy andis, therefore, important to the Board.
An effective corporate governanceframework helps the Board andmanagement to deliver the strategy
within the scope of the relevant legal
and regulatory landscapes. It ensures,amongst other things, that:• The Board is composed in an
appropriately balanced way which
promotes diversity and enables
it to operate effectively. Having
appropriate divisions of responsibility
between Executive and Non-Executiveroles provides external challenge tothe internal view. Similarly, diversity on
the Board and at a senior managementlevel avoids group-think and offers
different perspectives.
• The Board and management maintaintwo-way relationships with theGroup’s key stakeholders. The Board
should act in a way which promotes
the success of the Company for the
benefit of its shareholders, but itshould also have regard to its otherkey stakeholders when making
decisions. It is important that two-way
engagement is maintained to enable
key stakeholders to provide input to
the Group’s actions.
• The Group has a clear purpose andstrategy, and that Admiral’s culturealigns to it. Messaging and tone fromthe top are crucial and should beconsistent so that everyone is clear
about the goal and, therefore, works
towards the same thing.
• Remuneration is proportionate
and supports long-term success,therefore, generating the rightbehaviours and outcomes.

This year, the Annual Report has
been structured to better help thereader cross-reference the following
key sections of the UK Corporate
Governance Code 2018 (Code), withthe explanations of the Company’s
application of the Code principles andcompliance with its provisions fallingunder the respective sections:• Board leadership and Company
purpose (from page 142)
• Division of responsibilities(from page 149)
• Composition, succession andevaluation (from page 153)
• Audit, risk and internal control(from page 165)
The mechanisms described throughout
the Corporate Governance Report
are intended to demonstrate how
the Group’s corporate governanceframework contributes to the deliveryof the strategy.

Provisions:
Statement of Compliance
The Group complied with the provisions of
the UK Code except for provisions 19 and
32, for which there are explanations below.

Explanations:
Provision 19 of the Code states that
‘The chair should not be in post beyond
nine years from the date of their first
appointment to the board.’ Annette
Court was appointed as Board Chair in
April 2017, having spent five years as a
Non-Executive Director of the Board.
Annette reached her nine-year tenure
as Non-Executive Director on the Board
in March 2021. As reported in the Annual
Reports for the two prior periods, in
2019, the Board considered and agreed,
having consulted shareholders, that sheshould remain in post as Board Chair
for up to three years beyond March
2021, with the expectation that she
would serve two years, subject to annual
approval by the shareholders. This
represents a departure from the Codefor the 2021 financial year.

Provision 19 of the Code goes on to statethat ‘To facilitate effective succession
planning and the development of
a diverse board, this period can beextended for a limited time, particularlyin those cases where the chair was anexisting non-executive director on
appointment.’ Not only was Annette
an existing Non-Executive Director
upon her appointment as Board Chair,
but we also believe that it continues
to be necessary to extend her tenure
until March 2024 at the latest, in orderto facilitate Board continuity andsuccession following David Stevens, afounder of Admiral, stepping down fromhis role as CEO in December 2020 and
Milena Mondini assuming the role ofGroup CEO in January 2021.
The Board takes comfort from thefact that Annette’s re-election was
supported by shareholders at theprevious AGM on 30 April 2021 (99.93%
votes in favour) and that her 2021
performance review, led by the SID,
concluded that she continued toperform effectively as Board Chair,continued to exercise objective
judgement and promoted constructive
challenge amongst Board members.
Owen Clarke: ‘The Board concluded thatthe risk of the Chair failing to operatewith sufficient independence is low, but
the Board, led by the Senior Independent
Director, will continue to monitor the
Chair’s performance and objective
judgement during 2022 in order tomitigate any risk of reduced challenge todecision-making and any compromise in
the Chair’s objectivity.’
The 2021 Board evaluation also
concluded that the Board continued
to function well, under the leadershipof Annette. In addition, the Board’s
composition has continued to berefreshed during 2021, with theappointment of Evelyn Bourke and Bill
Roberts, further strengthening theBoard’s mix of skills, experience andknowledge whilst further mitigating any
potential reduction of challenge.

Company overview

Strategic report

Jean Park assumed the role of SID
on 1 January 2022 and, together
with the support of the Board, andJustine Roberts as the interim SID, willcommence the search for a Board Chair
successor during 2022.
Provision 32 of the Code requires that
‘Before appointment as chair of the
remuneration committee, the appointee
should have served on a remunerationcommittee for at least 12 months.’
Following notification from Owen Clarkeof his intention to step down from theBoard towards the end of 2021, steps
were taken to search for a Non-Executive
Director to succeed Owen as Chairof the Remuneration Committee.
Evelyn Bourke was appointed to theBoard as a Non-Executive Director and amember of the Remuneration Committee
on 30 April 2021. Further details about
the Non-Executive Director appointment
process are located on page 155.

Corporate governance

Financial statements

Having served four months as a memberof the Remuneration Committee
and following receipt of regulatory
approval, Evelyn was appointed as Chairof the Remuneration Committee on
1 September 2021. Despite not having
served on the Committee for at least
12 months before being appointed
as Committee Chair in accordancewith Provision 32, Evelyn has previous
experience of remuneration committees
through having been a member of the
IFG Group Plc Remuneration Committee
between 2013 and 2016, and throughher former role as CEO of Bupa Group
Plc. Evelyn has also built up substantial
experience in other leadership andoversight roles in the insurance industry
over the past 20 years, including chairing
committees on regulated boards forregulated entities, providing a solid
foundation for this role. Further details
about Evelyn’s experience and skills arelocated on page 139.

Additional information

141

Since her appointment to the Board
in April 2021, Evelyn has undertaken acomprehensive induction process witha particular focus on remuneration
issues relevant to the Group, in order toensure that she was fully aware of theGroup’s approach to remuneration andits challenges. During the appointment
process, it was noted that Evelyn’s
performance in her first four months as a
Non-Executive Director of the Board had
been effective, she had made positive
contributions to Board discussions, andshe is considered to be independent incharacter and judgement.
It is for these reasons that theNomination and Governance Committee
and the Board are confident that Evelyn
has the appropriate skills, knowledge
and experience to perform thisimportant role.

142

Admiral Group plc Annual Report and Accounts 2021

Governance Report continued

Board leadership and Company purpose
Compliance with the Code Principles
UK CodePrinciple

Description

References

Principle A

A successful company is led by an effective andentrepreneurial Board, whose role is to promote thelong-term sustainable success of the company, generating
value for shareholders and contributing to wider society.

• Role of the Board on page 150.
• Stakeholder sections in the Strategic Report:
Ȳ Customers on pages 87 – 89.
Ȳ People on pages 89 – 92.
Ȳ Partners and suppliers on pages 93 – 94.
Ȳ Shareholders on pages 95 – 96.
Ȳ Communities on pages 96 – 98.
Ȳ Environment on pages 98 – 99.
• Board evaluation on pages 163 – 164.

Principle B

The Board should establish the company’s purpose, values
and strategy, and satisfy itself that these and its culture
are aligned. All directors must act with integrity, lead byexample and promote the desired culture.

• Purpose, values and strategy on pages 02 – 03 and 35 – 44of the Strategic Report.
• Monitoring and assessing culture on pages 144 – 147.
• Role of the Board on page 150.

Principle C

The Board should ensure that the necessary resources
are in place for the company to meet its objectives andmeasure performance against them. The board should
also establish a framework of prudent and effective
controls, which enable risk to be assessed and managed.

•
•
•
•
•

Principle D

In order for the company to meet its responsibilities toshareholders and stakeholders, the board should ensure
effective engagement with, and encourage participation
from, these parties.

• Stakeholder engagement on pages 87 – 99.
• Stakeholder sections in the Strategic Report:
Ȳ Customers on pages 87 – 89.
Ȳ People on pages 89 – 92.
Ȳ Partners and suppliers on pages 93 – 94.
Ȳ Shareholders on pages 95 – 96.
Ȳ Communities on pages 96 – 98.
Ȳ Environment on pages 98 – 99.

Principle E

The Board should ensure that workforce policies andpractices are consistent with the company’s values andsupport its long-term sustainable success. The workforce
should be able to raise any matters of concern.

• Culture on pages 144 – 147.
• Whistleblowing on page 148.
• Whistleblowing in the Audit Committee Report on page 171.

Meetings and attendanceDirectors are expected to attend
all meetings of the Board and theCommittees on which they serve and to
devote sufficient time to the Group to
perform their duties. Where Directors areunable to attend meetings, they receive
papers for that meeting, giving themthe opportunity to raise any issues with
the Chair in advance of the meeting. The
number of scheduled Board meetings andCommittee meetings, of which they are amember, attended by each Director during2021 is provided in the table overleaf.
In addition to the seven scheduled Board
meetings held during the year, thefollowing additional meetings were held:

Going concern in the Directors’ Report on page 204.
Role of the Board on page 150.
Board evaluation on pages 163 – 164.
Internal audit in the Audit Committee Report on page 171.
Risk management and internal control systems in the Risk
Committee Report on pages 175 – 176.

• In February 2021, two meetings
were called at short notice toconsider ad hoc matters.
• In June 2021 to approve theappointment of Bill Roberts asa Non-Executive Director to theBoard and to appoint JP Rangaswami
as a member of the Group
Risk Committee.
The Board also delegated authority
to a Board Sub-Committee on six
occasions during the year toreview and approve final drafts ofannouncements and proposals,
which had already been consideredby the Board or its Committees,on behalf of the Board.

Due to the continuing Covid pandemic
social distancing restrictions andlockdown measures at the beginning of
the year, the Board has held several ofits meetings remotely. The Board wasfortunate to meet in person for two of
its ten meetings held during the year,
including its strategy meeting (andOctober Board) which was held over threedays at the ConTe head office in Rome.
The work of the Group Audit Committee
increased during the year, resulting in
the need to hold six additional meetings,
two of which were held as joint meetings
with the Risk Committee. Further detailsof the activities of the Audit Committee
are provided in its report on pages
165 – 171.

Company overview

Strategic report

Corporate governance

Financial statements

143

Additional information

The increase in Group Risk Committee meetings beyond the five meetings scheduled for the year was a result of discussions
required in relation to remuneration and Admiral’s internal capital model. Further details on the activities of the Risk Committee
are provided in its report on pages 172 – 176.
The increase in Group Nomination and Governance Committee meetings was due to Non-Executive Director recruitment andother ad hoc matters.

Audit Committee
Board meetings
Meetings

Total Meetings Held
Annette Court(Chair)100%

Milena Mondini de Focatiis(Chief Executive Officer)

100%

Geraint Jones(Chief Financial Officer)

100%

Owen Clarke
Karen Green
Jean Park
Manning Rountree
Justine Roberts
Andrew Crossley
Michael Brierley
Jayaprakasa (JP) Rangaswami
Evelyn Bourke
Bill Roberts

80%

90%

100%

85.7%

70%

100%

90%

90%

100%

100%

Risk Committee
meetings

Nomination and
GovernanceCommittee
meetings

Remuneration
Committee
meetings

9

8

9/9

–

10

131

10

10/10

–

–

10/10

–

–

–

–

10/102

–

–

–

–

8/103

–

–

13/13

–

–

10/10

–

5/67

–

–

9/9

–

10/10

–

–

–

–

3/412

–

9/105

100%

10/10

–

6/76

–

7/108

–

10/10
9/101092%

100%

12/139

100%

83%

–

100%

13/13

100%

100%

100%

9/9

9/1011

–

4/413

–

–

–

3/315

–

–

–

75%

7/84

87.5%

–
8/8

100%

8/8

100%

–

100%

5/514
–

1 Two of these meetings were held jointly with the Risk Committee, for which apologies were received from Manning Rountree in respect of the meeting held on 25 February 2021. Membersof the Risk Committee also attended part of the meeting held on 20 September 2021, which included a training session.
2 Geraint attended two days out of three of the Board strategy meeting on 6–8 October 2021 due to a prior commitment.
3 Owen was unable to attend one ad hoc meeting of the Board called at short notice on 15 February 2021 and a scheduled Board meeting on 2 & 3 March 2021 due to personal circumstances.
4 Owen was unable to attend the Remuneration Committee meeting 10 February 2021 due to an unexpected emergency and, therefore, Jean Park chaired this meeting.
5 Karen was unable to attend one ad hoc meeting of the Board called at short notice on 10 June 2021.
6 Manning was unable to attend one ad hoc meeting of the Board called at short notice on 10 June 2021.
7 Manning stepped down as a Non-Executive Director of the Board on 17 June 2021 and was unable to attend the Risk Committee meeting on 12 February 2021 due to a prior external commitment.
8 Justine was unable to attend three ad hoc meetings of the Board called at short notice on 8 February 2021, 15 February 2021 and 10 June 2021.
9 Andy was unable to attend an Audit Committee meeting on 28 April 2021 due to a prior external commitment.
10 Mike was unable to attend an ad hoc meeting of the Board called at short notice on 10 June 2021.
11 JP was unable to attend an ad hoc meeting of the Board called at short notice on 10 June 2021.
12 JP was appointed as a member of the Risk Committee on 17 June 2021 but was unable to attend the Risk Committee meeting held on 30 July 2021 due to a prior external commitment.
13 Evelyn was only able to attend one day of the Board meeting held on 16 & 17 June 2021 due to a prior external commitment.
14 Evelyn was appointed to the Board as a Non-Executive Director and a member of the Remuneration Committee on 30 April 2021 and was subsequently appointed as the Chair of that
Committee on 1 September 2021.
15 Bill was appointed to the Board as a Non-Executive Director on 11 June 2021.

144

Admiral Group plc Annual Report and Accounts 2021

Governance Report continued

Principal areas of focus for the
Board in 2021

Strategy

Governance• Strategy deep dives throughout
the year from each Group business,
including the launch of diversified
businesses under Admiral Pioneer• Progress made against the findings
arising from the 2020 internal Board
evaluation• Continued to monitor the transitionof Milena Mondini to CEO• Diversity and inclusion• Directors’ duties• Group succession planning and talentmanagement• Matters reserved for the Board andthe Committees’ respective termsof reference, particularly in lightof the allocation of climate change
responsibilities• BEIS audit and governance reform
consultation• Review of Group purpose• Financial Conduct Authority (FCA)
pricing remedies for the UK generalinsurance market• Assess market implementation of
the FCA’s market study on generalinsurance pricing and ensure Admiraldelivers a strong response

Regulatory/risk updates• Oversee the Group’s diversification
strategy• Own Risk and Solvency Assessment
Report (ORSA) review• Updates on diversity and inclusion• Updates from Investor Relations• Sustainability approach and, inparticular, climate change• FCA attended the June Board meeting• Prudential Regulatory Authority (PRA)
attended the October Board meeting• Continue to deepen the Board’s
understanding of external risk factors• Assessment of key external risk
factors and lessons learned from Covid• Oversee the roll-out and evolution of
the Group reward strategy• Cyber risk updates and crisis
management education, including
lessons learned• Regulatory relationships• IFRS 17 Insurance Contracts training
and financial impact assessment• Suppliers and partners, including
prompt payment practices• Monitor the development andexecution of Admiral’s sustainability
approach and the delivery against key
pledges• Provide steering and oversight forcapital management, reinsurance andthe internal model application process

Operational performance• Group health and safety, wellbeing
and impact of remote-working• Ensure customers continue to beat the front and centre of new
propositions and incremental changes• Modern slavery risks in the supply
chain• Stakeholder map and respective
stakeholder updates throughout
the year, including engagement
mechanisms• Reinsurance arrangements• Ensure diversity and inclusion
objectives are embedded• Group Strategy Review at thestrategy-focused meeting in
October, which considered productdiversification, Admiral 2.0 and motor
evolution, as well as updates from eachGroup subsidiary business on theirindividual strategies

Stakeholders• Update on culture and people,
including GPTW results• Continuing focus on executive teamsuccession planning• Support the continuous developmentof Admiral’s core competencies• Internal Model Application Process(IMAP) updates• Updates from the Head ofInternational Insurance on theoverseas ECG• Ensure that there is a robust selection
process for the new Group Board Chair,Group Risk Committee Chair and SID• Brand, technology and digitalprogramme updates• Non-Executive Director recruitment• Updates from the Chair of the UK
Employee Consultation Group (ECG)

Principal areas of focus for the
Board for 2022

• Impact of the Covid pandemic• Hybrid working updates• Regular trading updates from theGroup’s subsidiary businesses• Group financial performanceand position• The Group’s Five-Year Plan
• Dividend considerations

Culture
It remains important that Admiral’sculture evolves and adapts as thebusiness environment changes but it
is even more critical that those partsof our culture that have been ourcompetitive advantage and a key driverof our success to date, are fiercely
protected, especially in continuing
periods of change.

Company overview

Strategic report

Aligning our culture with our
purpose, values, strategy, policies
and practices
Our culture is strongly aligned to our
new Group purpose to ‘Help more
people to look after their future. Always
striving for better, together’. Providing
customers with great products andservices, whilst caring for our people andother important stakeholders is key towhat we do.
Although our Group purpose wasrenewed in January 2021, our unique
workplace culture continues to be
reinforced by our Four Pillars of Culture:

Corporate governance

Financial statements

The Four Pillars are built into the fabricof our training, communication, policies
and the way we do business. During
the year, the Board received assurance
from management that the Grouppurpose had been embedded within theoperational process and policies and that
there continued to be alignment with
its rewards and incentives. The Board
recognised that there was evidence of
the Group purpose and values having
been embedded in the Group’s policies
and practices but requested that further
information on the overall embeddingof the Group’s purpose be provided inearly 2022.
Further information on:

Fun
We want our people to look forward
to coming to work, celebrate
who they are, and feel happy andsupported enough to give that little
bit extra.

Communication
We encourage effective andtransparent communication at alllevels. This is aided by accessible
management and opportunities
to encourage feedback across theGroup.

Equality
We work hard to promote a sense offairness and equality. Everyone has
the opportunity to succeed, backed
by groups supporting diversity,
inclusion and social mobility.

Recognition and reward
A job well done should beappropriately rewarded. At theheart of this pillar is our shareownership scheme, which rewards
success with a stake in the
Company.

• What makes Admiral a fun place towork can be found in the Strategic
Report on page 12.
• Communication with our people canbe found in the Strategic Report on
page 89.
• Our approach to diversity andinclusion can be found in the Strategic
Report on pages 54 – 56 and theGroup Nomination and GovernanceCommittee Report on pages 159 – 161.

Additional information

145

There are many initiatives which
promote Admiral’s unique culture, someof which include:• A compensation and promotion
structure based on meritocracy• Star lunches where colleagues arerecognised for their performance andare invited to attend a lunch with asenior manager• Group Top 10 competition in which
all departments compete in a highly
contested Group-wide competition
to present to a panel of senior
managers on a different subject eachyear in order to be awarded the best
department• Annual Manager Awards• Local reward and recognition
programmes• High five feedback programmes wherecolleagues can submit feedback oncolleagues across departments who
have given great service• Ministry of Fun. Further information
can be found on page 12 of theStrategic Report• The Group’s approach to investing inand rewarding its workforce can befound in the Directors’ Remuneration
Report on page 185.

• Health and wellbeing initiatives
introduced during Covid to encourage
employees to speak up if they needed
support, a weekly health and wellbeing
bulletin, yoga classes, webinars, artclasses, amongst many other things

Guiding and promoting culture• Training/career development

Our Directors have a responsibility to
act with integrity, lead by example andpromote the desired culture. They do sothrough their everyday interactions, and
we also ensure that any policies which
apply to the Non-Executive Directors are
consistent with the equivalent policies
for the workforce.

• Diversity and inclusion working groups
and initiatives• Putting health and safety first,
particularly in respect of the returnto office considerations• New employee induction workshops
on Business and Culture at Admiral(see page 147)

Ministryof fun!

146

Admiral Group plc Annual Report and Accounts 2021

Governance Report continued

Monitoring and assessing indicators of culture
People and culture scorecard
During 2021, work was progressed to update the culture scorecard. The scorecard continues to undergo a period of evolution
but provides a good view of the key people and culture metrics in order to help management and the Board’s assessments of theoverall health of the Group’s culture. It also supports the identification of any trends in the evolution of the Group’s workforce andculture, including any associated risks which could impact the execution and support of the Group’s strategy.
The Group continues to view the following people and culture metrics that are derived from the annual Great Place to Work (GPTW)
survey and Admiral’s regular internal pulse surveys as the lead indicators for people and culture at Admiral. The GPTW survey is anexternal survey which collates anonymised question responses to provide an overall result, as well as departmental results.
GPTW Trust Index:

The Trust Index comprises 60 questions from the GPTW survey, that are stable
over time, benchmarked against the Best Companies in each market, and highly
representative of the overall people sentiment of a positive culture.

2021: 85.78%

GPTW Engagement
Index:The Engagement Index is a specific measure comprising nine questions from theGPTW survey relating to willingness to go the extra mile, intention to stay with thebusiness and likelihood of being an employer brand promoter. It is also benchmarked
and stable over time and has a proven correlation with business performance.
According to the GPTW institute research, the drivers that are most correlated tohigher engagement scores are: (i) teamwork, (ii) career development, (iii) values andethics, (iv) empowerment and accountability, and (v) innovation.

2021: 84.41%

GPTW Culture Index:

The Culture Index is a specific measure comprising of eight questions from theGPTW survey relating to employee perception of the workplace as friendly, fun andwelcoming.

2021: 90.38%

Pulse surveys are undertaken four times a year and ask the same questions of ourpeople to enable management to track any trends.

e.g. 95% of our people feel well
supported by the business*

Pulse surveys

2020: 87.36%

2020: 86.84%

2020: 92.74%

98% of our people think wetreat customers fairly*
76% of our people think that
communication within thebusiness is good*
99% of our people are awareof the Group’s Whistleblowing
Policy** June 2021 pulse survey results

Other people metrics Headcount, gender balance, absence, attrition, recruitment.

Scores continue to be very high acrossthe Group, resulting in each Group entity
being ranked among the Best Places toWork in their respective local markets.
This demonstrates the strength andimpact of the Admiral culture. Admiralis ranked as the 17th Best Workplace inEurope by Great Place to Work.
Pulse survey results in 2021
demonstrated that people at Admiralcontinued to feel well supported by their
managers, the majority enjoyed working
from home and communication wasscored highly. Some examples of action
taken following comments raised within
the pulse surveys are outlined in the Our
People section on pages 89 – 93 of theStrategic Report.

The Board received an update on the
People and Culture Scorecard metrics
during the year, including updates
on the impact of remote working on
Admiral’s culture and how this risk
would evolve as the Group moved to a
hybrid working model.
Management recognised at that timethat there were several metrics which
needed to be closely monitored as aresult of the culture risks associatedwith a move to a more permanentmodel of hybrid working, including
engagement, absence and attrition
trends, particularly as these metrics
had increased back to pre-Covid levelsin the UK, and recruitment, noting that
improvements were needed to enhance
the Group’s critical capabilities in areas
such as technology and analytics. The
Board also challenged how further
insights could be gained by tweaking

some of the metrics and noted thatthe fun aspect of Admiral’s culture wasimportant to Admiral people. Further
information on the Group’s transition
to hybrid working can be found in theStrategic Report on pages 101 – 102.

Other tools
In addition to employee participation in
regular monthly surveys and the annual
GPTW survey, there are several othermechanisms used by the Group and theBoard to monitor and assess culture.
For example, culture audits conductedby the internal audit function; ‘Meet
the Manager’ meetings; the ‘Ask Milena’scheme; regular online manager chats;
ECG meetings; mandatory training
completion rates; health and safety
data; whistleblowing and grievances;
promptness of payments to suppliers;
and customer net promoter score (NPS).

Company overview

Strategic report

All are felt to be valuable methods of
capturing the mood of our people andto gauge the health of our culture.
The Board Committees also help the
Board monitor and assess culture
through their respective responsibilities,some examples of which are highlighted
below.
Audit Committee – Whistleblowing,
Internal Audit, Group MinimumStandards.
Risk Committee – Risk events that would
impact remuneration from a malus andclawback perspective, financial crimeand misconduct risks.

Corporate governance

Additional information

147

Onboarding of new employees in a remote environment andprotecting our culture
Following the initial national Covid lockdowns, Admiral introduced a new element
to its induction for those joining remotely who had secured roles within the
support functions of the business, who otherwise would not have had thefour-week induction that our customer-facing colleagues complete, in orderto safeguard its unique culture. The business and culture induction is a 9.5 hour
programme covering the basics of our core values, culture and purpose andincludes the following modules:

Welcome to Admiral
MODULE

1

Remuneration Committee – Workforce
remuneration policies and assesses
their alignment with culture andstrategy, risk events reported to it by
the Risk Committee under the malus andclawback framework.

MODULE

Nomination & Governance Committee– Diversity and inclusion strategy andpolicies and progress against targets
to ensure alignment with the Group’s
strategy and values, and succession andtalent management.

MODULEAs well as receiving updates on theGroup’s culture at Board meetings, theNon-Executive Directors utilise othermechanisms to assess and monitor
culture, such as attending meetingsof the UK ECG and Subsidiary Boards
and performing site visits across thedifferent entities within the Group,
where possible, which enable the NonExecutive Directors to gauge the culture
for themselves during their discussions
with a cross-section of colleagues. In
the last quarter of 2021, some site visitswere able to happen in person. The
Board attended the ConTe office in Rome
and, alongside the Group Board strategy
meeting, received various presentations
from the ConTe management team andtook part in team building activities
and meetings with several of them. The
Board Chair was also able to visit theAdmiral Seguros office in Seville, theAdmiral Europe Compañía de Seguros
S.A.U. (AECS) team in Madrid and wasaccompanied by some of the NonExecutive Directors on those visits. Dueto the travel restrictions that remainedin place for much of 2021, the Chair andother Non-Executive Directors were notable to visit the Elephant team and theL’olivier team in person but instead held
virtual visits during the year.

Financial statements

2• How Admiral built its business back in 1993 to become
a FTSE 100 company• What brands we use to sell our products• Admiral’s purpose statement

Building our Business• Admiral Group’s business model• Admiral’s goals for 2021

Introduction to the Insurance Industry

3

MODULE

4

MODULE

5

MODULE

6

MODULE

7• The basics of the UK insurance market• Understanding the governing bodies within UK insurance• Principles of insurance

Learning about Admiral’s Products & Services• Our products and services• Reviewing our online websites and conducting
customer research

Upholding Our Culture at Admiral• How every employee can uphold Admiral’s uniqueculture moving into the future• Admiral’s four pillars of culture

Personal Development at Admiral• How Admiral can look after your future throughtraining and development• Registering for Admiral’s internal talent bankAward Winning Culture & Core Competencies• How to implement Admiral’s core competencies
into your role
• Admiral’s corporate responsibility report

148

Admiral Group plc Annual Report and Accounts 2021

Governance Report continued

Stakeholder engagement
During the year, the Board has
continued to focus on ensuring effective
engagement with its stakeholders
and that their interests are taken into
account in its decision-making. Detailed
information is set out in the Strategic
Report on pages 87 – 100 outlining
how the Board has discharged its
duties under s172(1) of the Companies
Act, including further information on
the ECG, which constitutes a formal
workforce advisory panel under
the Code.
Communication and interaction withshareholders remain very importantand engagement with them occurs
on a regular basis. Open and frequentdialogue with investors enables them tofully understand the Group’s strategy,
objectives and governance. The
Investor Relations team has day-to-day
primary responsibility for managing
communications with institutional
shareholders through a combination ofbriefings to analysts and institutional
shareholders, both at the half-year andfull-year results and on other occasions
such as roadshows and conferences. Dueto the Covid pandemic, such meetings,
briefings and conferences with investors
have taken place virtually since early2020.
In addition, the Chair, Senior
Independent Director (SID) and GroupCEO held individual meetings during
the year with major shareholders tounderstand their views on governanceand performance against strategy andreported to the Board on any significant
issues raised with them.
This is supplemented by feedback
to the Board on meetings between
management and investors. The
Investor Relations team also regularly
produces a report on their activities in
the previous quarter which is circulated
to the Board for their consideration.
The Report contains an analysis of shareprice performance; a summary of analyst
reports received during the month andof meetings that have been held withinvestors and analysts; together withdetails of any significant changes to theshareholders’ register.

The SID has specific responsibility to
be available to investors who have any
issues or concerns, and in cases wherecontact with the Chair, Chief Executive
Officer and Chief Financial Officer has
either failed to resolve their concerns,
or where such contact is inappropriate.
No such concerns have been raised in theyear under review.
All shareholders are invited to attend
the Company’s Annual General Meeting(AGM), unless circumstances such as
the Government’s Covid lockdown
restrictions prevent public gatherings.
Given the ongoing Covid pandemic
and lockdown restrictions, it was notpossible for shareholders to attend the2021 AGM in person. The 2021 AGM went
ahead with only the required quorum
meeting in person. The remainder ofthe Board joined the AGM by telephone.
Shareholders were able to attend via
telephone call, were invited to voteon the important customary annual
business and encouraged to submit
questions to the Board in advance of
the AGM.
The Chairs of the Audit, Remuneration,
Nomination and Governance, and Group
Risk Committees usually attend theAGM along with the other Directors andare available to answer shareholders’questions on the activities of theCommittees they chair. Shareholders
are also invited to ask questions during
the meeting and have an opportunity
to meet with Directors after theformal business of the meeting has
been concluded, or in advance, if there
are restrictions in place on publicgatherings. Details of proxy voting by
shareholders, including votes withheld,
are made available on request andare placed on the Company’s website
following the meeting.
The Group maintains a corporatewebsite (www.admiralgroup.co.uk)
containing a wide range of informationof interest to institutional and private
investors. The major shareholders of
the Company are listed in the Directors’
Report on page 205.

The regular channels of communication
with both the FCA and PRA that existed
throughout the year were supplemented
by the FCA and PRA being invited toattend Board meetings in 2021. The FCA
and PRA attended the Board remotelyin June and October 2021, respectively,
which gave the Board an opportunity
to hear directly the views of eachregulator. The Board is also kept up todate with the regular communications
between the AIGL Board and theGibraltar Financial Services Commission
as well as contact between the Group’s
other insurance subsidiaries andrespective regulators.

Whistleblowing
The Board has in place arrangements
by which employees can raise concerns
in confidence and, if necessary,anonymously. During the year, the Board
received an update on the Group’s
whistleblowing arrangements fromthe management team. The Group’s
Whistleblowing Champion, Karen
Green, was satisfied that the update
was proportionate for independent
investigation of the matters raised
and supported an ethical businessculture where colleagues felt safe
raising concerns. In addition, and on an
exceptions basis, the Board is updated in
respect of reports arising from mattersthat have been raised by our people
under the Whistleblowing Policy. The
Audit Committee receives more regular
updates in respect of whistleblowing
matters. Please see page 171 forfurther information.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

149

Division of responsibilities
Compliance with the Code principles
UK Code Principle

Description

References

Principle F

The Chair leads the Board and is responsible for its overall
effectiveness in directing the company. They should
demonstrate objective judgement throughout theirtenure and promote a culture of openness and debate. In
addition, the Chair facilitates constructive Board relations
and the effective contribution of all non-executive
directors, and ensures that directors receive accurate,
timely and clear information.

•
•
•
•
•

Principle G

The Board should include an appropriate combinationof executive and non-executive (and in particular,
independent non-executive) directors, such that no one
individual or small group of individuals dominates theBoard’s decision-making. There should be a clear divisionof responsibilities between the leadership of the Boardand the executive leadership of the company’s business.

• Board composition and succession planning on pages
157 – 162.
• Code explanation for Provision 19 on page 140.
• Board evaluation on pages 163 – 164.
• Board roles and responsibilities on page 150.

Principle H

Non-executive directors should have sufficient time
to meet their responsibilities. They should provide
constructive challenge, strategic guidance, offer
specialist advice and hold management to account• Time commitment and external appointments on page 159.
• Board biographies (for external commitments) on
pages 134 – 139.
• Board evaluation on pages 163 – 164.

Principle I

The Board, supported by the company secretary, should
ensure that it has the policies, processes, information,
time and resources it needs in order to function
effectively and efficiently.

• Information flows to and from the Board on page 151.
• Board evaluation on pages 163 – 164.

Role of the Chair on page 150.
Code explanation for Provision 19 on page 140.
Individual Director evaluation on page 164.
Board evaluation on pages 163 – 164.
Information flows to and from the Board on page 151.

Group Board

Audit
Committee

Nomination &Governance

Risk
Committee

Executive Management

Remunerationcommittee

150

Admiral Group plc Annual Report and Accounts 2021

Governance Report continued

Board roles and responsibilities
The Chair is primarily responsible for leading the Board, setting its agenda, promoting a culture of openness and debate andmonitoring its effectiveness. The Chair is supported by the SID, who acts as a sounding board and serves as an intermediary for theother Directors if required. Neither are involved in the day-to-day management of the Group. Save for the matters reserved for
the Board, the Chief Executive Officer (with the support of the Executive Directors and the senior executives) is responsible for
proposing the strategy to be adopted by the Group, running the business in accordance with the strategy agreed by the Board andimplementing Board decisions.
It is the Non-Executive Directors’ role to provide constructive challenge, strategic guidance, offer their respective specialist
advice and hold management to account.
The Board has approved a statement that sets out the clear division of responsibilities between the Chair, Chief Executive Officer
and SID. This and matters reserved for decision by the Board are reviewed annually.
Chair

Senior Independent Director

Chief Executive Officer• Runs the Board and sets its agenda, with anemphasis on strategic issues.
• Ensures the Board has effective decisionmaking processes, demonstrating objective
judgement and applying sufficient challenge
to proposals.
• Facilitates constructive Board relations,
including effective contribution from NonExecutive Directors.
• Ensures the Board has an appropriate balanceof skills, knowledge, experience and diversity.
• Leads the induction and development plansfor new and existing Board members.
• Communicates with major shareholders andensures the Board understands their views.
• Ensures the Board receives accurate, timely
and clear information.
• Leads the annual Board evaluation.

• Supports the Chair in the delivery of their•objectives.
• Acts as a sounding board for the Chair and •serves as an intermediary for the other
Directors.
• Available to shareholders if they have•concerns that cannot be resolved throughthe normal channels.
•• Works with the Chair and other Directors/
shareholders to resolve significant issues
where necessary.
•• Leads the annual performance evaluation of
the Chair.
•• Leads the Chair appointment process.

Runs the Group’s business and delivers its
commercial objectives.
Proposes and develops the Group’s strategy,
in close consultation with the Group’s senior
management, the Chair and the Board.
Implements the decisions of the Board and
its Committees.
Ensures operational policies and practices
drive appropriate behaviour, in line with theGroup’s culture.
Leads the communication programme withkey stakeholders, including employees.
Ensures management provides theBoard with appropriate information andnecessary resources.

Role of the Board
The Board is responsible for promoting the long-term, sustainable success of the Group and its shareholders and is the principal
decision-making forum for the Group, providing entrepreneurial leadership, both directly and through its Committees, anddelegating authority to the Executive team. The Board has determined the Group’s purpose which represents its values andstrategy and is satisfied that it is aligned with the culture of the Group. Part of the Board’s role is to promote the Group’s culture
and, in particular, ensure that its uniqueness is safeguarded in such times of change.
The Board is responsible for organising and directing the affairs of the Group in a manner that generates and preserves value
over the long term. Through the strong governance framework that it has in place, the Board is able to deliver on its strategy ofproviding strong sustainable financial and operational performance. The Board is also accountable for ensuring that in carryingout its duties, the Group’s legal and regulatory obligations are being met; and for ensuring that it operates within appropriately
established risk parameters.
The Group’s UK-regulated entities are accountable to the Financial Conduct Authority (FCA) and the Prudential Regulatory
Authority (PRA) for ensuring compliance with the Group’s UK regulatory obligations and that dealings with the FCA and PRA are
handled in a constructive, co-operative and transparent manner. Similar provisions apply in respect of the Group’s international
businesses with regard to the relevant regulatory authorities, such as the Gibraltar Financial Services Commission and Dirección
General de Seguros y Fondos de Pensiones in Spain.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

151

Matters reserved to the Board

Board Committees

Group conflicts of interest

The Board has adopted a formalschedule of matters reserved for the
Board’s consideration. This is monitoredby the Company Secretary and reviewed
by the Board on an annual basis. Specificmatters reserved to the Board include
the approval of:

The Board has delegated authority to
several permanent Committees to deal
with matters in accordance with written
Terms of Reference. The principal
Committees of the Board – Audit,
Remuneration, Risk, and Nomination
and Governance all comply with therequirements of the Code, except where
non-compliance has been explained on
pages 140 – 141 of this report.

In compliance with the requirementsof the Companies Act 2006 regarding
Directors’ duties in relation to conflictsof interest, the Group’s Articles of
Association allow the Board to authorise
potential conflicts of interest that may
arise and to impose such limits as it
thinks fit. The Group has a Conflicts ofInterest Policy which deals with conflictsof interest, and this was reviewed andapproved by the Board in October 2021.
The Policy sets out the process andprocedure by which the Board manages
potential conflicts of interest that
may arise at Board level, within Board
Committees, and within the Group’s
Subsidiary Boards. Following this review,
the Board concluded that the processcontinued to operate effectively.

• The Group’s long-term objectives andcorporate strategy• Operating and capital budgets,financial results, and any significant
changes to accounting practices orpolicies• The Group’s capital structure• Results and financial reporting• The system of internal control and risk
management• The Group’s overall risk appetite• Changes to the structure, size andcomposition of the Board, including
new appointments• Succession plans for the Board andsenior management• Dividend policy and proposals for
dividend payments• Major acquisitions, disposals, andother transactions outside delegatedlimits• The annual review of its own
performance and that of its
Board Committees• Annual review of the Group’s
Board policies• The review of the Group’s overall
corporate governance arrangements

All Committees are chaired by anindependent Non-Executive Director,
except the Nomination and GovernanceCommittee, which is chaired by the Chairof the Board, and comprise a majority of
independent Non-Executive Directors.
In accordance with the UK Code, allmembers of the Audit Committee are
independent Non-Executive Directors.
Appointments to the Committees are
made on the recommendation of theNomination and Governance Committee
and are for a period of up to three
years, which may be extended for two
further three-year periods, provided
the Director remains independent.
The Committees are constituted
with written Terms of Reference thatare reviewed annually to ensure thatthey remain appropriate and reflect
any changes in good practice andgovernance. These Terms of Reference
are available on request from theCompany Secretary and can also befound on the Company’s website:www.admiralgroup.co.uk.
Directors are fully informed of all
Committee matters by the Committee
Chairs reporting on the proceedingsof their Committee at the subsequent
Board meeting. Copies of Committee
minutes are also distributed to theBoard. Committees are authorised
to obtain outside legal or otherindependent professional advice if they
consider it necessary. The Chair of eachCommittee attends the Annual General
Meeting to respond to any shareholder
questions that might be raised on theCommittee’s activities. An evaluationof the performance of each Committee
against the duties set out in each Termsof Reference is carried out annually.

In addition, each Board member is asked
to complete, annually, a conflicts ofinterest questionnaire that sets out
any situation in which they, or theirconnected persons, have, or could
have, a direct or indirect interest that
could conflict with the interests of theCompany. Any current directorships that
they, or their connected persons hold,any advisory roles or trusteeships held,
together with any companies in which
they hold more than 1% of the issued
share capital are also disclosed.

Information flows to andfrom the Board
Agendas and papers
Agendas and papers are circulated to
the Board electronically in a securemanner in preparation for Board andCommittee meetings. The Board agenda
is structured by the Chair in consultation
with the Company Secretary and Chief
Executive Officer. An annual schedule ofagenda items is reviewed and updated
at each meeting to ensure that items
are considered at the appropriate
point in the financial and regulatory
cycle. Meetings are structured so as
to allow for consideration and debateof all matters. Routine Board papers
are supplemented by information
specifically requested by the Directors
from time to time.

152

Admiral Group plc Annual Report and Accounts 2021

Governance Report continued

At each scheduled meeting, the Board
receives updates from the Chief
Executive Officer and Chief Financial
Officer as to the financial and operational
performance of the Group and any
specific developments of which theBoard should be aware. In addition, there
is an update provided at each Board on
the matters discussed and considered ateach of the Group’s principal subsidiary
Board meetings.
Additional meetings are called whenrequired and there is contact between
meetings, where necessary, to progress
the Group’s business.

Attendees
The CEO of UK Insurance (Cristina
Nestares) together with the Chief Risk
Officer (James Armstrong) are invited
to attend every Board meeting andregular Board dinners, when these cantake place. During 2021, the Head ofInternational Insurance (Costantino
Moretti) and the CEO of Admiral Loans(Scott Cargill) have been invited toattend material topics of debate at
the Board meetings. This has proved
an effective means of ensuring that
senior managers below Board level have
exposure to and gain experience of theoperation of the Board.

Dynamics
All Board and Committee meetings
during the year were held in an open
atmosphere conducive to robust andconstructive challenge and debate.
All Directors have, therefore, beenable to bring independent judgement
to bear on issues such as strategy,
risk management, performance, andresources.

Cross-Committee membershipAs shown on pages 134 – 139 andpage 143, Committee membership is
composed in a way that ensures that
there is cross-committee membership,
which allows items of importance to be
flagged from Committee to Committee
in a timely manner. This complements
the Committee briefings that the Board
receives on the key points of discussion
following each Committee.

AdviceAll the Directors have access to the advice
and services of the Company Secretary.
He has responsibility for ensuring that
Board procedures are followed and foradvising the Board, through the Chair,on governance matters. The Company
Secretary provides updates to the Boardon regulatory and corporate governanceissues, new legislation, and Directors’
duties and obligations. The appointment
and removal of the Company Secretaryis one of the matters reserved for the
Board.
The Directors are also given accessto independent professional advice
at the Group’s expense, should they
deem it necessary to carry out their
responsibilities.

Other information flows
The Board Chair continued to holdvirtual visits with various parts of thebusiness during 2021, until she was able
to resume in-person visits later in theyear. The Non-Executive Directors wereinvited to join her on the virtual andin-person visits. Further information on
those visits is included on page 24.
As referenced within the commentaryon culture on page 147, the NonExecutive Directors are invited toattend ECG meetings and participate
in the two-way engagement with ourcolleagues. Further information about
this engagement mechanism is outlined
on page 91 of the Strategic Report.
The Non-Executive Directors and the
Chair met virtually during the year
without the Executive Directors being
present, including before each Board
meeting.
When management teams present to
the Board on their operations, they
are usually invited to join the Board fordinner, which gives the opportunity for
informal interaction between Directors
and management. However, as was
the case in 2020, these opportunities
have not always been able to take place
during 2021, as a result of the various
Covid restrictions which have been inplace. The Chair has continued to holdone-to-one meetings with members of
the Group’s senior management team ona virtual basis.

Training and professional
development
On appointment, Directors take part in
a comprehensive induction programme
whereby they receive financial andoperational information about theGroup; details concerning their
responsibilities and duties; as well as an
introduction to the Group’s governance,
regulatory and control environment.
This induction is usually supplemented
by visits to the Group’s head office in
Cardiff and certain overseas offices,and meetings with members of thesenior management team and theirdepartments.
The Non-Executive Director induction
programme has continued to be adapted
in 2021 to take account of the Covid
pandemic lockdown restrictions, withmuch of it being facilitated virtually toensure that the induction experience
matches the usual face-to-faceexperience. Feedback on the updated
induction programme has been positive.
Further information on the inductionsof Evelyn Bourke and Bill Roberts during2021 is contained in the Nomination
and Governance Committee Report on
pages 154 – 162.
Development and training of Directors
is an ongoing process and is consideredthrough the year. The Directors are
regularly updated on the Group’sbusiness; legal matters concerning
their role and duties; the competitiveenvironments in which the Group
operates; and any other significant
changes affecting the Group and theindustry of which it is a part. During
the year, the Board received deep
dive updates, briefings and training on
the following topics: Internal model
application process (IMAP), IFRS 17
Insurance Contracts implementationand financial impact, Group cyber risk,
Group cyber risk crisis management, the
FCA’s market study, mobility, diversity
and inclusion, small business market,
amongst several business deep dives.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

Composition, succession and evaluation
Compliance with the Code Principles
UK Code Principle

Description

References

Principle J

Appointments to the Board should be subject to formal,• Appointments during 2021 on pages 155 – 156.
rigorous and transparent procedure, and an effective• Succession planning on pages 155 – 162.
succession plan should be maintained for Board and senior
management. Both appointments and succession plans
should be based on merit and objective criteria and, within
this context, should promote diversity of gender, socialand ethnic backgrounds, cognitive and personal strengths.

Principle K

The Board and its committees should have a combinationof skills, experience and knowledge. Consideration should
be given to the length of service of the Board as a wholeand membership regularly refreshed.

Principle L

Annual evaluation of the Board should consider its• Board evaluation on pages 163 – 164.
composition, diversity and how effectively members• Individual Director evaluation on page 164.
work together to achieve objectives. Individual evaluation • Board Committee evaluations:should demonstrate whether each Director continues toȲ Nomination & Governance Committee on page 162.
contribute effectively.
Ȳ Audit Committee on page 171.
Ȳ Risk Committee on page 175.
Ȳ Remuneration Committee on page 190.

• Board composition and succession planning:Ȳ Balance of skills, knowledge and experience on
pages 158 – 159.
Ȳ Non-Executive Director tenure and independence on
pages 151 – 161.
• Annual re-election on page 157.
• Training and professional development on page 152.
• Induction on page 157.

153

154

Admiral Group plc Annual Report and Accounts 2021

Nomination and Governance Committee
Annette Court
Chair of the Nomination and
Governance Committee
Dear Shareholder,

We also continue to takewhat we do well and what
we learn to new markets
and new products, both in
the UK and abroad.

This part of the report highlights the role that theNominations and Governance Committee plays inmonitoring the current and evolving Board’s composition,
ensuring that there is a balance of skill, experience andknowledge, as well as diversity in the broadest sense, andoversight of the Group’s governance arrangements.
During the year, the Committee conducted an external
search for two Board members to succeed Manning
Rountree and Owen Clarke. Following a robust andtransparent recruitment process, Evelyn Bourke and Bill
Roberts were appointed as Non-Executive Directors. Evelyn
was also appointed Chair of the Remuneration Committee
later in the year and Jean Park was appointed as the SID witheffect from 2022, to succeed Owen Clarke in the respectiveroles. Further details about these appointments and theprocess conducted are outlined later in this report on
page 155.
The Committee also focused its time on ensuring that theGroup’s policy on diversity and inclusion, gender balance of
the Group’s senior management and their direct reports andthe approach to succession planning were achieving theirrespective objectives.

Committee members:
Annette Court (Chair)
Owen Clarke
Justine RobertsNumbm e e er o f
ting
s:

9

The annual review of the Committee’s own effectiveness
took place towards the end of 2021, and the Committee
concluded, overall, that it remained effective but notedsome areas for improvement in 2022. These are outlined
later within this report.
In line with the requirements of Solvency II, the Senior
Insurance Manager Regime, and in accordance with theGroup’s Senior Managers & Certification Regime Policy, I
have also carried out the process of assessment for theGroup CEO, Group Non-Executive Directors, and the Chairsof the Group’s material, regulated subsidiaries (EUI Limited,
Admiral Insurance Company Limited and Admiral Insurance(Gibraltar) Limited) to ensure they meet the requirements
in terms of qualifications, capability, honesty and integrityfor 2021.
Annette Court
Chair of the Nomination and Governance Committee
3 March 2022

Company overview

Strategic report

How the Committee operates
Membership
Membership of the Committee at the
year-end was Annette Court (Chair),Owen Clarke and Justine Roberts. Jean
Park replaced Owen Clarke as a memberof the Committee from 1 January
2022. Justine Roberts and Jean Park are
independent Non-Executive membersof the Committee, as was Owen Clarke
during his tenure, in accordance with theCode which requires that the majority ofmembers should be independent NonExecutive Directors.

Attendance at meetings
The Company Secretary acts as
Secretary to the Committee. Other
individuals, such as the Chief Executive
Officer, the Group Head of Talent and
Reward and representatives of different
parts of the Group, may be invited toattend all or part of any meeting, as andwhen appropriate.

Meetings held
The Committee meets at least twice
per year and at such other times as the
Chair may require. In 2021, there were sixscheduled meetings, but the Committee
met formally on nine occasions, as wellas informally on several other occasions
to meet with individuals identified as
possible candidates to join the Board. The
Committee Chair agrees the meetings
and agendas for each meeting, which arelinked to an agenda planner covering the
responsibilities of the Committee.
All of the Committee meetings in 2021
were held remotely. Details of member
attendance at the Committee meetings
held during the year are outlined on
page 143.

How the Committee keeps up
to dateThe Committee is kept up to dateregularly on proposed appointments
and governance changes across theGroup, as well as key developments inthe corporate governance landscape.
The Terms of Reference of theCommittee include all the relevant
matters under the Code and are reviewed
annually by the Committee.

Corporate governance

Financial statements

Role and responsibilities of theCommittee and key activities
in 2021
The Committee reviews the leadershipand succession needs of the Board andensures appropriate procedures arein place for nominating, training andevaluating Directors. A description of
its responsibilities and the activity it has
focused on during the year is outlined
under the following headings.

Appointments during 2021
Appointments to the Board are
the responsibility of the Board asa whole, acting on the advice andrecommendations of the Nomination
and Governance Committee. The
Nomination and Governance Committee
seeks to balance the retirement andrecruitment of Non-Executive Directors
ahead of their replacement so as to
avoid a dislocation of Board process bylosing experience and skills. The Boardis mindful of the need to promote
diversity in appointments to the Group
Board and across the rest of the Group.
Appointments are made on merit andagainst objective criteria, having due
regard to the benefits of diversity, witha view to ensuring the Board has theappropriate mix of personality, skills,
and experience.
The policy on Board appointments
involves the Committee developing anappropriate specification that identifies
the required skills and experience forthe role and, in most instances, engaging
external recruitment consultants,
to lead the recruitment process andidentify suitable candidates. Interviewsof the shortlisted candidates are heldwith the Chair and members of theCommittee. After consideration by
the Committee, a recommendation
is made to the Board to appoint thepreferred candidate. The Committee issatisfied that this constitutes a formal,
rigorous and transparent process forthe appointment of new Directors to
the Group Board and its subsidiaries,
embracing a full evaluation of the skills,
knowledge and experience requiredof Directors.

Additional information

155

Appointment of Evelyn Bourke
Following notification from Owen Clarkeof his intention to step down from his
position as Non-Executive Director of
the Group Board upon the expiry of his
six-year term, the Group Board Chair,with the support of the Committee,
commenced the recruitment process
for a new Non-Executive Director anda potential Remuneration Committee
Chair as a priority. The Committee wasalso mindful that Owen Clarke also held
the role of Senior Independent Director
at the time, and that a successor would
be required for the Group Board Chair
in 2023.
During the process to identify potential
NED candidates, consideration was given
to the skills, experience, knowledge anddiversity that the Group Board would
require with Owen Clarke and Manning
Rountree, who had also notified theBoard of his intention to step down,
stepping down and to maintain optimal
Board composition and diversity.
From this, the Non-Executive Director
candidate objective criteria were agreed
and shared with the Group Board.
External consultancy, Russell Reynolds
Associates, was subsequently engaged
to help with the search for potential
candidates, which (except for having
been engaged in prior searches for theAdmiral Group Board) had no otherconnection with Admiral or its Directors.
On its website, Russell Reynolds
Associates commit to promoting
diversity to access a more diverse poolof candidates, which is important toAdmiral’s objective of achieving
Board diversity.
As part of the process, the Committee
was provided with a shortlist of
candidate CVs and a reserve listof candidate CVs to discuss, and it
considered the merits and suitabilityof each of the candidates before
recognising Evelyn Bourke as oneof several strong candidates.

156

Admiral Group plc Annual Report and Accounts 2021

Nomination and Governance Committee continued

The Committee considered the factthat Evelyn, if appointed, would nothave at least 12 months experienceon a remuneration committee, as
recommended under the Code forremuneration committee chairs,
but proceeded on the basis that she
had sufficient past remunerationcommittee experience and substantial
experience in insurance, risk andcapital management. Several rounds
of interviews took place with theshortlisted candidates and referenceswere also obtained for the final
shortlisted candidates. Consideration
was given to the likely views of theregulator of the candidates, given thatthe role of Chair of the Remuneration
Committee is a role requiring regulatory
approval.
The Committee also considered thetime commitment required of the role,in light of the candidates’ existing
external appointments, and reviewed
Evelyn’s independence, concluding that
she was independent and had sufficient
time to commit to the role.
Having completed the appointments
process outlined above largely
remotely, the Board, on therecommendation of the Committee,
appointed Evelyn Bourke as anindependent Non-Executive Director
and a member of the Remuneration
Committee with effect from 30 April
2021. At that time, Owen remained
Chair of the Remuneration Committee
and in the role of SID. The Board, on therecommendation of the Nomination
and Governance Committee andfollowing regulatory approval,
appointed Evelyn to the role of Chairof the Remuneration Committee witheffect from 1 September 2021.
As well as having a wealth of experience
in insurance, risk and capital management,
Evelyn was Bupa’s CFO for three and halfyears, before becoming CEO in 2016 andthen stepping down in December 2020.

During her tenure, she led a period oftransformative change that included
the introduction of a clear strategic
framework and strengthening of theleadership team. Evelyn has also heldleadership roles at Standard Life, Friends
Provident and Chase de Vere. Details of
Evelyn’s current external commitments
are outlined on page 139.

Appointment of Bill Roberts
Similarly, following notification from
Manning Rountree of his intention to
step down from his position as NonExecutive Director of the Group Boardand member of the Risk Committee
upon the expiry of his six-year term, theGroup Board Chair, with the supportof the Committee, commenced therecruitment process for a new NonExecutive Director.
As already mentioned as part of Evelyn’s
appointment, consideration was given
to the skills, experience and knowledge
that the Group Board would require withboth Owen Clarke and Manning Rountree
stepping down in 2021, and those requiredfor optimal Board composition anddiversity. From this, the Non-Executive
Director candidate objective criteria wereagreed and shared with the Group Board.
The focus for this particular appointment
was on commercial business leadership,
strength of knowledge of the US insurance
market, particularly the US motor
insurance market, prior board experience
with UK experience being listed asa desirable, merger and acquisition
experience, as well as other characteristics
which fitted with the Admiral culture.
External consultancy, Heidrick& Struggles, which has no otherconnection with Admiral or its Directors,
was engaged to help with the searchfor potential candidates for thisappointment. On its website, Heidrick &Struggles’ Code of Ethics states that it
endeavours to create diverse pipelines
for its clients.

The Committee was provided witha summary of twelve prospective
candidate profiles, including the three
shortlisted candidates. The Committee
considered the merits and suitability ofeach of the three shortlisted candidates
and recognised that although UK
board experience and diversity froma gender and ethnicity viewpoint had
been a challenge in respect of thepool of candidates for this role, thethree shortlisted candidates would
each bring something different to theAdmiral Group Board. The Committee
considered that the priorities for
the Group Board appointment wereexperience, time commitment,
enthusiasm, and cultural fit, all ofwhich they believed Bill met.
The Committee considered Bill’s
external time commitments andindependence, noting that he did nothave any other executive or nonexecutive director commitments thatwould impact the time commitment
requirements for the Admiral Group
Board NED role and that he wasconsidered to be independent.
Therefore, the Board, on therecommendation of the Committee,
appointed Bill as an independent NonExecutive Director with effect from11 June 2021.
Bill has a wealth of insurance,
underwriting and marketing experience
gained during his time at US insurer,
GEICO, which he joined in 1984. Whilst
at GEICO, Bill held several Executive
appointments, including Chief
Operating Officer and President andChief Executive Officer for all GEICO
Insurance Companies, a position heheld from 2018 until he was promoted
to Vice Chairman, GEICO Insurance
Companies in 2020. Bill held thisrole until he retired from GEICO in
December 2020.

Company overview

Strategic reportInduction
Upon appointment, Non-Executive
Directors embark on a comprehensive
induction programme, comprisingcommon elements for all Non-Executive
Directors, as well as elements tailoredto the individual depending on theirrole, skills, knowledge and experience.
The induction covers topics such as therole of a Non-Executive Director andtheir responsibilities, the workings ofthe Board and the Group’s Subsidiary
Boards, and the Company’s operations.
Non-Executive Directors are provided
with a suite of background reading
before induction sessions are arranged
with individuals from each of the Groupbusinesses, again, depending on the
induction needs. Ongoing professional
development needs of newly appointed
Non-Executive Directors are thenmonitored via annual individual Director
evaluations and the Committee’s
oversight of the Non-Executive Director
skills matrix.

Other Board Committee changes
and term extensions in 2021
The Board, on the recommendationof the Nomination and GovernanceCommittee, agreed to the following
proposals during the year:

Corporate governance

Financial statements• The extension of Andy Crossley’s
term for a further three years until
February 2024.
• The appointment of JP Rangaswami
as a member of the Risk Committeewith effect from 17 June 2021, as aresult of Manning Rountree stepping
down as a Non-Executive Director andmember of the Risk Committee onthat same date.
• The extension of Mike Brierley’s
term for a further three years until
August 2024.
• The extension of Karen Green’s
term for a further three years until
December 2024.
• The appointment of Jean Park as amember of the Group Nomination and
Governance Committee with effectfrom 1 January 2022.
As a result of Owen Clarke’s intention
to step down from the Board on 31
December 2021, the Committee
considered successor candidates
for the role of SID. The Committee
considered the candidates from a NonExecutive Director tenure perspective,
the qualities required to successfully
perform the role of the SID, as well as
the SID responsibilities, particularly inlight of the fact that the SID would needto lead the Board on the appointmentof a new Group Board Chair during

Additional information

2022 and early 2023. Subsequently,
the Board, upon the recommendationof the Committee, approved that Jean
Park be appointed as the SID with effectfrom 1 January 2022. The appointment
was made on the basis that, despite
Jean coming to the end of her nine-year
tenure in January 2023, she held andunderstood the qualities required of a
SID, through her prior experience as SID
for FTSE 250 company, Murray Income
Trust.

Annual re-election
As set out in the Group’s Articles of
Association, all Directors should retire
and offer themselves for re-election ateach AGM, in accordance with the UK
Corporate Governance Code and theCompany’s current practice. Therefore,
all Directors will be submitting
themselves for election or re-election byshareholders at the forthcoming AGM.
The Board is satisfied that all areproperly qualified for their election
or re-election by virtue of their skills
and experience and their contribution
to the Board and its Committees.
Further details of why each Director’s
contribution is, and continues to be,important to the Company’s long-termsustainable success is provided within
the notes to the Notice of the 2022
Annual General Meeting.

Board composition and succession planning

Balance of skills
knowledge andexperience

Non-Executive tenure& independence

Board compositionand succession
planning

Time commitment
and external
appointments

157

Board
diversity

Annual Board
evaluation& individual
Director appraisals

158

Admiral Group plc Annual Report and Accounts 2021

Nomination and Governance Committee continued

Composition
As at 31 December 2021, the Board
comprised twelve Directors: the Chair(who was independent on appointment),
two Executive Directors, and nine
independent Non-Executive Directors.
As announced on 8 October 2021, Owen
Clarke stepped down from the Board on
31 December 2021.
The Committee carefully considers theindependence, composition and balanceof skills and knowledge of the Board.
As a result, the Group continues tomonitor the need to refresh Board andCommittee membership in an orderly
manner so as to maintain the continuityof Board process and the strength of
personal interaction which underlies theeffectiveness of the Board.

Non-Executive Director tenure
and independence
The table below details the length ofservice of the Chair and each of thecurrent Non-Executive Directors,
illustrates the balance of experienceand fresh perspectives, as well as theindependence of each of the NonExecutive Directors.

The Directors have abroad range of skills andexperience and can bring
independent judgement
to bear on issues ofstrategy, performance,risk management,
resources and standardsof conduct which areintegral to the successof the Group.

Director

Date ofappointment

Current length of service
as a Non-Executive Director
at 31 December 2021
Independent

Annette Court

21 March 2012

9 years 9 months**

On appointment*

Jean Park

17 January 2014

7 years 11 months

Independent

Owen Clarke

19 August 2015

6 years 4 months

Independent

Justine Roberts

17 June 2016

5 years 6 months

Independent

Andy Crossley

27 February 2018

3 years 10 months

Independent

Mike Brierley

5 October 2018

3 years 3 months

Independent

Karen Green

14 December 2018

3 years

Independent

JP Rangaswami

29 April 2020

1 year 8 months

Independent

Evelyn Bourke

30 April 2021

8 months

Independent

Bill Roberts

11 June 2021

6 months

Independent* In accordance with the Code.
** Provision 19 of the Code relating to the tenure of the Chair was not complied with during the year. An explanation of
non-compliance is located on page 140.

Independent Non-Executive Directors
are currently appointed for fixed periodsof three years, subject to election byshareholders. The initial three-year
period may be extended for two further
three-year periods subject to reelection by shareholders. Their lettersof appointment may be inspected at
the Company’s registered office or
can be obtained on request from theCompany Secretary.
Owen Clarke was the SID for the year
under review. The Board is satisfied
that Owen has the requisite knowledge
and experience gained through his
Board position, his Chairing of theRemuneration Committee (until 1
September 2021), and his membershipof the Nomination and GovernanceCommittee. In addition, Owen has
financial services experience, gained
through his appointment as Chairman,
and formerly Chief Investment Officer
of Equistone Partners Europe. Owen
was available to shareholders during
the year if they had concerns, wherecontact through the normal channelsof the Chair, Chief Executive Officer, orChief Financial Officer had either failed
to resolve their concerns or wheresuch contact was inappropriate. As
SID, he was also responsible for leading
the Board’s discussion on the Chair’s
performance at the end of the year.

The Board, having given thoroughconsideration to the matter, considers
the nine Non-Executive Directors to be
independent and is not aware of any
relationships or circumstances, otherthan the above, which are likely to affect,
or could appear to affect, the judgementof any of them.
An explanation for the Group Board
Chair’s extended term beyond the nine
years recommended by the Code areprovided on page 140.

Balance of skills, knowledge
and experience
The Committee regularly reviews theBoard skills matrix, particularly in thecontext of succession planning and skills
that are potentially lost at the end of
a Director’s tenure on the Board. The
current matrix is outlined below and an
explanation regarding how it feeds into
succession planning follows later in thisreport.
The Directors have a broad range ofskills and experience and can bring
independent judgement to bear on
issues of strategy, performance, risk
management, resources and standardsof conduct which are integral to thesuccess of the Group.

Company overview

Strategic report

Time commitment andexternal appointments
As well as considering the demands of a
Director’s time upon appointment, any
subsequent external appointments of
Non-Executive Directors and Executive
Directors require prior approval of theCommittee and the Board.
The Committee also reviews the timecommitment required of Non-Executive
Directors at least annually to consider
whether the guidance time commitmentof certain roles needs to be extended
due to market or responsibility changes.
Alongside this, a review of the external
commitments of Non-Executive
Directors is performed. The most recent
review concluded that the independent
Non-Executive Directors have sufficient
time available to perform their duties.

Overall assessment of composition
The Board remains satisfied thatit has the appropriate balance ofskills, experience, independence andknowledge of the Group to enable it
and its Committees to discharge theirduties and responsibilities effectively,
as required by the Code. In addition, theDirectors are aware of their legal duties
to act in a way they consider, in goodfaith, will be most likely to promote
the success of the Company for its
shareholders, as well as considering theinterests of other stakeholders. Further
details of how the Board fulfils its
duty in this regard are outlined on
pages 87 – 106.

Board and senior management
diversity and inclusion
Gender diversity
Diversity and the variety of perspectives
that it brings has been proven in studies
to increase innovation and creativity,
and, as a result, improves performance. It
also has other positive impacts, such asproviding greater awareness, widens thetalent pool and challenges the views orpractices that have become embedded
over time. Admiral’s strategy depends on
all of these things, which are enhanced
by diversity, and supports our goals.

Corporate governance

Financial statements

Additional information

159

Total Board Director skills
Finance (11)
Risk (10)Insurance (8)Executive/Strategic Leadership (12)Marketing/Retail (3)M&A (5)City (7)International (9)Tech/Digital/Data (6)Operations (10)Entrepreneurial (7)Loans (5)Remuneration/People (7)ESG/Sustainability (4)During the year, the Committee
reviewed the Group Board Diversity
and Inclusion Policy and discussed theappropriateness of the measurable
targets to increase diversity andinclusion at Group Board, Subsidiary
Board and senior management level.
The Committee seeks to ensure thata clear recruitment strategy for Board
appointments is in place and is aligned tothis policy.
Measures that are covered under the
Policy, including progress updates
against each, include:(i) Having one member of the senior
executive team who is responsible
and accountable for gender diversity
and inclusion at Group level. Cristina
Nestares (EUI CEO) is the accountable
executive for gender diversity.
(ii) Setting internal targets for gender
diversity in senior management.
Progress against the Group’s target of
40% of women in senior management
by 2023 is detailed below.
(iii) Publishing progress annually against
these targets in reports on theGroup’s website. Progress updates on
the Group’s progress against the HM
Treasury’s Women in Finance Charter
commitments are provided on anannual basis on the Group’s corporatewebsite.

(iv) Linking the pay of the CEO to theprogress made against these internal
targets on gender diversity. In 2021,
the Remuneration Committee
considered and approved a proposal
to link the progress against the
Women in Finance target within
the non-financial performancemeasures of the EUI CEO, Cristina
Nestares. Further information on thisis contained within the Directors’
Remuneration Report on page 199.
The Group has continued to exceed
the target set by both Lord Davies
in his report: Women on Boards, andthe Hampton Alexander Review (thatbuilds on the Davies Review) which
encouraged FTSE 350 companies toachieve at least 33% women on Boards.
Women on the Admiral Group Plc Board
represented 50% of its membership as
at 31 December 2021, compared with
42% on 31 December 2020. Official data
published by the FTSE Women Leaders(succeeding the Women on Boards
Report and Hampton Alexander Review)
issued in February 2022 reported thatthe percentage of women on FTSE
100 Boards was 39.1% improving from
36.2% in 2021, which demonstrates
the good progress Admiral has madecompared with the average of the FTSE
100. The data also highlights that the
combination of women in the Chair,
CEO and SID roles is still not common,
demonstrating Admiral’s continued
strong support of the progression of
women in leadership roles.

160

Admiral Group plc Annual Report and Accounts 2021

Nomination and Governance Committee continued

As a result of the continued progress
to balance gender diversity at Group
Board level and to align with the Womenin Finance Charter’s aim of increasing
female representation at the UK senior
executive level to 40% by the endof 2023, the Committee approved aproposal to increase the annual target
from a minimum of 33% women to 40%.
The aim is to achieve this level of gender
diversity at an aggregate level across theSubsidiary Boards too. As at 31 December
2021, women represented 29% of all of
the Subsidiary Boards compared to 28%
as at 31 December 2020, demonstratingthat there is further work to improve
gender diversity at this level.

Board Gender Diversity
Male

Female50%

50%

Board Ethnicity
White (11)During the year, the Committee reviewed
the gender balance of those in senior
management and their direct reports
and considered the initiatives that havebeen proposed to focus on improving
gender balance. The FTSE Women Leaders(formerly Hampton-Alexander Review)target of 33% female representation
within senior management has beenachieved across the Group, with females
representing 44% of our Senior Executives
and 35% of their direct reports.

Ethnic minority (1)Age diversity (by brackets)
40s (17%)50s (42%)60s (33%)70s (8%)Ethnic diversity
The Board continues to monitor therequirements of the Parker Review’sreport on ethnic diversity in the context
of the composition of its Group andSubsidiary Boards, the initiatives that are
being implemented to increase diversityand discuss how measures to develop adiverse pipeline of talent as regards toBoard appointments could be developed
and monitored. The Group Board
includes one Board member from an
ethnic minority, which meets one of theParker Review’s key recommendations
for FTSE 100 companies. Further
information on how the Group isdeveloping candidates for the pipeline isoutlined in the sections below and in theStrategic Report on pages 54 – 56.

Board Nationality
UK (67%)
Non-UK (33%)

Non-Executive Director tenure>9 years
6–9 years
3–6 years<3 years

Annette Court
Jean Park
Owen Clarke
Justine Roberts
Andy Crossley

9 years 9 months
7 years 11 months
6 years 4 months
5 years 6 months
3 years 10 months

Mike Brierley
Karen GreenJP Rangaswami
Evelyn Bourke
Bill Roberts

3 years 3 months
3 years
1 year 8 months
8 months
6 months

The Group remains strongly supportiveof the principle of boardroom diversity,of which gender and ethnicity areimportant, but not the only, aspects.
What is important is diversity of thought,
experience and approach and each new
appointment must complement whatalready exists at the Board table.

Company overview

Strategic report

Ethnic diversity amongst senior
management and the wider workforce
is something that Admiral has increased
its focus on in 2021. However, theCommittee recognises that theworkforce is not always comfortablewith voluntarily sharing such personal
information. There have been initiatives
to encourage more people to make suchvoluntary disclosures, in respect of otherdiversity questions, and this has been
discussed by the Employee Consultation
Group during the year.

Activity to improve diversity
in the talent pipelineUK• Continued engagement withrecruitment agencies to emphasise
our diversity and inclusion aims
and the need for a diverse pool ofcandidates• The introduction of a five-year
diversity and inclusion strategy
that has been communicated andintegrates with Admiral’s people
services strategy

Corporate governance

Financial statements

Group
In 2021, the international diversity andinclusion forum was set up for all business
entities. This bi-monthly forum’s purpose
is to share knowledge and best practicethroughout the Group. The forum has led
to the design of an international diversity
and inclusion roadmap, a Group diversity
and inclusion maturity model and various
initiatives introduced to improve adiverse talent pipeline, such as:• Training on unconscious bias for all key
recruiters and the international senior
executive team• Common guidelines to ensure inclusive
job descriptions that will appeal to adiverse candidate base
• Having a common target of reaching
the 40% of female candidates for
short-listed roles in 2021
• Communicating to recruitment firms
our commitment to making progressin achieving a diverse workforce whenengaging them to recruit middle
and senior levels of talent, withoutcompromising calibre

Additional information

161• The planned introduction of the first‘international mentoring programme’with the aim of supporting andempowering high potential womenacross the Group in their careers
The Board and senior management
recognise that longer-term remote
working brought about by the Covid
pandemic could make it more difficult
to recognise discrimination and support
those that may be impacted. Admiralis committed to adapt to the newenvironment and ensure that it provides
an equal workplace for all our people.
The Group remains committed
to providing equal opportunities,
eliminating discrimination, andencouraging diversity amongst its
employees both in the UK and overseas.
A breakdown of the gender of Directors
and senior employees at the end of
the financial year together with detailsof the Group’s Equality, Diversity andDignity at Work Policy are set out in theStrategic Report on pages 54 – 55.

• A review of maternity and paternity
benefits has been undertaken and a‘family-friendly’ section in Admiral’s‘Big Book’ of policies, procedures,
benefits and working conditions has
been created so that all colleagues caneasily locate information on Admiral’s
policies relating to fertility treatment,
baby loss, parental leave, adoption
leave and parental bereavement,
amongst others

Succession planning• A new initiative with Cardiff University
called ‘Aspire’ has allowed Admiral torecruit seven students from underrepresented groups, such as thosefrom ethnic minority backgrounds
and women in technology. They took
part in a summer internship in 2021
year, with a view to forming a longerterm relationship and the offer ofpermanent employment once theyfinish their respective education

Description: There are emergency succession plans to ensure that there is sufficient coveror a plan in place for key roles of the Board, namely, the Chair, the SID, Committee Chairs
and, in turn, Committee members if a Committee Chair’s absence is longer than expected.
These plans take account of any requirements under the respective Committee’s Terms ofReference, as well as any Code requirements.

• Admiral signed up to 10,000 Black
Interns, an initiative which seeks tooffer 2,000 internships each year
for five consecutive years across 24
sectors, and will start to provide theintern opportunities in summer 2022

The Committee is responsible for ensuring that plans are in place for orderly
succession for appointments to the Board and also reviews the succession plans for
Executive Directors and other key senior management positions.

Non-Executive Directors
Non-Executive Director succession planning is split into short, medium and longer
term horizons to ensure that all eventualities, as far as possible, are planned for.
Horizon: Emergency cover

Horizon: Medium term (3–6 year tenure)
Description: The Committee’s medium-term succession planning involves considering the
replacement of Non-Executive Directors over time to refresh the Board. The Committee
considers (i) each Director’s period of tenure and aims to have staggered departure dates,(ii) the skills and experience gaps that will be created as each Director’s tenure comes to anend, and (iii) the diversity gaps that might also become present.
Horizon: Longer term (6–9 year tenure)
Description: The Committee’s longer-term succession planning involves the considerationof the skills, experience, and diversity that the Board will need over the longer term, taking
into account the Group’s strategy and the main trends and factors that are likely to affect theGroup’s long-term success.

162

Admiral Group plc Annual Report and Accounts 2021

Nomination and Governance Committee continued

The regular review of these succession
plans provides an opportunity for theCommittee to discuss the insights
provided by the data in order to informthe desired mix of skills, experienceand diversity that the Board needs now
and in the future, in the context of theGroup’s strategic objectives.
The Committee will this year bestarting a search for two Non-Executive
Directors with the appropriate skills andexperience to succeed the Chair and theGroup Risk Committee Chair. In doing
so, the Committee will consider theskills, experience and diversity gaps that
could materialise with the departureof the present Chair and Group Risk
Committee Chair.

Executive Directors andsenior management
Responsibility for making senior
management appointments rests with
the Chief Executive Officer and talentmanagement continues to be a key areaof focus for the Committee to ensurethat there is a diverse pipeline of talent
for senior management and potentially
Executive Director succession.
During the year, the Committee
considered progress to improve talentmanagement and succession planningwithin the Group. This was in responseto the review in 2020 which identified
several improvements that needed
to be made to Admiral’s succession
planning to improve the talent pipeline.
Effective internal talent management
ensures that Admiral’s unique culture ispreserved as far as possible.
The Committee received an update in
2021 on the new succession framework
which is now used across the Group. It has
encouraged more structured thinking
about opportunities across departments
and internationally, even in circumstanceswhere this is a well embedded practicealready within Admiral. Discussions on
success profiles have also helped tovisualise how success will look in the
future for the critical senior management
roles, whilst also providing future talent
with visibility on what future development
might look like for them. Other parts of
the overall succession planning processcontinue to be embedded with theintroduction of better:

Governance• Scoping and anticipating future
critical capabilities

As part of the Committee’s annual
review of its own performance andprocesses, each Committee member
completed a questionnaire designed
to provide objective assessment of theCommittee’s performance, including
its effectiveness in monitoring Board
composition, considering Executive and
Non-Executive succession, overseeing
talent management, succession planningand developing directors’ knowledge.

• Success profiling• Identification of career aspirations• Assessment• Development plans (noting thatsome Group entities are more matured
than others)• Collective analytics
Overall, this year’s review of succession
planning concluded that there was ahealthy pipeline of talent across theGroup, with no immediate risk in respectof leadership continuity, and the rightlevel of talent to execute our ‘internallygrown leaders’ strategy. However, it also
concluded that some critical functionsin the UK fell short on gender diversity,
as well as some international entities,
such as Spain. This gap represents a risk
to the achievement of our commitment
and ambition on gender diversity
at senior management level and so
this will be closely monitored by theCommittee in 2022. In addition, further
work will be undertaken to improve theethnic diversity of entities located in
geographies where such diversity should
be better represented, which will also beoverseen by the Committee in 2022.
The Committee remains satisfied that
effective succession plans for Directors
and senior management are in place
to ensure the continued ability of theGroup to implement strategy andcompete effectively in the markets inwhich it operates.

The Committee also regularly reviews
the Group’s governance arrangements,
including any changes to the Subsidiary or
Committee structure, as well as oversightof the regulatory applications madeunder the Senior Managers Regime.

Committee Effectiveness Review

The Committee discussed the resultsof the review at its meeting in February
2022 and concluded that, overall, theCommittee remained effective. Areasof focus and improvement for theCommittee in 2022 were identified asincluding clarifying the extent of theCommittee’s oversight of governancearrangements and improving theclarity and focus of papers provided
to the Committee. The Committee
recognised that progress had been madeto improve talent management andexecutive succession planning but feltthat the Committee’s oversight could beenhanced further.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

163

Board Evaluation

2019

2020

2021

External Board
Evaluation

Internal Board
Evaluation

Internal Board
Evaluation

Progress with 2020 Board Evaluation recommendations
Having last carried out an external Board
evaluation in 2019 in accordance with
the Code requirement that FTSE 350
companies should carry out an externallyfacilitated evaluation of the Board atleast every three years, the 2021 Board
evaluation process was facilitatedinternally with use of a questionnairedeveloped by Independent Audit, whohave no other connection with the Groupor its Directors. The following progress
was made during 2021 in respect of the
key findings from that review:

Agreed areas of focus for 2021

Progress update

Environmental, social andgovernance (ESG) risks andopportunities from emerging
technology and ensuring that theright information is available tomonitor ESG performance

During the year, the Board has increased the numberof updates and sessions held on ESG matters, receiving
updates on the embedding of the new Group Purpose(approved at the beginning of 2021), the Group’s
sustainability strategy, response to climate change,
stakeholder engagement, progress to meet diversity
and inclusion targets, and the responsible investment
strategy, amongst other things.

Information security

During the year, the Board also increased the updates
and sessions received on information security andcyber risk, general technology updates and held a crisis
management session which was based on IT security andlessons learned to date.

2021 Board Evaluation• Board dynamics and the interaction
between the Chair, Non-Executive
Directors and management to achieve
the Board’s objectives

The 2021 Board evaluation process was
also facilitated internally by the Chairwith the support of the Group Company
Secretary. A similar questionnairedeveloped by Independent Audit, whohave no other connection with the Groupor its Directors, was utilised to evaluate
the Board’s performance and dynamics
in 2021. The online questionnaire wassent to all Board members and regular
Board attendees in November 2021 andconsidered:• Board composition together with theutilisation of the experience, skills andexpertise, as well as diversity of Board
members• Leadership and succession planningincluding the oversight of the Group’s
processes for managing, developing
and retaining talent• Understanding by the Board of theprevailing culture within the Group• Quality, timeliness of delivery andpresentation of Board papers andBoard support• Time management and operational
performance of Board and Committee
meetings• Risk management and theeffectiveness of the Board inconsidering the Group’s risk
management framework andinternal controls• The effectiveness of the Board’s
strategic and operational oversight.
• Priorities for change that would
enhance Board performance
The results of the evaluation werediscussed at the January 2022 Board
meeting and showed a board thatappeared to be functioning well, withsome identified opportunities for
improvement.

164

Admiral Group plc Annual Report and Accounts 2021

Outcomes and areas of focus for 2022
Board dynamics

The relationship between the Executive and the Non-Executive was assessed as good, with little significant
divergence in views. Working with management and the inclusivity of discussions were each scored well in thecontext of meeting the Board’s objectives.

Board composition

The Board concluded that it comprised the right mix of skills, experience and diversity in the context of theGroup’s strategy. The Group Nomination & Governance Committee will continue to review composition in thecontext of Board succession planning and the Board’s needs in the coming years.

Board oversight andrisk management

The Board felt that good progress had been made in respect of its objectives for 2021 but noted several areas
which could be enhanced or should be of focus for 2022. These items fed into the Board’s agreed objectives
for 2022 and are detailed under ‘principal areas of focus for the Board for 2022’ on page 144.

Management and focusof meetings

Meetings were assessed as having been well-chaired and the agendas well-managed. Virtual meetings had
evolved and were felt to be operating effectively. Improvements in the structure and content of Board papers
were noted, but continued focus was needed in 2022 to improve the papers and call out the key issues andrisks that should be the focus of Board discussion.

Stakeholder oversight

The level of stakeholder consideration in decision-making was scored well and it was acknowledged that
Admiral’s approach to ESG would evolve over time.

2021 Board Committee Effectiveness Reviews
Further information on each of the Board Committee’s evaluations of their own performance can be found within the respective
Board Committee reports.

Individual Director Evaluation
The performance of the Chief Financial Officer is appraised annually by the Chief Executive Officer, to whom he reports. The
Chair, taking into account the views of the other Directors, reviews the performance of the Chief Executive Officer. The Chair also
carries out the performance assessments of each of the Non-Executive Directors. Each of the Directors were determined to havecontinued to effectively contribute to the work of the Board in 2021.
The performance of the Chair is reviewed by the Board led by the SID. Following the latest review, the SID considered anddiscussed with the Chair the comments and feedback that had been received from the Directors as part of the Chair’s evaluationquestionnaire and was able to confirm that the performance of the Chair is effective.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

165

Audit Committee Report
Karen Green
Chair of the Audit Committee

I am pleased to set out in this report an update on the main activities of theCommittee in 2021.

Audit, risk and internal control
Compliance with the Code Principles
UK Code Principle Description

References

Principle M

The Board should establish formal and•transparent policies and procedures to ensure the •independence and effectiveness of internal and •external audit functions and satisfy itself on the •integrity of financial and narrative statements.
•

Roles and Responsibilities on page 168.
Non-audit fees on pages 170 – 171.
Effectiveness of external audit process on page 171.
Internal audit on page 171.
Directors’ responsibilities and responsibility statement in the
Directors’ Report on page 208.
• Principal risks and uncertainties within the Strategic Report on
pages 116 – 123.

Principle N

The Board should present a fair, balanced andunderstandable assessment of the company’s
position and prospects.

Principle O

The Board should establish procedures to manage •risk, oversee the internal control framework, and •determine the nature and extent of the principal
risks the company is willing to take in order to•achieve its long-term strategic objectives.

• Reporting, accountability and audit within the Directors’ Reporton page 207.

Internal audit on page 171.
Principal risks and uncertainties within the Strategic Report on
pages 116 – 123.
Reporting, accountability and audit within the Directors’ Reporton page 207.

Covid
Committee members:
Karen Green (Chair)
Andy Crossley
Mike Brierley

Number ofmeetings:

13

The Committee continued to consider
the impact of the Covid pandemic on
the Group’s financial reporting anddisclosures, along with the continued
effectiveness of the Group’s
key internal controls given thecontinued remote or hybrid working
environment subsisting for much of
the year. This included the impact
of Covid on the key accounting
and actuarial judgements made bymanagement, particularly in relation
to the valuation of claims reservesand credit loss provisions, as well thepotential impact on going concern
and viability assumptions.

166

Admiral Group plc Annual Report and Accounts 2021

Audit Committee Report continued

Significant financial
reporting issues

IFRS 17 (Insurance Contracts)
implementation

The setting of insurance claims
reserves in accordance with the Group’s
agreed reserving methodology is a key
accounting judgement in the Group’s
Financial Statements (as set out innote 5 to the Financial Statements),
and the Committee continues toplace considerable focus on this area.
The Committee challenged the key
reserving assumptions and judgements,
movements, emerging trends andanalysis of uncertainties underlying theanalysis of outstanding claims for the
UK Car Insurance business proposedby management alongside that of
the Group’s external independentactuarial advisers. In 2021, inter alia,
this included the ongoing impact of
Covid on claims frequency and severity,
the impact of inflation on the claims
reserves, and future scenarios for the
Ogden discount rate. It also focusedon management’s assessment of thelevel of uncertainty inherent in theclaims reserves and the changes in thisassessment from prior periods. The
Committee also received reports on theclaims reserving processes performed
for insurance businesses other than UK
Car and recommended to the Board theaggregate claims reserves for inclusionin the Group’s financial statements.

During the year, the Committee
continued to receive regular reportson the progress of the Group’s IFRS
17 implementation programme.
These included: the output of an
external assurance review undertaken
in relation to the Group’s overall
preparedness, including considerations
and interdependencies regarding
the upgrade of financial ledgers forvarious Group companies; reports
setting out management’s assessmentof key technical accounting mattersand potential initial accounting policy
choices, and a preliminary financial
impact assessment focusing on thetransition to the new standard. The
Committee received training from theGroup’s external auditor on IFRS17 andthe developing detailed accounting
guidance. The Committee also received
regular updates on the implementationof the Group’s selected software
solutions for IFRS 17 and the programme
status, including resourcing matters.

In addition to claims reserving, theCommittee spent time reviewing
management’s support for a numberof other significant financial reporting
matters including the expected credit
loss provision held in relation to theLoans receivable balance held by theGroup’s loans business AFSL, otherpotential provisions and contingent
liabilities, and the results of impairment
testing performed in relation to theGroup parent company’s investments inGroup subsidiaries.

Corporate governance andreporting changes
The Committee was kept abreast of
the Group’s engagement with the
Department for Business, Energy &Industrial Strategy (BEIS) consultation on‘Restoring trust in audit and corporate
governance: proposals on reforms’
during 2021 and will continue tomonitor developments in this area. The
Committee also oversaw, in conjunction
with the Group’s Risk Committee, theGroup’s progress in relation to theimplementation of the Taskforce for
Climate-related Financial Disclosures(TCFD) recommendations. Both
Committees received a briefing fromthe Group’s external auditor on TCFD
regulation and trends in the market
and reviewed their respective terms ofreference to ensure appropriate clarity
over their respective responsibilities.

Internal controls
The Committee has continued tomaintain a focus on the various
improvements underway to the Group’s
internal control environment, including
an assessment of the Group’s IT access
control management, and received
several reports from the first, second
and third lines of defence on themeasures being taken to address various
issues identified in this area in particular.

Internal Audit External
Effectiveness Review
The Committee undertook a review ofthe effectiveness of the internal audit
function by way of an independent
external quality assessment performed
by KPMG LLP with a view to providing
the Committee with an external
perspective on both the evolution anddevelopment of the Internal Audit
Function following the appointment of
a new Head of Internal Audit in March
2020 and best practice.
I hope you find the above summary, andthe more detailed report, both usefuland informative.

Karen Green
Chair of the Audit Committee
3 March 2022

Company overview

Strategic report

Corporate governance

Financial statements

How the Committee operates

Meetings held

Membership

The Committee meets at least six times
per year and has an agenda planner
linked to events in the Company’s
financial calendar and other important
issues that arise throughout theyear, which fall for consideration by
the Committee under its remit. The
Committee Chair agrees the meetings
and agendas for each meeting.

Membership of the Committee at theend of the year was: Karen Green (Chair),Andy Crossley and Mike Brierley.
Two of the Committee’s members are
Fellows of the Institute of Chartered
Accountants in England and Wales. Given
the insurance and financial services
experience of the members of theCommittee, the Board considers that they
have a broad range of skills, experienceand knowledge of the insurance sector,
which represents the principal market
in which the Group operates, and also
the area of consumer lending in which
the Group has a growing business, suchthat they are able to effectively analyse,
challenge and debate the issues thatfall within the Committee’s remit. The
Board is satisfied that the Committee
as a whole has competence relevant tothe sectors in which the Group operates
and further considers that a number of
its members have recent and relevant
financial experience.

Attendance at meetings
The Company Secretary acts as
Secretary to the Committee. Other
individuals, such as the Chair of theBoard, Chief Executive Officer, Chief
Financial Officer, Chief Risk Officer,
Chief Actuary, Heads of Complianceand Internal Audit, and representativesof different parts of the Group, may
be invited to attend all or part of any
meeting as and when appropriate.
The external auditor was invited toattend all of the Committee’s meetings
held in 2021, except in respect of
those agenda items when its own
performance, reappointment and fees
were reviewed and discussed, or where
any other conflict was identified.

There were seven scheduled Committee
meetings held during the year (withtwo of these meetings focused onreserving matters in conjunction withthe half year and full year reporting).
Six additional meetings were held
during the year covering ad hoc matterswhich arose during the year, including
the mid-year trading statement andvarious risk events. Two meetings were
held as joint meetings with the Group
Risk Committee.
All of the Committee’s meetings in
2021 were held remotely given theongoing restrictions. Details of member
attendance at the Committee meetings
held during the year are outlined on
page 143.

How the Committee keeps up to date
The Committee is kept up to date withchanges to Accounting Standards andrelevant developments in financial
reporting, company law, and thevarious regulatory frameworks throughpresentations from the Group’s external
auditor, Chief Financial Officer, Chief
Actuary and Company Secretary. In
addition, members attend relevant
seminars and conferences provided
by external bodies. The Committee
also receives tailored briefings frommanagement and the Group’s external
auditors from time to time. Topics
included the Task Force for Climaterelated Financial Disclosures (TCFD) and
IFRS 17 implementation in 2021.

Additional information

167

The Terms of Reference of the Audit
Committee include all the mattersrequired under the Code and arereviewed annually by the Committee.
The Chair of the Audit Committee
meets individually with the Group
Head of Internal Audit, Chief Financial
Officer, Chief Actuary, the external
auditor and UK Head of People Services(who has overall responsibility for coordinating the Group’s whistleblowing
arrangements) on a regular basis. The
Committee also held (i) two private
meetings with the Group Head ofInternal Audit, (ii) one private meetingwith the Chief Financial Officer, and(iii) two private meetings with theexternal auditor.

Role and responsibilitiesof the Committee
The Audit Committee’s primary
responsibilities are to:

Financial reporting• Monitor the integrity of the Group’s
Financial Statements and any formal
announcement relating to the Group’s
financial performance, including theGroup’s Solvency and Financial Condition
Report, reviewing any significant
financial reporting judgements which
they contain, including that of theGroup’s Going Concern status• Provide advice (where requested by
the Board) on whether the Annual
Report and Accounts, taken as a whole,is fair, balanced and understandable,and provides the informationnecessary for shareholders to assess
the Group’s position and performance,business model and strategy• Oversee the Group’s climate-related
financial disclosures under TCFD

168

Admiral Group plc Annual Report and Accounts 2021

Audit Committee Report continued

Internal controls and internal audit• Keep under review the effectivenessof the Company’s internal financial
controls, internal control and risk
management systems• Monitor and assess the role andeffectiveness of the Group’s internal
audit functions in the context of theGroup’s overall internal control and risk
management systems

External audit• Make recommendations to the Board,
to be put to shareholders for theirapproval at the AGM, in relation to
the appointment, reappointment andremoval of the Group’s external auditor• Approve the remuneration and termsof engagement of the Group’s external
auditor• Review and monitor the Group
external auditor’s independence andobjectivity, and the effectivenessof the audit process, taking into
consideration relevant UK professionaland regulatory requirements• Review the policy on the engagementof the Group external auditor toprovide non-audit services, ensuringthat there is prior approval of nonaudit services, considering the impact
this may have on independence andtaking into account the relevant
ethical guidance in this regard

Other• Review the Group’s proceduresfor handling allegations from
whistleblowers• Report to the Board on how it hasdischarged its responsibilities

Summary of key activities
during 2021
During the year the Committee reviewed
the following:

Financial reporting• The Group Annual Report and interim
results announcement, including key
accounting judgements and disclosures• Parent company financial statements(both annual and interim), and related
key accounting judgements anddisclosures, including impairment
testing of the parent company’s
investments in subsidiaries• Reports from the Chair of the Group
Risk Committee on the principal
risks faced by the Group and thework undertaken by the Group
Risk Committee to ensure risk isappropriately managed• Received reports from the chair of theAdmiral Insurance Company Limited(AICL) and Admiral Insurance Gibraltar
Limited (AIGL) Audit Committees
on the financial statements for AICL
and AIGL, including key accounting
judgements and disclosures• The Group Solvency and Financial
Condition Report, including
disclosures specific to AICL and AIGL• Presentations from the Group’s actuarial
reserving team and independent
external actuarial experts to assist
the Committee in concluding on theadequacy of the Group’s IFRS reserves
and Solvency II technical provisions• Information supporting the Group’s
Going Concern assumption• Matters associated with the tradingstatement published on 12 July 2021,
including the impact on reserving,financial reporting, the draft capitalplan and dividend, as well as the draft
trading statement itself• Reports prepared by management
demonstrating risk transfer within
reinsurance contracts in linewith the requirements of IFRS 4(Insurance Contracts)• Updates from the Group’s loans
business on the IFRS 9 (Financial
Instruments) provision• Reports assessing the accounting anddisclosure impacts of risk events arisingin the Group’s European businesses• The prominence of alternative
performance metrics included in
the Group’s Annual Report• A paper setting out the Group’s
planned approach for compliance with
the new Financial Conduct Authority(FCA) requirement for filing andpublishing annual reports in a newelectronic format• Progress updates on the Group’s
implementation of IFRS 17 (Insurance
Contracts), including deep divesessions on the financial impact
assessment and the conclusions of thetechnical analysis performed to date

• Updates from management and abriefing from the external auditor
on the implementation of the
TCFD requirements• An update on the prompt paymentof suppliersInternal audit and internal controls• Reports from the internal audit
functions within the Group on theeffectiveness of the Group’s risk
management and internal control
procedures, approval of the 2022
Audit Plan including resourcing levels,
details of key audit findings, andactions taken by management tomanage and reduce the impact of therisks identified• Performance and effectiveness of theinternal audit function, including an
independent external quality assurance
review of the Group Internal Audit
function completed by KPMG LLP• A summary of the key findings from allreports from Internal Audit, including
management responses to theconclusions set out in the reports• Reports on the controls in place, including
any breaches or incidents, in respectof the Group’s overseas subsidiaries• European insurance internal audit
updates, including an update from the
Chair of the European Audit Committee(of the Group’s subsidiary Admiral
Europe Compañía de Seguros, S.A.,(AECS) which underwrites the Group’s
European insurance businesses) on theactivities of that Committee• An update from the Chair of the US
Audit Committee (of the Group’s
subsidiary Elephant Insurance Company)on the activities of that Committee• Reports on the output of theassessment of adherence to andembedding of the Group MinimumControl Standards’ framework• Reports from the first, second and thirdlines of defence on IT internal controls

External audit• Reports from the external auditor,
including the management letter
highlighting system and control
recommendations, key accounting andaudit issues and conclusions on thehalf year and full year reportingCompany overview

Strategic report• Confirmation of the external auditor’s
independence• Reports from Deloitte, the external
auditor, on their proposed audit scopeand plan• Proposed external audit fee and thedrivers of the year-on-year increase

Other• Updates on tax matters, including
the Group Tax Strategy which wasrecommended to the Board forapproval and is available atwww.admiralgroup.co.uk• Progress updates on the BEIS
consultation relating to audit andcorporate governance reforms,
including updates received fromthe external auditor• The effectiveness of the Group’s
Whistleblowing Policy, which sets
out the arrangements for raisingand handling allegations from
whistleblowers, and receiving
regular reports on instancesof whistleblowing that havebeen raised• The Committee’s terms of reference• The Committee’s effectiveness• Meetings held with the external
auditors, the Group Head of Internal
Audit, and the Chief Financial Officer,
respectively, without management
being present

Significant issues considered by
the Committee
After discussion with both management
and the external auditor, the Audit
Committee determined that the key risksof misstatement of the Group’s Financial
Statements related to the valuation ofgross insurance claims reserves.
This significant issue was discussedwith management during the year andwith the external auditor at the time
the Committee reviewed and agreed
the external auditor’s Group audit plan;
when the external auditor reviewed
the interim Financial Statements inAugust 2021 and also at the conclusionof the external audit of these full year
Financial Statements.

Corporate governance

Financial statements

Valuation of gross insurance
claims reserves
The Committee continued to spend
significant time reviewing andchallenging the approach, methodology
and key assumptions adopted bymanagement in setting reserves for
insurance liabilities in the Financial
Statements to ensure consistency with
the Group’s stated reserving approach to
set reserves at a prudent level.
In this context, the Committee challenged
management on the importantjudgements and assumptions used inestimating outstanding claims. Further
information is set out in more detail in thecritical accounting estimates section ofNote 3 to the Financial Statements.
As in previous periods, the Committee
held meetings specifically focusedon reserving, receiving presentations
on UK Car Insurance reserves from theinternal actuarial reserving and financeteams, as well as the independent
external actuarial advisors. At thesemeetings management provided further
information on the projected best
estimate gross claims reserves, as wellas the margin to be held above best
estimate in the Financial Statements andwere challenged by the Committee as totheir adequacy and the consistency ofthe level of prudence with prior periods.
The Committee reviewed and discussed
the continuing impact of Covid on bothclaims frequency and claims severity
as well as changes in claims settlement
patterns. In addition, the effects ofinflationary pressures on outstanding
reserves were considered in relation toboth damage and bodily injury claims,
as well as scenarios in relation to the
future Ogden rate. The Committee also
reviewed management’s assessmentof the level of uncertainty inherent in
the claims reserves and changes to thatassessment from previous periods.
The Committee also received updates
from the Group’s external auditor,
Deloitte, on its work in relation to thissignificant audit risk. This included
reviewing management’s actuarial data
quality assessments, best estimate
reserve projections and the margin
included above best estimate, as well as
support for management’s qualitativeand quantitative support for gross

Additional information

169

claims reserves included in the Financial
Statements. Based on this work, theauditor was satisfied that the financial
statement reserves remain appropriate
and consistent with the Group’s
accounting policy.
The Committee also received reports on
the reserving processes for the Group’s
insurance businesses other than UK Car
Insurance. Whilst acknowledging thatthe setting of reserves for claims which
will settle in the future is a complex andjudgemental area and having had theopportunity to challenge management’s
proposal in respect of both best
estimate reserves and margin held above
best estimate to cover unforeseen
deteriorations in the best estimate,
the Committee is comfortable that an
appropriate process has been followed,
and that there has been sufficient
scrutiny, challenge and debate to giveconfidence that the reserving levels set
provide an appropriate margin above
best estimate.

Other financial reporting issues
IFRS 9 provision for expectedcredit losses
During the year, the Committee hascontinued to review and challenge
the IFRS 9 provision for expectedcredit loss arising through the Group’sloans business, Admiral Loans. Areasof focus included enhancements
made to the IFRS 9 provisioning
methodology in response to findings
and recommendations made by theGroup’s external auditor, Deloitte
LLP, during the prior period external
audit, the continuing impact of theCovid pandemic on default experience,
the assessment of circumstancesindicating a significant increase in credit
risk, and underlying forward-looking
economic assumptions.
The Committee reviewed and challenged
management’s recommendation
for further enhancements to theprovisioning methodology including thedefinition of default, new behaviouralmodels supporting probability of default
calculations, and forward-looking
elements of the significant increase incredit risk (SICR) assessment. Further
information on the provision and key
assumptions are found in note 7 to thefinancial statements.

170

Admiral Group plc Annual Report and Accounts 2021

Audit Committee Report continued

The Committee received a report from
Deloitte LLP, the Group’s external auditor,
in respect of work performed in relation
to the Admiral Loans expected credit loss
(ECL) model, and in particular in respectof management’s key judgements inselecting macro-economic scenarios andkey assumptions within the provision.
Based on the work performed, theauditor was satisfied that management’s
judgements remain appropriate within
the current climate.
On the basis of the work performed andhaving had the opportunity to challengemanagement’s proposal in respect ofthe provision for expected credit losses,
the Committee was comfortable that an
appropriate process has been followed,
noting the enhancements made to theprovisioning methodology in response torecommendations made by the external
auditors, and that there has been
sufficient scrutiny and challenge to giveconfidence that the provision has been
set in line with the IFRS 9 requirements
and included appropriate allowance for
uncertainties arising from the current
macro-economic environment.

Misstatements
No material unadjusted audit differenceswere reported by the external auditor.
The Committee confirms that it issatisfied that the auditor has fulfilled
its responsibilities with diligence andappropriate professional scepticism.
After reviewing the presentations
and reports from management andconsulting, where necessary, with theauditor, the Committee is satisfied thatthe financial statements appropriately
address the critical judgements and key
sources of estimation uncertainty (bothin respect to the amounts reported
and the disclosures). The Committee
is also satisfied that the significant
assumptions used for determining thevalue of assets and liabilities have been
appropriately scrutinised, challenged
and are sufficiently robust.

IFRS 17 implementation
IFRS 17 is a new insurance accounting
standard that will be effective from
1 January 2023. Given the fundamental
changes to the Group’s financial
statements and systems and processes

that will be required as a result of the
new standard, the Committee has
dedicated a significant amount of timeto understanding and assessing theimpact of the standard on the Group’s
financial reporting process and theprogress of implementation of chosen
software solutions.
Through the year the Committee
received the following updates:• An IFRS 17 briefing from external
auditors Deloitte• The findings of a third-party assurance
review on the Group’s IFRS 17
implementation programme• Regular updates as to the programme
status, including progress against
plans for individual workstreams andother issues such as resourcing levels• An initial financial impact assessment
focusing on the potential transition
adjustment• Detailed analysis of the key technicaldecisions, including the status of thework of the external auditor Deloitte
in respect of those technical issues• Updates as to the status of thesoftware solution for IFRS 17 andthe dependencies with other financetransformation projects, including
the implementation of new generalledger systems in several of theGroup’s businesses• Planned governance timescales foraccounting policy choices, and revised
financial statements presentationahead of the 1 January 2023
implementation date

External audit
External auditor appointment
The Group last completed an audit
tender during 2020/21 when, following
the completion of a transparent andindependent audit tender process,Deloitte LLP were recommended toshareholders as the Group’s auditor at
the Annual General Meeting in April
2021 and a resolution was passed tothat effect. The Committee confirms
it is in compliance with the provisionsof the Statutory Audit Services forLarge Companies Market Investigation
Order 2014.

The Committee had oversight of thetransition of audit partners at the
beginning of 2021. David Rush has been
Deloitte’s senior statutory audit partner
for the Group since 1 January 2021.
On the recommendation of theCommittee, the Board approved that
Deloitte should be recommended toshareholders for re-appointment as
the Group’s auditors at the 2022 Annual
General Meeting. A resolution to that
effect will be proposed at the Annual
General Meeting.

Audit fee
During 2021, the Committee reviewed
and approved the audit fee proposal
for the 2021 year end Group audit.
The agreed fee for the audit and otherassurance related services for 2021 is£2.25 million (2020: £1.6 million), with
the increase reflecting the impact ofoperational separation of the audit andactuarial practices within the ‘big four’,
an increase in the hourly fee rate per hour
and the audit work performed to date inrelation to the Group’s implementationof IFRS 17 (Insurance Contracts).
The Committee approved the fee
increase having discussed with theauditor the rationale for the proposal.

Safeguarding the external auditor’s
independence and objectivity
The Committee reviewed and approved
its policy on non-audit services in
February 2021 and was satisfied thatit continued to align with current
regulatory guidance. Under the policy,
the Group’s statutory auditor will only
be engaged to carry out non-audit
services in exceptional circumstancesor where there is a regulatory request,
and where agreed by the Committee.
This is to ensure that the independence
and objectivity of the external auditor
is safeguarded.
Pursuant to the policy and unless requiredby law or regulation, any non-audit
services will: a) be subject to ratificationby the Committee, if the cost does notexceed £15,000, or be subject to priorapproval from the Committee where
the cost exceeds £15,000 or such costsin the aggregate exceed £30,000 and b)in aggregate and where applicable, shallnot cost more than 70% of the averageCompany overview

Strategic reportstatutory audit fee for the past threefinancial years. In considering whether
to approve such non-audit services, theCommittee shall consider whether:• It is probable that an objective,
reasonable and informed third party
would conclude that the understandingof the Group obtained by the auditor
for the audit of the financial statements
is relevant to the service, and• The nature of the service would
compromise auditor independence.
The Committee will continue to monitor
regulatory developments in this area toensure that its policy on non-audit fees
adheres to current guidance.

Effectiveness of the external
audit process
The Committee undertakes an annual
review to assess the independence andobjectivity of the external auditor andthe effectiveness of the audit process,taking into consideration relevant
professional and regulatory requirements,
the progress achieved against theagreed audit plan, and the competencewith which the auditor handled the key
accounting and audit judgements.
As part of its review, the Committee
considered, among other things, thefollowing: the output of an online
questionnaire completed by all
Committee members and relevant
members of the Group’s Finance andInternal Audit functions and the findingsof the FRC Audit Quality Reviews (AQR)
published in July 2021. Following thisreview, the Committee concluded
that the external auditor, Deloitte LLP,
remained independent and that theexternal audit process remained effective.

Internal audit
The Group Head of Internal Audit
attended all seven scheduled Audit
Committee meetings, as well as threeof the additional Committee meetings,
and provided a range of presentations
and papers to the Committee, throughwhich the Committee monitored theeffectiveness of all of the Group’s materialinternal controls, including financial,
operational and compliance controls onbehalf of the Board.

Corporate governance

Financial statements

Additional information

171

The Group Head of Internal Audit also
carries out an annual review of theeffectiveness of the Group’s systems ofinternal control and risk management andreports on the outcome of this review
to the Committee. In February 2022, theGroup Head of Internal Audit reported anadequate level of assurance in relation
to the Group’s arrangements for risk
management, control infrastructure,
governance and fraud prevention controls.

effectiveness of the reported findings,
and a summary of the key findings ofeach completed audit is provided to theCommittee as part of the Group Headof Internal Audit’s regular Committee
update. In addition, the UK internal
audit function carries out high-levelgovernance reviews of all foreign
operations, assessing the internal
control frameworks and system ofrisk management.

The Committee also reviewed andapproved the Group Internal Audit
Policy, which includes the Group Internal
Audit Terms of Reference setting out
the role; objectives; reporting lines andaccountability; authority; independence;and objectivity of the internal audit
function. During private meetings heldwith the Group Head of Internal Audit,
the Committee monitored and discussed
the evolution and development of
the internal audit function. The role,competence and effectiveness of eachinternal audit function across the Group
was also assessed by KPMG LLP via an
independent external quality assessment
during 2021. The Committee considered
KPMG’s report and concluded that theGroup internal audit function, including
the relevant subsidiary internal audit
functions, remained independent andeffective, whilst recognising that there areopportunities to enhance the functions’
key operating processes and ensure thatit continues to meet the needs of theGroup. The Group Head of Internal Audit
continues to have responsibility to ensure
the quality of the internal audit activities
in the Group’s overseas locations.

Committee effectiveness review

Members of the Committee also receive
all issued audit reports, enabling themto challenge the reports’ content,
including the rating, and related
recommendations. The Committee
approves the internal audit plan at
the start of each calendar year whilst
the effectiveness and workload of
the internal audit functions and theadequacy of available resources aremonitored throughout the year.
The European operations in Spain, Italy
and France have a dedicated internal
audit team and the US business also has
its own locally based team. All reports
are evaluated by the Group Head ofInternal Audit to ensure the quality andAs part of the Committee’s annual review
of its own performance and processes,
each Committee member completed acomprehensive questionnaire designed
to provide objective assessment of theCommittee’s performance, including its
effectiveness in monitoring internal andexternal audit.
The Committee discussed the resultsof the review at its meeting in earlyFebruary 2022 and concluded that
the Committee continued to operate
effectively with some areas for
improvement, such as the timing of theannual review of the effectiveness of theexternal audit process and continuing
to focus on improving the timeliness ofthe circulation of papers in advance ofthe meeting, and continued emphasis on
root cause analysis and thematic issues
in relation to Internal Audit reports.

Whistleblowing
On behalf of the Board, the Committee
considered and reviewed the Group’s
whistleblowing policy and received
quarterly updates on the use of the policy
and the instances of whistleblowing that
had been raised across the Group during
the year. During the year, the Committee
concluded that the Group’s current
whistleblowing arrangements were an
appropriate means by which employees
could raise concerns in confidence
and anonymously.

172

Admiral Group plc Annual Report and Accounts 2021

The Group Risk CommitteeStatement from Andy Crossley
Interim Chair of the Group Risk Committee

1. Introduction
1.1. This report has been prepared by the Chair of the Group
Risk Committee (GRC) and outlines the following for inclusionin the ‘Group Risk Committee’ section of the Annual Report.
• The Statement from the Chair of the GRC;
• Composition of the Committee;• Duties and responsibilities of the Committee; and• Covid updates, highlighting 2021 as a year of increasingstability and adaptation across the Group.
• Admiral’s risk strategy and approach, including review of
the Group’s risk strategy and risk appetite; considerationof a refreshed suit of key risk indicators; and oversight ofthe management of material risk events.
• Admiral’s ongoing preparations for the Financial Conduct
Authority (FCA) Pricing Practices regulatory changes.

• A summary of key Committee activities in 2021.

• Oversight of work required to ensure Admiral is prepared
to meet the challenges of climate change.

Dear Shareholder,• Developments linked to the launch of new products andthe monitoring of plans to develop existing products.

As Chair of the Group Risk Committee, I am pleased
to present the Committee’s report for 2021.
The Committee has received updates on the UK Insurance
business as well as developments within the other businesses
as part of the Group’s Enterprise Risk Management
Framework (‘ERMF’). Developments considered by theCommittee throughout the year included:
Committee members:
Jean Park (Chair)
Andy Crossley (Interim Chair)
Jayaprakasa (JP) Rangaswami
Cristina Nestares (UKInsurance CEO)

Numberofmeetings:

10• Oversight of Admiral’s operational resilience work,
including improvements in cyber security controls
throughout the Group.
• The continuing development of the Admiral Internal Model.
Covid: During 2021 the Committee has received andchallenged regular updates from the Group and its
subsidiaries in relation to Covid; with the impact on Admiral’s
principal risks and uncertainties reducing greatly through2021 to a position of increased stability and functionality.
The Committee continues to monitor the impact of Covid
and Admiral’s response to its risk mitigation.
Following the recent emergence of the Omicron variant
in December 2021, the Committee members once again
received regular reporting providing an overview of the
impacts of the pandemic on the Admiral Group including:operational and financial impacts, changes to local andnational guidance, infection and death rates, etc.
In respect of the operational impacts of Covid, theCommittee continues to support the Group’s cautious
approach to the use of office space in line with all applicable
local and national guidance, with a prioritisation of
employee physical wellbeing and mental health, as well as
providing a high level of service to our customers. This has
been achieved through a focus on improving the stability ofIT systems and development of home working functionality,
alongside communication with colleagues to gather
information on their preferred working approaches.
The Committee has also reviewed the Group’s solvency andliquidity positions in response to market volatility and wider
economic uncertainty, considering factors such as changes
in inflation, the wider impact of supply chain disruption,and pressures put on individual household finances. The
Committee will continue to closely monitor these and otherfinancial impacts of Covid as they develop.

Company overview

Strategic report

Risk strategy and approach: During
the year the Committee reviewed theAdmiral Group Board’s (hereafter ‘the
Board’) risk strategy and risk appetite
across the Group. The Committee also
approved a refresh of the suite of Key
Risk Indicators with associated triggers
and limits, reflecting the updates to theGroup Risk Appetite.
The ongoing focus on monitoring andreporting customer outcome risks has
been further enhanced through thecontinued embedding of the Group
Conduct Risk Framework. Similarly, theGroup minimum standards continue tobe enhanced to reflect the growth of
non-UK insurance businesses.
The Committee also continues to focus
on key operational risks that affect theGroup. The governance of the risk event
process continues to improve, providing
greater assurance to the Committee
regarding the management of risk
events. The Committee has continued tospend time reviewing notable risk events
reported during the year.
FCA Pricing Practices regulatorychanges: The Committee continues tomonitor the implementation of the FCA
Pricing Practices regulatory changes
through established project governanceand receives regular updates on the work
being undertaken internally, on external
partner assurance and on any potential
impacts on Admiral’s principal risks anduncertainties. For information regarding
the impact of the FCA Pricing Practices
regulatory changes on Admiral’s principal
risks and uncertainties, see the Viability
Statement (page 124).
Climate change: The Committee hasreceived regular updates on the work
being undertaken relating to climatechange to ensure that Admiral ismeeting current requirements and isappropriately preparing to meet futurechallenges. These updates includecommentary on risk management,
investments, ongoing climate-relatedstrategic developments, and theimplementation of changes necessary
for compliance with new regulatory
requirements, as outlined in ‘Proposals
to enhance climate-related disclosuresby listed issuers and clarificationof existing disclosure obligations’Corporate governance

Financial statements(PS20/17). This is further describedin the Viability Statement (page124), and additional information on
Admiral’s approach to climate change
can be found in the Task Force on
Climate-Related Financial Disclosures
disclosure (page 107).
New product developments andexisting product escalation: As aresult of the Committee’s oversightof individual Group entities, combinedwith the oversight afforded by theGroup’s project governance framework,
the Committee has considered andchallenged updates relating to material
projects and change programmes within
the Group, including those designed todevelop new products, and those thatwill develop and accelerate existingproducts. Such oversight includes
the continued development andgrowth of Admiral Pioneer, the further
development of Admiral Financial
Services Limited and numerous otherdevelopments throughout the Group.
Technology, cyber and operational
resilience: Updates were provided to theCommittee throughout 2021 regarding
Admiral’s cyber and technology
risk, as part of Admiral’s ERMF. A key
development of which included theintroduction of an enhanced target
operating model for the managementof Group information security andtechnology risks.
The Committee also received regular
updates on the cyber security
programme of work that is ongoing
within several of the European insurance
businesses; a programme to further
reduce the information security riskof Admiral’s EU businesses in line with
the Group’s Cyber Security Framework.
These updates included considerationof programme prioritisation, key
milestones and progress updates.
Operational resilience was a key areaof focus for the Committee in 2021,
with updates received through ongoingoversight of the Admiral Project
Governance Framework, including
project aims, key milestones, andprogress against deadlines; as well as
additional specific/in-depth operational
resilience updates being provided.

Additional information

173

The Committee also
continues to focus on
key operational risks
that affect the Group.
It was noted that the operational
resilience programme is utilising bothinternal expertise as well as obtaining
external expertise and assurance.
Admiral’s internal model: A significant
amount of time has been spent
overseeing the further developmentof the Admiral internal model (‘AIM’)
which is used to capture and quantify
all material risks within the Groupand to calculate the solvency capitalrequirement. Much of 2021 has been
focused on enhancement of the model
following feedback from the PRA.
The Group continues to maintain aregulatory capital add-on to coverrisks not captured within the Standard
Formula. The Committee has reviewed
the Group’s proposed dividend level,
capital plan and capital buffer in line with
the Capital Policy. The review consideredseveral sensitivities, stress tests andscenarios tests, including assessing
the uncertainty around Covid impacts.
The Group continues to make use of
Undertaking Specific Parameters (USPs)
for AIGL and the Volatility Adjustment(VA) across its UK insurance entities.
Throughout 2021 the Committee
challenged and reviewed the settingof, and outputs from, regular stressand scenario testing and reverse stresstesting, with continued focus on theprincipal risks and uncertainties facing
the Group. The output was incorporated
into the annual Group ORSA Report for
2021 which the Committee reviewed
prior to Board approval.

Andy Crossley
Interim Chair of the Group Risk
Committee
3 March 2022

174

Admiral Group plc Annual Report and Accounts 2021

The Group Risk Committee continued

The work of the Committee is supported by more detailed work
undertaken by subsidiary Board and/or executive Risk Management
Committees in each of the Group’s operational entities.

Composition of the Group
Risk Committee
Membership at the end of the year
was: Jean Park (Chair), Andy Crossley(Interim Chair), Cristina Nestares, and
JP Rangaswami, with Mark Waters acting
as Secretary to the Committee.
The Committee held five scheduled
meetings, with a further additional fivemeetings taking place, predominantly
to discuss remuneration and the Admiral
Internal Model.

Duties and Responsibilities of
the Group Risk Committee
The duties and responsibilities of
the Committee are set out in theCommittee’s Terms of Reference, thatwere reviewed and approved by theAdmiral Group Board.
The responsibilities of the Committee
can be summarised as:• Overseeing the development,
implementation and maintenance of
the Group’s overall Risk Management
Framework and ensuring that it isin line with emerging regulatory,
corporate governance and bestpractice guidelines.
• Considering and recommending to
the Board for approval the Group’s
risk appetite, as well as ongoing
monitoring and review of theGroup’s risk exposures.
• Monitoring the Group’s prudential risk
exposure, which includes ensuringthat the Group’s capital resources
and liquidity profile are appropriate
to its needs, whilst meeting minimum
regulatory requirements, including
overseeing and challenging the designand execution of the Group’s stressand scenario testing.
• Reviewing the Group’s proposedinterim and final dividend payments.

• Reviewing the annual Group ORSA
Report and any required interim ORSA
Report, with recommendations being
provided to the Board for approval.

• Reviewing reports from the Group
Risk, Group Compliance, Group Data
Protection and Privacy, and GroupInternal Audit functions.

• Reviewing and approving the Solvency
II Actuarial Function Reports on
Reinsurance and Underwriting
each year.

• Formally reporting to the Group
Audit Committee to facilitate theirrecommendation of the Annual Reportand Accounts to the Board on thefollowing key areas and disclosures:principal risks and uncertainties, risk
management and internal control,
viability, risks associated withmaterial transactions and/or strategic
proposals, and TCFD.

• Reviewing the Group’s progress
towards approval of the Group’s
internal capital model.
• Monitoring the adequacy andeffectiveness of the Group’s Risk
and Compliance functions.
• Approving the annual plans for theGroup Risk and Compliance functions
which include reviewing regulatory
developments and any planned
meetings between the PRA and FCA
and the business.
• Reviewing any significant risk issues
that have a material impact on thecustomers of the business and / orconcern the regulator.
• Ensuring the adequacy andeffectiveness of the Group’s systems
and controls for the prevention offinancial crime, and data protection
systems and controls.
• Reviewing the Group’s compliancewith Solvency II.
• Considering the annual process for thereview and appraisal of adherence toGroup Minimum Standards.
• Reviewing compliance with Group
policies, including the Group’s
Reinsurance Policy, Group ORSA Policy,
and Group Underwriting Policy.
• Reviewing and approving the
remuneration report from theCRO prior to Group Remuneration
Committee sign off, as well as
providing feedback on the Directors’
Remuneration Policy, and commenting
on remuneration metrics to help
ensure there is no conflict with risk
management objectives.

The Committee Chair reports formallyto the Board on the Committee’s
proceedings after each meeting,on all matters within its duties andresponsibilities, as set out in previously
circulated minutes to the Board. The
Committee Chair also reports on theactivities of the Committee in a formal
written report that is submitted to anddiscussed by the Board annually.
The work of the Committee is
supported by more detailed work
undertaken by subsidiary Board and/ or executive Risk Management
Committees in each of the Group’s
operational entities. At each meeting,
the Risk Management Committees
consider notable: movements in theoperation’s risk profile; risk events;and emerging risks. Risk Management
Committees also assess and monitor
regulatory issues, ensuring that theirresolution and the action taken areappropriately recorded. The Risk
Management Committees receive
regular information on Conduct Risk,
such as complaint handling reports andother related management information.
The Group Risk Management function
reviews and collates information fromacross the Group for consideration by
the Committee.

Company overview

Strategic report

In addition, to ensure that theCommittee is operating at maximum
effectiveness, it conducts a periodic
review of its performance (last reviewed
in June 2021) and at least annuallyreviews its constitution and terms ofreference (last reviewed in November2021). Any changes it considers
necessary are recommended to theGroup Board for approval.

Summary of Key Group Risk
Committee Activities in 2021
During the year the Committee:• Reviewed the Group’s updated
risk strategy, risk appetite andassociated triggers and limits inthe context of the Group’s agreed
strategic objectives.
• Received and challenged regular
updates related to Covid, including:
impact on the Group’s principal risks
and uncertainties; employee healthand wellbeing; return to office plans;
IT and information security updates;
and the impact to subsidiaries within
the Group.
• Recommended the ‘2021 Group ORSA
Report’ and ORSA Policy for Board
approval prior to submission of thereport to the regulator.
• Reviewed the Group’s proposed
dividend level, capital plan and capital
buffer in line with the Capital Policy.
• Reviewed the Group’s regulatory
capital add-on application as part ofSolvency II capital requirements.
• Received regular monitoring
reports on customer outcome
risk and reviewed updates to theGroup Minimum Standards andPolicy Framework.
• Received in-depth updates ofindividual Group entities, including
Agri-Environment Climate Scheme,
European University Institute (EUI),
Admiral Financial Services Limited(AFSL), and Able.

Corporate governance

Financial statements• Considered in-depth analysis of anumber of the Group’s most significant
risk areas, via stress and scenario
testing and reverse stress testing.
• Considered the adequacy of risk
mitigation measures and contingency
plans, including a review of the Group’s
reinsurance provisions.
• Dedicated a significant amount of time
to developing the Admiral internal
model, receiving regular updates on the
progress of the project and providing
challenge to key project work streams,
in particular the model validation.
• Received regular updates on climatechange-related initiatives, including
enhancements to governancestructures and risk frameworks,
and challenged recommendations
for Group net zero greenhouse gas
emission targets.
• Received regular risk monitoring
reports on performance of Key Risk
Indicators within the overall risk
management framework.
• Received updates on the impact of
notable risk events throughout 2021.
• Received regular updates in relation
to key programmes of work, including
Information Security, IT, IFRS 17, and
FCA Pricing Practices as part of theGroup’s enhanced project governanceframework.
• Considered the annual renewal of theGroup’s corporate insurance coverage.

1.1. Principal risks anduncertainties
The Board of Directors confirms that it
has performed a robust assessment of
the Group’s principal and emerging risks.
These risks, along with explanationsof how they are being managed andmitigated, are included in the Strategic
Report, page 116.
Information on how key risk drivers have
impacted on the Group’s principal risks
has been included within the Viability
Statement, page 124.

Additional information

175

1.2. Risk management andinternal control systems
The system of risk management
and internal control over Admiral’sinsurance, operational, market, credit
and group risk is designed to manage
rather than eliminate the risk offailure to achieve business objectives
and breaches of risk appetites.
Furthermore, risk management can
only provide reasonable and not
absolute assurance against material
misstatement or loss. The Group Board
is ultimately responsible for the Group’ssystem of risk management and internal
control and the Group Audit Committee(GAC) has reviewed the effectiveness of
this system (a summary of GAC duties
and responsibilities, as well as key
GAC activities in 2021 is available on
page 165).
The Group Board is of the view:that there is an ongoing process for
identifying, evaluating and managing theGroup’s risks and internal controls; thatit has been in place for the year ended
31 December 2021; and that, up to thedate of approval of the Annual Reportand Accounts, it is regularly reviewed by
the Group Board and accords with theinternal control guidance for Directors
provided in the 2018 UK Corporate
Governance Code.
The Group Board confirms that it has
performed a robust assessment of theGroup’s principal and emerging risks.
These risks, along with explanationsof how they are being managed andmitigated, are included in the strategic
report on page 116, with key risk drivers
impacting Admiral’s principal risks anduncertainties being further discussed
in the Viability Statement on page 124.
The Group Board is responsible fordetermining the nature and extent of
the principal risks it is willing to take inachieving its strategic objectives. This
assessment supports the Group Board inmonitoring the integrity of the Group’sreported financial statements.

176

Admiral Group plc Annual Report and Accounts 2021

The Group Risk Committee continued

The Group Board meets at least seventimes a year to discuss the directionof the Group and to provide oversightof the Group’s risk management andinternal control systems.
The Group Board has delegated thedevelopment, implementation andmaintenance of the Group’s overallrisk management framework to theGroup Risk Committee (GRC). The GRC
reports on its activities to the Group
Board and the GAC, supporting theoverall assurance provided by the GAC
that the Group’s internal control, risk
management and compliance systems
continue to operate effectively.
The Group Board has delegated to the
GAC the review of the adequacy andeffectiveness of the Company’s internalfinancial controls, and internal control
and risk management systems.

The Subsidiary Boards, GRC, and entity
Risk Committees receive reports
setting out key performance and risk
indicators and consider possible control
issues brought to their attention by
early warning mechanisms that areembedded within the operational
units. They, together with the GAC,
also receive regular reports fromthe Internal Audit function, which
include recommendations for
improvement of the control andoperational environments.
The Chair of the GRC provides a written
report to the Group Board of theactivities carried out by the Committee
on an annual basis (a summary of GRC
duties and responsibilities, as well as
key GRC activities in 2021 is available on
pages 174 – 176). In addition, the Group
Board receives reports from the Chairof the GAC as to its activities, together
with copies of the minutes from
Subsidiary Board meetings, the GRC
and the GAC.

The GAC’s ability to provide assurance
to the Group Board depends on theprovision of periodic and independentconfirmation, primarily by Group Internal
Audit, that the controls established by
Management are operating effectively
and where necessary provides a highlevel challenge to the steps being
taken by the GRC to implement the risk
management strategy.

Statement of assurance
Based on the conclusions of our work,
as detailed above and including theoversight and review of the 2021 GroupORSA Report, the Group Risk Committee
can provide the Group Board with anadequate level of assurance in relation to
its arrangements for risk management.

The Group operates a ‘three lines of defence’ approach to Risk and Internal Control.
1st Line of Defence

2nd Line of Defence

3rd Line of Defence

The Group Board recognises that the dayto-day responsibility for implementing
policies for risk identification,assessment and management lies
with the senior management, whose
operational decisions must take into
account risk and how it can be controlled
effectively.

The ‘second line of defence’ is led by theGroup Chief Risk Officer and comprises
the Corporate Governance functions andCommittees that are in place to provide
oversight of the effective operationof the internal control framework. The
Corporate Governance functions facilitate
the oversight and operation of the Group
Policy Framework and Group MinimumStandards, covering risk management andcontrols for all notable risks to the Group.
The Corporate Governance functions
perform second line reviews, including
reviews of the capital modelling andbusiness planning processes to support
the Group Board’s assessment of theGroup’s ongoing viability. Regular reviewsof all risks are undertaken in conjunction
with senior management, with theresults of these reviews recorded in risk
registers and reported to the appropriate
governance forums and Boards.

The ‘third line of defence’ comprises
the independent assurance provided by
the GAC and the Group Internal Audit
function. Internal Audit undertakes a
programme of risk-based audits covering
all aspects of both the first and secondlines of defence. The findings from theseaudits are reported to all three lines,
i.e. management, the Executive andoversight Committees, and the GAC.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

177

The Remuneration Committee
Evelyn Bourke
Chair of theRemuneration Committee
Dear Shareholder,I am pleased to introduce my first Directors’ Remuneration
Report as Chair of the Remuneration Committee(the ‘Committee’) and approved by the Board for theyear ended 31 December 2021.

Admiral’s remuneration
structure reinforces ourunique culture and createsstrong alignment with
our shareholders.

This is the first report since I took up the role of Committee
Chair on 1 September 2021. I would like to thank mypredecessor in the role, Owen Clarke, for his leadershipof the Committee since 2018 and his support during thehandover period.
I would like to thank shareholders for supporting Admiral’sRemuneration Policy and Annual Report on Remuneration
at the April 2021 AGM with votes of 98.6% and 99.7%,
respectively.
I look forward to welcoming you at our AGM in
2022 and to your continued support for this year’s
remuneration resolution.

Business Context
Committee members:
Evelyn Bourke (Chair)
Jean Park
Mike Brierley

Numbe
ro
meetin f
gs:

82021 represented another strong set of results given thechallenging circumstances, with a 4.2% increase in Groupturnover and a 26.5% increase in the Group’s share of
pre-tax profit, excluding restructure costs, to £769 million.
The proposed final dividend for 2021 is 118p per share(2020: 86.0p), representing a normal dividend (65% of
post-tax profits) of 42.1 pence, a special dividend of
29.9 pence per share and a final dividend in relation to
the sale of Penguin of 46 pence per share.
We have a unique company culture, the main pillars are:fun – ensuring we are a great place to work; communication– we encourage active and transparent communication at
all levels; equality – we work hard to promote a sense offairness and equality; and recognition and reward – we place
share ownership at the heart of this pillar. To read more
about our employee culture turn to page 12.
How we treat vulnerable customers has been an area of
focus for 2021. Our specialist customer support team help
some of our most vulnerable customers compassionately
when they need us the most. To read more about how wehelped our customers in 2021 turn to page 14.

178

Admiral Group plc Annual Report and Accounts 2021

The Remuneration Committee continued

Our approach to sustainability underpins
our corporate strategy and helps
translate our purpose into action. To
help communicate how our approach
drives long-term stakeholder value welaunched a sustainability project in 2021.
The aim of this project was to refine key
Environmental, Social and Governance(ESG) focus areas and outline tangible
ESG ambitions. To read more on oursustainability approach turn to page 46.
We have six financial measures and six
non-financial measures which help us
understand how we have performed as abusiness; these include profit and growthfrom a financial standpoint, and customer
satisfaction and feedback and employee
feedback from a non-financial standpoint.
A summary of our financial and nonfinancial KPI’s can be found on page 61.

Recap of remuneration structureat Admiral
Admiral’s remuneration structure
reinforces our culture and creates strongalignment with shareholders:• Base salaries are targeted at the lower
end of our peer group.
• Pensions for the Executive Directors
are fully aligned with that offeredto the workforce, and have been forsome time, set at a maximum level of
6% of base salary subject to an overallmaximum employer contribution of£15,000.
• Executives are encouraged to build up
significant shareholdings in the Groupto maximise shareholder alignment.
Our main incentive plans are the Share
Incentive Plan (‘SIP’), which encourages
wide share ownership across our

employees, and the Discretionary Free
Share Scheme (‘DFSS’). DFSS primarily
incentivises Earnings per Share (EPS)
growth, Return on Equity (RoE) andTotal Shareholder Return (TSR) vs.
the FTSE 350 (excluding investmentcompanies) over a three-year period.
For Executive Directors, vesting is
additionally dependent on a scorecard
which includes customer outcomes,
people engagement, ESG and strategy
implementation. It is also subject toa potential adjustment in respect ofrisk events arising in the period whichhave a material adverse customer,
regulatory or financial impact.
• Shareholder alignment is reinforcedby granting DFSS awards as a fixed
number of shares, ensuring the value
at grant is directly aligned with theshareholder experience. The Committee
reviews award sizes annually, taking into
account factors such as the shareholder
dilution impact of all employee shareschemes and share price movement
since the last award, in particularwhether a material share price increase
has resulted from general market orother external factors.
• Admiral pays a bonus (the ‘DFSS
bonus’) that is equivalent to the actual
dividends paid out to shareholders
calculated on the number of unvested
DFSS awards held. It is important
to note that this is in place of, notadditional to, a conventional cash bonus
scheme. The DFSS bonus payable to
Executive Directors is subject to a +/20% adjustment based on performanceagainst a scorecard of non-financial
metrics which includes customer
outcomes and performance against
strategic objectives.

The Committee recognises that some
aspects of the structure of pay at
Admiral are unusual compared to thetypical practice at other large UK-listedcompanies, but we believe that thestructure contributes to our cultureof focusing on collective success andis aligned with Admiral’s philosophy
around the efficient use of capital anddistribution of surplus profits, all ofwhich aligns to shareholder interests.

Decisions made by the
Remuneration Committee in
2021 on Executive Director
compensation
Taking into account the approved
remuneration structure and Admiral’sbusiness performance, the Committee
made the following decisions during 2021:• Based on performance to 31
December 2021, 98.57% and 93.08%of the DFSS award granted in 2019 willvest to Milena Mondini de Focatiis andGeraint Jones, respectively. It should
be noted that the vesting calculations
were based on re-stated financials,
to ensure the sale of the pricecomparison business did not artificiallyinflate vesting outcomes. The fulldetails of the vesting outcomes are on
page 194.
• Milena Mondini de Focatiis and Geraint
Jones also received a DFSS bonus of£653,849 and £471,763 respectively.
This bonus is equivalent to dividends
which would have been paid during
the year on all outstanding DFSS andsalary shares awarded, but not yet
vested, plus a +/- 20% adjustment for
performance against a scorecard of
Non-Financial Metrics.

Company overview

Strategic report

In addition, the DFSS bonus was
subject to a potential adjustment
to take into account any risk events
which were considered to have amaterial customer, regulatory or
financial impact. For this year there
were no such risk adjustments. The fulldetails of the DFSS bonus calculations
are on page 195.
• During the course of 2021, Milena
Mondini de Focatiis was granted anaward of 90,000 shares and Geraint
Jones was granted an award of 52,500
shares under the DFSS. This is theequivalent to £3,109,500 or 447% ofMilena’s base salary and £1,813,875
or 448% of Geraint’s base salaryrespectively. These awards will vest on:Ȳ three-year EPS growth –26.67% weighting;Ȳ TSR vs. FTSE 350 (excluding
investment companies) – 26.67%
weighting;Ȳ RoE – 26.67% weighting; andȲ the average outcomes of thescorecards of Non-Financial
Metrics used to assess DFSS bonus
adjustments over the performance
period – 20% weighting.
There will also be the potential for
downwards adjustment subject to anassessment to take into account ofrisk events which are considered tohave a material customer, regulatory or
financial impact over the course of theperformance period. Further details canbe found on page 182.

Corporate governance

Financial statements

2022 remuneration
arrangements
Executive Director remuneration
arrangements for 2022 will continue toalign with the 2021 Remuneration Policy.
Milena Mondini de Focatiis’ salary wasincreased by 3.0% to £715,850 andGeraint Jones’s salary was increasedby 3.0% to £416,800, effective from
1 January 2022. These increases are inline with proposed base pay changes
across the wider Group for 2022.
The Committee reviewed the metrics
that will apply to DFSS and DFSS bonus
awards for 2022. Further details areshown on page 197 – 198. In particular,
the Committee considered the use ofEnvironmental, Social and Governance(‘ESG’) measures. For 2022, DFSS andDFSS bonus awards will be subject toperformance targets based on Diversity,
both in senior management and acrossthe Group, and a reduction in our
carbon emissions.
The Annual Report on Remuneration(subject to an advisory vote) will be put
to our shareholders at the AGM in 2022.
We do hope that you vote in favour of
the report. I am available to discuss our
Remuneration Policy and Annual Report
on Remuneration with shareholders.

Evelyn Bourke
Chair of the Remuneration Committee
3 March 2022

Additional information

179

180

Admiral Group plc Annual Report and Accounts 2021

Remuneration at a glance
I would like to thank shareholders for supporting Admiral’s Remuneration
Policy and Annual Report on Remuneration at the April 2021 AGM withvotes of 98.6% and 99.7%, respectively.
How did we perform during 2021?

212.2p

Earnings per share(pence)56%

187p(2020: 52%)

Full year dividend
per share (pence)

Return on equity (%)(2020: 170.7p)(2020: 156.5p)

10-year TSR performance:
Admiral vs. FTSE100 and FTSE350 indices

What did our Executive Directors
earn in 2021?

Growth in the value of a hypothetical £100 holding
over ten years to 31 December 2021

• Pension, benefits and SIP includes 2021
pension contribution of £19,698, and £19,055
for the CEO and CFO, respectively£700• DFSS bonus of £653,849 and £471,763 for
the CEO and CFO, including an adjustment
for performance against scorecards of
non-financial measures.

£600• DFSS value for the CEO and CFO relates to
98.57% and 93.08% of their 2019 DFSS awards
vesting, respectively.

£500

£400

£1,067,918£300£1,236,749£200£653,849£100£0Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21
AdmiralFTSE 100

FTSE 350£19,698£471,763£695,000£19,055£404,660

Milena Mondini de Focatiis

Geraint Jones

Chief Executive Officer

Chief Financial Officer

SalaryPension, benefits and SIP

DFSS Bonus

DFSS shares

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

181

Director’s remuneration policy
Compliance Statement
This Remuneration Report has been prepared according to the requirements of the Companies Act 2006 (the Act), Regulation
11 and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations
2018, the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 and other relevant
requirements of the FCA Listing Rules. In addition, the Board has adopted the principles of good corporate governance set out inthe UK Corporate Governance Code (the Code) and the guidelines issued by its leading shareholders and bodies such as ISS, theInvestment Association, and the Pensions and Lifetime Savings Association.
Unless otherwise stated, information contained within this Remuneration Report is unaudited.
The following Remuneration Policy (the ‘2021 Policy’) was approved by a 98.6% shareholder vote and therefore came into effectfrom the April 2021 AGM. There have been no changes to the Remuneration Policy since the 2021 AGM.

Complying with the Code Principles
UK CodePrinciple

Description

References

Principle P

Remuneration policies and practices should be designed to support
strategy and promote long-term sustainable success. Executive
remuneration should be aligned to company purpose and values, andbe clearly linked to the successful delivery of the company’s longterm strategy.

•
•
•
•

Principle Q

A formal and transparent procedure for developing policy on
executive remuneration and determining director and senior
management remuneration should be established. No director should
be involved in deciding their own remuneration outcome.

• Executive Director Remuneration Policy on page 182.
• Incentive outcomes on page 193.
• Remuneration Committee overview on page 177.

Principle R

Directors should exercise independent judgement and discretion
when authorising remuneration outcomes, taking account ofcompany and individual performance, and wider circumstances.

• Remuneration outcomes for 2021 on page 190.
• Remuneration Committee overview on page 177.

Key Principles on page 181.
Executive Director Remuneration Policy on page 182.
Remuneration outcomes for 2021 on page 191.
Implementation of remuneration policy for 2022 on
page 197.

Key Principles of Admiral Remuneration Arrangements
The Group is committed to the primary objective of maximising shareholder value over time in a way that also promotes effective
risk management and excellent customer outcomes and ensuring that there is a strong link between performance and reward.
This is reflected in the Group’s stated Remuneration Policy of paying competitive, performance-linked and shareholder-aligned
total remuneration packages comprising basic salaries coupled with participation in performance-based share schemes togenerate competitive total reward packages for superior performance. The Board is satisfied that the adoption of this Policy
continues to meet the objectives of attracting and retaining high quality executives across the Group.
The Committee reviews the remuneration framework and packages of the Executive Directors and senior managers andrecognises the need to ensure that the Remuneration Policy is firmly linked to the Group’s strategy, including its risk management
approach. In setting the Policy and making remuneration decisions, the Committee takes into account pay and conditions
elsewhere in the Group. The main principles underlying the Remuneration Policy are:• Competitive total package – the Group aims to deliver total remuneration packages that are market-competitive, taking into
account the role, job size, responsibility, and the individual’s performance and effectiveness. Prevailing market and economic
conditions and developments in governance are also considered, as are general salary levels throughout the organisation;• Significantly share-based – our base salaries are targeted towards the lower end of market but are combined with meaningful
annual share awards that vest on long-term performance to ensure strong alignment with shareholders and the longterm interests of the Group. Executives are also encouraged to build up significant shareholdings in the Group to maximise
shareholder alignment;• Long-term perspective – a significant part of senior executives’ remuneration is based on the achievement of stretching
performance targets that support the delivery of the Group’s strategy and shareholder value. The extended performance andvesting horizons promote a long-term perspective that is appropriate to the insurance sector;

182

Admiral Group plc Annual Report and Accounts 2021

Director’s remuneration policy continued• Effective risk management – incentives are designed to ensure they do not encourage excessive risk-taking. They are alignedwith the delivery of positive customer outcomes and reinforce the Group’s risk policy;• Open and honest culture – the Group has a strong culture of focusing on collective success, whilst still recognising individual
contribution to the Group’s performance, and this is reflected in our remuneration structure across the business; and• Transparency to stakeholders – the remuneration structure is designed to be easy to understand, and all aspects are clear toemployees and openly communicated to employees, shareholders, and regulators.

Remuneration Policy table
This table describes the key components of the remuneration arrangements for Executive Directors.
Purpose and link to strategy

Operation

Opportunity and performance metrics

Base Salary
To attract and retain talent
by setting base salaries atlevels appropriate for thebusiness.

Salaries are reviewed annually or following asignificant change in responsibilities.

Any salary increases are applied in line with the outcome of
the review.

Salary levels / increases take account of:In respect of existing Executive Directors, it is anticipatedthat increases in cash salary will not normally exceed
the increase for the general employee population over
the term of this Policy. More significant increases may
be awarded in certain circumstances including, but notlimited to: where there has been a significant increase inrole size or complexity, to apply salary progression for a
newly appointed Executive Director, or where the Executive
Director’s salary has fallen significantly behind market.

• Scope and responsibility of the position.
• Individual performance and effectiveness,and experience of the individual in the role.
• Average increase awarded across the Group.

Where increases are awarded in excess of that for thegeneral employee population, the Committee will provide
the rationale in the relevant year’s Annual Report on
Remuneration.
PensionTo provide retirement
benefits.

The Group operates a Personal Pension Plan,a Defined Contribution Scheme.
This is available to all employees following
completion of their probationary period.

In the UK, the Group matches employee contributions up
to a maximum of 6% of base salary subject to an overallmaximum employer contribution of £15,000 or provides
the equivalent value in cash. Base salary is the only elementof remuneration that is pensionable.
The pension provision and rules are the same for Executive
Directors and the main body of staff.

Other Benefits
To provide competitive
benefits.

Includes (but not limited to):Benefits may vary by role.

•
•
•
•

None of the existing Executive Directors received total
taxable benefits exceeding 5% of base salary during themost recent financial year, and it is not anticipated thatthe cost of benefits provided will exceed this level over theterm of this Policy.

Death in service scheme.
Private medical cover.
Permanent health insurance.
Relocation, at the Committee’s discretion.

All benefits are non-pensionable.

The Committee retains the discretion to approve ahigher cost in exceptional circumstances (e.g., relocation),or in circumstances driven by factors outside theCompany’s control (e.g., material increases in health careinsurance premiums).

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

183

Purpose and link to strategy

Operation

Opportunity and performance metrics

Discretionary Free
Share Scheme (DFSS)
To motivate and reward
longer-term performance,
aid long-term retention of
key executive talent, use
capital efficiently, growprofits sustainably andfurther strengthen thealignment of the interestsof shareholders and staff.

Executive Directors may be granted awards
annually at the discretion of the Committee.

Maximum opportunity: A maximum face value on award of
500% of base salary applies. Threshold performance will
result in vesting of up to 25% of the maximum award.

Awards may be in the form of nil or nominal
priced options or conditional shares. Awards arenormally granted on an annual basis and vest
after a minimum of three years subject to Group
performance and continued employment.
A two-year holding period applies to vested
awards, during which time Executive Directors
may not sell the vested awards except to cover
tax liabilities.
Awards are subject to a potential downwards
adjustment based on an assessment to take
into account of risk events which are considered
to have a material customer, regulatory
or financial impact over the course of theperformance period.

DFSS shares are granted as a fixed number of shares(subject to the quantum limits of the plan, as describedabove). The number granted is reviewed and may be
adjusted by the Committee, for example, if there has beena significant change in share price.
Vesting of DFSS awards is subject to the Group’s
performance over a three-year performance period.
The performance measures may include EPS growth,
ROE, relative TSR and a scorecard of Non-Financial metrics
selected by the Committee. Details of the measures,
weightings and performance targets used for specific
DFSS grants are included in the relevant year’s Annual
Report on Remuneration.

Awards are subject to malus and clawback
provisions, i.e., forfeiture or reduction ofunvested awards and recovery of vested awards.
Events which may lead to the application of malus
and clawback are set out in the Group’s Malus
and Clawback Framework and include material
financial misstatement, responsibility for conduct
which results in significant losses, material failureof risk management, misconduct, reputational
damage and corporate failure.
The Remuneration Committee has discretion toadjust the formulaic vesting outcome to ensure
the final outcome is a fair and true reflection ofunderlying business performance.
The DFSS bonus
To further align incentive
structures with shareholderinterests through thedelivery of dividend
equivalent bonuses.

To incentivise shareholder value creation andefficient use of capital, management participatesin a bonus scheme which directly links theirawards to dividends paid to shareholders. Bonusis calculated to be equivalent to dividends thatwould have been payable during the year on all
outstanding DFSS shares awarded but not vested.

Maximum opportunity: sum equal to the dividends payable
during the year on awarded but unvested DFSS shares,
subject also to a possible 20% upwards or downwards
adjustment based on performance against a scorecard of
non-financial metrics.
No bonus is payable unless dividends are payable on Admiralshares.

The DFSS bonus is subject to a +/- 20%
adjustment based on performance against
targets based on a set of strategic, customer andother non-financial metrics. Whilst the bonus may
be adjusted upwards or downwards by up to 20%
in any given year, it is not anticipated that theadjustment will increase the Executive Directors’
remuneration on average over the long term.
The DFSS bonus is subject to the Group’s Malus
and Clawback Framework.
Approved Free Share
Incentive Plan (SIP)
To encourage shareownership across all
employees, using HMRC
approved schemes for
eligible UK employees.

All eligible UK employees participate in the SIP
after completing a minimum 12 months’ service.
Grants are made twice a year based on the resultsof each half year and vest after three years
subject to continued employment.

The SIP is an all-employee scheme and Executive Directors
participate on the same terms as other employees. The
acquisition of shares is therefore not subject to thesatisfaction of a performance target.
Maximum opportunity is in line with HMRC limits.

184

Admiral Group plc Annual Report and Accounts 2021

Director’s remuneration policy continued

Purpose and link to strategy

Operation

Opportunity and performance metrics

In-employment
shareholding requirement
To align interests of
Executive Directors withshareholders.

Guideline to be met within five years of the laterof the introduction of the guidelines and an
Executive Director’s appointment.

400% of base salary.

Post-termination
shareholding requirement
To further align theinterests of Executive
Directors with shareholders
and encourage a focus
on long-term sustainable
performance

Shareholding required to be maintained at thein-employment requirement (or number of shares
held at time of termination, if lower) for a periodof two years post termination.

400% of base salary (or number of shares held at time oftermination, if lower).

The Committee is satisfied that the above Remuneration Policy is in the best interests of shareholders and does not promote
excessive risk-taking. The Committee retains discretion to make changes required to satisfy legal or regulatory requirements andother non-significant changes to the Remuneration Policy without reverting to shareholders.

Notes to the Remuneration Policy table
Payments from Existing Awards
Executive Directors are eligible to receive payment from any award made prior to the approval and implementation of the 2021
Remuneration Policy. This includes all outstanding awards under the previous 2015 and 2018 Remuneration Policies, or any awards
made prior to appointment to the Board. Details of any such payments will be set out in the Annual Report on Remuneration as
they arise.

Selection of Performance Measures
Vesting under the DFSS is linked to financial metrics including growth in EPS, ROE, and relative TSR.
Growth in EPS has been selected as a performance measure as the Committee feels it is a strong indicator of both long-term
shareholder return and the underlying financial performance of the business. It is transparent and highly visible to executives.
ROE has been selected as the Committee believes that a returns metric reinforces the focus on capital efficiency and delivery ofstrong returns for our shareholders, thereby further strengthening the alignment of incentives with Admiral’s strategy.
Relative TSR vs. the FTSE 350 (excluding investment companies) has been selected to reflect value creation for Admiral’sshareholders as compared to the general market.
For 2019 awards onwards, vesting of DFSS awards is also linked to non-financial measures which may include strategic, customer
and other measures. The Committee believes that the additional emphasis on these measures reinforces Admiral’s focus on ourcustomers and on other non-financial Group priorities, whilst also more clearly demonstrating alignment of Group remuneration
practices with the requirements of Solvency II.
The specific performance measures and their respective weightings in respect of each DFSS award may vary to reflect thestrategic priorities at the time of the award.
Performance targets are set taking into account the Company’s strategic priorities and the economic environment in which theCompany operates. The Committee believes that the performance targets set are stretching and motivational, and that maximum
outcomes are available only for outstanding performance.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

185

Remuneration Policy for Other Employees
The Company’s approach to annual salary reviews is consistent across the Group, with consideration given to the role size,
experience required, individual performance and pay levels in comparable companies.
In general, the Remuneration Policy which applies to other senior executives is consistent with that for Executive Directors.
Remuneration is typically linked to Company and individual performance in a way that reinforces shareholder value creation.
Around 3,300 employees from across the Group, as well as the Executive Directors, participate in the DFSS. The Committee
determines DFSS awards for those executives within its remit and on an aggregate basis for all other participants in the DFSS. For
the Executive Directors, all DFSS share awards are subject to performance conditions. For other senior managers and employees atlower organisational levels, a proportion of awards (ranging from half to two-thirds) are subject to performance, with performance
conditions either in line with those described above or set based on key performance drivers of the individual’s relevant business
unit, and the remainder has no performance conditions attached other than the requirement that the recipient remains anemployee of the Group at the date of vesting. Award sizes vary by organisational level and an assessment of both financial andnon-financial individual and business unit performance.
All holders of DFSS awards receive the DFSS bonus, with the bonus for a number of senior managers being adjusted for
performance against a scorecard of customer, risk and other non-financial metrics.
The Company operates a personal pension scheme which is available to all employees once they have completed theirprobationary period. For all employees, including the Executive Directors, the Company matches the employee contribution
up to a maximum of 6% of salary, subject to an overall maximum of £15,000, or provides the equivalent value in cash.
All UK employees who have served a minimum tenure at Admiral are eligible to participate in the SIP on the same terms. Most
overseas employees receive an equivalent award to the UK SIP awards and these awards have no performance measures attached.

Service Contracts and Leaver/Change of Control Provisions
The Company’s Policy is to limit termination payments on termination to pre-established contractual arrangements. In the eventthat the employment of an Executive Director is terminated, any compensation payable will be determined in accordance withthe terms of the service contract between the Company and the employee, as well as the rules of any incentive plans. Under
normal circumstances, Executive Directors are entitled to receive termination payments in lieu of notice based on base salary andcompensation for loss of benefits. The Company has the ability to pay such sums in instalments. The notice period for all Executive
Directors is one year.
Executive Director

Date of appointment

Contract duration

Geraint Jones

13 August 2014

Rolling contract, 12-month notice period

Milena Mondini de Focatiis

11 August 2020

Rolling contract, 12-month notice period

There is no provision in the Executive Directors’ contracts for compensation to be payable on early termination of their contractover and above the notice period element. The Executive Directors’ service contracts are available to view at the Company’s
registered office.

186

Admiral Group plc Annual Report and Accounts 2021

Director’s remuneration policy continued

When considering termination payments, the Committee reviews all potential incentive outcomes to ensure they are fair to bothshareholders and participants. The table below summarises how the awards under the DFSS and DFSS bonus scheme are typicallytreated in specific circumstances, with the final treatment remaining subject to the Committee’s discretion:
Plan

Scenario

Treatment of awards

Timing of vesting

DFSS

Resignation

Awards lapse under most circumstances e.g., dismissal for cause or
resignation.

n/aDeath, injury or disability,
redundancy, retirement
or any other reasons theCommittee may determine

Any unvested award will be prorated for time with reference tothe proportion of the vesting period remaining at termination, andperformance, unless the Committee determines otherwise.

Normal vesting date.

Change of control

Unless the Committee determines otherwise, any unvested award
will be prorated for time with reference to the proportion of thevesting period remaining at change of control, and extent to which
the Committee determines that the performance conditions havebeen met or are likely to be met at the point of change of control.

Immediately

Resignation

n/a

n/a

Death, injury or disability,
redundancy, retirement
or any other reasons theCommittee may determine

Not payable after the event.

n/aChange of control

Not payable after the event.

n/aResignation

Awards lapse under most circumstances e.g., dismissal for cause or
resignation.

n/aDeath, injury or disability,
redundancy, retirement
or any other reasons theCommittee may determine

Any unvested award will be prorated for time with reference to the
proportion of the vesting period remaining at termination, unlessthe Committee determines otherwise.

Normal vesting date, with
Committee discretion toaccelerate.

Change of control

Unless the Committee determines otherwise, any unvested award
will be prorated for time with reference to the proportion of thevesting period remaining at the point of change of control.

Immediately.

DFSS bonus

Salary shares(CFO only,
awards under2018 Policy)

For all leavers (with the exception of in the event of termination for cause), in respect of vested DFSS and vested salary shareawards that are still subject to a holding period, awards will normally be released in full at the end of the holding period, though
the Committee has discretion to determine otherwise, taking into account the circumstances at the time.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

187

Non-Executive Directors
The Company has entered into letters of appointment with its Non-Executive Directors (NEDs). Summary details of terms andnotice periods are included below.
NED

Term

Initial date of appointment

Commencementof current contract

Notice period

Annette Court

3 years

21 March 201226 April 2020Three months

Jean Park

3 years

17 January 201417 January 2020

One month

Justine Roberts

3 years

17 June 201617 June 2019

One month

Andrew Crossley

3 years

27 February 201827 February 2021

One month

Michael Brierley

3 years

05 October 201805 October 2021

One month

Karen Green

3 years

14 December 201814 December 2021

One month

Jayaprakasa Rangaswami

3 years

29 April 2020

29 April 2020

One month

Evelyn Bourke

3 years

30 April 2021

30 April 2021

One monthBill Roberts

3 years

11 June 2021

11 June 2021

One month

The NEDs are not eligible to participate in the SIP, DFSS or DFSS bonus scheme and do not receive any pension contributions.
Details of the 2021 Policy on NED fees are set out in the table below:
Purpose and link to strategy

Operation

Opportunity and performance metrics

To attract and retain NEDsof the highest calibre withexperience relevant to theCompany

Fees are reviewed annually.

Fee levels are set by reference to NED fees atcompanies of a similar size and complexity.

The Group Chair fee is determined by the Committee after
consultation with the Executive Directors. The NED fees are
determined by the Group Chair together with the Executive
Directors.
Additional fees are payable for acting as Senior Independent
Director or as Chair or member of a Board Committee andmay be payable as appropriate in relation to other additional
responsibilities (e.g., attending meetings overseas).
Fees are paid in a mix of cash and Company shares for theCompany Chair, and in cash for other Non-Executive Directors.
The Board retains discretion to vary the mix or determine thatfees are paid entirely in cash or Company shares.

In the event that there is a material
misalignment with the market or a change
in the complexity, responsibility or timecommitment required to fulfil a NED role, theBoard has discretion to make an appropriate
adjustment to the fee level.
The maximum aggregate annual fee for NEDs
is capped at the limit provided for in the
Company’s Articles of Association.

188

Admiral Group plc Annual Report and Accounts 2021

Director’s remuneration policy continued

Pay-for-Performance: Scenario Analysis
The following charts provide an estimate of the potential future reward opportunities for the Executive Directors, and thepotential split between the different elements of pay under four different performance scenarios: ‘Minimum’, ‘On-target’,‘Maximum’ and ‘Maximum with share price growth’.
As described above, Admiral’s DFSS bonus is directly aligned with dividends received by our shareholders, with an adjustment for
performance on a selection of non-financial measures. Whilst the Executive Directors’ final DFSS bonus outcome may be adjusted
upwards or downwards for these measures by up to 20% in any given year, it is anticipated that the average adjustment over thelong term will be close to 0%.
£6,000,000
74%£5,000,000

66%£4,000,000

74%£3,000,000
66%£2,000,000

33%
48%

32%

16%

12%

32%

£1,000,000
52%

35%

18%

13%

48%

32%

16%

12%

52%

35%

18%

14%

Minimum

On-target

Maximum

Maximum withshare pricegrowth£0Minimum

On-target

Maximum

Maximum withshare pricegrowthMilena Mondini de Focatiis

Geraint Jones

On appointment as Chief Executive Officer

Chief Financial Officer

Fixed remuneration

DFSS bonus

DFSS

The value of DFSS awards is calculated based on the average share price in the last three months of 2021 £30.10 and the number of
DFSS shares awarded in 2022 (90,000 and 52,500 shares for CEO and CFO respectively).
Component‘Minimum’‘On-target’

Base salary• Annual cash salary for 2022

Pension• £15,000 annual contribution for CEO and CFO

Benefits• Taxable value of annual benefits provided in 2021

DFSS

• 0% vesting

DFSS bonus• Based on the DFSS bonus paid 2021

• 25% average vesting‘Maximum’• 100% vesting‘Maximum withshare price growth’• 100% vesting plus 50%
share price appreciation

Company overview

Strategic report

Approach to Remuneration
Relating to New Executive
Director Appointments
External Appointments
When appointing a new Executive
Director, the Committee may make useof any of the existing components ofremuneration as set out in the Policy
Table. The Committee’s policy is to set
the remuneration package for a new
Executive Director in accordance withthe approved Remuneration Policy at thetime of the appointment.
In determining the appropriate
remuneration for a new Executive
Director, the Committee will consider
all relevant factors to ensure that
arrangements are in the best interestsof the Company and its shareholders.
Where an individual is appointed on an
initial base salary that is below market,
any shortfall may be managed withphased increases over a period of time,
subject to the individual’s performanceand development in the role. This may
result in above-average salary increases
during this period.
The Committee may also make anaward in respect of a new Executive
Director appointment to ‘buy out’
incentive arrangements forfeited onleaving a previous employer. In doing so,
the Committee will consider relevant
factors, including any performance
conditions attached to the forfeited
awards and the likelihood of thoseconditions being met to ensure thatthe value of the buy-out award is
no greater than the fair value of theawards it replaces. The Committee may
also avail itself of Listing Rule 9.4.2 R,
if appropriate, in respect of buy-out
incentive arrangements (i.e., if the termsof participation for the prospective
Executive Director are similar to all,or substantially all employees who
participate in the plan, then approval byordinary resolution of the shareholdersof the listed company in general meeting
is not required).

Corporate governance

Financial statements

Internal Appointments
Remuneration for new Executive
Directors appointed by way of internal
promotion will similarly be determinedin line with the Policy for external
appointees, as detailed above. Where an
individual has contractual commitments
made prior to their promotion to theBoard, the Company will continue tohonour these arrangements. Incentive
opportunities for below-Board
employees are typically no higher thanfor Executive Directors, but measures
may vary if necessary.

Other Directorships
Executive Directors are permitted
to accept appointments as NonExecutive Directors of companies withprior approval of the Group Board.
Approval will be given only where theappointment does not present a conflictof interest with the Group’s activities,
and where the wider exposure gained
will be beneficial to the development of
the individual.

Considerations of Conditions
Elsewhere in the GroupThe Committee considers the pay andemployment conditions elsewhere in theGroup when determining remuneration
for Executive Directors.

Considerations of Shareholder Views
When determining remuneration,
the Committee takes into accountbest practice guidelines issued byinstitutional shareholder bodies. The
Committee is open to feedback fromshareholders on the Remuneration Policy
and will continue to monitor trends anddevelopments in corporate governanceand market practice to ensure theremuneration structure for our
Executive Directors remains appropriate.

Additional information

189

Considerations of Regulatory
Requirements
The Committee regularly reviews the
Remuneration Policy and structure in
the context of Solvency II remuneration
guidance, and EBA, PRA, and FCA
expectations regarding the supervisionof insurance firms. The Chief Risk
Officer periodically attends Committee
meetings as part of this process andprovides support to the Committee
in understanding any risk-related
implications of remuneration decisions.
Whilst the Remuneration Policy includes
several features which help ensurecompliance with current regulatory
guidance, the Committee reserves thediscretion to adjust the Remuneration
Policy, and its execution, to take into
account any developments in such
regulatory guidance.

190

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration
This section of the report provides details of how
Admiral’s Remuneration Policy was implemented in
2021 and how the Remuneration Committee intends
to implement the proposed Remuneration Policy in2022 (subject to shareholder approval).
Remuneration Committee
Membership in 2021

• Reviewed the implementation of nonfinancial performance measures for abroader employee population in the
UK Insurance Business; andThe Board sets the Group’s
Remuneration Policy and, through theauthority delegated to it by the Board,
the Committee is responsible for making
recommendations to the Board on theimplementation of the Remuneration
Policy. Its remit includes recommending
the remuneration of the Group Board
Chair and the Executive Directors;
approving the remuneration of senior
management; and determining thecomposition of and awards made under
the performance-related incentive
schemes.

As mentioned in the Governance Report,
during the year ended 31 December
2021, the Committee also performed
its regular activities:

At the end of 2021 the Committee
consisted of Evelyn Bourke, Owen Clarke,
Jean Park and Michael Brierley. The
Committee met eight times during
the year.

• Reviewed workforce remuneration,
including alignment of the Group’s
current remuneration structure with
the Living Wage;The Group Chair, CEO, CFO and CRO
are invited to meetings where theCommittee considers it appropriate
to obtain their advice on Groupstrategy and performance and senior
executive pay strategy. No director
is involved in deciding their own
remuneration outcome. The membersof the Committee do not have any
personal financial interests (other thanshareholdings), or any conflicts, that
relate to the business of the Committee.
The Committee members do not haveany day-to-day involvement in therunning of the Group.

Committee activities
During the year ended 31 December
2021, in addition to its regular activities,
the Committee also:• Reviewed the strategic, customer and
ESG metrics introduced for adjustingof variable pay of Executive Directors;• Reviewed the design of annual
incentives as part of ongoing workon the Group’s reward strategy.

• Reviewed the DFSS vesting and bonus
arrangements for Executive Directors,
senior management and relevant staff(Material Risk Takers) covered under
Solvency II;• Reviewed Admiral’s Gender Pay Gap
reporting statistics;• Reviewed risk events and their impact
on variable pay;
• Undertook an evaluation of theCommittee’s performance during theyear;• Reviewed the Committee’s terms ofreference;• Reviewed the Group’s Malus andClawback Framework; and• Reviewed external remuneration
trends and market conditions.
Remuneration topics were discussedwith employees at the Employee
Consultation Group, which met fivetimes over the year. In prior years the
Remuneration Committee Chair has
attended one of these meetings. It is
the intention of the Chair to attend
this group in 2022 to re-connect
with our employees in the post-covid
period to understand the new normal
work environment and associatedremuneration issues.

Significant shareholder engagement wasundertaken relating to the remuneration
policy vote which was successfully
implemented for 2021.

Committee Effectiveness Review
As part of the Committee’s annual
review of its performance and processes,
each Committee member and regularattendee completed a questionnaire
designed to assess the Committee’s
performance, including in respect of
the activities and general operationof the Committee. The Committee
discussed the results of the review at its
meeting in January 2022 and concluded
that, overall, the Committee remained
effective. Several areas of focus andimprovement were identified for 2022,
including continued oversight of the
reward strategy review, challenging
management on the setting of
performance targets and metrics, andCommittee support, with improvementin the clarity of papers highlighted
in particular.

Advisors to the Committee
During the year, in order toenable the Committee to reach
informed decisions, advice on market
data and trends was obtained fromindependent consultants Willis Towers
Watson. Willis Towers Watson reported
directly to the Committee Chair andare signatories to and abide by the
Code of Conduct for Remuneration
Consultants (which can be found atwww.remunerationconsultantsgroup.com).
Willis Towers Watson also provided
advice to the Company in relation tocapital modelling and claims metrics
pricing. The fees paid to Willis Towers
Watson in respect of work carried out
in relation to the Committee in 2021
(based on time and materials) totalled£133,883.
The Committee undertakes due
diligence periodically to ensure thatadvisors remain independent of theCompany and that the advice provided is
impartial and objective. The Committee
is satisfied that the advice provided byWillis Towers Watson is independent.
The Company Secretary also circulates
market survey results as appropriate.

Company overview

Strategic report

Corporate governance

Financial statements

191

Additional information

Summary of Shareholder Voting at the 2021 AGM
The table below shows the results of the advisory vote on the 2020 Annual Report on Remuneration and the binding vote on the2021 Remuneration Policy at the 2021 AGM.

Total number of votes

Annual Report on Remuneration

For

AgainstTotal votes cast

Abstentions

241,874,004

692,157

242,566,161

703,42299.71%

0.29%

239,875,066

3,393,084

243,268,150

1,433

98.61%

1.39%% of votes cast
Total number of votes

2021 Remuneration Policy% of votes cast

Total Single Figure of Remuneration for Executive Directors (audited)
The table below sets out the total single figure remuneration received by each Executive Director for the years ended
31 December 2021 and 31 December 2020:
1. Basesalary2. Benefits

3. Pension

Total
fixed pay

4. SIP

5. DFSS

6. DFSS
bonus

2021

£695,000£454£15,643£711,097£3,601£1,068,159£653,849£1,725,609£2,436,705

2020£233,750£163£6,705£240,618£1,795£952,479£150,796£1,105,070£1,345,688

2021£404,660£454£15,000£420,114£3,601£1,260,769£471,763£1,736,133£2,156,247

2020£375,450£425£14,949£390,824£3,606£1,565,218£252,703£1,821,527£2,212,351

2021

–

–

–

–

–

–

–

–

–

2020

£419,515£425£1,345£421,285

n/a

n/a

n/a

n/a

£421,285

Executive Director

Milena Mondinide Focatiis

Geraint JonesDavid Stevens*1

Total
Total
variable pay remuneration*1 David Stevens did not participate in any incentive plan given his significant shareholdings.

The figures have been calculated as follows:
1.		Base salary: amount earned for the year. For Geraint Jones, this also includes 2,500 salary shares awarded on each of 13 March
2020 and 2 September 2020 with a value of £51,450 and £66,000 which have been valued using closing share price at date of
grant of £20.58 and £26.40 respectively. Neither David Stevens nor Milena Mondini de Focatiis received salary shares during
the year.
2.		 Benefits: the taxable value of annual benefits received in the year.
3.		 Pension: the value of the Company’s contribution during the year.
4.		 SIP: the face value at grant.
5.		DFSS: the value at vesting of shares vesting on performance over the three-year periods ending 31 December 2021 and
31 December 2020. For the 2021 figures, given that vesting occurs after the 2021 Directors’ Remuneration Report is finalised,
the figures are based on the average share price in the last three months of 2021 £30.10. The 2020 figures have been trued
up based on the actual share price on vest £31.78. For 2021, favourable movements of £322,946 and £381,163 are includedin the DFSS value, attributable to an increase in the share price over the vesting period for Milena Mondini de Focatiis andGeraint Jones, respectively. For 2020, £341,091 and £560,518 of the DFSS value is attributable to share price appreciation
over the vesting period, for Milena Mondini de Focatiis and Geraint Jones, respectively.

192

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration continued

6.		DFSS bonus: the bonus is equivalent to dividends that were paid in respect of the performance year on all outstanding DFSS
shares awarded but not yet vested. The bonus is paid in two tranches annually:		 i)	in respect of H1 2021: a bonus of £377,281.93 was paid to Milena Mondini de Focatiis, based on 211,000 unvested shares, ascorecard outcome of 111.06% and the interim dividend of 161p per share; and a bonus of £272,090.81 was paid to Geraint
Jones based on 152,500 unvested shares and a scorecard outcome of 110.82% and the interim dividend of 161p per share.
		 ii)	in respect of H2 2021, due for payment in May 2022: a bonus of £276,566.98 is due to Milena Mondini de Focatiis, basedon 211,000 unvested shares, a scorecard outcome of 111.08% and the final dividend of 118p per share; and a bonus of£199,672.52 is due to Geraint Jones based on 152,500 unvested shares and a scorecard outcome of 110.96% and the final
dividend of 118p per share.
		 The payments in respect of H2 2021 are subject to completion of internal governance procedures.
7.		Milena Mondini de Focatiis was appointed to the Board as CEO-Designate on 11 August 2020. Her 2020 remuneration includes
salary, pension and benefits in respect of her service as CEO-Designate, DFSS bonus received after appointment and DFSS
vesting on performance over the three-year period ending after her appointment. Milena was subsequently appointed as CEO
on 1 January 2021. The 2020 figures for Milena are only a partial year as an Executive Director, compared with 2021 which is afull year. This is evident in the difference between the single figure for each year.
8.		In line with Milena Mondini de Focatiis’ appointment as CEO-Designate, her pension arrangements increased for the year, up
to the cap of £15,000 in line with the policy. However, as the year for pension contributions runs from April to March in linewith the tax year, as opposed to the performance year, it is an oddity of calculation basis that the pension showing in respectof 2021 is showing as over the policy. Milena’s pension arrangements for April 2020 to March 2021 and April 2021 to March2022 are £15,000, respectively, which is in line with the policy.

Total Single Figure of Remuneration for Non-Executive Directors (audited)
The table below sets out the total single figure remuneration received by each NED for the years ended 31 December 2021 and
31 December 2020.
Total fees
2021
Director

2020

Fees

Taxable benefits 8

Fees

Taxable benefits9

Annette Court1£336,004£121£326,218£513

Owen Clarke2£102,206£625£102,460£286

Karen Green£88,000£366£86,000£163

Jean Park3£118,000£294£116,000£887£70,000£192£71,742£98£36,155£0£77,600£4,899Andrew Crossley5£130,200£793£126,095£1,218Michael Brierley£132,600£27£125,858£2,699

Jayaprakasa Rangaswami£71,777£109£43,826–

Evelyn Bourke6£54,717

£184

–

–

Bill Roberts£35,947£0

Justine Roberts
Manning Rountree

4

5

7

		
1 The 2021 fee for Annette Court is £336,004 (a cash fee of £235,203 and a share fee of £100,801).
2 Owen Clarke’s fees are to 31 December 2021.
3 Jean Park’s fees for 2020 and 2021 include additional fees relating to her position as Chair of the Group Risk Committee and is in recognition of the increased time commitment required ofher as a consequence of Solvency II regulations and the Internal Model Application Process.
4 Manning Rountree’s fees are to 17 June 2021.
5 The fees for Andrew Crossley and Michael Brierley include additional fees in relation to their positions as Chairman of the EUI Limited Board of Directors and Admiral Financial Services
Limited Board of Directors, respectively.
6 Evelyn Bourke was appointed as an independent Non-Executive Director and member of the Remuneration Committee on 30 April 2021. She was subsequently appointed as Chair of theRemuneration Committee on 1 September 2021.
7 Bill Roberts was appointed as an independent Non-Executive Director on 11 June 2021.
8 Taxable benefits represent those expense reimbursements relating to travel, accommodation and subsistence in connection with the attendance at Board, Subsidiary and Committee
meetings during the year, which are deemed by HMRC to be taxable. The amounts in the table are ‘grossed-up’ to include the UK tax paid by the Company on behalf of the non-executive
directors. Non-taxable expense reimbursements have not been included in the table.

Company overview

Strategic report

Corporate governance

Financial statements

193

Additional information

Incentive Outcomes for Financial Year to 31 December 2021 (audited)
DFSS Awards Vesting on Performance to 31 December 2021
On 26 September 2019, Milena Mondini de Focatiis was granted an award under the DFSS of 36,000 shares with a value at the dateof award of £756,000 (based on a grant date share price of £21.00). This award and the applicable performance conditions related
to her previous divisional role rather than her role of CEO and Executive Director.
Vesting of the award was weighted as 67% performance shares, dependant on the achievement of financial performancemeasures and 33% of the award was non-performance shares.
On 26 September 2019, Geraint Jones was granted an award under the DFSS of 45,000 shares with a value at the date of awardof £945,000 (based on a grant date share price of £21.00). Vesting of the award was based 80% on the achievement of financial
performance conditions and 20% on a scorecard of non-financial measures.

Financial performance outcomes
The performance conditions applicable to these awards are, EPS growth vs. LIBOR, TSR vs. FTSE 350 (excluding investmentcompanies), and ROE, weighted equally and all measured over the three-year period 1 January 2019 to 31 December 2021.
Over this period, the returns to our shareholders were strong, with TSR in the upper quartile versus FTSE350 companies and with
ROE of 52.5%. The combination of these shareholder returns and EPS growth contributed to a vesting level of 97.87% in relation to
performance against financial metrics. The Committee reviewed this vesting outcome and concluded that it was appropriate.
The table below details the Company’s performance against targets.
Performance range

Vesting
Contribution(% ofmaximum)

Performance measureThresholdMaximum

Vesting schedule

Actual outturn

EPS growth vs. LIBOR

Growth in linewith LIBOR

Growth of 36 points(equivalent to 10% p.a.)in excess of LIBOR

10% for achieving thresholdwith straight-line relationship to100% for maximum performance

45.8 points inexcess of LIBOR100%

TSR vs. FTSE 350(excluding investmentcompanies)

MedianUpper quartile

25% for median, with straightline relationship to 100% for
upper quartile

77th Percentile

100%

Return on Equity (ROE)

25%

55%

25% for achieving thresholdwith straight-line relationship to100% for maximum performance

52.50

93.60%

Non-financial performance outcomes
The individual vesting contribution in relation to the non-financial measures for Geraint Jones for 77.50% for 2019, 66.81 for2020 and 77.33% for 2021. This aggregated to an overall rating across the three years of 73.88%, which has a weighted outcomeof 14.78%.
Further details of the scoring for 2021 can be seen on page 194.

194

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration continued

Overall Vesting
The combined vesting outcomes for Milena Mondini de Focatiis and Geraint Jones can be seen in the below table.
Award Weighting

Performance outcomes

Vesting (% of maximum)

Milena Mondinide Focatiis

Geraint Jones

Milena Mondinide Focatiis

Geraint Jones

Milena Mondinide Focatiis

Geraint Jones

Financial performance measures:
EPS growth vs. LIBOR, TSR vs. FTSE 350(excluding investment companies) and
Return on Equity (ROE)

67.00%

80.00%

97.87%

97.87%

65.57%

78.30%

Non-financial performance measures–

20.00%–

73.88%–

14.78%

Non-performance shares

33.00%–––

33.00%–

Total

100.00%100.00%––98.57%

93.08%DFSS Vesting Component

The Committee reviewed the vesting outcomes and concluded that they were appropriate, and that no adjustments were required.
Based on performance and scorecard outcomes the total amount that will vest to Milena Mondini de Focatiis in September 2022
will therefore be 98.57% (i.e., 35,487 shares), and the total amount that will vest to Geraint Jones in September 2022 will be 93.08%(i.e., 41,886 shares), subject to their continued employment on the vesting date.
Vested DFSS awards are subject to clawback provisions. Events which may lead to the application of clawback are set out in theGroup’s Malus and Clawback Framework and include material financial misstatement, responsibility for conduct which results insignificant losses, material failure of risk management, misconduct, reputational damage or corporate failure.

DFSS bonus in Respect of 2021
In line with the Remuneration Policy, the Group paid a bonus to all holders of DFSS shares in 2021, which was equivalent to thedividend payable on all outstanding DFSS shares awarded but not yet vested. The 2021 Bonus for Executive Directors also includes
a potential +/- 20% adjustment to the DFSS bonus based on performance of a set of non-financial performance metrics, which for2021 was grouped into four categories: customer, ESG, Strategy and People.
For the customer and people strategic pillars, relevant quantitative data was used to assess performance and an outcome wasdetermined. For ESG, a qualitative assessment of performance against key governance metrics and an assessment internal
stakeholder feedback. For the strategy, the Board members derived a collective view on the progress against the strategic
priorities.

Company overview

Strategic report

Corporate governance

Financial statements

195

Additional information

Details of the measures used in the scorecard and outcomes are summarised in the table below:
Outcomes (% out weighting for each category)
Milena Mondinide Focatiis

Geraint Jones

Category

Metrics

Target

Max

H1

H2

H1

H2

Customeroutcomes••••

Sales, renewals and post-sales servicing
ClaimsComplaints
IT key risk indicators

8.75%

17.5%

12.82%

12.89%

12.82%

12.89%

Customerfeedback• Measured through the Admiral Business
Benchmarking survey

8.75%

17.5%

12.87%

12.83%

12.87%

12.83%

Environmental,
Social andGovernance

•
•
•
•
•
•

3.25%

7.5%

5.35%

5.36%

5.35%

5.36%

3.25%

7.5%

5.70%

5.70%

5.10%

5.40%

15%

30%

20.90%

10%

20%

20%

20%

Total

50%

100%

77.64%

77.69%

77.04%

77.39%Overallscorecard
multiplier

100%

120%

111.06%111.08%110.82%110.96%Strategic objectives
Risk event escalation
Attrition% completion of activity plans
Risk Register
Audit report outcomes• Internal stakeholder feedback score
Strategy

Board assessment of the following key strategic priorities;• Progress towards Admiral 2.0 (data and analytics goal)• Diversification – existing non-motor productdevelopment (both top line and KPIs), in particularHousehold and Loans• Diversification – development of new products• Progress towards defining motor mobility strategy

People• Admiral Group Trust Index compared to Best Workplacesin the World Benchmark

20.90%The overall outcome of the scorecard was assessed to be a 111.06% multiplier to the DFSS bonus paid for H1 2021 and a 111.08%
multiplier to the DFSS bonus for H2 2021 (to be paid in 2022) for Milena Mondini de Focatiis and 110.82% multiplier to the DFSS
bonus paid for H1 2021 and a 110.96% multiplier to the DFSS bonus for H2 2021 (to be paid in 2022) for Geraint Jones.
In addition, the Executive Directors’ DFSS bonus is subject to a further risk adjustment (downwards only) to take into account ofrisk events which are considered to have a material customer, regulatory or financial impact.
During the year, and in addition to the above, the Committee took into account relevant trigger events as part of the establishedrisk adjustment process, and determined it was not appropriate to apply a downwards adjustment on that basis.
DFSS bonus payments are subject to malus and clawback provisions.

196

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration continued

Scheme Interests Granted in 2021 (audited)
DFSS
In September 2021, Milena Mondini de Focatiis was granted an award of 90,000 shares and Geraint Jones was granted an award
of 52,500 shares under the DFSS. This is the equivalent to £3,109,500 or 447% of Milena’s cash salary and £1,813,875 or 448% of
Geraint’s cash salary respectively (based on share price of £34.55).
The three-year period over which performance will be measured is 1 January 2021 to 31 December 2023. The award is eligible tovest on the third anniversary of the date of grant i.e., September 2024, subject to performance and to continued employment.
Vested awards will be subject to an additional two-year post-vest holding period.
The award will vest on three-year EPS growth TSR vs. FTSE 350 (excluding investment companies), ROE and a scorecard ofstrategic, customer and other non-financial measures, inclusive of customer outcomes, customer feedback, ESG, strategic
measures and people metrics. There will also be the potential for downwards adjustment subject to an assessment to take into
account of risk events which are considered to have a material customer, regulatory or financial impact over the course of theperformance period. The performance conditions are summarised in the table below.
Performance range
Performance measure

WeightingThresholdMaximum

Vesting

EPS growth

26.67%

Growth of 0.5%

Growth of 36%

10% for reaching threshold, rising
to 100% at maximum performance

TSR vs. FTSE 350 (excluding
investment companies)

26.67%MedianUpper quartile

25% for median, with straight-line
relationship to 100% for upper quartile

Return on Equity (ROE)

26.67%

25%55%

25% for achieving threshold withstraight-line relationship to 100% formaximum performance

Scorecard non-financial
measures20%

Vesting of between 0% and 100% of this element is based on the aggregate
outcomes of the scorecards used to determine the DFSS bonus adjustments over
the three-year performance period. Further details of the aggregation of thesescorecards will be provided upon vesting

DFSS awards are subject to malus and clawback provisions, which are set out in the Group’s Malus and Clawback Framework, as
outlined in page 183.

SIP
In March 2021, Milena Mondini de Focatiis and Geraint Jones were granted awards under the SIP of 61 shares with a face value of£1,795.84, which will vest on 12 March 2024, subject to continued employment.
In September 2021 Milena Mondini de Focatiis and Geraint Jones were granted awards under the SIP of 50 shares with a face valueof £1,805.50, which will vest on 1 September 2024, subject to continued employment.

Exit Payments (audited)
No exit payments were made to an Executive Director during the year.

Payments to Past Directors (audited)
Following stepping down from the role of CEO on 31 December 2020, David Stevens has continued as an adviser to the Group in a
part-time capacity, with a salary of £70,033 per annum.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

197

Implementation of Remuneration Policy for 2022
Executive Directors
Salary, Pension and Benefits
Salaries for the Executive Directors in 2022 have been determined in line with the Remuneration Policy. Milena Mondini de Focatiis’salary was increased by 3.00% to £715,850 effective 1 January 2022 and Geraint Jones’ salary was increased by 3.00% to £416,800
effective 1 January 2022.
Due consideration was given to ensure these increases are in line with the proposed increases for employees across the Groupfor 2022.
The Executive Directors will continue to participate in the Group Personal Pension Plan on a consistent basis as other employees,
where employee contributions are matched up to a maximum 6% of base salary with a cap on the maximum employer contributionof £15,000 per annum. The Company will offer individuals a choice between pension contributions and cash in lieu. Both Executive
Directors will continue to receive benefits in line with the Policy.

DFSS
The Committee intends to make awards under the DFSS to Milena Mondini de Focatiis and Geraint Jones in September 2022 of
90,000 and 52,500 shares, respectively. The Committee will confirm the size for each of the 2022 DFSS awards closer to the award
date. In determining whether the award size should differ from the above number of shares, the Committee will consider any large
share price change over the prior year, and, in particular, whether this is due to external factors out of management control. The
actual 2022 DFSS awards will be disclosed in the 2022 Annual Report on Remuneration.
It is currently anticipated that the vesting of 2022 DFSS awards for Milena Mondini de Focatiis and Geraint Jones will continue tobe assessed across the three-year performance period depending 75% on three-year EPS growth, TSR vs. FTSE 350 (excluding
investment companies) and ROE, and 25% on a scorecard of strategic, customer and other non-financial metrics. As per award size,
the Committee will confirm the performance conditions and targets to be attached to the 2022 DFSS award closer to the award
date and will disclose them in the 2022 Annual Report on Remuneration.
The Committee is mindful of the potential impact of the forthcoming change to the IFRS 17 accounting standard on the Group’sreported financial results. At this stage the nature and degree of any such impact has not been confirmed. For DFSS awards which
will straddle the change in accounting standard, the Committee intends to set targets on the current basis. However, it will keepthese under review and apply its discretion to ensure that the targets remain no more or less stretching than originally anticipated
as a result of the accounting change.
During 2021 the Committee took the opportunity to review the ESG measures to be included in the non-financial metrics witha view to enhancing these for 2022. As a result, new measures will be introduced for 2022 focusing on Diversity, both in senior
management and across the Group, and the reduction in Emissions. Further information on the Group’s sustainability approach
strategy can be found on page 46.
The table below summarises the strategic, customer, ESG and other non-financial metrics which will apply to 2022 DFSS awards.
There will also be the potential for downwards adjustment subject to an assessment to take into account of risk events which areconsidered to have a material customer, regulatory or financial impact over the course of the performance period.
Strategic Pillar

Customer – 34%

MeasuresWeighting %Customer outcomes (CRMI)

17%

Customer feedback (NPS)17%

Overall scoring from the board on scorecard of measures around:
Strategy – 33%

ESG – 33%

• Progress towards Admiral 2.0 (data and analytics goal)• Diversification – existing non-motor product development(both top line and KPIs), in particular Household and Loans• Diversification – development of new products• Progress towards defining motor mobility strategy

33%

Great Place to Work Trust Index

18%

Diversity

7.5%

Environment – Emissions

7.5%

198

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration continued

DFSS bonus
As in prior years, Milena Mondini de Focatiis and Geraint Jones will be eligible to receive DFSS bonus in 2022. The bonus is calculated
to be equivalent to dividends that would have been payable during the year on all outstanding DFSS shares and any salary sharesawarded but not vested. The DFSS bonus will include a +/- 20% adjustment based on performance against a set of non-financial
performance metrics. The details of the metrics and any adjustment applied will be provided in the 2022 Annual Report on
Remuneration.
The same non-financial measures as above will apply, as will the potential for downwards adjustment subject to an assessment totake into account of risk events which are considered to have a material customer, regulatory or financial impact over the courseof the performance period.

Chair and Non-Executive Directors
Fees for the Board Chair and other Non-Executive Directors were reviewed in January 2022, having previously been last reviewed in
2021. Increases were made, effective 1 January 2022, to reflect the increased time commitment of these roles.
2022 fee (p.a.)2021 fee (p.a.)Chair£346,0841£336,004

NED base fee£70,000£65,000• Audit Committee£25,000£23,000• Group Risk Committee£43,0002£43,000• Remuneration Committee£25,000£23,000• Nomination and Governance Committee£10,000£10,000• Audit Committee£15,000£12,600• Group Risk Committee£15,000£12,600• Remuneration Committee£10,000£10,000• Nomination and Governance Committee£5,000£5,000£15,000£13,500

Additional fee for chairing:

Additional fee for membership of:

Additional fee for being Senior Independent Director

1 The 2022 fee for the Board Chair increased by 3% from £336,004 to £346,084 and comprises a cash fee of £242,259 and a share fee of £103,825 with which the Chair is required undera Share Agreement entered into with the Group to use the net proceeds in two equal instalments to purchase Group shares after the Group’s Full Year Results and Half Year Results areannounced each year. The Board Chair does not receive any additional fees (e.g. for committee membership) as these are included in the overall Chair fee.
2 The fee payable for 2022 to Jean Park continues to include an additional fee of £20,000 per annum in recognition of the increased time commitment required as a consequence of theInternal Model Application Process.

Company overview

Strategic report

Corporate governance

Financial statements

199

Additional information

CEO pay ratio
The table below sets out the pay ratios for the CEO for the periods ended 31 December 2020 and 31 December 2021.
Year

2021
2020

MethodLower quartile

MedianUpper quartile

95:1

81:1

50:1

17:1

15:1

10:1

Option A

The lower quartile, median and upper quartile employees were determined using calculation methodology A which involved
calculating the actual full-time equivalent remuneration for all UK employees for 2021. From this analysis, three employees werethen identified as representing the 25th, 50th and 75th percentile of the UK employee population. Admiral chose this method as
it is the preferred approach of the government and that of investor bodies and Admiral had the systems in place to undertake thismethod. It is also consistent with the approach used to calculate the ratios for 2018 to 2020.
The Committee has considered the pay data for the three employees identified and believes that it fairly reflects pay at therelevant quartiles amongst our UK workforce. The three individuals identified were full-time employees during the year. None
received an exceptional incentive award which would otherwise inflate their pay figures. No adjustments or assumptions weremade by the Committee with the total remuneration of these employees calculated in accordance with the methodology used to
calculate the single figure of the CEO. It should be noted that the lower quartile employees were in receipt of DFSS bonus and/or
DFSS vesting in the year.
The employee pay levels for 2021 are detailed below:
CEO

P25 (lower quartile)P50 (median)

P75 (upper quartile)

Salary£695,000£18,952£18,334£22,423

Total Remuneration1£2,436,705£25,470£29,881£48,071

1 The single figure of remuneration for the CEO includes actual salary and pension costs paid during 2021, in line with The Companies (Miscellaneous Reporting) regulations 2018. For
other employees, salary and pension costs are included on an FTE basis, in line with the legislation. While the basis of calculation differs between CEO and other employees, management
considers this a fair comparison of remuneration.

The pay ratio for 2021 has increased sharply from the 2020 figure. As the prior CEO David Stevens declined to participate in theshare schemes due to his significant shareholding as a founder, the CEO pay ratio was relatively modest for 2020.
It is worth noting the salary for the median employee is lower than that of the lower quartile employee. This is due to theidentification of individuals being done on a total remuneration basis.
A significant proportion of the Milena Mondini de Focatiis’ remuneration is dependent on the Company’s performance andtherefore it may vary more materially, resulting in movements in the CEO pay ratio from year to year moving forwards. However,
the reward policies and structures applying to the CEO are broadly aligned with those of the wider workforce and therefore
consistent performance is likely to lead to a broadly consistent CEO pay ratio.

Relative Importance of Spend on Pay
The table below shows the percentage change in dividends and total employee remuneration spend from the financial year ended
31 December 2020 to the financial year ended 31 December 2021.
2021
£m

2020
£m

%
changeDistribution to shareholders

816

453

80%

Employee remuneration

500

451

10%

The Directors are proposing a final dividend for the year ended 31 December 2021 of 118 pence per share, bringing the total
dividend for 2021 to 279 pence per share (2020: 156.5 pence per share).

200

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration continued

Pay for Performance
The following graph sets out a comparison of Total Shareholder Return (TSR) for Admiral Group plc shares with that of the FTSE
100 and FTSE 350 indices, of which the Company is a constituent, over the ten-year period to 31 December 2021. The Directors
consider these to be the most appropriate indices against which the Company should be compared. TSR is defined as thepercentage change over the period, assuming reinvestment of income.

10-year TSR performance: Admiral vs. FTSE100 and FTSE350 indices
Growth in the value of a hypothetical £100 holding over ten years to 31 December 2021
£700

£600

£500

£400

£300

£200

£100

£0
Dec-11

Dec-12CEO

Dec-132012

Dec-142013

2014

Dec-15

Dec-16

Dec-17AdmiralFTSE 100

FTSE 350

2015

2016

Dec-182017

Dec-1920182019

Dec-20Dec-21

2020

2021

Incumbent

Henry
Henry
Henry
Henry
Henry
Engelhardt Engelhardt Engelhardt Engelhardt Engelhardt1

David
Stevens2

David
StevensDavid
StevensDavid
StevensDavid
Stevens

MilenaMondini deFocatiis5

CEO single figureof remuneration£373,759£387,546£393,260£397,688£148,776£246,023£395,019£403,662£413,724£421,285£2,436,705

DFSS vesting outcome(% of maximum)

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

98.57%6

CFO

2012

2013

2015

2016

2017

2018

2019

2020

2021

Incumbent

Kevin
Chidwick

Kevin
Chidwick

Kevin
Chidwick

Geraint
Jones3

Geraint
Jones

Geraint
Jones

Geraint
Jones

Geraint
Jones

Geraint
Jones

Geraint
Jones

Geraint
Jones

CFO single figureof remuneration£1,431,218 £1,444,443 £1,204,164£363,551£539,704£599,139

85%

69%

50% and 0%

DFSS vesting outcome(% of maximum)

100%

100%

2014

70%

£1,184,445 £1,461,813 £1,773,303 £2,212,3514 £2,156,247
74.20%

87.60%

88.8%

98.5%

93.08%6

1 Henry Engelhardt stepped down from the Board on 13 May 2016. His 2016 remuneration includes salary and benefits in respect of his service as CEO.
2 David Stevens was appointed as the CEO on 13 May 2016. His 2016 remuneration includes salary, pension and benefits in respect of his service as CEO.
3 Geraint Jones was appointed to the Board as CFO on 13 August 2014. His 2014 remuneration includes salary, pension and benefits in respect of his service as CFO, his full year DFSS and hisfull year DFSS bonus.
4 This figure has been trued up since the 2020 report for the value of the 2018 DFSS based on the actual share price on vest of £31.78.
5 Milena Mondini De Focatiis was appointed as the CEO on 1 January 2021. Her 2021 remuneration includes salary, pension and benefits in respect of her service as CEO.
6 98.57% of Milena Mondini De Focatiis’ and 91.31% Geraint Jones’ 2019 DFSS award will vest in September 2022 subject to their continued employment on the vesting date.

There are no annual bonus outcomes to report in the table as the Admiral DFSS bonus is not structured as a traditional annual
bonus scheme and consequently a vesting outcome (as a percentage of max) is meaningless.

Company overview

Strategic report

Corporate governance

Financial statements

201

Additional information

Annual change of each Director’s pay compared to the annual change in average employee pay
The following table summarises the annual percentage change of each Director’s remuneration compared to the annual
percentage change of the average remuneration of the Company’s employees, calculated on a full-time equivalent basis.
Financial year-ended 31 December
Percentage change in Director’s remuneration

2021 (% change)
Base salary/ fees

Taxable benefits

DFSS bonus

Milena Mondini de Focatiis*

197.33%178.53%333.60%

Geraint Jones

7.78%

6.82%

86.69%

Annette Court

3.00%-76.36%

N/A

Owen Clarke-0.25%

118.72%

N/A

Evelyn Bourke

N/A

N/A

N/A

Karen Green

2.33%

124.10%

N/A

Jean Park

1.72%-66.89%

N/A

Jayaprakasa Rangaswami

63.78%

N/A

N/A

Justine Roberts-2.43%

96.18%

N/A

Manning Rountree-53.41%-100.00%

N/A

Andrew Crossley

3.26%-34.92%

N/A

Michael Brierley

5.36%-99.02%

N/A

Bill Roberts

N/A

N/A

N/A

Percentage change in employees’ remuneration

4.39%

4.42%

27.31%

Executive Directors

Non-Executive Directors

Milena Mondini de Focatiis was appointed to the Board as CEO-Designate on 11 August 2020. Her 2020 remuneration figure
includes salary, pension and benefits in respect of her service as CEO-Designate, DFSS bonus received after appointment and DFSS
vesting on performance over the three-year period ending after her appointment. Milena was subsequently appointed as CEO on
1 January 2021. The 2020 figures for Milena are only a partial year as an Executive Director, compared with 2021 which is a full year.
This is evident in the difference between the single figure for each year.
While the changes in taxable benefits for Non-Executive Directors are large on a percentage point basis, these are changes insmall amounts (generally low hundreds of Pounds) and relate to tax on business expenses – i.e., travel to Board meetings.

Dilution
The Company currently uses newly issued shares to fund the DFSS, SIP and salary shares. The Company has controls in place toensure that shares awarded under the incentive schemes operated by the Company within any rolling ten-year period do not
exceed 10% of the number of ordinary shares in the capital of the Company in issue at the time of each award. It is currently
anticipated that a combination of attrition and actual vesting will result in dilution of less than 10%. As required by the rules ofour share schemes, the Company will in any event ensure that the actual dilution level does not exceed 10% in any rolling ten-year
period by funding of any vested (and future) share scheme awards as appropriate with market-purchased shares.

202

Admiral Group plc Annual Report and Accounts 2021

Annual report on remuneration continued

Interests held by Directors (audited)
The Company has adopted Executive Director shareholding guidelines whereby all Executive Directors are required to acquire andretain a beneficial shareholding in the Company equal to at least 400% of base salary (excluding salary shares, where applicable),which can be built up over a period of five years from the later of the introduction of the guidelines and the individual’s date of
appointment. Both Executive Directors meet the shareholding requirement.
As at 31 December 2021, the Directors held the following interests:
Shares held
Beneficiallyowned outright

Subject tocontinued
employment only

Subject toperformance
conditions

Shareholding
requirement(% of 2021 salary)

Current
shareholding(% of 2021 salary)

Requirement
met?

Milena Mondini de Focatiis

67,3871

35,6723

175,000400%> 400%

Yes5

Geraint Jones

99,243151,8862

97,500400%> 400%

Yes

Annette Court

12,519Evelyn Bourke

2,981

Owen Clarke

110,852

Jean Park

4,000

Director

Jayaprakasa Rangaswami

0

Justine Roberts

0

Manning Rountree0

Andrew Crossley

1,079

Michael Brierley

3,690

Karen Green

0Bill Roberts

5,000

1 Total includes SIP shares both matured and awarded.
2 Total reflects shares from the 2019 DFSS award (performance test has been applied, and award is due to vest in September 2022) and salary shares awarded in 2019 and 2020.
3 Total reflects shares from the 2019 DFSS award (performance test has been applied, and award is due to vest in September 2022).
4 The final column in the above table relates to meeting the current Remuneration Policy requirement of 400% of salary.
5 Milena Mondini de Focatiis has five years from her appointment as Executive Director (11 August 2020) to meet the guideline.
6 There have been no changes in the Directors’ holdings in the share capital of the Company, as set out in the table above, between 31 December 2021 and the date of this Report.

There have been no changes to Directors’ shareholdings since 31 December 2021.
None of the Directors had an interest in the shares of any subsidiary undertaking of the Company or in any significant contracts of
the Group.

Company overview

Strategic report

Corporate governance

Financial statements

203

Additional information

Executive Directors’ Interests in Shares under the DFSS and SIP and salary share awards (audited)
Value at
31 Dec 2021
or maturity(£)1

At start ofyear

Awardedduring year

Vested/maturedduring year

DFSS

36,000–29,970DFSS

36,000––DFSS

85,000

–

–

DFSS

–

90,000–SIP equiv. (through DFSS)

96

–

96

–

SIP equiv. (through DFSS)

87

–

87

–

SIP

84

–

–

84

£21.46£1,803£2,652

18/03/2019

18/03/2022

SIP

83

–

–

83

£21.45£1,780£2,62030/08/2019

30/08/2022

SIP

88

–

–

88

£20.58£1,811£2,77813/03/2020

13/03/2023

SIP

68

–

–

68

£26.40£1,795£2,14702/09/2020

02/09/2023

SIP

–

61

–

61

£24.99£1,524£1,926

12/03/2021

12/03/2024

SIP

–

50

–

50

£36.11£1,806£1,57901/09/2021

01/09/2024

DFSS

50,000–49,250–£20.40£1,020,000£1,682,380

26/09/2018

26/09/2021

DFSS

45,000––45,000£21.00£945,000£1,420,650

26/09/2019

26/09/2022

DFSS

45,000––45,000£27.37£1,231,650£1,420,650

24/09/2020

24/09/2023

DFSS

–

52,500–52,500£34.55£1,813,875£1,657,425

23/09/2021

23/09/2024

Salary Shares

2,500

–

2,500

–

£18.70£46,750£73,700

09/03/2018

09/03/2021

Salary Shares

2,500

–

2,500

–

£20.59£51,475£91,725

24/08/2018

24/08/2021

Salary Shares

2,500

–

–

2,500

£21.46£53,650£78,925

18/03/2019

18/03/2022

Salary Shares

2,500

–

–

2,500

£21.45£53,625£78,925

30/08/2019

30/08/2022

Salary Shares

2,500

–

–

2,500

£20.58£51,450£78,925

13/03/2020

13/03/2023

Salary Shares

2,500

–

–

2,500

£26.40£66,000£78,925

02/09/2020

02/09/2023

SIP

96

–

96

–

£18.70£1,795£2,83009/03/2018

09/03/2021

SIP

87

–

87

–

£20.59£1,791£3,192

24/08/2018

24/08/2021

SIP

84

–

–

84

£21.46£1,803£2,652

18/03/2019

18/03/2022

SIP

83

–

–

83

£21.45£1,780£2,62030/08/2019

30/08/2022

SIP

88

–

–

88

£20.58£1,803£2,77813/03/2020

13/03/2023

SIP

68

–

–

68

£26.40£1,782£2,14702/09/2020

02/09/2023

SIP

–

61

–

61

£24.99£1,524£1,926

12/03/2021

12/03/2024

SIP

–

50

–

50

£36.11£1,806£1,57901/09/2021

01/09/2024

Type

Price ataward (£)

Value ataward date(£)–

£20.40£734,400

36,000£21.00£756,000

85,000£23.08£1,961,800

90,000£34.55£3,109,500£18.70£1,795£2,83009/03/2018

09/03/2021£20.59£1,791£3,192

24/08/2018

24/08/2021

At endof yearDate ofAward2

Final vesting/maturity date

£1,023,775

26/09/2018

26/09/2021£1,136,520

26/09/2019

26/09/2022£2,683,450

24/04/2020

24/04/2023£2,841,300

23/09/2021

23/09/2024

Milena Mondini de Focatiis

Geraint Jones

1 The value at maturity relates only to shares vested.
2 For SIP and Salary Shares, the price at award reflects the average closing share price over the five days prior to the award date.

The closing price of Admiral shares on 31 December 2021 was £31.57 per share.
By order of the Board,

Evelyn Bourke
Chair of the Remuneration Committee
3 March 2022

204

Admiral Group plc Annual Report and Accounts 2021

Director’s report
The Directors present their Annual Report and theaudited Financial Statements for the year ended
31 December 2021
Information included in theStrategic Report
As permitted by legislation, some of
the matters required to be included in
the Directors’ Report have instead been
included in the Strategic Report as theBoard considers them to be of strategic
importance. Specifically, these are:Page
reference

Disclosure

Future business developments Page 35 – 44.
Greenhouse gas emissions,energy consumption andenergy efficiency action

Pages 107,
112 and 113.

Employment of disabled
persons (as defined by the
Disability Discrimination
Act 1995)

Page 55.

Engagement with colleagues

Page 89 – 92.

Engagement with suppliers,
customers and others in abusiness relationship with
the Company

Pages 87 –89, 93 – 94
and 95 – 96.

Page
reference

1

Interest capitalised –by the Group

7

Allotment of shares Page 287.
for cash pursuant
to Group employee
share schemes

12, 13Financial instruments

The profit for the year, after tax
but before dividends, amounted to£996.7 million (2020: £527.8 million).
The Directors declared and paid
dividends of £720.9 million during2021 (2020 £425.7 million). Refer tonote 12b for further details.

The objectives and policies for managing
risks in relation to financial instruments
held by the Group are set out in note 6 to
the Financial Statements.

The Directors have proposed a final
dividend of £347 million (118.0 pence
per share). Subject to shareholders’approval at the 2022 Annual General
Meeting (AGM), the final dividend will
be paid on 6 June 2022 to shareholders
on the register at the close of businesson 6 May 2022.
Further information on the Groups’
dividend policy is located in note 12e
and on page 23 of the Strategic Report.

Disclosure of information under
Listing Rule 9.8.4
Subsectionof Listing
Rule 9.8.4 DetailGroup results and dividends

Shareholder waiver Page 206.
of dividend

Research and development
Details of costs incurred in respect of
research and development can be foundin note 11 on page 281.

Political donations
No political donations were made during
the year.

Interest Capitalised
No interest was capitalised by the Groupduring the year.

Significant contracts of materialinterest to shareholders
The Group considers its co-insurance andreinsurance contracts to be significant
and of material interest to shareholders.
A number of the Group’s contractual
arrangements with reinsurers include
features that, in certain scenarios, allow
for reinsurers to recover losses incurred
to date. The overall impact of such
scenarios would not lead to an overall
net economic outflow from the Group.
No other contractual arrangements
are considered to be significant to therunning of the Group’s business.

Directors and their interests
The present Directors of the Company
are shown on page 134 – 139 of thisReport, whilst Directors’ interests inthe share capital of the Company are
set out in the Remuneration Report on
pages 202 – 203. A list of Directors in thefinancial period to 31 December 2021 isshown on page 134.

Going concern
Under Provision 30 of the 2018 UK
Corporate Governance Code, the Board
confirms that it considers the Going
Concern basis of accounting appropriate.
In considering this requirement, theDirectors have taken into account thefollowing.
In particular, as part of this assessment
the Board considered updated
projections of performance andprofitability a number of times during
the pandemic, with some key highlights
including:• The Group’s profit projections,
including:Ȳ The ongoing impact of thepandemic, including the return ofclaims frequency towards prepandemic levels across all of theGroup’s insurance businesses
Ȳ Changes in premium rates andprojected policy volumes acrossthe Group’s insurance businesses,
including early indications of the
impact of the FCA general insurance
pricing reform which came into
effect at the start of 2022
Ȳ Potential impacts on the cost of
settling claims across all insurance
businesses, including the impact ofinflationary pressures

Company overview

Strategic reportȲ Projected trends in other revenue
generated by the Group’s insurance
business from fees and the sale ofancillary products
Ȳ Projected contributions to profit
from businesses other than the UK
Car insurance businessȲ Expected trends in unemployment
in the context of credit risks andthe growth of the Group’s Loansbusiness• The sale of the Group pricecomparison businesses, Penguin
Portals and Preminen along with theintention to return the remaining
amount of net proceeds back toshareholders• The Group’s solvency position, which
has been closely monitored throughperiods of market volatility, inparticular, early in the pandemic. The
Group continues to maintain a strong
solvency position above target levels• The adequacy of the Group’s liquidity
position after considering all of thefactors noted above• The results of business plan scenariosand stress tests on the projected
profitability, solvency and liquidity
positions including the impact ofsevere downside scenarios thatassume severe adverse economic,
credit and trading stresses• The regulatory environment, inparticular focusing on regulatory
guidance issued by the FCA and
the PRA in the UK and ongoing
communications between
management and regulators• A review of the Company’s principal
risks and uncertainties and theassessment of emerging risks
Following consideration of theabove, the Directors have reasonable
expectation that the Group has
adequate resources to continue inoperation for the foreseeable future,a period of not less than 12 months
from the date of this report, and that itis therefore appropriate to adopt thegoing concern basis in preparing thefinancial statements.

Corporate governance

Financial statements

205

Additional information

Share Capital, AGM and related matters
Major Shareholders
Other than as stated below, as far as the Company is aware, there are no persons
with significant direct or indirect holdings in the Company. Information provided
to the Company pursuant to the Financial Conduct Authority’s (FCA) Disclosure andTransparency Rules (DTRs) is published on a Regulatory Information Service and on
the Company’s website.
The Company received notifications in accordance with the FCA’s DTRs of
the following notifiable interests in the voting rights in the Company’s issued
share capital:
As at 31 December 2021
Number of Shares%

Henry Engelhardt & Diane Briere de I’Isle

25,605,472

8.5%

Mawer Investment Management Ltd.

18,397,582

6.1%

BlackRock Inc.

16,342,137

5.5%

FMR LLC

15,197,215

5.1%

Münchener Rückversicherungs- Gesellschaft AG

14,947,781

5.0%

Moondance Foundation

11,900,000

4.0%

N.M. Rothschild & Sons Ltd.

10,360,747

3.5%

Vanguard Group Holdings

9,338,688

3.1%

David & Heather Stevens

8,422,950

2.8%

Notes:
1	% as at date of notification. The DTRs require notification when the % voting rights(through shares and financial instruments) held by a person reaches, exceeds offalls below an applicable threshold specified in the DTRs.
2	Notifications received by the Company in accordance with the FCA’s DTRs in the
period from 31 December 2021 to 24 February 2022 were as follows:
Number of sharesas at date of
notification% of sharesas at date of
notification

Shareholder

Date of notification

BlackRock Inc.

31 January 2022

15,331,477

5.1%BlackRock Inc.

8 February 2022

15,216,185

5.07%BlackRock Inc.

9 February 2022

15,278,989

5.09%

There are no people who hold shares carrying special rights with regard to controlof the Company.
The interests of Directors and Officers and their connected persons in the issued
share capital of the Company are given in the Remuneration Report on page 202.
Further information on the rights attaching to shares under the employee shareschemes are provided in the Remuneration Report.

206

Admiral Group plc Annual Report and Accounts 2021

Director’s report continued

Directors’ interests
The interests of Directors and Officers
and their connected persons in theissued share capital of the Company are
given in the Remuneration Report on
page 202.

Shares held in Employee
Benefit Trust
The EBT does not use its voting rights
in respect of the shares it holds in the
EBT at general meetings, however, it
may choose to do so if recommended
by the company via a letter of wishes.
If any offer is made to shareholders toacquire their shares, the trustee will not
be obliged to accept or reject the offer
in respect of any shares which are atthat time subject to subsisting awards
but will have regard to the interests of
the award holders and will have power
to consult them to obtain their viewson the offer. Subject to the above, thetrustee may take action with respect
to any offer it thinks fair. The trustee
has waived its right to dividends on theshares held in the trust.

If a poll is called at a general meeting,every member present in person or byproxy and entitled to vote shall haveone vote for every ordinary share held.
The notice of the general meeting
specifies deadlines for exercising
voting rights either by proxy noticeor present in person or by proxy in
relation to resolutions to be passed
at general meeting. All proxy votes
are counted and the numbers for,against or withheld in relation to eachresolution are announced at the Annual
General Meeting and published on the
Company’s website after the meeting.
There are no restrictions on the transfer
of ordinary shares in the Company
other than:• Certain restrictions may from time
to time be imposed by laws andregulations (for example, insider
trading laws).
• Pursuant to the Listing Rules of the
FCA whereby certain employees anddirectors of the Company require theapproval of the Company to deal in the
Company’s securities.

Additional information
for shareholders

The Company has not purchased any of
its own shares during the period.

The following provides the additional
information required for shareholders inaccordance with the Takeovers Directive
and the respective UK law.

There are no agreements between the
Company and its Directors or employees
providing for compensation for loss ofoffice or employment (whether throughresignation, purported redundancy
or otherwise) that occur because of atakeover bid.

At 31 December 2021, the Company’s
issued share capital comprised a single
class of shares referred to as ordinary
shares. Details of the share capitaland shares issued during the year canbe found in note 12d. The rights andobligations attached to the Company’s
ordinary shares are set out in the
Articles of Association of the Company,
copies of which can be obtained from
Companies House.

There are a number of agreementsthat alter or terminate upon a changeof control of the Company following
a takeover bid, such as commercial
contracts (entered into in the normal
course of business). None are considered
to be significant in terms of their impact
on the business of the Group as a whole.

Powers of the Company Directors
The Directors are responsible formanaging the business of the Company
and may exercise all powers of theCompany subject to the provisions of
relevant statutes, to any directions
given by special resolution and to theCompany’s Memorandum and Articles.
The Articles, for example, containspecific provisions and restrictions
concerning the Company’s power toborrow money. Powers relating to theissuing of new shares and buyback ofshares are also included in the Articles
and such authorities are renewed byshareholders at the Annual General
Meeting each year.

Power to issue shares
At the last Annual General Meeting,held on 30 April 2021, authority was
given to the Directors to allot unissued
relevant securities in the Company up toa maximum of £198,014, representing
the Investment Association’s Guidelines
limit of approximately two thirds ofthe issued share capital as at 22 March
2021. This authority expires on the dateof the Annual General Meeting to beheld on 28 April 2022 and the Directors
will seek to renew this authority for thefollowing year.
A further special resolution passed atthat meeting granted authority to the
Directors to allot equity securities in the
Company (up to a maximum of 5% of theissued share capital of the Company) for
cash, without regard to the pre-emption
provisions of the Companies Act 2006.
This authority also expires on the dateof the Annual General Meeting to beheld on 28 April 2022 and the Directors
will seek to renew this authority for thefollowing year.

Company overview

Strategic report

In line with the principles publishedby the Pre-Emption Group in March
2015, and their template resolutions
published in May 2016, allowing acompany the ability to seek authority
over a further 5% of the issued ordinary
share capital on a non-pre-emptive basis
subject to certain conditions, it is theintention of the Company, at the AGM
on 28 April 2022, to seek this additional
authority by special resolution and will
confirm in the Notice of AGM that such
additional shares are only issued inconnection with a specified acquisitionor capital investment.

Appointments of Directors
The Company’s Articles of Association(the Articles) give the Directors power
to appoint and replace Directors.
Under the Terms of Reference of theGroup Nomination and GovernanceCommittee, any appointment must berecommended by the Group Nomination
and Governance Committee for approvalby the Board of Directors. At theGroup’s Annual General Meeting on 26
April 2018, new Articles of Association
were approved by shareholders which
provide that all Directors will retire
and offer themselves for re-election
at each Annual General Meeting, in
accordance with the UK Corporate
Governance Code and the Company’s
current practice. Therefore, all Directors
will be submitting themselves for either
election or re-election by shareholders
at the forthcoming AGM.

Articles of Association
The Articles may only be amended by
special resolution of the shareholders.

Directors’ indemnities
and insurance
Directors and Officers insurance coveris in place for all Directors to provide
cover against certain acts or omissions
on behalf of the Company. A Deed Poll of
Indemnity was executed in October 2015,

Corporate governance

Financial statements

indemnifying each of the Directors, andCompany Secretary, in relation to certain
losses and liabilities that they might incurin the course of acting as Directors of
the Company. The Deed Poll of Indemnity
is categorised as qualifying third party
provisions as defined by Section 234 of
the Companies Act 2006 and remains inforce for all past and present Directors of
the Company.
The Board is of the view that it is in
the best interests of the Group to
attract and retain the services of themost able and experienced Directors
by offering competitive terms ofengagement, including the grantingof such indemnities. Neither the Deed
Poll of Indemnity nor insurance cover
would provide any coverage in the eventthat a Director is proved to have acted
fraudulently or dishonestly.

Annual General Meeting (AGM)
It is proposed that the next AGM beheld at Tŷ Admiral, David Street, Cardiff,
CF10 2EH on Thursday 28 April 2022 at
2.00pm, notice of which will be sent toshareholders with the Annual Report.

Reporting, accountability
and audit
UK Corporate Governance Code
Admiral is subject to the UK Corporate
Governance Code (the Code), publishedby the Financial Reporting Council(FRC) in July 2018 and available on theirwebsite, www.frc.org.uk. The Company’s
Annual Report and Accounts, taken as awhole, addresses the requirements ofthe 2018 Code.
The UK Corporate Governance Code2018 (the Code) was applicable for theGroup during the year under review, and
the Group has applied the principles andcomplied with the provisions of the Codeexcept with regard to non-compliancewith provisions 19 and 32 as set out in
the Corporate Governance Report on
page 140.

Additional information

207

The Directors confirm that the Annual
Report and Accounts, taken as a whole,is fair, balanced and understandable andprovides the information necessary forshareholders to assess the Company’s
position and performance, businessmodel and strategy.
The Board is ultimately responsible for
the Group’s system of risk management
and internal control and, through theGroup Audit Committee, has reviewed
the effectiveness of the Group’s
internal control and risk management
arrangements relating to the financial
reporting process and the principal
risks facing the business. The Board
is satisfied that the Group’s internal
control and risk management framework
is prudent and effective and that,through the Group Audit Committee
and Group Risk Committee, risk can beassessed, managed and assurance giventhat all material controls are reviewed
and monitored.
Information on the compositionand operation of the Board and its
Committees is located in the following
sections:• Corporate Governance Report on pages
140 – 164 in respect of the Board.
• Nomination and Governance Committee
Report on pages 154 – 162.
• Audit Committee Report on pages
165 – 171.
• Risk Committee Report on pages
172 – 176.
• Remuneration Committee Report on
pages 177 – 203.
The Group’s gender diversity information
for the financial year, together with an
explanation of the policies related todiversity, are set out in the Strategic
Report on page 54 – 56 and in the
Nomination and Governance Committee
Report on pages 159 – 161.

208

Admiral Group plc Annual Report and Accounts 2021

Director’s report continued

Branches
The Group has several branches locatedin Canada, India, France and Italy,
through its subsidiary structure. Further
details of the Company’s subsidiaries,
associated undertakings and branches
are contained in note 12f.

Directors’ responsibilities
The Directors are responsible forpreparing the Annual Report and theGroup and parent company financial
statements in accordance withapplicable law and regulations.
Company law requires the Directors
to prepare Group and parent company
financial statements for each financial
year. Under that law they are required
to prepare the Group Financial
Statements in accordance with IFRS
adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European
Union and applicable law and haveelected to prepare the parent company
financial statements in accordance with
UK Accounting Standards, including FRS
101 Reduced Disclosure Framework.
Under company law, the Directors must
not approve the Financial Statements
unless they are satisfied that they give atrue and fair view of the state of affairsof the Group and parent company andof their profit or loss for that period. In
preparing each of the Group and parent
company financial statements, theDirectors are required to:• make judgements and estimates thatare reasonable and prudent.

The Directors are responsible for the
maintenance and integrity of thecorporate and financial information
included on the Company’s website.

• for the Group financial statements,
state whether they have been
prepared in accordance with IFRS as
adopted by the UK.

Legislation in the UK governing the
preparation and dissemination of
Financial Statements may differ fromlegislation in other jurisdictions.

• select suitable accounting policies andthen apply them consistently.

• for the parent company financial
statements, state whether applicable
UK Accounting Standards, including
FRS 101 Reduced Disclosure
Framework, have been followed,
subject to any material departures
disclosed and explained in the parent
company financial statements.
The Directors are responsible forkeeping adequate accounting records
that are sufficient to show and explain
the parent company’s transactions anddisclose with reasonable accuracy at any
time the financial position of the parent
company and enable them to ensurethat its Financial Statements comply
with the Companies Act 2006. They havegeneral responsibility for taking such
steps as are reasonably open to themto safeguard the assets of the Groupand to prevent and detect fraud andother irregularities.
Under applicable law and regulations,the Directors are also responsible forpreparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report
and Corporate Governance Statementthat complies with that law andthose regulations.

Responsibility statement
The Directors confirm that to the best of
their knowledge:• the financial statements, prepared inaccordance with the applicable setof accounting standards, give a trueand fair view of the assets, liabilities,
financial position and profit or loss of
the Company and the undertakings
included in the consolidation taken asa whole; and• the Directors’ Report and theStrategic Report include a fair reviewof the development and performanceof the business and the position of
the Company, and the undertakings
included in the consolidation taken asa whole, together with a descriptionof the principal risks and uncertainties.

Company overview

Strategic report

Disclosure of information to auditor
The Directors who held office at thedate of approval of this Directors’
Report confirm that, so far as they areeach aware, there is no relevant audit
information of which the Company’s
auditor is unaware; and each Director
has taken all the steps that they ought
to have taken as a Director to makethemselves aware of any relevant
audit information and to establishthat the Company’s auditor is awareof that information.

Auditor
Following completion of the tender
for the Group’s audit services andthe Board’s approval of the Audit
Committee’s recommendation to reappoint the Company’s auditor, Deloitte
LLP has indicated willingness to continue
in office and resolutions to reappoint it
and to authorise the Directors to fix its
remuneration will be proposed at theAnnual General Meeting.
By Order of the Board,

Mark Waters
Company Secretary
3 March 2022

Geraint Jones
Chief Financial Officer
3 March 2022

Corporate governance

Financial statements

Additional information

209

210

Admiral Group plc Annual Report and Accounts 2021

Financial
Statements
Quick navigation
212 Independent Auditor’s Report
224 Consolidated Income Statement
226	Consolidated Statement ofComprehensive Income
227 Consolidated Statementof Financial Position
228 Consolidated Cash Flow Statement
229 Consolidated Statement of
Changes in Equity
230 Notes to the Financial Statements
298 Parent Company Financial Statements
301 Notes to the Parent Company Financial
Statements
311 Consolidated Financial Summary(unaudited)

211

Adam’sstory
The gradu
ate programme
consists of four different
positions,as a seriesof asix-monthplacement s.

Spotted on the coverWe sit down with Adam from Group procurement, as he talks
about engaging with different stakeholders on the Admiral’s
graduate scheme.
Hi I’m Adam
I joined Admiral’s graduate scheme in
2021 following my studies at Cardiff
University. I was intrigued to findout more about Admiral as they are avisible employer in Cardiff, a careers
partner of the University and because
I knew that a few older graduates who
had secured successful placements
and started their careers in that way.
The graduate programme consistsof four different positions, as aseries of a six-month placements.
After the programme finishes, most
graduates tend to permanently join
one of the departments that they
have experienced during the scheme.
I decided to join group procurement
initially and it was a good choice, as
over the last six months I’ve engaged
with different stakeholders all overthe business and learnt a great deal

about our supply chain. I also feel likeI have contributed to the directionof travel that the group is moving
towards in that respect. At myinterview I liked the fact that I didn’t
necessarily need business experience,and that to learn and be part of ateam the main requirement was
attitude, and a willingness to pull inthe same direction as everyone else.
The things that I enjoy about Admiral
are the things that surprise me themost – I like that we are encouraged
to work flexible hours, and to build
social elements like chatting overcoffee into our manager catch ups
and debriefs. If I was to describe
Admiral, I would say inclusive, relaxedand fast paced. I feel challenged
in a different way to studying
and I’m interested to see what
future opportunities the graduate
programme may bring.

Over the last six
months I’ve engaged
with different
stakeholders allover the businessand learnt a great
deal about our
supply chain.

212

Admiral Group plc Annual Report and Accounts 2021

Independent auditor’s reportto the members of Admiral Group Plc

Report on the audit of the financial statements
1. Opinion
In our opinion:• the financial statements of Admiral Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true and fair viewof the state of the Group’s and of the Parent Company’s affairs as at 31 December 2021 and of the Group’s profit for the year
then ended;• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’; and• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:• the Consolidated and Parent Company Income Statements;• the Consolidated and Parent Company Statements of Comprehensive Income;• the Consolidated and Parent Company Statements of Financial Position;• the Consolidated Cash Flow Statement;• the Consolidated and Parent Company Statements of Changes in Equity;• the related notes 1 to 14 to the Group financial statements, excluding the capital adequacy disclosures in note 12e calculated inaccordance with the Solvency II regime which are marked as unaudited; and• the related notes 1 to 15 to the Parent Company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law
and United Kingdom adopted international accounting standards. The financial reporting framework that has been applied in the
preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including
FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).

2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied tolisted public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The
non-audit services provided to the Group for the year are disclosed in note 9c to the financial statements. We confirm that wehave not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Summary of our audit approach
Key audit matters

The key audit matter that we identified in the current year was:• Valuation of gross insurance claims reserves.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

213

Materiality

The materiality that we used for the Group financial statements was £36.2 million which was
determined on the basis of 5% of profit before tax (‘PBT’) from continuing operations anddiscontinued operations, excluding ‘profit on sale’.

Scoping

We identified five reporting components which we determined should be subjected to full scope
audits this year.
Specific audit procedures were completed in respect of seven further components which, although
not financially significant, did present some specific audit risks which needed to be addressed.
The components within the scope of our audit procedures account for 99% of the Group’s profit
before tax, 99% of the Group’s revenue and 99% of the Group’s net assets.

Significant changes
in our approach

We previously identified a key audit matter associated with the change in reserving process to use aninternally projected best estimate, during 2020. As there has been no further change in the reserving
process, and we did not identify any material findings related to this risk in the prior period, this nolonger represents a key audit matter.
We also previously identified a key audit matter associated with the scenarios and assumptions
used in the determination of the loan loss provision during 2020. We did not identify any material
findings related to this risk in the prior period and, in the current period, we have not identified
this as a key audit matter due to the quantum of the loan loss provision in the context of ourdetermined materiality.
The number of reporting components determined to be subjected to full scope audit this year has
reduced. This is due to one component, Inspop.com Limited, being disposed of in the year which istherefore no longer within our audit scope; one component, Elephant Insurance Company LLC, which
has not grown at a commensurate rate to the Group and therefore is of less significance this year; andone component, Admiral Financial Services Limited, due to the quantum of the loan loss provision inthis entity in the current year, the component is no longer subject to a full scope audit.
Furthermore, the number of reporting components which were not financially significant, butwhich did present some specific audit risks, has reduced. This is due to the disposal of a number ofcomponents in the Group, which are therefore no longer within our audit scope.

The impact of climatechange on our audit

In planning our audit, we have considered the impact of climate change on the Group’s operations andsubsequent impact on its financial statements. The Group sets out its assessment of the potential
impact on pages 111 to 112 of the Emerging Risks section.
In conjunction with our TCFD specialists, we have held discussions with the Group to understandmanagement’s:• process for identifying affected operations, including the governance and controls over thisprocess, and the subsequent effect on the financial reporting for the Group; and• long-term strategy to respond to climate change risks as they emerge including the effect on theGroup’s forecasts.
Our audit work has involved:• challenging the completeness of the physical and transition risks identified and considered in theGroup’s climate risk assessment and the conclusion that there is no material impact of climatechange risk on the current year financial reporting;• assessing the Group’s qualitative analysis, which supports the Group’s conclusion that there is nomaterial financial statement impact of climate risk on expected credit losses; and• assessing disclosures in the annual report and challenging the consistency between the financial
statements and the remainder of the annual report.
We have not been engaged to provide assurance over the accuracy of TCFD disclosures set out on
pages 107 to 113 of the Annual Report. As part of our procedures, we are required to read these
disclosures and to consider whether they are materially inconsistent with the financial statementsor our knowledge obtained during the course of our audit; we did not identify any materialinconsistencies as a result of these procedures.

214

Admiral Group plc Annual Report and Accounts 2021

Independent auditor’s report continued
to the members of Admiral Group Plc
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern
basis of accounting included:• We obtained an understanding of the relevant controls relating to management‘s going concern assessment process;• We evaluated management’s going concern assessment in light of Covid-19; this included obtaining evidence such as underlying
business plans and forecasts and challenging their reliability to support the key assumptions;• We assessed management’s reverse stress testing over the projected profitability, solvency and liquidity positions and thelikelihood of the various scenarios that could adversely impact upon the Group’s liquidity and solvency headroom;• We inspected the Group ORSA (‘Own Risk and Solvency Assessment’) to support our understanding of the key risks faced by theGroup, its ability to continue as a going concern, and the longer-term viability of the Group; and• We obtained and inspected correspondence between the Group and its regulators, the FCA and PRA, as well as reviewing
the Group Risk Committee meeting minutes, to identify any items of interest which could potentially indicate either
non‑compliance with legislation or potential litigation or regulatory action held against the Group.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sectionsof this report.

5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due tofraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocationof resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

215

5.1. Valuation of gross insurance claims reserves
Key audit matterdescription

The Group’s gross insurance claims reserves total £3,045 million as at 31 December 2021 (2020 year-end: £2,920
million). The judgements which are made by management in determining the valuation of claims reserves are by
far the most significant in terms of their impact on the Group’s financial position. Setting these claims reserves
is an inherently subjective exercise and small changes in underlying assumptions may have a material impact on
the overall year-end result reported.
Specifically, our significant areas of focus are management’s selection of the frequency and severity
assumptions for large bodily injury claims arising in the UK Car Insurance business. These particular claims resultin higher individual claims reserves and are more judgemental, in terms of the development of the ultimate
losses, due to the longer-term nature of the Group’s exposure (compared to property damage claims).
In line with the Group’s accounting policy, management adds a margin to the actuarial best estimate toarrive at the booked gross claims reserves. This margin reflects the inherent uncertainty in estimating theultimate losses on claims, over and above that which can be projected actuarially based on underlying claims
development data. This is a significant area of management judgement and, therefore, a focus of our audit.
Specifically, the consistency of the level of prudence within the margin for the UK Car Insurance reserves,
related to large bodily injury claims, is our key area of focus.
Refer to page 169 in the Audit Committee report where this is included as a significant issue and note 3 and note
5d in the financial statements which refer to this matter.

How the scope of our audit
responded to the key audit
matter

We obtained an understanding and tested the operating effectiveness of relevant controls relating to the
key actuarial assumptions identified and the setting of the management margin applied as an uplift on the
projected actuarial best estimate.
We obtained and inspected the reports from both management, and management’s external expert actuary,
and have involved our actuarial specialists to challenge management’s key assumptions. We also assessed theobjectivity and competence of management’s expert.
We benchmarked management’s frequency assumptions against available industry data and considered thecomparison in the context of the risk profile of the Group’s portfolio and the year-on-year changes in theseassumptions.
We undertook a graphical analysis of incurred development patterns to assess and challenge management’s
severity assumptions. We benchmarked the average cost per claim assumptions against available third-party
industry data in the context of this incurred development analysis.
We challenged management’s qualitative and quantitative support for the margin held over the actuarial best
estimate reserves through review of management’s accounting judgement papers and testing the key internal
controls governing the claims distribution model. We analysed the consistency of prudence within the booked
margin against previous reporting periods in the context of the underlying uncertainty in incurred claims
development and challenged management’s support for the booked position.

Key observations

Based on the procedures described above, we consider that the valuation of gross insurance claims reserves
remain appropriate and in line with the Group’s prudent accounting policy.

216

Admiral Group plc Annual Report and Accounts 2021

Independent auditor’s report continued
to the members of Admiral Group Plc
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements

Parent Company financial statements

Materiality£36.2 million (2020: £31.8 million)£2.9 million (2020: £2.9 million)

Basis for determining
materiality

5% of profit before tax from continuing operations anddiscontinued operations, excluding ‘profit on sale’ (2020:5% of profit before tax from continuing and discontinued
operations).

3% (2020: 3%) of two-year average of net assets(2020: two-year average of net assets).

Rationale for thebenchmark applied

We consider profit before tax to be the critical benchmarkof the performance of the Group and consider thisbenchmark to be suitable having compared to otherbenchmarks: our materiality equates to 1% of grossearned premium and 3% of equity (2020: 1% of grossearned premium and 3% of equity). We have excluded
profit on disposal from the discontinued operations due tothe quantum of this balance as it would be distortive to thedetermination of materiality for the financial statements
as a whole.

The Parent Company primarily exists as the holding
company which carries investments in Groupsubsidiaries and is the issuer of listed securities. We
consider that net assets is the critical benchmark for
the Company. The measure uses a two-year averageof net assets which we consider appropriate given
the inherent volatility associated with the timing ofdividend payments.

Group materiality£36.2mComponentmateriality range£2.9m to £31.4m

PBT excluding
profit on sale
£725m

Audit Committee
reporting threshold£1.8m

PBT excluding profit on saleGroup materiality

6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected andundetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements

Parent Company financial statements

Performance materiality

70% (2020: 70%) of Group materiality

70% (2020: 70%) of Parent Company materiality

Basis and rationale for determining
performance materiality

In determining performance materiality, we considered the following factors:• our risk assessment, including our assessment of the Group’s overall control environment andthat we consider it appropriate to rely on controls over a number of business processes; and• our past experience of the audit, which has indicated a low number of uncorrected
misstatements identified in prior periods.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

217

6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.8 million(2020: £1.3 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of thefinancial statements.

7. An overview of the scope of our audit
7.1. Identification and scoping of components
The five (2020: eight) significant components of the Group which were identified in our audit planning are Admiral Insurance(Gibraltar) Limited, Admiral Insurance Company Limited, EUI Limited, Admiral Europe Compañía de Seguros, and the AdmiralGroup plc parent entity. The following entities, which were considered significant components in the prior period, have not been
identified as significant in the current period:• Inspop.com Limited: This was disposed of by the Group in the period and therefore does not form part of our audit scope;• Admiral Financial Services Limited: Due to the quantum of the loan loss provision in this entity in the current year, thecomponent is no longer subject to a full scope audit; and• Elephant Insurance Company LLC: This company has not grown at a commensurate rate to the Group and therefore is no longer
considered significant to the Group.
Each of these significant components was subjected to a full-scope audit, completed to individual component materiality levels
which ranged from £2.9 million to £31.4 million (2020: £2.6 million to £25.1 million) dependent upon the relative significance ofeach individual component.
Additionally, we have completed specific audit procedures, designed to address specific audit risks, for seven (2020: seven)further components.
The components within the scope of our audit procedures account for 99% (2020: 98%) of the Group’s profit before tax, 99%(2020: 97%) of the Group’s revenue and 99% (2020: 97%) of the Group’s net assets.
For the remaining components, which were not subject to audit or specified audit procedures, we performed analysis at an
aggregated Group level to re-assess our evaluation that there were no significant risks of material misstatement presented by anyof these components.
6%

1%

Revenue

93%

2%

1%

Profitbefore tax

97%

4%

1%

Net assets

95%

Full audit scope

Full audit scope

Full audit scope

Specified audit proceduresSpecified audit proceduresSpecified audit procedures

Review at group level

Review at group level

Review at group level

7.2. Working with other auditors
We engaged local component auditors, being Deloitte member firms in the US and Spain, to perform the audit work in theserespective territories on our behalf. Typically, each year we visit the operations in Rome, Madrid, Seville and Richmond but, given
the presence of Covid-19, this was not possible for 2021. In response to this limitation, we directed and supervised the workof the component auditors by increasing the frequency of phone calls with the component audit teams, participating in videoconferences and viewing certain key audit documentation remotely.

218

Admiral Group plc Annual Report and Accounts 2021

Independent auditor’s report continued
to the members of Admiral Group Plc
8. Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to bematerially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.

9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of thefinancial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis ofaccounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have norealistic alternative but to do so.

10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance withlaws and regulations, we considered the following:• the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;• the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error;• results of our enquiries of management, internal audit, and the Audit Committee about their own identification and assessmentof the risks of irregularities;• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:Ȳ identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of
non‑compliance;

Company overview

Strategic report

Corporate governance

Financial statements

Additional information219

Ȳ detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;Ȳ the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and• the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including tax, actuarial, IT and industry specialists regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud in the following area: valuation of gross insurance claims reserves. In common withall audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisionsof those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, and relevant
tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included theGroup’s operating licence, PRA and FCA regulations and regulatory solvency requirements.

11.2. Audit response to risks identified
As a result of performing the above, we identified the valuation of gross insurance claims reserves as a key audit matter related tothe potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the
specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the financial statements;• enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigationand claims;• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondencewith HMRC, the Financial Conduct Authority and the Prudential Regulation Authority; and• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries andother adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and significant component audit teams, and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.

Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with theCompanies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:• the information given in the strategic report and the Directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and• the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in thecourse of the audit, we have not identified any material misstatements in the strategic report or the Directors’ report.

220

Admiral Group plc Annual Report and Accounts 2021

Independent auditor’s report continued
to the members of Admiral Group Plc
13. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that partof the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 204 to 205;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period
is appropriate set out on pages 124 to 127;
• the Directors’ statement on fair, balanced and understandable set out on page 207;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 175;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set
out on page 207; and• the section describing the work of the Audit Committee set out on pages 167 to 168.

14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:• we have not received all the information and explanations we require for our audit; or• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or• the Parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.

14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration havenot been made or the part of the Directors’ remuneration report to be audited is not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.

15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by shareholders’ approval at the Annual General
Meeting on 30 April 2021 to audit the financial statements for the year ending 31 December 2021 and subsequent financial
periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is six years,
covering the years ending 31 December 2016 to 31 December 2021.

15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with
ISAs (UK).

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

221

16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for thisreport, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial
statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National
Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s reportprovides no assurance over whether the annual financial report has been prepared using the single electronic format specified in
the ESEF RTS. We have been engaged to provide assurance on whether the annual financial report has been prepared using thesingle electronic format specified in the ESEF RTS and will report separately to the members on this.

David Rush
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
3 March 2022

222

Admiral Group plc Annual Report and Accounts 2021

Consolidated income statement
For the year ended 31 December 2021
Year ended

Continuing operations

Note

Insurance premium revenue
Insurance premium ceded to reinsurers

31 December
2021£m

31 December
2020£m

2,492.3

2,265.3(1,637.3)(1,513.7)

Net insurance premium revenue

5

855.0

751.6

Other revenue

8

314.8

329.4

Profit commission

5

304.5

134.0

Interest income

7

36.6

36.8

Interest expense

7

(6.1)

(7.2)

30.5

29.6

Investment return – interest income at effective interest rate

6

40.6

33.9

Investment return – other

6

4.6

26.8

1,550.0

1,305.3

5(1,506.8)(1,318.6)

1,174.5

1,025.4

Net interest income from loans

Net revenue
Insurance claims and claims handling expenses
Insurance claims and claims handling expenses recoverable from reinsurers
Net insurance claims

5(332.3)(293.2)

Operating expenses and share scheme charges

9(970.1)(814.6)

Operating expenses and share scheme charges recoverable from co- andreinsurers

9

491.1

456.6

6,9

(13.3)(33.6)Net operating expenses and share scheme charges(492.3)(391.6)

Total expenses(824.6)(684.8)Operating profit

725.4

620.5

Expected credit losses

Finance costs

6(13.7)(14.3)

Finance costs recoverable from co- and reinsurers

6

1.8

2.0

(11.9)(12.3)Net finance costs
Profit before tax from continuing operations

713.5

608.2

(130.2)(106.2)

583.3

502.0

Profit before tax from discontinued operations

11.3

29.4

Gain on disposal

404.4

–

Taxation expense

(2.3)

(3.6)

Taxation expense

10

Profit after tax from continuing operations

Profit after tax from discontinued operations
Profit after tax from continuing and discontinued operations

13

413.4

25.8

996.7

527.8

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

223

Year ended
31 December
2021£m

31 December
2020£m

Equity holders of the parent

997.9

528.8

Non-controlling interests (NCI)

(1.2)

(1.0)

996.7

527.8

Continuing operations

Note

Profit after tax attributable to:Earnings per share – from continuing operations
Basic

12

196.7p170.7p

Diluted12

196.1p170.4pBasic

12335.5p179.5p

Diluted12

334.5p179.2p

Earnings per share – from continuing and discontinued operations

Dividends declared and paid (total)

12

720.9

425.7

Dividends declared and paid (per share)

12247.0p147.5p224

Admiral Group plc Annual Report and Accounts 2021

Consolidated statement of comprehensive income
For the year ended 31 December 2021
Year ended

Note

Profit for the period – from continuing and discontinued operations

31 December
2021£m

31 December
2020
£m

996.7

527.8

(50.1)

40.6

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

10

1.4

(1.8)

(10.4)

3.5

6.6

(2.4)

Other comprehensive income for the period, net of income tax(52.5)

39.9

Total comprehensive income for the period

944.2

567.7

Equity holders of the parent

945.7

568.6

Non-controlling interests

(1.5)

(0.9)

944.2

567.7

Total comprehensive income for the period attributable to:Company overview

Strategic report

Corporate governance

Financial statements

225

Additional information

Consolidated statement of financial position
As at 31 December 2021
As at

Note

31 December
2021£m

31 December
2020£mProperty and equipment

11

103.2

140.4

Intangible assets

11

179.9

166.7

Deferred income tax

10

9.3

–

Corporation tax asset

10

10.6

22.9

Reinsurance assets

52,176.1

2,083.2

Loans and advances to customers

7

556.8

359.8

ASSETS

Insurance and other receivables

6

1,208.5

1,182.0

Financial investments

6

3,742.6

3,506.0

Cash and cash equivalents

6

372.7

298.2

Assets associated with disposal group held for sale

13

Total assets

–

83.0

8,359.7

7,842.2

EQUITY
Share capital

12

0.3

0.3

13.1

13.1

44.0

94.9

Retained earnings

1,348.8

1,004.4

Total equity attributable to equity holders of the parent

1,406.2

1,112.7

2.3

10.7

1,408.5

1,123.4

Share premium account
Other reserves

12

Non-controlling interests
Total equity
LIABILITIESInsurance contract liabilities

54,215.0

4,081.3

Subordinated and other financial liabilities

6

670.9

488.6

6, 11

1,960.0

1,991.2

Lease liabilities

6

105.3

122.8

Deferred income tax

10

_

0.9

Liabilities associated with disposal group held for sale

13

–

34.0

Trade and other payables

Total liabilities

6,951.2

6,718.8

Total equity and total liabilities

8,359.7

7,842.2

The accompanying notes form part of these financial statements.
These financial statements were approved by the Board of Directors on 3 March 2022 and were signed on its behalf by:

Geraint Jones
Chief Financial Officer
Admiral Group plc
Company Number: 03849958

226

Admiral Group plc Annual Report and Accounts 2021

Consolidated cash flow statement
For the year ended 31 December 2021
Year ended
31 December
2021£m

Restated
31 December
2020
£m

996.7

527.8

11

23.6

23.6

Note

Profit after tax – from continuing and discontinued operations
Adjustments for non-cash items:– Depreciation of property, plant and equipment and right-of-use assets– Impairment of property, plant and equipment and right-of-use assets

11

23.8

3.1

– Amortisation and impairment of intangible assets

11

44.7

19.2

– Gain on disposal of Comparison entities held for sale

13(404.4)–– Movement in expected credit loss provision

6

13.3

25.8

– Share scheme charges

9

65.2

54.0

(0.8)

0.2

– Accrued interest income from loans and advances to customers– Interest expense on funding for loans and advances to customers

6.1

7.2

6

(45.2)(60.7)

12.0

12.4– Taxation expense

10

132.5

109.8

Change in gross insurance contract liabilities

5

133.7

106.3

Change in reinsurance assets

5(92.9)(11.5)

6, 11

(9.2)

25.1

Change in gross loans and advances to customers

7(205.2)

77.3

Change in trade and other payables, including tax and social security

11(56.1)

40.2

637.8

959.8

Purchases of financial instruments(3,710.2)(2,389.2)

Proceeds on disposal/maturity of financial instruments

3,397.1

2,160.6

46.6

52.6

– Investment return– Finance costs, including unwinding of discounts on lease liabilities

Change in insurance and other receivables

Cash flows from operating activities, before movements in investments

Interest and investment income received

6

Cash flows from operating activities, net of movements in investments

371.3

783.8

Taxation payments(126.7)(175.0)Net cash flow from operating activities

244.6

608.8

(69.2)(43.1)Cash flows from investing activities:
Purchases of property, equipment and software

11

Proceeds from sale of Comparison entities

471.8

–

Net costs paid on sale of Comparison entities(14.8)–Net cash used in investing activities

387.8(43.1)–

2.4(46.3)Cash flows from financing activities:
Non-controlling interest capital contribution
Proceeds on issue of/ (Repayment of) loan backed securities

6

185.9

Proceeds from other financial liabilities

6

–

0.1

6,7

(20.2)(19.2)

Repayment of lease liabilities

6

(9.6)

(9.4)

Equity dividends paid

12

Finance costs paid, including interest expense paid on funding for loans(720.9)(425.7)(564.8)(498.1)

Net increase in cash and cash equivalents

67.6

67.6

Cash and cash equivalents at 1 January

351.7

281.7

Cash and cash equivalents included in disposal of comparison entities(41.3)–

Effects of changes in foreign exchange rates

(5.3)

2.4

372.7

351.7

Net cash used in financing activities

Cash and cash equivalents at end of period

6Company overview

Strategic report

Corporate governance

Financial statements

227

Additional information

Consolidated statement of changes in equity
For the year ended 31 December 2021
Attributable to the owners of the Company

Notes

At 1 January 2020
Profit/(loss) for the period – fromcontinuing and discontinued
operations

Sharecapital£mSharepremium
account£m

Fair value
reserve£m

Hedging
reserve£m

Foreignexchangereserve£m

Retained
profitand loss
£m

Total
£m

Noncontrollinginterests£m

Total
equity
£m

0.3

13.1

46.6

(1.2)

9.7

840.9

909.4

9.2

918.6

–

–

–

–

–

528.8

528.8

(1.0)

527.8

–

–

40.6

–

–

–

40.6

–

40.6

Other comprehensive income
Movements in fair value reserve
Deferred tax charge in relation to
movement in fair value reserve

–

–

(1.8)

–

–

–

(1.8)

–

(1.8)

Movement in hedging reserve

10

–

–

–

(2.4)

–

–

(2.4)

–

(2.4)

Currency translation differences

–

–

–

–

3.4

–

3.4

0.1

3.5

Total comprehensive income forthe period

–

–

38.8

(2.4)

3.4

528.8

568.6

(0.9)

567.7

–

–

–

–

–

(425.7)(425.7)–(425.7)

–

–

–

–

–

53.8

53.8

–

53.8

Transactions with equity holders
Dividends

12

Share scheme credit
Deferred tax credit on shareschemes credit

–

–

–

–

–

6.6

6.6

–

6.6

Contributions by NCIs

10

–

–

–

–

–

–

–

2.2

2.2

Changes in ownership interests
without a change in control

–

–

–

–

–

–

–

0.2

0.2

Total transactions with equity holders

–

–

–

–

–

(365.3)(365.3)2.4(362.9)

0.3

13.1

85.4

(3.6)

13.1

1,004.4

1,112.7

10.7

1,123.4

–

–

–

–

–

997.9

997.9

(1.2)

996.7

–

–

(50.1)–––(50.1)–(50.1)

Balance at 1 January 2021
Profit/(loss) for the period – fromcontinuing and discontinued
operations
Other comprehensive income
Movements in fair value reserve
Deferred tax charge in relation to
movement in fair value reserve

–

–

1.4

–

–

–

1.4

–

1.4

Movement in hedging reserve

10

–

–

–

6.6

–

–

6.6

–

6.6

Currency translation differences

–

–

–

–

(10.1)–(10.1)(0.3)(10.4)

Total comprehensive income forthe period––(48.7)

6.6(10.1)

997.9

945.7

(1.5)

944.2

Transactions with equity holders
Dividends

12

–

–

–

–

–

(720.9)(720.9)–(720.9)

Share scheme credit

9

–

–

–

–

–

63.1

63.1

–

63.1

Deferred tax credit on shareschemes credit

10

–

–

–

–

–

6.0

6.0

–

6.0

Transfer to gain on disposal of assets
held for sale

–

–

–

–

1.3

(2.0)

(0.7)

0.1

(0.6)

Change in ownership interests on saleof comparison

–

–

–

–

–

–

–

(6.7)

(6.7)

Change in ownership interests withouta change in control

–

–

–

–

–

0.3

0.3

(0.3)

–

Total transactions with equity holders

–

–

–

–

1.3

(653.5)(652.2)(6.9)(659.1)

0.3

13.1

36.7

3.0

4.3

1,348.8

1,406.2

2.3

1,408.5

As at 31 December 2021

228

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements
For the year ended 31 December 2021
1. General information
Admiral Group plc is a public limited company incorporated in England and Wales. Its registered office is at Tŷ Admiral, David Street,
Cardiff, CF10 2EH and its shares are listed on the London Stock Exchange. The nature of Admiral Group operations and its principal
activities is set out in the Business model section on page 04.
The consolidated financial statements have been prepared and approved by the Directors in accordance with United Kingdom
adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Company
has elected to prepare its parent company financial statements in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (FRS 101).

2. Basis of preparation
The consolidated financial statements have been prepared on a Going Concern basis. In making this assessment, the Directors’
have considered in detail the impact of the pandemic on the Group’s financial position and performance, including the projectionof the Group’s profits, regulatory capital surpluses and sources of liquidity for the next 12 months and beyond.
The following areas were focused on as part of this review:• The Group’s profit projections, including:Ȳ The ongoing impact of the pandemic, including the return of claims frequency towards pre-pandemic levels across all of theGroup’s insurance businesses
Ȳ Changes in premium rates and projected policy volumes across the Group’s insurance businesses, including early indications of
the impact of the FCA general insurance pricing reform which came into effect at the start of 2022
Ȳ Potential impacts on the cost of settling claims across all insurance businesses, including the impact of inflationary pressures
Ȳ Projected trends in other revenue generated by the Group’s insurance business from fees and the sale of ancillary products
Ȳ Projected contributions to profit from businesses other than the UK Car insurance businessȲ Expected trends in unemployment in the context of credit risks and the growth of the Group’s Loans business• The sale of the Group price comparison businesses, Penguin Portals and Preminen along with the intention to return theremaining amount of net proceeds back to shareholders• The Group’s solvency position, which has been closely monitored through periods of market volatility, in particular, early in the
pandemic. The Group continues to maintain a strong solvency position above target levels• The adequacy of the Group’s liquidity position after considering all of the factors noted above• The results of business plan scenarios and stress tests on the projected profitability, solvency and liquidity positions including
the impact of severe downside scenarios that assume severe adverse economic, credit and trading stresses• The regulatory environment, in particular focusing on regulatory guidance issued by the FCA and the PRA in the UK and ongoing
communications between management and regulators• A review of the Company’s principal risks and uncertainties and the assessment of emerging risks
Following consideration of the above, the Directors have reasonable expectation that the Group has adequate resources tocontinue in operation for the foreseeable future, a period of not less than 12 months from the date of this report, and that it istherefore appropriate to adopt the going concern basis in preparing the financial statements.
Further information regarding the Company’s business activities, together with the factors likely to affect its future development,
performance and position, is set out in the Strategic Report. Further information regarding the financial position of the Company,
its cash flows, liquidity position and borrowing facilities are also described in the Strategic Report. In addition, notes 6 and 12
to the financial statements include the Company’s objectives, policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

229

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 fairvalue through profit or loss or as fair value through other comprehensive income. The Group and Company financial statements
are presented in pounds sterling, rounded to the nearest £0.1 million.
Cash flows from operating activities before movements in investments comprise all cash flows arising from the Group’s insurance
and reinsurance activities, and from loans and advances issued to customers. Cash flows from financing activities include the cash
flows on issues of loan backed securities, lease liabilities and other financial liabilities.
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 can 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 dateis the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date control ceases. Losses applicable to the non-controllinginterests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to havea deficit balance.
The Group has securitised certain loans and advances to customers by the transfer of the loans to special purpose entities (‘SPEs’)controlled by the Group. Securitisation enables a subsequent issuance of debt by the SPEs to investors who gain the security of
the underlying assets as collateral. These SPEs are fully consolidated into the Group financial statements under IFRS 10, as theGroup controls the entity in line with the above definition.
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimatesand assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to bereasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is reviewed. To the extent that a change in an accounting estimate gives rise to changes in assets
and liabilities, the movement is recognised by adjusting the carrying amount of the related asset or liability in the period in which
the change occurs.

Restatement of prior year Consolidated cash flow statement
A prior period classification error within the Consolidated cash flow statement has been identified impacting the year ended
31 December 2020. In the prior period, amounts that should have been presented as interest and investment income received
were incorrectly presented as proceeds on disposal/maturity of financial instruments. The prior periods have been restated,
resulting in an increase of £42.5 million in interest and investment income received, and a corresponding decrease in proceeds
on disposal/maturity of financial instruments. The error has had no impact on the Consolidated statement of financial position,
Consolidated income statement or the Earnings per share calculations within.

Adoption of new and revised standards
The Group has adopted the following IFRSs and interpretations during the year, which have been issued and endorsed:• Amendments to IFRS 16 Leases: Covid-19 Related Rent Concessions beyond 30 June 2021
The application of this amendment has not had a material impact on the Group’s results, financial position and cash flows.

230

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
2. Basis of preparation continued
New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards
that have been issued but are not yet effective:• IFRS 17 Insurance Contracts (effective 1 January 2023)• Amendments to IAS 1 Classification of Liabilities as Current or Non-current and Presentation of Financial Statements and IFRS PracticeStatement 2: Disclosure of Accounting Policies (effective 1 January 2023)• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective
1 January 2023)• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a single transaction (effective
1 January 2023)• Amendments to IFRS 3 Reference to the Conceptual Framework (effective 1 January 2022)• Amendments to IAS 16 Property, Plant and Equipment–Proceeds before Intended Use (effective 1 January 2022)• Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract (effective 1 January 2022)• Annual Improvements to IFRS Standards 2018–2020 Cycle: Amendments to IFRS 1 First-time Adoption of International Financial
Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture (effective 1 January 2022)
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial
statements of the Group in future periods, except as noted below:

IFRS 17 – Insurance contracts
IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts andsupersedes IFRS 4 Insurance Contracts. IFRS 17 outlines a general model, which is simplified if certain criteria are met by measuring
the liability for remaining coverage using the premium allocation approach.
In June 2020, the IASB issued Amendments to IFRS 17 to address concerns and implementation challenges that were identified
after IFRS 17 was published. The amendments defer the date of initial application of IFRS 17 (incorporating the amendments) toannual reporting periods beginning on or after 1 January 2023, requiring a transition balance sheet at 1 January 2022.
The Group continues to assess the impact of IFRS 17 on its results and financial position.

3. Critical accounting judgements and key sources of estimation uncertainty
In applying the Group’s accounting policies as described in the notes to the financial statements, the Directors are required tomake judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to
make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from othersources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognisedin the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

231

Critical accounting judgements
The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the
Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on theamounts recognised in financial statements.
• Classification of the Group’s contracts with reinsurers as reinsurance contracts
A contract is required to transfer significant insurance risk in order to be classified as such. Management reviews all terms andconditions of each such insurance and reinsurance contract in order to be able to make this judgement. In particular, all reinsurance
contracts (both excess of loss and quota share contracts) held by the Group have been assessed and it has been concluded that allcontracts transfer significant insurance risk and have therefore been classified and accounted for as reinsurance contracts withinthese financial statements.
• Consolidation of the Group’s special purpose entities (‘SPEs’)
The Group has set up SPEs in relation to the Admiral Loans business, whereby the Group securitises certain loans by the transferof the loans to the respective SPEs. The securitisation enables a subsequent issue of debt by the SPEs to investors who gain the
security of the underlying assets as collateral.
The accounting treatment of SPEs has been assessed and it has been concluded that the entities should be fully consolidated
into the Group’s financial statements under IFRS 10. This is due to the fact that despite not having legal ownership, the Group has
control of the SPEs, being exposed to the returns and having the ability to affect those returns through its power over the SPEs.
The SPEs have therefore been fully consolidated into the Group’s financial statements.

Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are discussed below.
• Calculation of insurance claims provisions and reinsurance assets
The Group’s reserving policy requires management to set provisions for outstanding claims for the purpose of the financial
statements, above the projected best estimate outcome to allow for unforeseen adverse claims development. In the applicationof this policy, management applies judgement in:• calculating the best estimate of the gross ultimate total cost of settling claims that have been incurred prior to the balance
sheet date;• calculating the best estimate of the non-proportional excess of loss reinsurance recoveries relating to outstanding claims, and;• determining where, above the projected best estimate outcomes of gross outstanding claims and reinsurance recoveries, theinsurance claims provisions should sit in line with the Group’s reserving methodology.
Estimation techniques are used in the calculation of the provisions for claims outstanding, which represent a projection of theultimate estimated total cost of settling claims that have been incurred prior to the balance sheet date and remain unsettled at
the balance sheet date, along with a margin to allow for unforeseen adverse claims development.

232

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
3. Critical accounting judgements and key sources of estimation uncertainty continued
The primary areas of estimation uncertainty are as follows:

1) Calculation of gross best estimate claims provisions
The key area where estimation techniques are used is in the ultimate projected cost of reported claims, which includes the
emergence of claims that occurred prior to the balance sheet date, but had not been reported at that date.
The Group, utilising internal actuarial teams, projects the best estimate claims reserves using a variety of different recognised
actuarial projection techniques (for example incurred and paid chain ladders, and initial expected assumptions) to allow an
actuarial assessment of their potential outcome. This includes an allowance for unreported claims. The projection techniques are
subject to review by an independent external actuarial specialist to provide an impartial assessment.
Claims are segmented into groups with similar characteristics and which are expected to develop and behave similarly, for example
bodily injury (attritional and large) and damage claims, with specific projection methods selected for each head of damage. Key
sources of estimation uncertainty arise from both the selection of the projection methods and the assumptions made in setting
claims provisions through the review of historical development of underlying case reserve estimates, overlaid with emerging
market trends.
Allowance is made for changes arising from the internal and external environment which may cause future claim cost inflation todeviate from that seen in historic data. Examples of these factors include:• Changes in the reporting patterns of claims impacting the frequency of bodily injury claims;• Emerging inflationary trends on the average cost of bodily injury and damage claims;• The likelihood of bodily injury claims settling as Periodic Payment Orders;• Changes in the regulatory or legal environment that lead to changes in awards for bodily injury claims and associated legal costs;• Changes to the underlying process and methodologies employed in setting and reviewing case reserve estimates.
Implicit assumptions in the actuarial projections include average cost per claim and average claim numbers by accident year,
future rates of claims inflation and loss ratios by accident year and underwriting year. These metrics are reviewed and challenged
as part of the process for making allowance for the uncertainties noted.

2) Calculation of excess of loss reinsurance recoveries
The Group uses excess of loss reinsurance in order to mitigate the impact of large claims. The reinsurance is non-proportional andrecoveries are made on individual claims above the relevant thresholds.
As for the underlying gross claims, actuarial teams project the best estimate excess of loss reinsurance recoveries using avariety of actuarial projection techniques that focus on both the ultimate frequency of reported recoveries and the average sizeof the recovery.
Key sources of estimation uncertainty arise from both the selection of the projection methods and the assumptions made incalculating the recoveries through the review of historical development of underlying case reserve estimates, overlaid withemerging market trends.
The most significant element of the estimation relates to large bodily injury claims. The key assumption in the calculation ofexcess of loss recoveries relates to the numbers of large claims in the Group’s UK Motor insurance business that will attract
recoveries, where the high retention means that a small number of additional large claims would potentially result in a material
increase in the excess of loss recoveries.

3) Calculation of the margin held for adverse development
A wide range of factors inform management’s recommendation in setting the margin held above actuarial best estimates, which is
subject to approval from the Group’s Reserving and Audit Committees, including:• Reserve KPIs such as the level of margin as a percentage of the ultimate reserve;• Results of stress testing of key assumptions underpinning key actuarial assumptions within best estimate reserves;

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

233• A review of a number of individual and aggregated reserve scenarios which may result in future adverse variance to the ultimate
best estimate reserve;• Qualitative assessment of the level of uncertainty and volatility within the reserves and the change in that assessment
compared to previous periods.
In addition, for the Group’s UK Car Insurance business, the Group’s internal reserve risk distribution is used to determine theapproximate confidence level of the recommended booked reserve position which enables comparison of the reserve strength toprevious periods and of it’s compliance with IFRS 4.
For sensitivities in respect of the claims reserves, refer to note 5d(ii) of the financial statements. These sensitivities are provided
based on booked loss ratios, as it is impractical to disaggregate the assumptions further, but for the disaggregated assumptions it
is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that are different from theassumption could require a material adjustment to the carrying amount. For further detail on objectives, policies and procedures
for managing insurance risk, refer to note 5 of the financial statements.
Future changes in claims reserves also impact profit commission income, as the measurement of this income is dependent on theloss ratio booked in the financial statements, and cash receivable is dependent on actuarial projections of ultimate loss ratios.
• Calculation of expected credit loss provision
The Group is required to calculate an expected credit loss (‘ECL’) allowance in respect of the carrying value of the Admiral loans
book in line with the requirements of IFRS 9. Due to the size of the loan book and the increased uncertainty given the impact
of Covid, the calculation of the ECL is deemed to be a critical accounting judgement and includes key sources of estimation
uncertainty. Management applies judgement in:• Determining the appropriate modelling solution for measuring the ECL;
• Calibrating and selecting appropriate assumptions;• Setting the criteria for what constitutes a significant increase in credit risk;• Identification of key scenarios to include and determining the credit loss in these instances.
The key areas of estimation uncertainty are in the calculation of the probability of default (PD) in the base scenario for stage 1 and2 assets, and the determination, impact assessment and weighting of the forward-looking scenarios.
Refer to the analysis in note 7 to the financial statements for further detail on the Group’s ECL methodology applied in the period.

4. Group consolidation and operating segments
4a. Accounting policies(i) Group consolidation
The consolidated financial statements comprise the results and balances of the Company and all entities controlled by theCompany, being its subsidiaries and SPEs (together referred to as the Group), for the year ended 31 December 2021 andcomparative figures for the year ended 31 December 2020. The financial statements of the Company’s subsidiaries and its SPEs areconsolidated in the Group financial statements.
The Company controls 100% of the voting share capital of all its principal subsidiaries, except Admiral Law Limited, Inspop USA LLC
and comparenow.com Insurance Agency LLC (indirect holding).
An SPE is fully consolidated into the Group financial statements under IFRS 10, where the Group has control over the SPE.
The parent company financial statements present information about the Company as a separate entity and not about its Group.
In accordance with IAS 24, transactions or balances between Group companies that have been eliminated on consolidation are notreported as related party transactions in the consolidated financial statements.

234

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
4. Group consolidation and operating segments continued(ii) Foreign currency translation
Items included in the financial records of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented inpounds sterling, the Group’s presentational currency, rounded to the nearest £0.1 million.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the datesof the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from thetranslation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement.
Non-monetary items measured at cost are translated at their historic rate and non-monetary items held at fair value aretranslated using the foreign exchange rate on the date that the fair value was established.
The financial statements of foreign operations whose functional currency is not pounds sterling are translated into the Group
presentation currency (pound sterling) as follows:• Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet.
• Income and expenses for each income statement are translated at average monthly exchange rates (unless this average is nota reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income andexpenses are translated at the date of the transaction).
• All resulting exchange differences are recognised in other comprehensive income and in a separate component of equity except
to the extent that the translation differences are attributable to non-controlling interests.
On disposal of a foreign operation, the cumulative amount recognised in equity relating to that particular operation is recognisedin the income statement.

4b. Segment reporting
The Group has five reportable segments, as described below. These segments represent the principal split of business that isregularly reported to the Group’s Board of Directors, which is considered to be the Group’s chief operating decision maker in linewith IFRS 8 Operating Segments.

UK Insurance
The segment consists of the underwriting of Motor insurance, Household and, Travel insurance and other products that
supplement these insurance policies within the UK. It also includes the generation of revenue from additional products and feesfrom underwriting insurance in the UK. The Directors consider the results of these activities to be reportable as one segment as
the activities carried out in generating the revenue are not independent of each other and are performed as one business. This
mirrors the approach taken in management reporting.

International Insurance
The segment consists of the underwriting of car and home insurance and the generation of revenue from additional products andfees from underwriting car insurance outside of the UK. It specifically covers the Group operations Admiral Seguros in Spain, ConTein Italy, L’olivier Assurance in France and Elephant Auto in the US. None of these operations are reportable on an individual basis,
based on the threshold requirements in IFRS 8.

Admiral Loans
The segment relates to the Admiral Loans business launched in 2017, which provides unsecured personal loans and car financeproducts in the UK, primarily through the comparison channel.

Other
The ‘Other’ segment is designed to be comprised of all other operating segments that are not separately reported to theGroup’s Board of Directors and do not meet the threshold requirements for individual reporting. It includes compare.com, theUS comparison business, and Admiral Pioneer.

Company overview

Strategic report

Corporate governance

Financial statements

235

Additional information

Discontinued operations (Comparison)
As set out in note 13 to the financial statements, on 29 December 2020 the Group announced its planned sale of the majority of
its comparison businesses. The sale was completed on 30 April 2021. The comparison operations are presented as discontinued
operations in both 2021 and 2020. The results for 2021 are reflective of the profit on disposal and four months of trading prior todisposal.
The segment relates to the comparison businesses disposed of including: Confused.com in the UK, Rastreator in Spain, LeLynx
in France, and the Preminen entities, which have a head office in Spain and operations in Mexico, and Penguin Portals, theintermediate holding company of Confused.com, LeLynx and Rastreator.
Taxes are not allocated across the segments and, as with the corporate activities, are included in the reconciliation to theconsolidated income statement and consolidated statement of financial position.
An analysis of the Group’s revenue and results for the year ended 31 December 2021, by reportable segment, is shown below.
The accounting policies of the reportable segments are materially consistent with those presented in the notes to the financial
statements for the Group.
Year ended 31 December 2021
Other
£m

Discontinued
operations*5£mEliminations*6
£m

Total
(continuing)
£m

Total
£m

37.6

27.9

67.2

(7.8)

3,507.3

3,566.9

–

12.4

–

–

855.0

855.0

34.6

1.0

6.1

67.2

(7.8)

619.3

678.9

–

27.8

–

–

2.7

30.5

30.5

UK
Insurance£mInternational
Insurance£mAdmiralLoans£mTurnover*1

2,751.7

690.3

Net insurance premium revenue

612.6

230.0

Other revenue and profit
commission

577.8
–

Net interest income

40.8

0.5

–

–

–

(2.7)

38.6

38.6

Net revenue

1,231.2

265.1

28.8

18.5

67.2

(7.8)

1,543.4

1,603.0

Net insurance claims(144.5)(176.2)–(11.6)––(332.3)(332.3)

Expenses(246.7)(100.5)(34.3)(20.6)(55.5)

7.8(401.9)(449.8)

–

–

–

–

404.4

–

–

404.4

840.0

(11.6)(5.5)(13.7)

416.1

–

809.2

1,225.3(88.3)(88.7)

4.0

4.0

Investment return*

2

Gain on disposal
Segment profit/(loss)
before tax
Other central revenue andexpenses, including sharescheme charges
Investment and interest income(11.4)(11.4)

Consolidated profit before tax*4713.5

1,129.2

Taxation expense(130.2)(132.5)

Consolidated profit after tax

583.3

996.7

Finance costs*

3

Other segment items:– Intangible and tangible
asset additions

94.8

47.6

0.6

1.2

–

–

144.2

144.2

– Depreciation and amortisation

65.5

44.5

0.7

0.2

–

–

110.9

110.9

*1	Turnover is an Alternative Performance Measure presented before intra-group eliminations and consists of total premiums written (including co-insurers’ share) and Other revenue. Referto the glossary and note 14 for further information.
*2 Investment return is reported net of impairment on financial assets, in line with management reporting.
*3 £ 0.6 million of IFRS 16 interest expense (being the Group’s net share of IFRS 16 interest expense) included within Finance Costs in the income statement has been reallocated to individual
segments within expenses, in line with management segmental reporting.
*4 P rofit before tax above of £1,129.2 million is presented cumulative of profit before tax from continuing operations (£713.5 million) and discontinued operations (£415.7 million, including£0.4 million of central expenses ).
*5 See note 13 for further detail on discontinued operations.
*6	Eliminations are in respect of the intra-group trading between the Group’s comparison and UK and International Insurance entities and intra-group interest. Of the £7.8 million eliminationof other revenue and profit commission, £7.6 million relates to discontinued operations, with the remaining £0.2 million relating to Compare.com

236

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
4. Group consolidation and operating segments continued
Revenue and results for the corresponding reportable segments for the year ended 31 December 2020 are shown below.
Year ended 31 December 2020
UK
Insurance£mInternational
Insurance£mAdmiral
Loans
£m

Other
£m

Discontinued
operations*5£mEliminations*6
£m

Total
(continuing)
£m

Total
£m

2,672.0

648.8

38.4

6.8

183.9

(22.2)

3,365.8

3,527.7

Net insurance premium revenue

539.8

211.8

–

–

–

–

751.6

751.6

Other revenue and profit
commission

427.9

27.4

1.6

6.7

183.9

(22.2)

463.4

625.3

–

–

26.7

–

–

2.9

29.6

29.6

Turnover*1

Net interest income

50.8

–

0.5

–

–

(3.3)

48.0

48.0

Net revenue

1,018.5

239.2

28.8

6.7

183.9

(22.6)

1,292.6

1,454.5

Net insurance claims(150.2)(143.0)

–

–

–

–

(293.2)(293.2)

Expenses(170.0)(87.4)(42.6)(9.8)(151.4)22.2(309.6)(439.0)

Segment profit/(loss)
before tax

698.3

8.8

(13.8)

(3.1)

32.5

(0.4)

689.8

722.3

(74.8)(77.9)

4.9

4.9

Investment return*2

Other central revenue andexpenses, including sharescheme charges
Investment and interest income(11.7)(11.7)

Consolidated profit before tax*4

608.2

637.6

Taxation expense(106.2)(109.8)

Consolidated profit after tax

502.0

527.8

Finance costs*

3

Other segment items:
Intangible and tangible asset
additions

59.1

43.0

0.2

0.5

1.6

–

102.8

104.4

Depreciation and amortisation

57.2

41.5

0.9

0.4

1.8

–

100.0

101.8

*1	Turnover is an Alternative Performance Measure presented before intra-group eliminations and consists of total premiums written (including co-insurers’ share) and Other revenue. Referto the glossary and note 14 for further information.
*2	Investment return is reported net of impairment on financial assets, in line with management reporting.
*3 £ 0.7 million of IFRS 16 interest expense (being the Group’s net share of IFRS 16 interest expense) included within Finance Costs in the income statement has been reallocated to individual
segments within expenses, in line with management segmental reporting.
*4 P rofit before tax above of £637.6 million is presented cumulative of profit before tax from continuing operations (£608.2 million) and discontinued operations (£29.4 million, including £3.1
million of central expenses).
*5 See note 13 for further detail on discontinued operations.
*6 E
 liminations are in respect of the intra-group trading between the Group’s comparison and UK and International Insurance entities. Of the £22.2 million elimination of other revenue andprofit commission, £22.0 million relates to discontinued operations, with the remaining £0.2 million relating to Compare.com.

Segment revenues
The UK and International 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 Discontinued operations (Comparison) revenues from transactions with other reportable segments is £7.6 million(2020: £22.0 million) which has been eliminated on consolidation, along with £0.2 million (2020: £0.2 million) of revenues from
Compare.com that are also eliminated on consolidation.
Revenues from external customers for products and services are consistent with the split of reportable segment revenues.

Company overview

Strategic report

Corporate governance

Financial statements

237

Additional information

Information about geographical locations
All material revenues from external customers, and net assets attributed to a foreign country, are shown within the International
Insurance reportable segment shown on the previous pages.

Segment assets and liabilities
The identifiable segment assets and liabilities at 31 December 2021 are as follows:
As at 31 December 2021
UK
Insurance£mInternational
Insurance£mAdmiral
Loans
£m

Other
£m

Discontinued
operations£m

Reportable segment assets

6,428.8

1,059.0

762.2

150.8

–

(635.0)

Reportable segment liabilities

5,342.8

934.8

629.4

429.3

–

(589.5)

6,746.8

Reportable segment net assets

1,086.0

124.2

132.8

(278.5)–(45.5)

1,019.0

Eliminations£m

Unallocated assets and liabilities

Total
£m

7,765.8

389.5

Consolidated net assets

1,408.5

Unallocated assets and liabilities consist of other central assets and liabilities, plus deferred and current corporation tax balances.
These assets and liabilities are not regularly reviewed by the Board of Directors in the reportable segment format.
Eliminations represent inter-segment funding, balances included in insurance and other receivables and deemed loan receivables
in respect of securitised loan receivables.
The segment assets and liabilities at 31 December 2020 are as follows:
As at 31 December 2020
UK
Insurance£mInternational
Insurance£mAdmiral
Loans
£m

Other
£m

Discontinued
operations£mEliminations
£m

Total
£m

Reportable segment assets

6,446.7

1,006.0

427.3

226.1

112.6

(702.9)7,515.8

Reportable segment liabilities

5,359.5

858.4

426.5

461.4

57.0

(654.2)

6,508.6

Reportable segment net assets

1,087.2

147.6

0.8

(235.3)55.6(48.7)

1,007.2

Unallocated assets and liabilities
Consolidated net assets

116.2
1,123.4

5. Premium, claims and profit commissions
5a. Accounting policies(i) Revenue – premiums
Premiums relating to insurance contracts are recognised as revenue, net of expected cancellations and insurance premium tax,
proportionally over the period of cover. Premiums with an inception date after the end of the period are held in the statement offinancial position as deferred revenue. Outstanding collections from policyholders related to unexpired risk are recognised withinpolicyholder receivables. A corresponding unearned premium provision is recognised (see note 5a(iii)).
In the UK, in 2020 the Group announced a Stay at Home premium refund for all existing motor insurance customers, which amounted
to £97.3 million net of insurance premium tax. The impact of this was to reduce gross insurance premium revenue (i.e. excluding coinsurer share of total premiums written) by £70.0m, and to reduce net insurance premium revenue by £21.1 million. The full impact of
the refund has been reflected in the prior period. See note 14d for further details.

238

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
5. Premium, claims and profit commissions continued(ii) Revenue – profit commission
Some of the co-insurance and reinsurance contracts under which motor premiums are shared or ceded, profit commission may beearned on a particular year of account, which is usually subject to performance criteria such as loss ratios and expense ratios. The
commission is dependent on the ultimate outcome of any year, with revenue being recognised when loss and expense ratios usedin the preparation of the financial statements move below a contractual threshold.
Profit commission receivable from reinsurance contracts is accounted for in line with IFRS 4, whereas profit commission receivablefrom co-insurance contracts is in line with IFRS 15. Further detail of the policy under IFRS 15 is set out in note 8.

(iii) Insurance contracts and reinsurance assets

Premiums
The proportion of premium receivable on in-force policies relating to unexpired risks is reported in insurance contract liabilities
and reinsurance assets as the unearned premium provision – gross and reinsurers’ share respectively.

ClaimsClaims and claims handling expenses are charged as incurred, based on the estimated direct and indirect costs of settling all
liabilities arising on events occurring up to the balance sheet date.
The provision for claims outstanding comprises provisions for the estimated cost of settling all claims incurred but unpaid at thebalance sheet date, whether reported or not. Anticipated reinsurance recoveries are disclosed separately as assets.
Whilst the Directors consider that the gross provisions for claims and the related reinsurance recoveries are fairly stated on thebasis of the information currently available to them, the ultimate liability will vary as a result of subsequent information andevents and may result in significant adjustments to the amounts provided.
Adjustments to the amounts of claims provisions established in prior years are reflected in the income statement for theperiod in which the adjustments are made and disclosed separately if material. The methods used, and the estimates made, arereviewed regularly.
A provision for unexpired risk is made where necessary for the estimated amount required over and above unearned premiums(net of deferred acquisition costs) to meet future claims and related expenses.

Co-insurance
The Group has entered into certain co-insurance contracts under which insurance risks are shared on a proportional basis, withthe co-insurer taking a specific percentage of premium written and being responsible for the same proportion of each claim. The
co-insurer therefore takes direct insurance risk from the policyholder and is directly responsible to the claimant for its proportionof the claim. As the contractual liability is several and not joint, neither the premiums nor claims relating to the co-insurance
are included in the income statement. Under the terms of these agreements, the co-insurers reimburse the Group for the same
proportionate share of the costs of acquiring and administering the business.

Reinsurance assets
Contracts entered into by the Group with reinsurers under which the Group is compensated for losses on the insurance contracts
issued by the Group are classified as reinsurance contracts. A contract is only accounted for as a reinsurance contract where there
is significant insurance risk transfer between the insured and the insurer.
Reinsurance assets are comprised of balances due from reinsurance companies for ceded insurance liabilities. Amounts
recoverable from reinsurers are estimated in a consistent manner with the outstanding claims provisions or settled claims
associated with the reinsured policies and in accordance with the relevant reinsurance contract.
The Group assesses its reinsurance assets for impairment on a regular basis, and in detail every six months. If there is objective
evidence that the asset is impaired, then the carrying value will be written down to its recoverable amount.
On commutation of reinsurance contracts, the reinsurer is discharged from all obligations relating to the contract. Reinsurance
assets and liabilities relating to the commuted contracts are settled in the period in which the commutation agreement is signed.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

239

31 December
2021£m

31 December
2020*1£m

5b. Net insurance premium revenue

Total insurance premiums including co-insurers’ share*2

3,098.7

2,957.2

Group gross premiums written excluding co-insurance

2,513.6

2,344.0

Outwards reinsurance premiums(1,643.0)(1,555.9)

Net insurance premiums written

870.6

788.1

Change in gross unearned premium provision(21.3)(78.7)

5.7

42.2

855.0

751.6

Change in reinsurers’ share of unearned premium provision
Net insurance premium revenue*1 See note 14d for the impact of the Stay at Home premium refund issued to UK Motor insurance customers on premiums written and net insurance premium revenue.
*2 Alternative Performance Measures – refer to the end of the report for definition and explanation, and to note 14a for 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 (‘AECS’) and Elephant Insurance Company. The vast majority of contracts are shortterm in duration, lasting for 10 or 12 months.

5c. Profit commission
31 December
2021£m

31 December
2020£m2016 and prior

65.7

63.3

2017

28.7

23.3

2018

18.6

5.5

2019

27.6

20.9

2020

150.0

11.7

Underwriting year (UK Motor only)––

Total UK Motor profit commission*1

2021

290.6

124.7

Total UK Household and International profit commission*1

13.9

9.3

Total profit commission

304.5

134.0

*1	From the total UK Motor profit commission of £290.6 million (2020: £ 124.7 million), £162.9 million (2020: £ 102.3 million) relates to co-insurance arrangements and £127.7 million(2020: £ 22.4 million) to reinsurance arrangements. The UK Household and International profit commission relates solely to reinsurance arrangements.

Sensitivities of the recognition of profit commission to movements in the booked loss ratio are shown in note 5d(ii).

5d. Reinsurance assets and insurance contract liabilities(i) Objectives, policies and procedures for the management of insurance risk
The Group’s primary business is the issuance of insurance contracts that transfer risk from policyholders to the Group and its
co‑insurance partners.
Insurance risk involves uncertainty over the occurrence, amount or timing of claims arising on insurance contracts issued. It is
primarily comprised of Reserve risk; the risk that the value of insurance liabilities established is insufficient to cover the ultimate
cost of claims incurred at the balance sheet date, and premium risk; the risk that the claims experience on business written but
not earned is higher than allowed for in the premiums charged to policyholders.
The Board of Directors is responsible for the management of insurance risk, although as mentioned in note 6, it has delegated thedetailed oversight of risk management to the Group Risk Committee.

240

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
5. Premium, claims and profit commissions continued
The Group also has a Group Reserving Committee as well as local Reserving Committees which are comprised of senior managers
within the finance, claims, pricing and actuarial functions in the respective businesses. The Reserving Committees primarily
recommends the approach for Insurance reserving but also reviews the systems and controls in place to support accurate
reserving and considers material reserving issues such as large bodily injury claims frequency and severity.
The Board implements certain policies to mitigate and control the level of insurance risk accepted by the Group. These include
pricing policies and claims management and administration processes, in addition to reserving policies and co- and reinsurance
arrangements as detailed below.

Reserve risk
Reserve risk is mitigated through a series of processes and controls. The key processes are as follows:• Regular management and internal actuarial review of individual and aggregate case claim reserves, including regular reportingof management information and exception reporting of significant movements;• Regular management and internal actuarial review of large claims, including claims settled or potentially settled by PPOs forwhich the uncertainty is increased by factors such as the lifetime of the claimant and movements in the indexation for the costof future care of the claimant;• Bi-annual external actuarial review of best estimate claims reserves using a variety of recognised actuarial techniques;• Internal actuarial analysis of reserve uncertainty through qualitative analysis, scenario testing and a range of stochastic
reserving techniques;• Ad hoc external reviews of reserving related processes and assumptions;• Use of a reserving methodology which informs management’s reserving decisions for the purposes of the Group’s financial
statements. As described in note 3, critical accounting judgements and estimates, the methodology determines that reserves
should be set above projected best estimate outcomes to allow for unforeseen adverse claims development.
As noted above, the Group shares a significant amount of the insurance business generated with external underwriters. As well as
these proportional arrangements, excess of loss reinsurance programmes are also purchased to protect the Group against verylarge individual claims and catastrophe losses.

Claims reserving
Admiral’s reserving policy (both within the claims function and in the financial statements) is initially to reserve conservatively,
above internal and independent projections of actuarial best estimates. This is designed to create a margin held in reserves toallow for unforeseen adverse development in open claims and typically results in Admiral making above industry average reserve
releases. Admiral’s booked claims reserves continue to include a significant margin above projected best estimates of ultimate
claims costs.
The margin held above ultimate outcomes in the financial statement reserves remains both significant and prudent. In relative
terms, it is modestly lower than that held at the end of 2020, reflecting the assessment of a slightly lower level of uncertainty inthe claims reserves than in recent periods.
As profit commission income is recognised in the income statement in line with loss ratios accounted for on Admiral’s own claims
reserves, the reserving policy also results in profit commission income being deferred and recognised over time.

Premium risk
As noted above, the Group defines premium risk as the risk that claims cost on business written but not yet earned is higher thanallowed for in the premiums charged to policyholders. This also includes catastrophe risk, the risk of incurring significant losses asa result of the occurrence of manmade catastrophe, or natural weather events.
Key processes and controls operating to mitigate premium risk are as follows:• Experienced and focused senior management and teams in relevant business areas including pricing and claims management;• A data-driven and analytical approach to regular monitoring of claims and underwriting performance;• Capability to identify and resolve underperformance promptly through changes to key performance drivers, inparticular pricing.

Company overview

Strategic report

Corporate governance

Financial statements

241

Additional information

In addition, as mentioned above, excess of loss reinsurance programmes are also purchased to protect the Group against very large
individual claims and catastrophe losses.
Other elements of insurance risk include reinsurance risk, the risk of placement of ineffective reinsurance arrangements, or the
economic risk of reduced availability of co-insurance and reinsurance arrangements in future periods.
The Group mitigates these risks by ensuring that it has a diverse range of financially secure reinsurance partners, including along‑term relationship with Munich Re and a number of other large reinsurers.

Concentration of insurance risk
The Directors do not believe there are significant concentrations of insurance risk. This is because, the risks are spread across alarge number of policies and a wide regional base. The International Car Insurance, UK Household, and UK Travel business further
contribute to the diversification of the Group’s insurance risk.
Information regarding reinsurance credit risk is provided in note 6j to the financial statements.

(ii) Sensitivity of recognised amounts to changes in assumptions

Underwriting year loss ratios – UK Car Insurance
The following table sets out the impact on equity and post-tax profit or loss at 31 December 2021 that would result from a 1%,
3% and 5% increase and decrease in the UK Car Insurance loss ratios used for each underwriting year for which material amounts
remain outstanding. This includes the impact on profit commission of the respective changes in booked loss ratios, which are also
shown separately below.
Underwriting year
Total impact on Income Statement (including profit commission)

2018

2019

2020

2021

Booked loss ratio

73%

72%

66%

90%

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

(15.8)(15.2)(16.6)(1.9)

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

(47.3)(45.4)(49.7)(5.7)

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

(76.9)(70.7)(82.0)(9.6)

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

15.8

15.2

16.6

1.9

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

47.8

46.0

49.7

5.7

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

80.4

77.4

82.8

9.6

As above, the impact is stated net of reinsurance and includes the change in net insurance claims along with the associated profit
commission movements that result from changes in loss ratios. The figures are stated net of tax at the current rate.
The following table sets out the impact on equity and post-tax profit or loss at 31 December 2021 that would result from a 1%,
3% and 5% increase and decrease in the UK Car Insurance loss ratios used for each underwriting year for which material amounts
remain outstanding, on profit commission only.
Underwriting year
Impact on profit commission only

2018

2019

2020

2021

Booked loss ratio

73%

72%

66%

90%

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

(4.0)

(5.9)

(12.8)–

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

(12.1)(17.3)(38.3)–

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

(18.2)(23.7)(62.9)–

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

4.0

5.9

12.8

–

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

12.6

17.9

38.3

–

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

21.6

30.5

63.8

–

242

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
5. Premium, claims and profit commissions continued
Sensitivities to key assumptions in the best estimate reserves have not been presented, given the significant and prudent margin
held above best estimate reserves and the co- and reinsurance arrangements that are also considered when determining the net
impact on the income statement. The underwriting year sensitivities presented above are considered to provide relevant andtransparent information on the changes to key inputs to the financial statements.

(iii) Analysis of recognised amounts
31 December
2021£m

31 December
2020£mClaims outstanding*1

3,045.0

2,919.9

Unearned premium provision

1,170.0

1,161.4

Total gross insurance liabilities

4,215.0

4,081.3

Claims outstanding

1,415.7

1,319.3

Unearned premium provision

760.4

763.9

2,176.1

2,083.2

1,629.3

1,600.6

Gross

Recoverable from reinsurers

Total reinsurers’ share of insurance liabilities
Net
Claims outstanding*2
Unearned premium provision

409.6

397.5

Total insurance liabilities – net

2,038.9

1,998.1*1 Gross claims outstanding at 31 December 2021 is presented before the deduction of salvage and subrogation recoveries totalling £87.6 million (2020: £70.5 million).
*2 Admiral typically commutes quota share reinsurance contracts in its UK Car Insurance business 24–36 months following the start of the underwriting year. After commutation, claims
outstanding from these contracts are included in Admiral’s net claims outstanding balance. Refer to note (v) below.

Company overview

Strategic report

Corporate governance

Financial statements

243

Additional information(iv) Analysis of claims incurred
The following tables illustrate the development of gross and net UK Insurance and International Insurance claims incurred forthe past ten financial periods, including the impact of re-estimation of claims provisions at the end of each financial year. The
first table shows actual gross claims incurred and the second shows actual net claims incurred. Figures are presented on anunderwriting year basis.
Financial year ended 31 December
Analysis of claims incurred(gross amounts)

2012
£m

2013
£m

2014
£m

2015
£m

2016
£m

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

Total
£m

(789.2)(249.6)

129.2

127.7

11.8

91.1

57.7

25.5

14.6

9.7

2013

–

(431.1)(325.5)

53.6

44.4

34.2

35.2

8.2

15.4

22.0

2014

–

–

(438.2)(347.1)

25.6

17.1

52.0

15.7

22.5

19.0

(633.4)

2015

–

–

–

(428.4)(411.2)

21.7

53.3

58.0

34.0

25.8

(646.8)

2016

–

–

–

–

(529.4)(463.7)

82.1

54.8

46.1

50.3

(759.8)

2017

–

–

–

–

–

(691.8)(615.0)

123.1

79.5

82.5

(1,021.7)

2018

–

–

–

–

–

–

(818.8)(546.9)

52.8

80.3

(1,232.6)

2019

–

–

–

–

–

–

–

(812.4)(476.2)89.8(1,198.8)

2020

–

–

–

–

–

–

–

–

(697.4)(519.5)(1,216.9)

2021

–

–

–

–

–

–

–

–

–

(881.7)(881.7)

UK Insurance gross claims incurred (789.2)(680.7)(634.5)(594.2)(858.8)(991.4) (1,153.5) (1,074.0)(908.7)(1,021.8)

Underwriting year (UK Insurance)
2012 and prior(543.6)

Underwriting year
(International Insurance)(112.2)(52.6)

11.5

7.0

10.6

4.4

4.8

3.1

(0.4)

–

2013

2012 and prior–(68.2)(57.8)

4.2

7.7

3.3

5.8

1.3

0.2

0.8

(102.7)

2014

–

–

(85.2)(65.5)

4.4

5.8

5.5

2.0

(0.4)

0.5

(132.9)

2015

–

–

–

(92.6)(101.6)

7.7

3.1

0.1

(0.1)

0.1

(183.3)

2016

–

–

–

–

(138.9)(125.3)

11.7

6.9

3.6

1.4

(240.6)

2017

–

–

–

–

–

(174.1)(147.3)

16.5

8.6

5.0

(291.3)

2018

–

–

–

–

–

–

(204.9)(165.7)20.1

6.2(344.3)

2019

–

–

–

–

–

–

–

(293.8)(141.2)13.3(421.7)

2020

–

–

–

–

–

–

–

–

(233.6)(160.6)(394.2)

2021

–

–

–

–

–

–

–

–

–

(285.7)(285.7)

International Insurance
gross claims incurred(112.2)(120.8)(131.5)(146.9)(217.8)(278.2)(321.3)(429.6)(343.2)(419.0)

Other gross claims incurred

(1.7)

(2.2)

(7.1)

(5.4)

(0.1)

(3.6)

(1.1)

–

–

–

Claims handling costs(26.0)(22.9)(21.4)(22.6)(27.1)(35.5)(37.9)(64.5)(66.7)(66.0)

Total gross claims incurred(929.1)(826.6)(794.5)(769.1) (1,103.8) (1,308.7) (1,513.8) (1,568.1) (1,318.6) (1,506.8)

244

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
5. Premium, claims and profit commissions continued
Financial year ended 31 December
Analysis of claims incurred(net amounts)

2012
£m

2013
£m

2014
£m

2015
£m

2016
£m

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

Total
£m

(344.3)(57.9)

129.2

126.8

41.8

96.7

50.5

22.1

11.6

10.1

2013

–

(184.4)(135.0)

38.4

49.3

36.4

34.7

4.4

13.7

19.3

(123.2)

2014

–

–

(187.0)(144.1)(16.4)

25.3

38.4

17.2

18.6

13.6

(234.4)

2015

–

–

–

(182.1)(162.0)

(2.6)

42.6

48.2

26.1

27.8

(202.0)

2016

–

–

–

–

(219.4)(180.7)

48.1

50.7

46.6

41.8

(212.9)

2017

–

–

–

–

–

(214.3)(182.9)

77.8

67.1

72.6

(179.7)

2018

–

–

–

–

–

–

(261.0)(165.2)

40.6

62.3

(323.3)

2019

–

–

–

–

–

–

–

(258.1)(142.5)56.9(343.7)

2020

–

–

–

–

–

–

–

–

(218.5)(169.1)(387.6)

2021

–

–

–

–

–

–

–

–

–

(321.2)(321.2)(344.3)(242.3)(192.8)(161.0)(306.7)(239.2)(229.6)(202.9)(136.7)(185.9)Underwriting year (UK Insurance)
2012 and prior

UK Insurance net claims incurred
Underwriting year
(International Insurance)(48.6)(22.5)

4.6

3.4

4.4

2.2

2.3

1.4

(0.1)

–

2013

2012 and prior–(26.6)(23.5)

1.7

4.8

0.9

3.0

0.7

0.1

0.3

(38.6)

2014––(31.6)(23.3)

1.8

1.8

2.2

0.8

(0.1)

0.2

(48.2)

2015

–

–

–

(33.4)(39.6)

5.1

1.3

1.3

–

0.1

(65.2)

2016

–

–

–

–

(47.9)(43.5)

6.3

2.4

1.5

0.6

(80.6)

2017

–

–

–

–

–

(60.7)(51.5)

5.5

3.2

2.3

(101.2)

2018

–

–

–

–

–

–

(71.2)(58.4)

7.8

2.7(119.1)

2019

–

–

–

–

–

–

–

(89.6)(50.1)

4.9(134.8)

2020

–

–

–

–

–

–

–

–

(95.4)(52.7)(148.1)2021(81.9)

–

–

–

–

–

–

–

–

–

(81.9)

International Insurance
net claims incurred(48.6)(49.1)(50.5)(51.6)(76.5)(94.2)(107.6)(135.9)(133.1)(123.5)

Other net claims incurred

(0.8)

(2.1)

(6.9)

(5.4)

(0.2)

(2.6)

(1.1)

–

–

–

Claims handling costs(10.8)

(9.5)

(8.9)

(9.4)

(11.2)(11.1)(11.8)(20.5)(23.4)(22.9)

Total net claims incurred(404.5)(303.0)(259.1)(227.4)(394.6)(347.1)(350.1)(359.3)(293.2)(332.3)

Company overview

Strategic report

Corporate governance

Financial statements

245

Additional information

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

2016

2017

2018

2019

2020

2021

2016

88%

84%

77%

73%

68%

64%

2017

–

87%

83%

75%

70%

65%

Underwriting year (UK Car only)

2018

–

–

92%

81%

78%

73%

2019

–

–

–

92%

76%

72%

2020

–

–

–

–

72%

66%

2021

–

–

–

–

–

90%

(v) Analysis of claims reserve releases
The following table analyses the impact of movements in prior year claims provisions on a gross and net basis. Figures arepresented on an underwriting year basis.
Financial year ended 31 December
Gross

2016
£m

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

135.7

214.0

245.1

141.8

116.2

112.5

Underwriting year (UK Motor insurance)
2016 and prior
2017

–

–

25.4

110.6

69.8

75.0

2018

–

–

–

83.2

57.3

64.1

2019

–

–

–

–

54.8

76.2

2020
Total gross release (UK Motor Insurance)
Total gross release (UK Household Insurance)
Total gross release (UK Travel Insurance)

–

–

–

–

–

52.9

135.7

214.0

270.5

335.6

298.1

380.7

–

1.6

4.6

8.3

9.2

6.0

–

–

–

–

–

2.2

Total gross release (International Insurance)

21.0

23.2

35.2

39.1

53.2

52.0

Total gross release

156.7

238.8

310.3

383.0

360.5

440.9

246

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
5. Premium, claims and profit commissions continued
Financial year ended 31 December
Net

2016
£m

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

75.4

165.9

213.0

141.8

116.2

112.5

–

–

8.0

75.8

67.7

72.4

Underwriting year (UK Motor Insurance)
2016 and prior
2017
2018

–

–

–

25.8

40.7

61.9

2019

–

–

–

–

17.0

54.6

2020

–

–

–

–

–

15.9

75.4

165.9

221.0

243.4

241.6

317.3

Total net release (UK Household Insurance)

Total net release (UK Motor Insurance)

–

0.5

1.4

2.5

2.8

2.5

Total net release (UK Travel Insurance)

–

–

–

–

–

2.2

Total net release (International Insurance)

9.9

9.5

13.5

14.4

18.6

16.4

Total net release

85.3

175.9

235.9

260.3

263.0

338.4

– Net releases on Admiral net share (UK Motor)

58.3

92.1

111.4

121.7

104.3

128.1

– Releases on commuted quota sharereinsurance contracts (UK Motor)

17.1

73.8

109.6

121.7

137.3

189.2

Total net release as above

75.4

165.9

221.0

243.4

241.6

317.3

Analysis of net releases on UK Motor Insurance:

Admiral typically commutes quota share reinsurance contracts in its UK Car Insurance business 24 or 36 months following thestart of the underwriting year. After commutation, any changes in claims costs on the commuted proportion of the business arereflected within claims costs and are separately analysed here. Releases on the share of business originally reinsured but sincecommuted are analysed by underwriting year as follows:
Financial year ended 31 December
2016
£m

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

17.1

73.8

109.6

80.2

67.9

66.3

2017

–

–

–

41.5

46.0

50.1

2018

–

–

–

–

23.4

43.5

2019

–

–

–

–

–

29.3

17.1

73.8

109.6

121.7

137.3

189.2

Underwriting year
2016 and priorTotal releases on commuted quota sharereinsurance contracts (UK motor)

Profit commission is analysed in note 5c.

Company overview

Strategic report

Corporate governance

Financial statements

247

Additional information(vi) Reconciliation of movement in claims provision
31 December 2021
Gross
£m

Reinsurance
£m

Net
£m

Claims provision at start of period

2,919.9(1,319.3)

1,600.6

Claims incurred (excluding claims handling costs and releases)

1,881.8(1,234.0)

647.8

Reserve releases(440.9)102.5(338.4)

–

318.4

318.4

Movement in claims provision due to commutation
Claims paid and other movements(1,315.8)

716.7(599.1)Claims provision at end of period

3,045.0(1,415.7)

1,629.3

31 December 2020
Gross
£m

Reinsurance
£m

Net
£m

Claims provision at start of period

2,899.4(1,354.2)

1,545.2

Claims incurred (excluding claims handling costs and releases)

1,612.4(1,079.6)

532.8

Reserve releases(360.5)97.5(263.0)Movement in claims provision due to commutation

–

352.7

352.7

Claims paid and other movements(1,231.4)

664.3(567.1)Claims provision at end of period

2,919.9(1,319.3)

1,600.6(vii) Reconciliation of movement in net unearned premium provision
31 December 2021
Gross
£m

Reinsurance
£m

Net
£m

1,161.4(763.9)397.5

Written in the period

2,513.6(1,643.0)

870.6

Earned in the period(2,492.3)

1,637.3(855.0)Translation differences(12.7)

9.2(3.5)

1,170.0(760.4)

409.6

Unearned premium provision at start of period

Unearned premium provision at end of period

31 December 2020
Gross
£m

Reinsurance
£m

Net
£m

Unearned premium provision at start of period

1,075.6(717.5)

358.1

Written in the period

2,344.0(1,555.9)

788.1

Earned in the period(2,265.3)

1,513.7(751.6)

7.1

(4.2)

2.9

1,161.4(763.9)397.5

Translation differences
Unearned premium provision at end of period

248

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs
6a. Accounting policies
i) Financial assets

Classification and measurement
The classification and subsequent measurement of the financial asset under IFRS 9 depends on:a. the Group’s business model for managing the financial assets; andb. the contractual cash flow characteristics of the financial asset.
Based on these factors, the financial asset is classified into one of the following categories:• Amortised cost – assets which are held in order to collect contractual cash flows and the contractual terms of the financial asset
give rise to cash flows which are solely payments of principal and interest on the principal amount outstanding (SPPI), where theasset is not designated as fair value through profit or loss (FVTPL).
For the Group, these include deposits with credit institutions, cash and cash equivalents, insurance receivables, trade and otherreceivables and loans and advances to customers.
The interest income generated from these assets is included in investment returns, with the exception of loans and advances tocustomers, where the interest receivable is recognised in interest income.
Impairment is recognised on these assets using the expected credit loss model.
• Fair value through other comprehensive income (FVOCI) – assets which are held both to collect contractual cash flows and to sell
the asset, where the contractual terms of the financial asset give rise to cash flows which are solely payments of principal andinterest on the principal amount outstanding (SPPI), where the asset is not designated as FVTPL.
For the Group, these assets include government and corporate debt, including private debt.
In addition, IFRS 9 allows an irrevocable election at initial recognition to designate equity investments at FVOCI that otherwise
would be held at FVTPL, provided these are not held for trading. The Group has made this election for certain equity investments.
Movements in the carrying amount are taken through OCI, with the exception of recognition of impairment gains or losses,
interest revenue and foreign exchange gains or losses which are recognised in profit or loss.
• Fair value through profit or loss (FVTPL) – assets which do not meet the criteria for amortised cost or FVOCI, or which aredesignated as FVTPL.
For the Group these assets include liquidity funds investing in short duration assets, other funds and derivative financial instruments.
A gain or loss on disposal of an investment measured at FVOCI is presented within investment return in the period in which it arises.

Impairment
The expected credit loss model is used to calculate any impairment to be recognised for all assets measured at amortised cost, as
well as financial investments measured at FVOCI. The general approach, which utilises the three-stage model, is used for Loans andadvances to customers (see note 7) whilst impairment for the remaining assets is measured using the simplified approach.

Derecognition
A financial asset is derecognised when the rights to receive cash flows from that asset have expired, or when the Group transfers
the asset and all the attached substantial risks and rewards relating to the asset to a third party.

ii) Financial liabilities

Classification and subsequent measurement
All financial liabilities are classified as subsequently measured at amortised cost using the effective interest method, except forderivatives that are classified at fair value through profit or loss and subsequently measured at fair value.
Movements in the amortised cost are recognised through the income statement.

Company overview

Strategic report

Corporate governance

Financial statements

249

Additional information

Derecognition
A financial liability is derecognised when the obligation under that liability is discharged, cancelled or expires.

iii) Investment return and finance costs
Investment return from financial assets comprises distributions as well as net realised and unrealised gains on financial assets
classified as FVTPL, interest income and net realised gains from financial assets classified as FVOCI, and interest income fromfinancial assets classified as amortised cost.
Finance costs from financial liabilities comprise interest expense on subordinated notes, loan backed securities, credit facilities
and lease liabilities, calculated using the effective interest rate method. The effective interest rate method calculates theamortised cost of a financial asset or liability (or group of financial assets or financial liabilities) and allocates the interest income
or expense over the expected life of the asset or liability.

6b. Investment return
31 December 2021£m

31 December 2020£m

At EIR

Other

Total

At EIR

Other

Total

–

3.6

3.6

–

8.5

8.5

40.0

2.3

42.3

32.5

5.0

37.5

0.6

–

0.6

1.4

–

1.4

–

–

–

–

–

–

Accrual for reinsurers’ share of investment return

–

(1.6)

(1.6)

–

12.9

12.9

Interest receivable on cash and cash equivalents*1

–

0.3

0.3

–

0.4

0.4

40.6

4.6

45.2

33.9

26.8

60.7

Investment return
On assets classified as FVTPL
On assets classified as FVOCI*1*3

On assets classified as amortised costs*1

Net unrealised losses
Unrealised losses on forward contracts

Total investment and interest income*2*1 Interest received during the year was £46.6 million (2020: £52.6 million).
*2 Total investment return excludes £2.7 million of intra-group interest (2020: £2.9 million).
*3 Realised gains on sales of debt securities classified as FVOCI are £2.3 million (2020: £5.0 million).

6c. Finance costs
31 December
2021£m

31 December
2020£mInterest payable on subordinated loan notes and other credit facilities*1*2

11.4

11.7

Interest payable on lease liabilities

2.3

2.6

Continuing operations

Interest recoverable from co-insurers and reinsurers

(1.8)

(2.0)

Total finance costs on continuing operations

11.9

12.3

*1 Interest paid during the year was £14.1 million (2020: £14.0 million).
*2 See note 7e for details of credit facilities.

Finance costs represent interest payable on the £200.0 million (2020: £200.0 million) subordinated notes and otherfinancial liabilities.
Interest payable on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16 and does not resultin a cash payment.

250

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs continued
6d. Expected credit losses

Note

31 December
2021£m

31 December
2020£m

Expected credit losses on financial investments

6f

2.6

7.8

Expected credit losses on Loans and advances to customers*1

7b

10.7

25.8

13.3

33.6

31 December
2021£m

31 December
2020£mTotal expense for expected credit losses*1 Includes £2.5 million (2020: £7.8 million) of write-offs, with total movement in the expected credit loss provision being £10.7 million (2020: £25.8 million).

See note 6f and note 7b for details of the impairment methodology.

6e. Financial assets and liabilities
The Group’s financial assets and liabilities can be analysed as follows:

Continuing operations

Financial investments measured at FVTPL
Money market and other funds

1,055.6

1,339.3

Derivative financial instruments

5.2–

Equity investments (designated FVTPL)

2.2–

1,063.0

1,339.3

2,408.6

1,912.7

Financial investments classified as FVOCI
Debt securities
Government gilts*1
Equity investments (designated FVOCI)

166.4

177.3

2,575.0

2,090.0

19.3

11.3

2,594.3

2,101.3

Financial assets measured at amortised cost
Deposits with credit institutions
Total financial investments

85.3

65.4

3,742.6

3,506.0

Other financial assets
Insurance receivables

956.6

977.9

Trade and other receivables (measured at amortised cost)

251.9

204.1

1,208.5

1,182.0

Insurance and other receivables
Loans and advances to customers (note 7)

556.8

359.8

Cash and cash equivalents

372.7

298.2

5,880.6

5,346.0

Subordinated notes

204.4

204.3

Loan backed securities

446.5

260.7

Other borrowings

20.0

20.0

Total financial assets from continuing operations
Financial liabilities

Derivative financial instruments
Subordinated and other financial liabilities
Trade and other payables*2
Lease liabilities
Total financial liabilities

–

3.6

670.9

488.6

1,960.0

1,991.2

105.3

122.8

2,736.2

2,602.6*1	Government gilts include UK government issued securities which are owned by the parent company and reviewed separately by the Group Investment Committee.
*2	Trade and other payables total balance of £1,960.0 million (2020: £1,991.2 million) above includes £1,528.4 million (2020: £1,502.6 million) in relation to tax and social security, deferredincome and reinsurer balances that are outside the scope of IFRS 9.

Company overview

Strategic report

Corporate governance

Financial statements

251

Additional information

The maturity profile of financial assets and liabilities under the scope of IFRS 4 and 9 at 31 December 2021 is as follows:
On demand£m< 1 year£m

Between 1 and2 years£m> 2 years£m

Money market funds and derivative financial instruments–

1,057.9

1.7

1.1

Deposits with credit institutions

–

75.3

10.0

–

Debt securities

–

713.2

304.5

1,390.8

Government gilts*1

–

–

57.9

108.4

Total financial investments–

1,846.4374.1

1,500.3

Trade and other receivables–

1,208.5––

Loans and advances to customers

–

171.3

174.7

210.8

Financial investments

Cash and cash equivalents

372.7

–

–

–

Total financial assets

372.7

3,226.2

548.8

1,711.1

Financial liabilities
Subordinated notes

–

11.0

11.0

211.0

Loan backed securities

–

170.2

126.7

172.0

–

20.0

–

–

Trade and other payables–

1,706.5––

Total financial liabilities–

1,907.7

137.7

383.0

Other borrowings*2*1	Government gilts include UK government issued securities which are owned by the parent company and reviewed separately by the Group Investment Committee.
*2	O f the £1,706.5 million held within trade and other payables in the maturity table, £1,274.9 million do not meet the definition of a financial liability under IFRS 9 but fall within the scope of
IFRS 4 hence are included in the above maturity profile.

The maturity profile of financial assets and liabilities under the scope of IFRS 4 and 9 at 31 December 2020 was as follows:
On demand£m< 1 year£m

Between 1 and2 years£m> 2 years£m

Money market funds and derivative financial instruments–

1,339.3––

Deposits with credit institutions

–

55.4

10.0

–

Debt securities

–

202.7

429.1

1,280.9

Government gilts

–

–

–

177.3

Total financial investments–

1,597.4

439.1

1,458.2

Trade and other receivables

–

204.1

–

–

Loans and advances to customers

–

116.9

125.6

117.3

Financial investments

Cash and cash equivalents

298.2

–

–

–

Total financial assets

298.2

1,918.4

564.7

1,575.5

Financial liabilities
Subordinated notes

–

11.0

11.0

222.0

Loan backed securities

–

102.7

83.8

86.1

–

20.3

–

–

Other borrowings
Trade and other payables–

1,751.4––

Total financial liabilities–

1,885.4

94.8

308.1

*1

*1	O f the £1,751.4 million held within trade and other payables, £1,262.8 million do not meet the definition of a financial liability under IFRS 9 but fall within the scope of IFRS 4 hence areincluded in the above maturity profile.

252

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs continued
The maturity profile of gross insurance liabilities at the end of 2021 is as follows:

Claims outstanding< 1 year£m

1–3 years£m> 3 years
£m

909.9

829.8

1,305.3

Unearned premium provision

1,170.0––

Total gross insurance liabilities

2,079.9829.8

1,305.3< 1 year£m

1–3 years£m> 3 years£m

The maturity profile of gross insurance liabilities at the end of 2020 was as follows:

Claims outstanding

874.3

816.3

1,229.3

Unearned premium provision

1,161.4––

Total gross insurance liabilities

2,035.7

816.3

1,229.3

Amortised
Cost*2
£m

Total
£m

6f. Financial investments
31 December 2021
FVTPL
£m

FVOCI
£m

AAA– AA

500.6

906.9

21.2

1,428.7A

401.0

1,007.9426.2

1,835.1

BBB

42.6

477.9

10.6

531.1

Sub BBB

22.0

71.7

–

93.7

Not rated*1

96.8

129.9

–

226.7

1,063.0

2,594.3

458.0

4,115.3

Total financial investments*1	£ 72.3 million of the unrated exposure stems from money market funds, which are rated AAA, but the underlying securities are not. The remaining unrated exposure is a mixture of private
debt (£127.5 million) and other holdings (£26.8 million).
*2 Investments held at amortised cost comprise deposits with credit institutions, and cash.

31 December 2020
FVTPL
£m

FVOCI
£m

Amortised
Cost*2
£m

Total
£m

AAA– AA

471.9

889.7

38.8

1,400.4

A

637.0

756.7

325.9

1,719.6

BBB

52.3

380.1

52.3

484.7

31.7

–

0.1

31.8

Sub BBBNot rated*1

Total financial investments

146.4

74.8

–

221.2

1,339.3

2,101.3

417.1

3,857.7*1	T he majority (£136.7 million) of the unrated exposure stems from money market funds, which are rated AAA, but the underlying securities are not. These specific exposures are repurchaseagreements. The remaining unrated exposure is a mixture of private debt (£70.3 million) and other holdings (£14.2 million).
*2 Investments held at amortised cost comprise deposits with credit institutions, and cash (including cash held by discontinued operations of £53.5 million).

Company overview

Strategic report

Corporate governance

Financial statements

253

Additional information

Classification and measurement
At initial recognition, the Group measures financial investments at fair value plus or minus, in the case of financial instruments notmeasured at fair value through profit and loss, directly attributable transaction costs. Transaction costs of financial instruments
measured at fair value through profit and loss are expensed to the profit and loss when incurred.
Money market funds and derivative financial instruments are measured at FVTPL. The regulatory capital within the Group is used
to invest in these instruments in addition to any surplus funds which may be held. Buying and selling activity occurs depending on
timing of different cash flows.
Debt securities are measured at FVOCI and as such fall under the scope of the ECL model. These assets are held to matchpolicyholder liabilities or interest on debt liabilities. If sold before maturity, gains or losses on these assets impact the P&L.
Private Equity investments have been designated as being reported through FVOCI due to these being long term, strategic
investments. Dividends are recognised in the Income Statement whilst a change in fair values will be reflected in OCI. Other funds
are measured at FVTPL.

Impairment
All financial investments held at FVOCI and at amortised cost have been assessed for impairment using the expected credit loss
model under IFRS 9. The assessment has been made based on the credit ratings of the entities and externally available credit
loss ratios.
The calculated impairment loss within the fair value is recognised through the Income Statement whilst fair value movements
are recognised in other comprehensive income. Deposits are held with well rated institutions and are held at book value, with
impairment calculated in a similar manner to debt securities.
All assets which require a calculation of impairment, are considered based on an external credit rating agency or an assessment
from Admiral’s external asset managers. The credit rating of all assets is regularly monitored. As at the year-end reporting date,the vast majority of financial assets are of investment grade and considered low risk under IFRS 9. These therefore remain withinstage 1 and a 12-month expected loss is used to calculate the impairment provision required.
Any assets downgraded below BBB are considered by the Group to have significantly increased in credit risk, and therefore arestage 2 under IFRS 9.
The impairment provision at 31 December 2021 is £11.3 million (£8.7 million at 31 December 2020). Given there is no materialchange in the credit quality or type of financial assets in the year and the movement in provision is immaterial, no further
disclosure has been made.

Fair value measurement
IFRS 13 requires assets and liabilities that are held at fair value to be classified according to a hierarchy which reflects theobservability of significant market inputs, based on three levels. The Group policy is to recognise transfer between fair value
hierarchy levels as at the end of the reporting period. There were no transfers between fair value hierarchy levels in the reporting
period (2020: none).
The table below shows how the financial assets held at fair value have been measured using the fair value hierarchy:
Represented*1
31 December 2021

Level one (quoted prices in active markets)

FVOCI
£m

FVTPL
£m

FVOCI
£m

1,060.8

2,449.5

1,339.3

2,026.5

–

–

–

–

2.2

144.8

–

74.8

1,063.0

2,594.3

1,339.3

2,101.3

Level two (use of observable inputs)
Level three (use of significant unobservable inputs)
Total

31 December 2020

FVTPL*2£m*1 £63.5 million has been reclassified between Level one and Level three as at 31 December 2020.
*2 Gains through the Income Statement are recognised within Investment return. See note 6b for further information.

254

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs continued
Fair value measurement using significant unobservable inputs (level three)
Level three investments consist of debt securities and equity investments. Debt securities are comprised primarily of investments
in debt funds which are valued at the proportion of the Group’s holding of the Net Asset Value (NAV) reported by the investment
vehicle. In addition, there is a small allocation of privately placed bonds which do not trade on active markets, these are valued
using discounted cash-flow models designed to appropriately reflect the credit and illiquidity of these instruments. The key
unobservable input across private debt securities is the discount rate which is based on the credit performance of the assets.
Equity securities are comprised of investments in Private Equity and Infrastructure Equity funds, which are valued at the
proportion of the Group’s holding of the NAV reported by the investment vehicle. These are based on several unobservable inputs
including market multiples and cash flow forecasts.
There were no significant inter-relationships between unobservable inputs that materially affect fair values.
The table below presents the movement in the period relating to financial instruments valued using a level three valuation:
EquitySecurities£m

Debt
Securities
£m

Total
£m

Balance as at 1 January 2021

11.3

63.5

74.8

Gains/(losses) recognised in IS

0.2

1.4

1.6

Level three investments

Gains/(losses) recognised in OCI

2.6

1.5

4.1

Purchases

8.5

80.9

89.4

Disposals(0.6)(21.8)(22.4)

Translation differences

(0.5)

–

(0.5)

Balance as at 31 December 2021

21.5

125.5

147.0

EquitySecurities£m

Debt
Securities
£m

Total
£m

Balance as at 1 January 2020

7.5

51.4

58.9

Gains/(losses) recognised in IS

–

1.5

1.5

Gains/(losses) recognised in OCI

0.5

(1.4)

(0.9)

Level three investments

Purchases

3.3

27.0

30.3

Disposals(0.7)(15.0)(15.7)

Translation differences

0.7

–

0.7

Balance as at 31 December 2020

11.3

63.5

74.8

31 December
2021£m

31 December
2020£mCash at bank and in hand*1

372.7

298.2

Total cash and cash equivalents

372.7

298.2

6g. Cash and cash equivalents

Continuing operations*1 Cash at bank and in hand includes £37.6 million (2020: £25.7 million) related to special purpose entities which is not available for use by the Group.

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term deposits with original
maturities of three months or less. All cash and cash equivalents are measured at amortised cost.
An assessment has been completed for impairment purposes in line with that set out in note 6f above. Given the short-term
duration of these assets and low risk of these assets, no impairment provision has been recognised.
For cash at bank and cash deposits and other receivables, the fair value approximates to the book value due to theirshort maturity.

Company overview

Strategic report

Corporate governance

Financial statements

255

Additional information

6h. Other assets
Insurance and other receivables
31 December
2021£m

31 December
2020£mInsurance receivables*1

956.6

977.9

Trade and other receivables

221.5

179.0

Prepayments and accrued income

30.4

25.1

1,208.5

1,182.0

Continuing operations

Total insurance and other receivables*1 Insurance receivables at 31 December 2021 include £87.6 million in respect of salvage and subrogation recoveries (2020: £70.5 million).

Insurance receivables
Insurance receivables are measured at historic cost. Given the short-term duration of these assets no bad debt provision has
been recognised.

Trade and other receivables
Classification. Trade and other receivables are measured at amortised cost, being made up of multiple types of receivable balances.
Impairment. Where a provision is required for these receivables, it is calculated in line with the simplified method for tradereceivables per IFRS 9, whereby lifetime expected credit losses are recognised irrelevant of the credit risk. In this case, theprovision is based on a combination of(i) aged debtor analysis,(ii) historic experience of write-offs for each receivable,(iii) any specific indicators of credit deterioration observed, and(iv) management judgement.
The level of provision is immaterial.
The amortised cost carrying amount of receivables is a reasonable approximation of fair value.

Contract balances
The following table provides information about receivables and contract assets from contracts with customers. Both balances areincluded in Trade and other receivables.
31 December
2021£m

31 December
2020£m

Receivables

16.8

13.8

Contract assets

23.8

23.7

Continuing operations

The contract asset relates to the Group’s right to consideration for work undertaken in the law companies on behalf of clients
which is ongoing or where the final fee has not yet been billed. The contract asset is transferred to trade receivables once the fee
has been billed.

256

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs continued
Significant changes in the contract asset balance during the period are as follows:
31 December
2021£mContract asset balance

At 1 January 2021

23.7

Revenue recognised

23.9

Transferred to trade receivables(24.9)

Write-backs

1.1

At 31 December 2021

23.8

The amount of revenue recognised in 2021 from performance obligations satisfied (or partially satisfied) in previous periods inrelation to the above contract balances is £nil (2020: £nil). See note 5c for details of profit commission recognised on previous
underwriting years.

6i. Financial and lease liabilities
31 December 2021

Subordinated
notes
£m

Loan backed
securities
£m

Other
borrowings
andderivatives£mFinancial liability at the start of the period

204.3

260.7

23.6

122.8

611.4

Interest payable per Income Statement

11.1

5.5

0.9

2.3

19.8

Cash flows(11.0)

180.3

(0.9)

(12.3)

156.1

Other foreign exchange and non-cash movements
Financial liability at the end of the periodLeaseliabilities
£m

Total
£m

–

–

(3.6)

(7.5)

(11.1)

204.4

446.5

20.0

105.3

776.2

Lease
liabilities
£m

Total
£m

31 December 2020

Subordinated
notes
£m

Loan backed
securities
£m

Other
borrowings
andderivatives£mFinancial liability at the start of the period

204.2

304.5

21.4

137.1

667.2

Interest payable per Income Statement

11.1

6.2

1.6

2.6

21.5

Cash flows(11.0)(50.0)(1.5)(12.4)(74.9)

–

–

2.1

(0.4)

1.7

Other foreign exchange and non-cash movements
Transferred to assets associated with disposal groupheld for saleFinancial liability at the end of the period

–

–

–

(4.1)

(4.1)

204.3

260.7

23.6

122.8

611.4

Subordinated notes
Financial liabilities are inclusive of £200.0 million subordinated notes issued on 25 July 2014 at a fixed rate of 5.5% with aredemption date of 25 July 2024.
The notes are unsecured subordinated obligations of the Group and rank pari passu without any preference among themselves.
In the event of a winding-up or bankruptcy, they are to be repaid only after the claims of all other creditors have been met.
There have been no defaults on any of the notes during the year. The Group has the option to defer interest payments on thenotes but to date has not exercised this right.
The fair value of subordinated notes (level one valuation based on quoted prices in active markets) at 31 December 2021 is£217.1 million (2020: £222.9 million).

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

257

Other borrowings
The Group holds a revolving credit facility of £200.0 million which expires in April 2023. The Group also holds a separate credit
facility of £20.0 million which expires in August 2022. £20.0 million was drawn under this agreement as at 31 December 2021 (2020:£20.0 million), which is shown within other borrowings in the table above.
The carrying value is a reasonable approximation of fair value.

Loan backed securities
Asset backed senior loan note facilities of £650.0 million have been established in relation to the Admiral Loans business (see note
3 for details of the accounting treatment of SPEs). As at the year end, £446.5 million (2020: £260.7 million) of these facilities had
been utilised.
The carrying value is a reasonable approximation of fair value.

Lease liabilities
The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may haveextension options. Lease terms are negotiated on an individual basis and contain 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.
For each lease, a right-of-use asset and corresponding lease liability is recognised at the date at which the leased asset becomes
available for use by the Group.
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 payments that are based on an index or a rate;• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that 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 have to pay to borrow the funds necessary to obtainan 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 principal and interest. A
finance cost is charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of thelease liability.
Whereby a change in lease term is identified, the lease liability is recalculated based on the present value of the remaining
lease payments.

6j. Objectives, policies and procedures for managing financial assets and liabilities
The Group’s activities expose it primarily to financial risks of credit, interest rate, liquidity and foreign exchange risk. The Board of
Directors has delegated the task of supervising risk management and internal control to the Group Risk Committee. There is alsoan Investment Committee that makes recommendations to the Group and subsidiary Boards on investment strategy, and oversees
the Group’s investments.
There are several key elements to the risk management environment throughout the Group. These are detailed in full in
the Corporate Governance Statement. Specific considerations for the risks arising from financial assets and liabilities aredetailed below.

Credit risk
The Group defines credit risk as the risk of financial loss if another party fails to perform its obligations. The key areas of exposure
to credit risk for the Group result through its reinsurance programme, investments, bank deposits, loans and advances tocustomers and policyholder receivables.
The Directors consider credit quality and counterparty exposure frequently and in significant detail. The Directors consider thatthe policies and procedures in place to manage credit exposure continue to be appropriate for the Group’s risk appetite and,during 2021 and historically, no material credit losses have been experienced by the Group.

258

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs continued
The impact on equity of a 100 basis point increase in credit spreads at the relevant valuation date, is as follows:

Reduction in equity

31 December
2021£m

31 December
2020
£m

71.0

53.8

Also see notes 7 and 6f for further information on credit risk in relation to loans and advances to customers, and financial
investments.

Financial investments and cash
Credit and counterparty risk is managed by the Group by investing in high quality money market funds, and setting suitableparameters for asset managers to adhere to when purchasing debt securities. Cash balances and deposits are placed only withhighly rated credit institutions. The detailed holdings are reviewed regularly by the Investment Committee.

Invested assets
As noted above, the Group primarily invests the following asset types:• Debt securities are held within segregated mandates and investment funds. This includes private debt. The guidelines of theinvestments ensure management of credit risk. Generally, the duration of the securities is relatively short and similar to theduration of the on book claims liabilities.
• Liquidity funds, which in turn invest in a mixture of short-dated fixed and variable rate securities, such as cash deposits,
certificates of deposits, floating rate notes and other commercial paper.
• Government bonds which are classified as FVOCI.
• Deposits with well rated institutions and are short in duration (one to five years). These are classified as held at amortised cost.
Therefore, neither the carrying value of the asset, nor the interest return will be impacted by fluctuations in interest rates.

Reinsurance assets
To mitigate the risk arising from exposure to reinsurers (in the form of reinsurance recoveries and profit commissions), theGroup only conducts business with companies of appropriate financial strength ratings. In addition, many reinsurance contracts
are operated on a funds withheld basis, which substantially reduces credit risk, as the Group retains the cash received frompolicyholders as collateral.

Loans and advances to customers
The risk appetite for the lending business is set to ensure that the risk taken is commensurate with the expected returns.
Management has defined an amber and a red loan loss limit, representing points at which action is required. These limits havebeen defined by management to reflect the business maturity, the business’ ambitions and the economic climate. Risk appetite isassessed at least annually, while the limits are continuously monitored.

Insurance assets
A further principal form of credit risk is in respect of amounts due from policyholders, largely due to the potential for default by
instalment payers. The impact of this is mitigated by the large customer base and low average level of balance recoverable. Thereis also mitigation by the operation of numerous high- and low-level controls in this area, including payment on policy acceptanceas opposed to inception and automated cancellation procedures for policies in default.
The amount of bad debt expense relating to policyholder debt charged to the income statement in 2021 and 2020 is insignificant.

Trade and other receivables
Trade receivables and other debtors are also subject to credit risk, although this is mitigated by a review of the credit worthinessof all counterparties prior to them being accepted.

Company overview

Strategic report

Corporate governance

Financial statements

259

Additional information

Other assets
All other assets are assessed as low credit risk under IFRS 9, with no significant amounts past due or impaired. No further disclosure
is provided due to this having an immaterial impact on the financial statements.
The Group’s credit risk exposure to assets with external ratings is as follows:

Rating31 December
2021£m

31 December
2020£mFinancial institutions – credit institutions

AAA

458.1

315.8

Financial institutions – credit institutions

AA

804.3

907.3

Financial institutions – credit institutions

A

1,835.1

1,719.6

Financial institutions – credit institutions

BBB and below

851.5

737.7

UK Government gilts

AA

166.3

177.3

Reinsurers

AA

685.5

666.1

Reinsurers

A

210.3

144.1

Reinsurers

BBB and below

5.4

10.2

The Group’s maximum exposure to credit risk at 31 December 2021 is £5,675.4 million (2020: £5,125.7 million), being the carrying
value of financial investments and cash, the carrying value of loans and advances to customers, and the excess of reinsurance
assets over amounts owed to reinsurers under funds withheld arrangements. The Group does not use credit derivatives or similar
instruments to mitigate exposure.
There were no further significant financial assets that were past due at the close of either 2021 or 2020.

Interest rate risk
The Group considers interest rate risk to be the risk that unfavourable movements in interest rates could adversely impact on thecapital values of financial assets and liabilities.
The impact on equity of a 50 basis point increase in interest rates at the relevant valuation date, is as follows:

Reduction in equity

31 December
2021£m

31 December
2020
£m

51.0

47.1

The impact reflects movements in the Group’s asset portfolio and is stated before any offsetting movements in liabilities. The
Group’s solvency II balance sheet, which includes technical provisions discounted using Bank of England and EIOPA yield curves
reflects a low sensitivity to interest rates as a result of well-matched durations of assets and liabilities.

Loans and advances to customers
The Group’s loan portfolio consists of fixed rate loans, which are funded at a floating variable rate. The Group has interest rate
swap arrangements, the risk management objective of which is to eliminate the majority of the interest rate risk variability in the
cash flows payable on the loan backed securities. This relates to the difference between fixed rate on loans written and floating
variable rate on funding.

Hedge accounting
Hedge accounting is applied when the criteria specified in IFRS 9 are met. In line with IFRS 9, the gain or loss on the hedged position
as at the balance sheet date is recognised through other comprehensive income.
This results in a hedging reserve in relation to the interest rate swap.
For the Group’s loan backed securities and related interest rate swaps, (which are bilateral agreements) the Group moved therelationships with the counterparties to amend the reference benchmark interest rate from GBP LIBOR to SONIA. This wascompleted on 15 June 2020.

260

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
6. Investment income and costs continued
Financial liabilities
The Group also holds a financial liability in the form of £200.0 million of subordinated notes with a ten year maturity and fixed rate
coupon of 5.5%. This liability is valued at amortised cost and therefore neither the carrying value of the deposits, nor the interest
payable, will be impacted by fluctuations in interest rates.

Other financial assets and liabilities
There is no significant exposure to interest rate risk for other financial assets and liabilities due to these being held at
amortised cost.

Liquidity risk
Liquidity risk is defined as the risk that the Group does not have sufficient available financial resources to enable it to meet its
obligations as they fall due, or can only secure them at excessive cost.
The Group holds appropriate liquidity buffers at the parent company and subsidiary levels.
The Group is strongly cash-generative due to the large proportion of revenue arising from non-underwriting activity. Further, as
noted above, a significant portion of insurance funds are invested in investment funds with same day liquidity, meaning that alarge proportion of the Group’s cash and investments are immediately available.
A breakdown of the Group’s other borrowings, trade payables and other payables is shown in note 11.
The subordinated notes have a maturity date of July 2024, whereas all trade and other payables will mature within three to
six months of the balance sheet date. (Refer to the maturity profile at the start of this note for further detail.)
In practice, the Group’s Directors expect actual cash flows to be consistent with this maturity profile except for amounts owed
to co-insurers and reinsurers. Of the total amounts owed to co-insurers and reinsurers of £1,436.8 million (2020: £1,503.7 million),£1,169.8 million (2020: £1,175.1 million) is held under funds withheld arrangements and therefore not expected to be settled
within 12 months.
A maturity analysis for insurance contract liabilities is included in note 6e. The maturity profile for financial assets is included at
the start of this note.
The Group’s Directors believe that the cash flows arising from these assets will be consistent with this profile. Liquidity risk is not,therefore, considered to be significant.

Foreign exchange risk
Foreign exchange risk arises from unfavourable movements in foreign exchange rates that could adversely impact the valuation ofoverseas assets and liabilities.
The Group is exposed to foreign exchange risk through its operations overseas. Although the relative size of the international
operations means that the risks are relatively small, increasingly volatile foreign exchange rates could result in larger potential
gains or losses. Assets held to fund insurance liabilities are held in the currency of the liabilities; however, surplus assets held as
regulatory capital in foreign currencies remain exposed.
The Group’s exposure to net assets and profits in currencies other than the reporting currency is immaterial other thanfor US dollars and euros. The Group’s exposure to net assets held in dollars at the balance sheet date was £21.3 million(2020: £31.5 million); the exposure to net assets held in euros (for both continued and discontinued operations) was £102.8 million(2020: £134.7 million).
If the sterling exchange rates against US dollars had strengthened/weakened by 10%, the Group’s profit before tax for the year
would increase/decrease by £1.9 million (2020: £0.9 million).
If the sterling rates with euros had strengthened/weakened by 10%, the Group’s profit before tax for the year would increase/decrease by £1.1 million (2020: £1.7 million).

Company overview

Strategic report

Corporate governance

Financial statements

261

Additional information

7. Loans and advances to customers
7a. Accounting policies
Loans and advances to customers relate to the Admiral Loans business, consisting of unsecured personal loans and car
finance products.

Classification
Loans and advances to customers are measured at amortised cost. This is because assets are held in order to collect contractual
cash flows and the contractual terms of the financial asset demand cash inflows which are solely payments of principal andinterest on the principal amount outstanding.

Interest income and expense
Interest income received in relation to loans and advances to customers is calculated using the effective interest method which
allocates interest, direct and incremental fees and costs over the expected lives of the assets and liabilities. There has been nochange in recognition of interest income from the comparative period.
Interest expense is calculated using the process appropriate to each source of funding, which is not linked to individual accounts.

Finance leases
Included within loans and advances to customers are personal contract purchase and hire purchase arrangements which areclassified as finance leases under IFRS 16. A receivable equal to the net investment in the lease has been recognised. The net
investment is equal to the gross investment in the lease discounted at the rate implicit in the lease.
Lease interest income is recognised within interest income in the income statement over the term of the lease using the effective
interest rate method.
The title to the underlying vehicle remains with the Group until the lessee has made all contractual payments, at which point
ownership is transferred to the lessee. In the event of breach of contract, such as non-payment, the vehicle itself acts as collateral
for the finance lease, becoming available for repossession in most cases.
Some of the ways in which the Group maintains its rights to the vehicle, and thus manages the risk of loss associated with thefinance lease, include:• The Group does not enter into any finance leases with a maximum loan-to-value limit, reducing the risk of shortfall on
termination of the contract.
• The Group requires the lessee to insure the underlying vehicle at all times, reducing the risk of non-recovery if the asset is stolen
or destroyed.
• The estimated future value of each vehicle, which is sourced externally, is considered in the pricing of the lease contracts toprovide protection against deterioration in that value.

7b. Loans and advances to customers
31 December
2021£m

31 December
2020£mLoans and advances to customers – gross carrying amount

607.0

401.8

Loans and advances to customers – provision(50.2)(42.0)

Total loans and advances to customers net of provision

556.8

359.8

31 December
2021£m

31 December
2020£mUnsecured personal loans

566.9

371.3

Finance leases

40.1

30.5

Total loans and advances to customers, gross

607.0

401.8

Loans and advances to customers are comprised of the following:

262

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
7. Loans and advances to customers continued
Fair value measurement
The loans and advances are recognised at fair value at the point of origination and then subsequently on an amortised cost basis.
This is deemed a reasonable approximation of fair value.

Expected credit losses
The expected credit loss model is a three-stage model based on forward looking information regarding changes in thecredit quality since origination. Credit risk is measured using a Probability of Default (PD), Exposure at Default (EAD)and Loss Given Default (LGD) defined as follows:• Probability of Default (PD): The likelihood of an account defaulting; calibrated through analysis of historic customer behaviour.
Where customers have already met the definition of default this is 100%. For customers that are not in default the PD isdetermined through analysis of historic data at a credit grade level. A behavioural PD is then used after two months based on
observed default rates by month on book and risk grade.
• Exposure at Default (EAD): The amount of balance at the time of default. For loans that are in arrears the EAD is taken as thecurrent balance plus any expected interest arrears. For up-to-date loans the EAD is calculated as the expected balance threemonths prior to each period, plus three months of interest arrears to account for the time it takes to default following falling
into arrears.
• Loss Given Default (LGD): The amount of the asset not recovered following a borrower’s default, determined through analysis ofhistoric recovery performance.
The PD is applied to the EAD to calculate the expected loss excluding recoveries. The LGD is then applied to this loss to calculate
the total expected loss including recoveries. A forward-looking provision is also calculated, as set out later in this note.
Loan assets are segmented into three stages of credit impairment:• Stage 1 – no significant increase in credit risk of the financial asset since inception.
• Stage 2 – significant increase in credit risk of the financial asset since inception.
• Stage 3 – financial asset is credit impaired.
For assets in stage 1, the allowance is calculated as the expected credit losses from events within 12 months after the reporting
date. For assets in stages 2 and 3 the allowance is calculated as the expected credit loss from events in the remaining lifetime ofeach asset.

Enhancements to Expected Credit Loss methodology
There have been several enhancements to the provisioning methodology since the 31 December 2020 year end position. The key
changes include:• The definition of default now includes loans 3 cycles in arrears (previously 4 cycles or more).
• The Significant Increase in Credit Risk (SICR) criteria and forward looking probability of default modelling have been updated
utilising enhanced analysis.

Significant increase in credit risk (SICR) (stage 2)
As explained above, stage 1 assets have an ECL allowing for losses in the next 12 months, stage 2 or 3 assets have an ECL allowing
for losses over the remaining lifetime of the contract. An asset moves to stage 2 when its credit risk has increased significantly
since initial recognition. IFRS 9 does not prescribe a definition of significant increase in credit risk but does include a rebuttablepresumption that this does occur for loan assets which are 30 days past due (which the Group does not rebut).
The Group has deemed a significant increase in credit risk to have occurred where:• the loan is 1 to 2 loan payments in arrears, or• the behavioural PD has moved outside a specified threshold from the application PD.

Company overview

Strategic report

Corporate governance

Financial statements

263

Additional information

Credit impaired (stage 3)
The Group does not rebut the presumption within IFRS 9 that default has occurred when an exposure is greater than 90 days
past due, which is consistent with a customer being three or more payments in arrears. In addition, a loan is deemed to be credit
impaired where:• there is an Individual Voluntary Arrangement (IVA) agreement confirmed or proposed, or;• customer has started or progressed bankruptcy action, or;• a repayment plan is in place, or;• customer is deceased.

Judgements required – Post Model Adjustments (PMAs)
As at 31 December 2021, the expected credit loss allowance included PMAs totalling £9.1m.

Post Model Adjustment

31 December
2021£m

31 December
2020£mModel Performance

2.0

4.9

Inflation

2.5–

Economic Scenarios

4.6

–

9.1

4.9

PMAs are calculated using management judgement and analysis. The key categories of PMAs are as follows:

Model Performance

Inflation
The impairment models operated are currently not highly sensitive to inflation expectations. Inflation is anticipated to risesignificantly in 2022 and a resulting increase in cost of living could alter the ability of some customers to make their loan
payments. A PMA has been held to acknowledge this.

Economic Scenarios
Throughout 2020 and 2021, large fluctuations in forecasts for unemployment have been observed as forecasters seek toanticipate the unprecedented impact of Covid on the economy. As a result, management judged to hold a PMA equivalent to a 1%
increase in the scenario weighted unemployment rate to account for uncertainty in the forecasts.

Write off policy
Loans are written off where there is no reasonable expectation of recovery. The Group’s policy is to write off balances to theirestimated net realisable value. Write-offs are actioned on a case-by-case basis taking into account the operational position andthe collections strategy.

Forward-looking information
Under IFRS 9 the provision must reflect an unbiased and probability-weighted amount that is determined by evaluating a range ofpossible outcomes. The means by which the Group has determined this is to run scenario analyses.
Management judgement has been used to define the weighting and severity of the different scenarios based on available data.
The key economic driver of credit losses from the scenarios is the likelihood of a customer entering hardship throughunemployment. Unemployment forecasts include a risk grade split of PD based on the correlation between grade-level default
rates observed relative to the change in unemployment rates in the previous downturn, adjusted for the unemployment forecast
expected in the current economic environment.
The scenario weighting assumptions used are detailed below, along with the unemployment rate assumed in each scenario at
31 December 2021.

264

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
7. Loans and advances to customers continued
31 December 2021
Scenario peak
Unemployment rate

31 December
2021
Weighting

31 December
2020
Weighting

40%

Base

4.3%

40%

Upturn

4.0%

10%

5%

Downturn

6.3%

30%

25%

Severe

6.6%

20%

30%

Whilst the macroeconomic environment outlook has improved since the prior year, there is a still a great deal of uncertainty andvolatility within economic forecasts. The weightings have been updated to reflect this more positive outlook, with the uncertainty
element incorporated into post model adjustments. The adjustments are not typically assessed under each distinct economic
scenario used to generate ECL, but instead are applied on the basis of final modelled ECL which reflects the probability weighted
view of all scenarios.

Sensitivities to key areas of estimation uncertainty
The key areas of estimation uncertainty identified, as per note 3 to the financial statements, are in the PD and the forward-looking
scenarios.
31 December
2021
Weighting

31 December
2021
Sensitivity£m

31 December
2020
Weighting

31 December
2020
Sensitivity
£m

Base

40%

(2.5)

40%

(2.0)

Upturn

10%

(9.7)

5%

(4.9)

Downturn

30%

6.9

25%

0.3

Severe

20%

11.1

30%

3.2

The sensitivities in the above tables show the variance to ECL that would be expected if the given scenario unfolded rather than
the weighted position the provision is based on. At 31 December 2021 the implied weighted peak unemployment rate is 5.8%: thetable shows that in a downturn scenario with a 6.3% peak unemployment rate the provision would increase by £6.9 million, whilst the
upturn would reduce the provision by £9.7 million, base case reduce by £2.5 million and severe increase the provision by £11.1 million.
Stage 1 assets represent 84% of the total loan assets; a 0.1% increase in the stage 1 PD, i.e. from 2.4% to 2.5% would result in a
£0.6 million increase in ECL.
The impact of the coronavirus pandemic and the various support measures that were put in place have resulted in an economic
environment that is skewed from historical economic conditions – particularly around levels of unemployment and inflation. As aresult, there is a greater need for management judgements to be applied alongside the use of models, therefore at 31 December
2021 post model overlays resulted in additional ECL allowances totalling £9.1 million (2020: £4.9 million). This comprises
judgements added due to uncertainty in economic forecasts, cohorts of customers exposed to inflation through lower levels ofdisposable income, and customers deemed to be at higher risk of unemployment.

Amounts arising from ECL: loans and advances to customers
The Group is exposed to credit risk from the Admiral Loans business.
The following table sets out information about the credit quality of the loans and advances to customers measured at amortised
cost. Credit grades are used to segment customers by apparent credit risk at the time of acquisition. Higher grades are the lowest
credit risk with each subsequent grade increasing in expected credit risk. The Group does not have any purchased or originatedcredit impaired assets. These tables are inclusive of the finance lease assets which are held by the Group, further analysis of thesebalances can be found in note 7c.
All probability of default figures included in this paragraph allow for forward-looking information, i.e. the PDs are a weighted
average from the economic scenarios considered. The average PD for assets in stage 1 is 2.4% (2020: 4.8%) reflecting the
expectation of defaults within 12 months of the reporting date. The average PD for assets in stage 2 is 30.0% (2020: 67.0%)
reflecting expected losses over the remaining life of the assets. The PD for assets in stage 3 is 100% (2020: 100%) as these assets
are deemed to have defaulted.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

265

Stage 112- month ECL£mStage 2Lifetime ECL£mStage 3
Lifetime ECL£m

31 December
2021
Total
£m

31 December
2020
Total
£m

Higher

350.1

55.0

–

405.1

269.6

Medium

130.3

11.6

–

141.9

94.1

Lower

30.2

1.8

–

32.0

17.0

–

–

28.0

28.0

21.1

Gross carrying amount

510.6

68.4

28.0

607.0

401.8

Expected credit
loss allowance(13.7)(12.7)(23.5)(49.9)(41.5)

Credit Grade*1

Credit impaired

Other loss allowance*

(0.3)

–

–

(0.3)

(0.5)

496.6

55.7

4.5

556.8

359.8

2

Carrying amount*1 Credit grade is the internal credit banding given to a customer at origination. This is based on external credit rating information.
*2 Other loss allowance covers losses due to a reduction in current or future vehicle value or costs associated with recovery and sale of vehicles.

The following tables reconcile the opening and closing gross carrying amount and expected credit loss allowance.

2021

Gross carrying amount as at 1 January 2021

Stage 112- month ECL£mStage 2Lifetime ECL£mStage 3
Lifetime ECL
£m

Total
£m

343.2

37.5

21.1

401.8

(42.2)

42.2––

Transfers
Transfers from stage 1 to stage 2
Transfers from stage 1 to stage 3

(4.7)

–

4.7

–

Transfers from stage 2 to stage 1

17.6(17.6)––

Transfers from stage 2 to stage 3

–

(5.6)

5.6

–

Transfers from stage 3 to stage 1

0.4

–

(0.4)

–

Transfers from stage 3 to stage 2

–

0.3

(0.3)

–

(163.2)(22.5)(2.9)(188.6)

Principal redemption payments

–

–

(2.4)

(2.4)

New financial assets originated or purchased

Write-offs

359.5

34.1

2.6

396.2

Gross carrying amount as at 31 December 2021

510.6

68.4

28.0

607.0

Stage 112- month ECL£mStage 2Lifetime ECL£mStage 3
Lifetime ECL
£m

Total
£m

456.2

6.5

16.4

479.1

2020

Gross carrying amount as at 1 January 2020
Transfers
Transfers from stage 1 to stage 2(26.5)

26.5––

Transfers from stage 1 to stage 3

(9.5)

–

9.5

–

Transfers from stage 2 to stage 1

0.8

(0.8)

–

–

Transfers from stage 2 to stage 3

–

(2.6)

2.6

–

Transfers from stage 3 to stage 1

–

–

–

–

Transfers from stage 3 to stage 2

–

–

–

–

(180.0)

(1.3)

(1.6)

(182.9)

–

–

(7.7)

(7.7)

New financial assets originated or purchased

102.2

9.2

1.9

113.3

Gross carrying amount as at 31 December 2020

343.2

37.5

21.1

401.8

Principal redemption payments
Write-offs266

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
7. Loans and advances to customers continued
Stage 112- month ECL£mStage 2Lifetime ECL£mStage 3
Lifetime ECL
£m

Total

10.9

12.7

17.9

41.5

Transfers from stage 1 to stage 2

(1.3)

2.3

–

1.0

Transfers from stage 1 to stage 3

(0.4)

–

0.6

0.2

Transfers from stage 2 to stage 1

3.1

(5.1)

–

(2.0)

Transfers from stage 3 to stage 1

0.1

–

(0.2)

(0.1)

2021

Expected credit loss allowance as at 1 January 2021
Movements with a profit and loss impact
Transfers

Changes in PDs/LGDs/EADs

(8.8)

(4.8)

5.6

(8.0)

New financial assets originated or purchased

10.1

7.6

2.0

19.7

Total net profit and loss charge in the period

2.8

–

8.0

10.8

–

–

(2.4)

(2.4)

13.7

12.7

23.5

49.9

Transfers from stage 2 to stage 3

–

(4.0)

4.0

–

Transfers from stage 3 to stage 2

–

0.1

(0.1)

–

Stage 112- month ECL£mStage 2Lifetime ECL£mStage 3
Lifetime ECL
£m

Total

5.6

3.4

14.4

23.4

Transfers from stage 1 to stage 2

(0.7)

1.1

–

0.4

Transfers from stage 1 to stage 3

(0.2)

–

0.4

0.2

Transfers from stage 2 to stage 1

0.2

(0.4)

–

(0.2)

Transfers from stage 3 to stage 1

0.1

–

(0.1)

–

Changes in PDs/LGDs/EADs

2.4

5.2

9.3

16.9

New financial assets originated or purchased

3.5

3.4

1.6

8.5

Total net profit and loss charge in the period

5.3

9.3

11.2

25.8

–

–

(7.7)

(7.7)

10.9

12.7

17.9

41.5

Transfers from stage 2 to stage 3

–

(2.4)

2.4

–

Transfers from stage 3 to stage 2

–

0.1

(0.1)

–

Write-offs
Expected credit loss allowance
as at 31 December 2021
Other movements with no profit and loss impact
Transfers

2020

Expected credit loss allowance as at 1 January 2020
Movements with a profit and loss impact
Transfers

Write-offs
Expected credit loss allowance as at
31 December 2020
Other movements with no profit and loss impact
Transfers

Company overview

Strategic report

Corporate governance

Financial statements

267

Additional information

7c. Finance lease receivables
Loans and advances to customers include the following finance leases. The Group is the lessor for leases of cars.
31 December
2021£m

31 December
2020£mLess than 1 year

11.7

8.4

Between 1 to 5 years

33.3

24.9

Gross investment in finance leases, receivable

More than 5 years

–

–

45.0

33.3

Unearned finance income

(5.2)

(3.3)

Net investment in lease receivables

39.8

30.0

Less impairment allowance

(1.3)

(0.8)

38.5

29.2

Net investment in finance leases, receivable
Less than 1 year

9.2

6.7

Between 1 to 5 years

30.6

23.3

More than 5 years

–

–

39.8

30.0

The net investment in finance leases shown above is net of the unguaranteed residual value of £0.3 million (2020: £0.5 million).

7d. Interest income

From loans and advances to customers
From finance leases

31 December
2021£m

31 December
2020
£m

34.0

34.8

2.6

2.0

36.6

36.8

Interest income receivable is recognised in the income statement using the effective interest method, which calculates theamortised cost of the financial asset and allocates the interest income over the expected product life.

268

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
7. Loans and advances to customers continued
7e. Interest expense
31 December
2021£m

31 December
2020£mInterest payable on loan backed securities

5.5

6.2

Interest payable on other credit facilities

0.6

1.0

Total interest expense*

6.1

7.2

1

*1 Interest paid in total during the year was £6.1 million (2020: £5.2 million).

Interest expense represents the interest payable on loan backed securities through SPEs of £650.0 million (2020: £400.0 million) of
which £446.5 million was drawn down at 31 December 2021 (2020: £260.7 million), and funding specifically allocated to the Admiral
Loans business, in the form of credit facilities of £120.0 million (2020: £120.0 million) of which £20.0 million was drawn down at
31 December 2021 (2020: £20.0 million). Admiral Group also has a further credit facility of £100.0 million (2020: £100.0 million) of
which £nil was drawn down at 31 December 2021 (2020: £nil).

8. Other revenue
8a. Accounting policy(i) Contribution from additional products and fees and other revenue
Revenue is credited to the income statement over the period matching the Group’s obligations to provide services. Where theGroup has no remaining obligations, the revenue is recognised immediately. An allowance is made for expected cancellations
where the customer may be entitled to a refund of amounts charged.
Commission from the provision of insurance intermediary services is credited to revenue on the sale of the underlying
insurance policy.
There has been no change in revenue recognition from the comparative period.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

269(ii) Nature of goods and services
The following is a description of the principal activities within the scope of IFRS 15 from which the Group generates its
other revenue.
Products and services

Nature, timing of satisfaction of performance obligations and significant payment terms

Fee and commission revenue:
Commission on underlying
products

The performance obligation is the provision of insurance intermediary services, at which point the performanceobligation is met. Revenue is therefore recognised at a point in time. Payment of the commission is due within
30 days of the period close.

Fee and commission revenue:
Administration fees

The performance obligation is the change requested being made to the underlying policy, at which point theperformance obligation is met.
Revenue is therefore recognised at a point in time and is collected immediately or in line with direct debit
instalments.

Revenue from law firm

The performance obligation is the pursuit of the compensation from the at fault party’s insurer on behalf of thecustomer. Once the case is settled the performance obligation is fully satisfied. Revenue is therefore recognisedover time using the expected value method. This method values revenue by multiplying hours incurred on open
cases by a 12-month realisable rate. The realisable rate is a probability weighted transaction price based on
settled cases. The expected value method therefore results in revenue recognised being constrained to that
where there is a high probability of no significant reversal.
Revenue is recognised over time because as the Group has an enforceable right to payment for performancecompleted to date and the work performed to date has no alternative use to the Group.
A contract asset is recognised equal to the work performed up to the balance sheet date but not yet billed.
Refer to note 6g for further detail of this balance.
Payment is due within 28 days of invoice.

Profit commission from ­co-insurers

The Group’s profit commission revenue falling within the scope of IFRS 15 Revenue from Contracts with Customers
relates to a contractual arrangement between the Group’s insurance intermediary EUI Limited, and an external
co-insurer (Great Lakes) which underwrites a share of the UK Car Insurance business generated by EUI Limited.
The variable consideration, being the profit commission recognised in respect of each underwriting year at
the end of each reporting period, is recognised at a point in time, and calculated based on a number of detailed
inputs, the most material of which are as follows:• Premiums, defined as gross premiums ceded including any instalment income, less reinsurance premium (forexcess of loss reinsurance).
• Insurance expenses incurred.
• Claims ratio (more typically referred to as a loss ratio).
Whilst the premiums and insurance expenses related to an underwriting year are typically fixed at theconclusion of each underwriting year and are not subject to judgement, the claims ratio is calculated from theunderwriting year loss ratios that result from the setting of claims reserves in the financial statements meaning
it is subject to inherent uncertainty. As stated in note 5d, Admiral’s reserving policy is initially to reserve
conservatively, above internal and independent projections of actuarial best estimates. This is designed tocreate a margin held in reserves to allow for unforeseen adverse development in open claims.
Admiral’s financial statement loss ratios, used in the calculation of profit commission income, continue toinclude a significant margin above projected best estimates of ultimate claims costs. It is this margin for
uncertainty, included in the financial statement loss ratios, which creates the constraint over the recognition of
the variable consideration, as using the booked loss ratio rather than the actuarial best estimate constrains the
profit commission income to a level where there is a high probability of no significant reversal of the revenue
recognised.
The key methods, inputs and assumptions used to estimate the variable consideration of profit commission
are therefore in line with those used for the calculation of claims liabilities, as set out in note 3 to the financial
statements, with further detail also included in note 5. There are no further critical accounting estimates orjudgements in relation to the recognition of profit commission.

Comparison

The performance obligation is the provision of insurance intermediary services, at which point the performanceobligation is met. Revenue is therefore recognised at a point in time.

Instalment income on insurance premium paid via instalments is using the effective interest rate, and as such is not within thescope of IFRS 15. Profit commission from reinsurers is within the scope of IFRS 4, and not within the scope of IFRS 15 Revenue fromContracts with Customers due to the nature of the income.

270

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
8. Other revenue continued
8b. Disaggregation of revenue
In the following tables, other revenue is disaggregated by major products/service lines and timing of revenue recognition. The
total revenue disclosed in the table of £678.9 million (2020: £625.3 million) represents total other revenue and profit commission
and is disaggregated into the segments included in note 4.
Year ended 31 December 2021
UK
Insurance£mInternational
Insurance£mAdmiral
Loans
£m

Other
£m

Total
(continuing)£mComparison(discontinued)*2
£m

Total
£m

Major products/service line
Instalment income

101.7

3.7

–

–

105.4

–

105.4

Fee and commission revenue

137.2

28.3

1.0

–

166.5

–

166.5

Revenue from law firm

25.0

–

–

–

25.0

–

25.0

–

–

–

5.3

5.3

59.6

64.9

Other

12.0

–

–

0.6

12.6

–

12.6

Total other revenue

275.9

32.0

1.0

5.9

314.8

59.6

374.4

Profit commission

301.9

2.6

–

–

304.5

–

304.5

Total other revenue andprofit commission

577.8

34.6

1.0

5.9

619.3

59.6

678.9

Point in time

309.6

28.3

1.0

5.9

344.8

59.6

404.4

Over time

27.5

–

–

–

27.5

–

27.5

Comparison*

1

Timing of revenue recognition

Revenue outside the scope of IFRS 15

240.7

6.3

–

–

247.0

–

247.0

577.8

34.6

1.0

5.9

619.3

59.6

678.9

Year ended 31 December 2020
UK
Insurance£mInternational
Insurance£mAdmiral
Loans
£m

Other
£m

Total
(continuing)£m

Discontinued(Comparison)*2
£m

Total
£m

Major products/service line
Instalment income

102.4

4.0

–

–

106.4

–

106.4

Fee and commission revenue

155.3

21.8

1.6

–

178.7

–

178.7

Revenue from law firms

26.7

–

–

–

26.7

–

26.7

–

–

–

5.9

5.9

161.9

167.8

Other

11.1

–

–

0.6

11.7

–

11.7

Total other revenue

295.5

25.8

1.6

6.5

329.4

161.9

491.3

Profit commission

132.4

1.6

–

–

134.0

–

134.0

Total other revenue andprofit commission

427.9

27.4

1.6

6.5

463.4

161.9

625.3

Point in time

267.1

21.8

1.6

6.5

297.0

161.9

458.9

Over time

28.4

–

–

–

28.4

–

28.4

Revenue outside the scope of IFRS 15

132.4

5.6

–

–

138.0

–

138.0

427.9

27.4

1.6

6.5

463.4

161.9

625.3

Comparison*

1

Timing of revenue recognition*1	Comparison revenue excludes £7.8 million (31 December 2020: £22.2 million) of income from other Group companies, including £7.6 million (2020: £22.0 million) from discontinued operations.
*2 See note 13 for further detail on discontinued operations.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

271

9. Expenses
9a. Accounting policies(i) Acquisition costs and operating expenses
Acquisition costs incurred in obtaining new and renewal business are charged to the income statement over the period in whichthose premiums are earned. All other operating expenses are charged to the income statement as incurred.

(ii) Employee benefits
As detailed in the Remuneration Committee Report, the key elements of employee remuneration are:
• Base salaries and pension contributions;• Share-based incentive plans;• A discretionary bonus, (the ‘DFSS Bonus’), rather than an annual cash bonus, that is based on the number of DFSS awards held andactual dividends paid out to shareholders.
Within note 9b, the charges for base salaries and pension contributions (and the related social security costs) are recognised
within insurance contract expenses or administration and other marketing costs, based on the role of the employee.
Charges for the share-based incentive plans (and related social security costs) and discretionary bonus are included within sharescheme charges. These charges are not shown as part of the result for each reportable segment, or within the expense ratio, due
to them being materially comprised of an accounting charge in line with IFRS 2 Share-based payments which does not result in acash payment to employees but instead results in an issue of new shares (resulting in a dilution of existing shares).
The rules of the share schemes ensure that the actual dilution level does not exceed 10% in any rolling ten-year period.

Base salaries and pension contributions
Base salaries and the related employer social security costs are charged to the income statement in the period that they
are incurred.
The Group contributes to defined contribution personal pension plans for its employees. The contributions payable to theseschemes are charged in the accounting period to which they relate.

Share-based incentive plans and related social security costs
The Group operates a number of equity and cash settled compensation schemes for its employees, the main ones being:• a Share Incentive Plan (SIP), which is in place for all UK employees encouraging wide share ownership across employees, and• the Discretionary Free Share Scheme (DFSS). DFSS shares are typically awarded to managers, and for the majority of employees
50% of the DFSS shares awarded are subject to three performance conditions being Earnings per Share growth, Return on Equity
and Total Shareholder Return vs. the FTSE 350 (excluding investment companies) over a three-year period. The other 50% areguaranteed with continued employment.
For both schemes, employees must remain in employment three years after the award date (i.e. at the vesting date), otherwise theshares are forfeited.
The majority of these schemes are classed as equity settled under IFRS 2, due to the employees receiving shares (rather than cash)
as consideration for the services provided.
For equity settled schemes, the charge, which reflects the fair value of the employee services received in exchange for the grantof the free shares, is recognised as an expense, with a corresponding increase in equity, as shown in Consolidated statement ofchanges in equity (2021: £63.1 million; 2020: £53.8 million).

272

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
9. Expenses continued
For the cash settled schemes, the expense recognised for the fair value of services received results in a corresponding increasein liabilities.
The key drivers and assumptions used to calculate the charge for the schemes over the three year vesting period are:• the number of shares awarded, which is set at the start of each scheme. Details of the number of shares awarded for eachscheme where shares remain unvested is set out in note 9f(iii).
• the fair value of the shares:
Ȳ For the SIP, the fair value of the shares awarded is the share price at the award date. Awards under the SIP are entitled toreceive dividends, and hence no adjustment is made to this fair value.
Ȳ For the DFSS equity settled awards, awards are not eligible for dividends, although a discretionary bonus is currently paid
equivalent to the dividend that would have been paid on the shareholding, hence the fair value of the shares is revised
downwards to take account of these expected dividends.
Ȳ For the DFSS cash settled awards, the fair value is based on the share price at the vesting date. The closing share price at theend of each reporting period is used as an approximation for the closing price at the end of the vesting period.
• staff attrition rates, which impact the ultimate number of shares that vest.
• in the case of the DFSS, the vesting rates based on the performance conditions, which also impact the ultimate number ofshares that vest.
The number of shares that have ultimately vested compared to those originally awarded is set out in note 9f(iv).
At each balance sheet date, the Group revises its assumptions on the number of shares which will ultimately vest based on thelatest forecast information for attrition rates and, for the DFSS, the extent to which the performance conditions are met.
The financial impact as a result of any change in the assumptions is recognised through the income statement. Any significant
changes in assumptions may therefore result in an increased/decreased charge in an accounting period as a result of this true-upof the expected cumulative charge required.

Social security costs on share-based incentive plans
Social security costs are incurred by the Group in respect of the share-based incentive plans, with the expense recognised overthe vesting period for each share scheme. For the SIP, these costs are paid when the employees sell the shares after vesting(typically 3–5 years after the grant date). For the DFSS, the costs are paid immediately upon vesting.
The total social security costs are calculated based on the following:• The taxable value of the shares, being:Ȳ For the SIP, the lower of the share price at award date and the share price at the balance sheet date.
Ȳ For the DFSS, the share price at the balance sheet date.
• the number of shares expected to vest for each scheme, driven by the number of shares awarded, attrition rates and, for the
DFSS, the vesting rate based on performance conditions.
• the appropriate social security rate.
These assumptions are updated at the end of each reporting period. The financial impact as a result of any change in theassumptions is recognised through the income statement. Any significant changes in assumptions may therefore result in an
increased/decreased charge in an accounting period as a result of this true-up of the expected cumulative charge required.

Discretionary bonus on shares allocated but unvested
The cost of the DFSS bonus is recognised and paid in each period equivalent to the dividends on shares allocated to employeesthat are still entitled to vest but have not yet vested. The cost shown also includes the social security costs on the discretionary
bonus. No accrual is made for future discretionary bonus payments due to there being no contractual obligation for such a bonus
at the balance sheet date.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

273

9b. Operating expenses and share scheme charges
31 December 2021

Continuing operations

Gross
£m

Recoverablefrom co- andreinsurers£mAcquisition of insurance contracts*1

179.5(113.0)66.5

Administration and other marketing costs (insurance contracts)

540.0(343.8)196.2

Insurance contract expenses

719.5(456.8)262.7

Administration and other marketing costs (other)

151.5

–

151.5

Share scheme charges

99.1(34.3)

64.8

Net
£m

Movement in expected credit loss provision

13.3

–

13.3

Total expenses and share scheme charges – continuing operations

983.4(491.1)492.3

31 December 2020

Continuing operations

Gross
£m

Recoverablefrom co- andreinsurers£mAcquisition of insurance contracts*1

166.2(106.8)59.4

Administration and other marketing costs (insurance contracts)

437.4(321.0)116.4

Insurance contract expenses

603.6(427.8)175.8

Administration and other marketing costs (other)

131.3

–

131.3

Share scheme charges

79.7(28.8)

50.9

Net
£m

Movement in expected credit loss provision

33.6

–

33.6

Total expenses and share scheme charges – continuing operations

848.2(456.6)391.6*1 Acquisition of insurance contracts expense excludes £0.3 million (2020: £0.2 million) of aggregator fees from other Group companies.

The £196.2 million (2020: £116.4 million) administration and marketing costs allocated to insurance contracts is principally madeup of salary costs.
Analysis of other administration and other marketing costs:

31 December
2021£m

31 December
2020£mExpenses relating to additional products and fees

91.9

80.6

Loans expenses (excluding movement on ECL provision)

23.7

16.8

Other expenses

35.9

33.9

Total – continuing operations

151.5

131.3

Continuing operations

Refer to note 14 for a reconciliation between insurance contract expenses and the reported expense ratio.

274

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
9. Expenses continued
9c. Employee costs and other expenses
31 December 2021

31 December 2020

Continuing operations

Total
£m

Net
£m

Total
£m

Net
£m

Salaries

338.2

111.9

298.8

100.1

Social security charges

35.4

12.8

32.6

11.6

Pension costs

17.7

6.0

16.2

5.4

Share scheme charges (see note 9f)

99.1

64.8

79.7

50.6

Total employee expenses

490.4

195.5

427.3

167.7

– Owned assets

13.4

3.4

12.0

3.0

– ROU assets

10.2

2.7

10.0

2.9

Depreciation charge:

Amortisation charge:– Software

19.3

5.6

19.1

5.6

– Deferred acquisition costs

180.6

68.0

166.4

59.0

– Fees payable for the audit of the Company’s annual
accounts

0.1

0.1

0.1

0.1

– Fees payable for the audit of the Company’s
subsidiary accounts

1.5

0.6

1.2

0.6

– Fees payable for audit related assurance services
pursuant to legislation or regulation

0.8

0.5

0.5

–

Auditor’s remuneration (including VAT) (total Group):£34,800 (inclusive of VAT) (2020: £8,880) was payable to the auditor for other services in the year.
Total and net expenses are before and after co- and reinsurance arrangements respectively.
Refer to the Corporate Governance Report for details of the Audit Committee’s policy on fees paid to the Company’s auditor for
non-audit services. Audit fees are 64% (2020: 70%) of total fees and 36% (2020: 30%) of total fees are for non-audit services, which
are classed as audit related assurance services under the FRC rules on non-audit services.
The amortisation of software and deferred acquisition cost assets is charged to expenses in the income statement.

9d. Employee numbers (including Directors)
Average for the year
2021
Number

2020
NumberDirect customer contact employees

7,271

7,278

Support employees

3,454

3,559

Total

10,725

10,837

Total average employees in 2021 relating to comparison entities disposed of during the year were 222 (2020: 643).

Additional information

275

31 December
2021£m

31 December
2020£m

Directors’ emoluments

1.1

2.1

Amounts receivable under SIP and DFSS share schemes

3.0

2.7

Company contributions to money purchase pension plans

–

–

4.1

4.8

2021
Number

2020
Number2

3Company overview

Strategic report

Corporate governance

Financial statements

9e. Directors’ remuneration(i) Directors’ remuneration

Total(ii) Number of Directors

Retirement benefits are accruing to the following number of Directors under:– Money purchase schemes

9f. Employee share schemes
Total share scheme costs for the Group excluding discontinued operations are analysed below:
31 December 2021
SIP charge (i)DFSS charge (ii)

Total charge

Gross
£m

Net
£m

Gross
£m

Net
£m

Gross
£m

Net
£m

IFRS 2 charge for equity settled share schemes

19.9

13.7

41.3

27.0

61.2

40.7

IFRS 2 charge for cash settled share schemes

–

–

5.0

2.9

5.0

2.9

Total IFRS 2 charge

19.9

13.7

46.3

29.9

66.2

43.6

Social security costs on IFRS 2 charge

0.8

0.5

9.0

6.4

9.8

6.9

Discretionary bonus on shares allocatedbut unvested

–

–

23.1

14.3

23.1

14.3

20.7

14.2

78.4

50.6

99.1

64.8

Total share scheme charges –continuing operations

Re-presented 31 December 2020
SIP charge (i)DFSS charge (ii)

Total charge

Gross
£m

Net
£m

Gross
£m

Net
£m

Gross
£m

Net
£m

IFRS 2 charge for equity settled share schemes

17.3

11.6

34.3

21.8

51.6

33.4

IFRS 2 charge for cash settled share schemes

–

–

3.9

2.2

3.9

2.2

Total IFRS 2 charge

17.3

11.6

38.2

24.0

55.5

35.6

Social security costs on IFRS 2 charge

1.7

1.1

8.4

5.7

10.1

6.8

Discretionary bonus on shares allocatedbut unvested

–

–

14.1

8.5

14.1

8.5

19.0

12.7

60.7

38.2

79.7

50.9

Total share scheme charges –continuing operations

Total share scheme costs for discontinued operations were £0.4 million (2020: £3.1 million). The total IFRS 2 charge for equity
settled share schemes for discontinued operations were £0.5 million (2020: £2.6 million).

276

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
9. Expenses continued
Net share scheme charges are presented after allocations to co-insurers (in the UK and Italy) and reinsurers (in the International
Insurance businesses). The proportion of net to gross share scheme charges would be expected to be consistent in each period, atapproximately 65%.
Financial year ended 31 December

2021
£m

Total
cumulative
charge to
date
£m

2.3

–

16.2

5.9

2.4

17.6

3.4

6.0

6.4

15.8

–

–

3.1

6.7

9.8

–

–

–

4.4

4.4

17.3

19.9

2018 and
prior
£m

2019
£m

2020
£m

2017

8.6

5.3

2018

3.4

5.9

1

2019*

–

1

2020*

2021*1Analysis of gross cost

Year of share scheme – SIP

Gross IFRS 2 costs – SIP
Year of share scheme – DFSS
2017
2018

12.0

13.5

6.0

–

31.5

12.6

47.7

3.6

14.9

16.6

2

–

3.4

10.9

15.8

30.1

2020*2

–

–

4.7

13.0

17.7

2021*

–

–

–

4.9

4.9

Gross IFRS 2 costs – DFSS

38.2

46.3

Total IFRS 2 costs – continuing operations

55.5

66.2

2019*

2

*1	Awards are made in March and September of each year, and vest over 36 months from award date. On the 2019 scheme, an average of 5 months’ charge remains outstanding, on the 2020
scheme an average of 17 months’ charge remains outstanding, and on the 2021 schemes an average of 29 months’ charge remains outstanding.
*2	T he main award is made in September of each year, with smaller awards made at other points through the year. The shares vest over 36 months from award date. On the 2019 main DFSS,
9 months’ charge remains outstanding, on the 2020 main DFSS 21 months’ charge remains outstanding, and on the 2021 main DFSS, 33 months’ charge remains outstanding.

(i) The Approved Share Incentive Plan (the SIP)
Eligible UK based employees qualify for awards under the SIP based upon the performance of the Group in each half-year period.
The maximum award for each year is £3,600 per employee and the maximum number of shares that can vest relating to the 2021
schemes is 688,384 (2020 schemes: 982,643; 2019 schemes: 1,113,496).
The awards are made at the discretion of the Remuneration Committee, taking into account the Group’s performance.

(ii) The Discretionary Free Share Scheme (the DFSS)
Under the DFSS, details of which are contained in the remuneration policy section of the Directors’ Remuneration Report,
individuals receive an award of free shares at no charge.
The maximum number of shares that can vest relating to the 2021 schemes is 2,850,114 (2020 scheme: 2,795,261; 2019
schemes: 2,637,196).
The vesting percentage for most employees for the 2018 DFSS scheme which vested during 2021 was 99.3% (2017 DFSS
scheme: 94.4%).

Company overview

Strategic report

Corporate governance

Financial statements

277

Additional information(iii) Number of free share awards committed at 31 December 2021
Awardsoutstanding*1

SIP 2019*2

1,113,496

2982,643

SIP 2021*2

688,384

SIP 2020*

2,637,196

DFSS 2019*3
32,795,261

DFSS 2021*3

DFSS 2020*

2,850,114

Total awards committed

11,067,094*1 Being the maximum number of awards committed before accounting for expected staff attrition and vesting conditions.
*2 Shares are awarded in March and September of each year, and vest three years later.
*3 The main award is made in September of each year, with smaller awards made at other points through the year.

(iv) Number of free share awards vesting during the year ended 31 December 2021
During the year ended 31 December 2021, awards under the SIP H1 18 and H2 18 schemes and the DFSS 2018 schemes vested.
The total number of awards vesting for each scheme is as follows.
Original awards

Awards vested

SIP 2018 schemes

1,192,302

969,209

DFSS 2018 schemes

3,373,948

2,915,009

The difference between the original and vested awards reflects employee attrition (SIP schemes) and both employee attrition andthe vesting outcomes based on performance conditions noted above (DFSS schemes).
The weighted average fair value of the shares granted in the year was £31.16 (2020: £23.13).
The weighted average market share price at the date of exercise for shares exercised during the year was £31.92 (2020: £25.60).

10. Taxation
10a. Accounting policy
Income tax on the profit or loss for the periods presented comprise of current and deferred tax.

(i) Current tax
Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or
substantively enacted by the balance sheet date, and includes any adjustment to tax payable in respect of previous periods.
Current tax related to items recognised in other comprehensive income is also recognised in other comprehensive income and notin the income statement.

(ii) Deferred tax
Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the
carrying amount of assets and liabilities for accounting purposes and the amounts used for taxation purposes.
Deferred tax is calculated at the tax rates that have been enacted or substantially enacted by the balance sheet date and that are
expected to apply in the period when the liability is settled, or the asset is realised.
The principal temporary differences arise from carried forward losses, depreciation of property and equipment and share scheme
charges. The resulting deferred tax is charged or credited in the income statement, except in relation to share scheme charges
where the amount of tax benefit credited to the income statement is limited to an equivalent credit calculated on the accounting
charge. Any excess is recognised directly in equity.

278

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
10. Taxation continued
Deferred tax assets relating to carried forward losses are recognised only to the extent that it is probable that future taxable
profits will be available against which the assets can be utilised. The probability of the availability of future taxable profits isdetermined by a combination of the classification of the status of the businesses holding cumulative tax losses and the businessplan profit projections for that business, subject to appropriate stress testing.

10b. Taxation

Continuing operations

31 December
2021£m

31 December
2020
£m

129.2

101.6

Current tax
Corporation tax on profits for the year
Under-provision relating to prior periods

4.2

0.6

133.4

102.2

Current period deferred taxation movement

(1.5)

4.0

(Over) provision relating to prior periods

(1.7)

–

130.2

106.2

31 December
2021£m

31 December
2020£mProfit before tax

713.5

608.2

Corporation tax thereon at effective UK corporation tax rate of 19.0% (2020: 19.0%)

135.6

115.5

Current tax charge
Deferred tax

Total tax charge per consolidated income statement

Factors affecting the total tax charge are:Continuing operations

Expenses and provisions not deductible for tax purposes

2.2

0.7

Non-taxable income(8.3)(10.5)

Impact of change in UK tax rate on deferred tax balances

(3.6)

0.4

Adjustments relating to prior periods

2.5

0.6

Impact of different overseas tax rates

(1.4)

(1.6)

Unrecognised deferred tax

3.2

1.1

130.2

106.2

Total tax charge for the period as above

The corporation tax recoverable for continuing operations as at 31 December 2021 was £10.6 million (2020: £22.9 million
recoverable). See note 13 for details of the corporation tax charge on discontinued operations.
In 2021, over 130 countries reached a historic agreement to reform the international tax framework. The main aim of theagreement was to ensure that large, multinational corporations pay their fair share of tax in the countries in which they operate
and this included the introduction of a new global minimum corporate income tax rate of 15%. In January 2022, the UK reiterated
its intention to implement new legislation to give effect to this new framework, with these changes expected to come into force
in 2023. The new rules are not expected to have a material impact on the Group.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

279

10c. Deferred income tax asset/(liability)
Analysis of deferred tax asset/(liability)Taxtreatmentof shareschemes£mCapitalallowances£m

Carriedforwardlosses£m

Fair value
reserve£m

Otherdifferences
£m

Total
£m

Balance brought forward at 1 January 2020

5.9

(2.1)

–

(5.4)

1.2

(0.4)

Tax treatment of share scheme charges throughincome or expense

(3.2)

–

–

–

–

(3.2)

Tax treatment of share scheme charges throughreserves

6.6

–

–

–

–

6.6

Capital allowances

–

0.7

–

–

–

0.7

Carried forward losses

–

–

2.9

–

–

2.9

(0.5)

(0.3)

(2.9)

–

(0.5)

(4.2)

Transferred to disposal group held for sale
Movement in fair value reserve

–

–

–

(1.8)

–

(1.8)

Other difference

–

–

–

–

(1.5)

(1.5)

Balance carried forward at 31 December 2020

8.8

(1.7)

–

(7.2)

(0.8)

(0.9)

Tax treatment of share scheme charges throughincome or expense

(6.3)

–

–

–

–

(6.3)

Tax treatment of share scheme charges throughreserves

6.0

–

–

–

–

6.0

–

9.5

–

–

–

9.5

Capital allowances
Carried forward losses

–

–

–

–

–

–

Movement in fair value reserve

–

–

–

1.4

–

1.4

Other difference

–

–

–

–

(0.4)

(0.4)

8.5

7.8

–

(5.8)

(1.2)

9.3

Balance carried forward at 31 December 2021

Positive amounts presented above relate to a deferred tax asset position.
The average effective rate of tax for 2021 is 19.0% (2020: 19.0%). An increase to the main rate of corporation tax in the UK to
25% was announced in the 2021 Budget and is expected to come into effect in 2023. This will increase the Group’s future tax
charge accordingly.
The deferred tax asset has increased during the year, mainly relating to capital allowances. The increase in capital allowances isdue to the impairments recognised on property and equipment and intangible assets as part of the restructure costs referenced
in the financial narrative earlier in this report. It is anticipated that these timing differences will reverse when the tax rate isincreased to 25% which ultimately contributes to an increase in the deferred tax asset.
The deferred tax asset in relation to carried forward losses (for continuing operations) remains at £nil at the year-end (2020: £nil)
due to uncertainty over the availability of future taxable profits against which to offset or utilise any deferred tax asset.
At 31 December 2021, the Group had unused tax losses amounting to £261.8 million (2020: £236.8 million), relating primarily to
the Group’s US businesses Elephant Auto and compare.com, for which no deferred tax asset has been recognised. The earliest
expiry date for any of these tax losses is 2029. The total aggregated unrecognised deferred tax liabilities on temporary differences
associated with subsidiaries is £nil (2020: £nil).

280

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
11. Other assets and other liabilities
11a. Accounting policy(i) Property and equipment, and depreciation
All property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line
method to write off the cost less residual values of the assets over their useful economic lives. These useful economic lives are
as follows:
Improvements to short leasehold buildings– four to ten years

Computer equipment			

– two to four years

Office equipment				– four years

Furniture and fittings			

– four years

Motor vehicles				– four years

Right-of-use assets			

– two to twenty years, aligned to lease agreement

As set out further in note 6i to the financial statements, a right-of-use asset is established in relation the Group’s leasearrangements.
The right-of-use asset is measured at cost, which comprises the following:• the amount of the initial measurement of lease liability (note 6i to the financial statements);• 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 straightline basis.
The Group does not have any significant leases which qualify for the short-term leases or leases of low-value assets exemption.

(ii) Impairment of property and equipment
In the case of property and equipment, carrying values are reviewed at each balance sheet date to determine whether there
are any indicators of impairment. If any such indicators exist, the asset’s recoverable amount is estimated and compared tothe carrying value. The carrying value is the higher of the fair value of the asset less costs to sell and the asset’s value in use.
Impairment losses are recognised through the income statement.

(iii) Intangible assets

Goodwill
All business combinations are accounted for using the acquisition method. Goodwill has been recognised in acquisitionsof subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net identifiable
assets acquired.
The classification and accounting treatment of acquisitions occurring before 1 January 2004 have not been reconsidered in
preparing the Group’s opening IFRS balance sheet at 1 January 2004 due to the exemption available in IFRS 1 (First time adoption).
In respect of acquisitions prior to 1 January 2004, goodwill is included at the transition date on the basis of its deemed cost,which represents the amount recorded under UK GAAP, which was tested for impairment at the transition date. On transition,amortisation of goodwill has ceased as required by IAS 38.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units (CGUs) according
to business segment and is reviewed annually for impairment.
The goodwill held on the balance sheet at 31 December 2021 and 2020 is allocated solely to the UK Insurance segment.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

281

Impairment of goodwill
The annual impairment review involves comparing the carrying amount to the estimated recoverable amount (by allocating
the goodwill to CGUs) and recognising an impairment loss if the recoverable amount is lower. Impairment losses are recognised
through the income statement and are not subsequently reversed.
The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use of the CGU.
The value in use calculations use cash flow projections based on financial budgets approved by management covering a period of
up to three years. Cash flows beyond this period are considered, but not included in the calculation.
The key assumptions used in the value in use calculations are those regarding revenue growth, along with expected changes inpricing and expenses incurred during the forecast period. Management estimates revenue growth rates and changes in pricing
based on past practices and expected future changes in the market.
The headroom above the goodwill carrying value is very significant, and there is no foreseeable event that would eliminate
this margin.

Deferred acquisition costs
Acquisition costs comprise all direct and indirect costs arising from the conclusion of insurance contracts. Deferred acquisition
costs represent the proportion of acquisition costs incurred that correspond to the unearned premiums provision at the balance
sheet date. This balance is held as an intangible asset. It is amortised over the term of the contract as premium is earned.

SoftwarePurchased software is recognised as an intangible asset and amortised over its expected useful life (generally the licence term).
Internally generated software is recognised as an intangible asset, with directly attributable costs incurred in the development
stage capitalised. The internally generated software assets are amortised over the expected useful life of the systems andamortisation commences when the software is available for use.
The carrying value of software is reviewed every six months for evidence of impairment, with the value being written down if any
impairment exists. Impairment may be reversed if conditions subsequently improve.

(iv) Provisions, contingent liabilities and contingent assets
Provisions are recognised when a legal or constructive obligation arises as a result of an event that occurred before the balance
sheet date, when a cash outflow relating to this obligation is probable and when the amount can be estimated reliably.
Where a material obligation exists, but the likelihood of a cash outflow or the amount is uncertain, or where there is a possible
obligation arising from a past event that is contingent on a future event, a contingent liability is disclosed.
Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or
non-occurrence of future events. Where it is probable that a cash inflow will arise from a contingent asset, this is disclosed.

282

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
11. Other assets and other liabilities continued
11b. Property and equipment
Improvements
to short
leaseholdbuildings£mComputerequipment£m

Officeequipment£m

At 1 January 2020

33.4

71.4

Transfer of assets associated with disposalgroup held for sale

(1.2)

Additions
Impairment
Disposals

Furniture andfittings£m

ROU
Asset –
Leaseholdbuildings
£m

Total
£m

22.4

10.6

134.4

272.2

(6.2)

(0.9)

(0.2)

(5.5)

(14.0)

3.1

14.1

0.8

0.2

0.1

18.3

–

–

–

–

(3.1)

(3.1)

–

(0.6)

–

(0.3)

(1.8)

(2.7)

Cost

Foreign exchange and other movements

0.7

(0.1)

0.3

(0.1)

0.1

0.9

At 31 December 2020

36.0

78.6

22.6

10.2

124.2

271.6

At 1 January 2020

19.8

58.7

18.4

9.1

11.8

117.8

Transfer of depreciation associated withdisposal group held for sale

(0.6)

(5.2)

(0.5)

(0.2)

(1.6)

(8.1)

Charge for the year

3.7

6.8

1.8

0.5

10.8

23.6

–

(0.7)

–

(0.2)

(1.5)

(2.4)

Depreciation

Disposals
Foreign exchange and other movements

0.1

–

0.3

(0.1)

–

0.3

At 31 December 2020

23.0

59.6

20.0

9.1

19.5

131.2

13.6

12.7

4.0

1.5

122.6

154.4

13.0

19.0

2.6

1.1

104.7

140.4

At 1 January 2021

36.0

78.6

22.6

10.2

124.2

271.6

Additions

1.9

7.6

0.4

0.7

5.6

16.2

*1

Net book amountAt 1 January 2020
Net book amountAt 31 December 2020
Cost

Impairment

(0.2)

–

(0.7)

(0.6)

(17.8)(19.3)

Disposals(0.3)(17.1)

(0.1)

(0.3)

(8.2)

(26.0)

Foreign exchange and other movements

(0.4)

(0.2)

(0.3)

(0.1)

(0.5)

(1.5)

At 31 December 2021

37.0

68.9

21.9

9.9

103.3

241.0

23.0

59.6

20.0

9.1

19.5

131.2

Charge for the year

3.9

8.2

0.9

0.4

10.2

23.6

Impairment

(0.2)

–

(0.7)

(0.6)

–

(1.5)

Disposals(0.2)(10.4)

(0.1)

(0.3)

(3.8)

(14.8)

Depreciation
At 1 January 2021

Foreign exchange and other movements

(0.2)

(0.1)

(0.2)

(0.1)

(0.1)

(0.7)

At 31 December 2021

26.3

57.3

19.9

8.5

25.8

137.8

10.7

11.6

2.0

1.4

77.5

103.2

Net book amountAt 31 December 2021

*1	W ithin foreign exchange and other movements for the ROU asset, £0.6 million relates to remeasurements of the ROU asset due to amendments to the payment terms of theleasing arrangement.

Company overview

Strategic report

Corporate governance

Financial statements

283

Additional information

Impairment recognised in property and equipment in the period reflects the decision to exit lease agreements in the UK in
2022 and 2023. The impaired right-of-use assets are now held at a recoverable amount determined based upon a value in
use calculation.

11c. Intangible assets

Re-presented

Goodwill£mDeferredacquisition
costs
£m

Software –Internallygenerated*1£mSoftware –Other*2
£m

Total
£m

62.3

24.8

69.5

3.7

160.3

At 1 January 2020
Additions

–

61.3

19.8

5.0

86.1

Amortisation charge–(59.0)(17.3)(1.9)(78.2)

Disposals

–

–

–

(1.2)

(1.2)

Transfer of assets associated with disposal group held for sale

–

–

(0.6)

(0.6)

(1.2)

Foreign exchange movement

–

0.2

1.2

(0.5)

0.9

62.3

27.3

72.6

4.5

166.7

At 31 December 2020
Additions

–

69.4

36.8

21.8

128.0

Amortisation charge–(68.0)(18.1)(1.2)(87.3)

Disposals

–

–

–

–

–

Impairment––(25.4)–(25.4)

Transfer of assets associated with disposal group held for sale

–

–

–

–

–

Foreign exchange movement

–

(0.5)

(1.5)

(0.1)

(2.1)

62.3

28.2

64.4

25.0

179.9

At 31 December 2021

*1	Gross carrying amount and accumulated amortisation of internally generated software as at the end of 2021 are £119.7 million (2020: £149.7 million) and £55.3 million respectively(2020: £77.1 million).
*2 Gross carrying amount and accumulated amortisation of other software as at the end of 2021 are £55.9 million (2020: £35.1 million) and £30.9 million respectively (2020: £30.6 million).

Impairment recognised in internally generated software relates to impairment of technology assets which are to be replaced as aresult of the continued investment in technology and digital capabilities outlined as part of the Admiral 2.0 strategy. The impaired
assets are now held at recoverable amounts determined by value in use calculations.
Goodwill relates to the acquisition of Group subsidiary EUI Limited (formerly Admiral Insurance Services Limited) in November
1999. As described in the accounting policies, 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 greaterthan the carrying amount and therefore no impairment losses have been recognised.
Only one year of forecasts is required to support the recoverable value of goodwill above. Given the short time period used tosupport the recoverable amount, no terminal growth rate or discounting is applied.
Refer to the accounting policy for goodwill for further information.

284

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
11. Other assets and other liabilities continued
An analysis of deferred acquisition costs is given in the table below:
Gross
£m

Reinsurance
£m

Net
£m

At 1 January 2020

74.6

(49.8)

24.8

Additions

168.4(107.1)

61.3

Amortisation(166.4)107.4(59.0)

Foreign exchange movement

1.0

(0.8)

0.2

At 31 December 2020

77.6

(50.3)

27.3

Additions

181.4(112.0)

69.4

Amortisation(180.6)112.6(68.0)

Foreign exchange movement

(1.5)

1.0

(0.5)

At 31 December 2021

76.9

(48.7)

28.2

31 December
2021£m

31 December
2020£m11d. Trade and other payables

Trade payables

39.8

34.9

Amounts owed to co-insurers

161.9

240.9

Amounts owed to reinsurers

1,274.9

1,262.8

Other taxation and social security liabilities

71.7

72.9

Other payables

112.4

135.6

Accruals and deferred income (see below)
Total trade and other payables

299.3

244.1

1,960.0

1,991.2

Of amounts owed to reinsurers (recognised under IFRS 4), £1,169.8 million (2020: £1,175.1 million) is held under funds withheldarrangements.
Analysis of accruals and deferred income:
31 December
2021£m

31 December
2020£mPremium received in advance of policy inception

117.4

98.3

Accrued expenses

117.5

77.2

Deferred income

64.4

68.6

Total accruals and deferred income as above

299.3

244.1

Company overview

Strategic report

Corporate governance

Financial statements

285

Additional information

11e. Leases
The Group occupies various properties under leasing arrangements that are now recognised as right of use assets and leaseliabilities. A maturity analysis of lease liabilities based on contractual undiscounted cash flows is set out below:
31 December
2021£m

31 December
2020£mWithin one year

12.9

13.8

Between two to five years

41.8

42.4

Maturity analysis – contractual undiscounted cash flows

Between five to ten years

32.7

39.1

Over ten years

35.4

50.0

Total

122.8

145.3

31 December
2021£m

31 December
2020£mAmounts recognised in the statement of financial position are as follows:

Lease liabilities
Current

10.5

11.0

Non-Current

94.8

111.8

Total

105.3

122.8

See note 11b for right of use assets depreciation and the carrying amount of right of use asset at the end of the reporting period. Only
one class of underlying assets is identified as leasehold buildings. Total cash outflows in relation to leases is disclosed under 6i.
The Group has no significant financial commitments other than those accounted for as right of use assets and lease liabilities
under IFRS 16.

11f. Contingent liabilities
The Group’s legal entities operate in numerous tax jurisdictions and on a regular basis are subject to review and enquiry by therelevant tax authority.
One of the Group’s previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority denying
the application of the VAT exemption relating to insurance intermediary services. The Company has appealed this decision via the
Spanish Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent withthe way similar supplies are treated throughout Europe. Whilst the Company is no longer part of the Admiral Group, the contingent
liability which the Company is exposed to has been indemnified by the Admiral Group up to a cap of £22 million.
The Group is also in discussions with tax authorities in Italy and Spain on various corporate tax matters. To date these discussions havefocused primarily on the transfer pricing and cross-border arrangements in place between the Group’s intermediaries and insurers.
No provision has been made in these financial statements in relation to the matters noted above.
The Group is, from time to time, subject to threatened or actual litigation and/or legal and/or regulatory disputes, investigations
or similar actions both in the UK and overseas. All potentially material matters are assessed, with the assistance of external
advisers if appropriate, and in cases where it is concluded that it is more likely than not that a payment will be made, a provision isestablished to reflect the best estimate of the liability. In some cases it will not be possible to form a view, for example if the facts
are unclear or because further time is needed to properly assess the merits of the case. No provisions are held in relation to suchmatters. In these circumstances, specific disclosure of a contingent liability will be made where material.
The Directors do not consider that the final outcome of any such current case will have a material adverse effect on the Group’s
financial position, operations or cash flows, and no material provisions are currently held in relation to such matters.
A number of the Group’s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers
to recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow fromthe Group.

286

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
12. Share capital
The Group’s capital includes share capital and the share premium account, other reserves which are comprised of the fair value
reserve, hedging reserve and foreign exchange reserve, and retained earnings.

12a. Accounting policies(i) Share capital
Shares are classified as equity when there is no obligation to transfer cash or other assets.

(ii) Dividends
Dividends are recorded in the period in which they are declared and paid.

(iii) Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group parent company, AdmiralGroup plc by the weighted average number of ordinary shares during the period.
Diluted earnings per share is calculated by dividing profit or loss attributable to equity holders of the Group parent company by
the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares.

12b. Dividends
Dividends were proposed, approved and paid as follows:
31 December
2021£m

31 December
2020£m

Proposed March 2020 (77.0 pence per share, 56.3 pence per share approved April 2020 and paid June 2020)

–

162.3

Declared August 2020 (91.2 pence per share, including 20.7 pence per share deferred, paid October 2020)

–

263.4

Proposed March 2021 (86.0 pence per share, approved April 2021 and paid June 2021)

250.8

–

Declared August 2021 (161.0 pence per share, paid October 2021)

470.1

–

Total dividends

720.9

425.7

The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2019 and 2020 financial
years. The dividends declared in August are interim distributions in respect of 2020 and 2021.
A 2021 final dividend of 118.0 pence per share (approximately £347 million) has been proposed, made up of 72.0 pence per sharerelating to continuing operations and 46.0 pence per share as the second special dividend relating to the disposal of the Penguin
Portal comparison businesses. Refer to the Chair’s Statement and financial narrative for further detail.

Company overview

Strategic report

Corporate governance

Financial statements

287

Additional information

12c. Earnings per share
31 December
2021£m

31 December
2020£mProfit for the financial year after taxation attributable to equity shareholders – continuing operations

585.0

502.9

Profit for the financial year after taxation attributable to equity shareholders – discontinued operations

412.9

25.9

Profit for the financial year after taxation attributable to equity shareholders – continuing and discontinued
operations

997.9

528.8

297,480,041

294,563,978

Unadjusted earnings per share – basic – continuing operations

196.7p170.7pUnadjusted earnings per share – basic – discontinued operations

138.8p8.8p

Unadjusted earnings per share – basic – continuing and discontinued operations

335.5p179.5p298,351,248

295,034,233

Unadjusted earnings per share – diluted – continuing operations

196.1p170.4pUnadjusted earnings per share – diluted – discontinued operations

138.4p8.8p

Unadjusted earnings per share – diluted – continuing and discontinued operations

334.5p179.2p

Weighted average number of shares – basic

Weighted average number of shares – diluted

The difference between the basic and diluted number of shares at the end of 2021 (being 871,207 2020: 470,255) relates to awardscommitted, but not yet issued under the Group’s share schemes. Refer to note 9 for further detail.

12d. Share capital
31 December
2021£m

31 December
2020
£m

0.5

0.5

0.3

–

–

0.3

0.3

0.3

Authorised
500,000,000 ordinary shares of 0.1 pence
Issued, called up and fully paid
299,554,720 ordinary shares of 0.1 pence
296,692,063 ordinary shares of 0.1 pence

During 2021, 2,862,657 (2020: 3,005,734) new ordinary shares of 0.1 pence were issued to the trusts administering the Group’s
share schemes.
632,657 (2020: 755,734) of these were issued to the Admiral Group Share Incentive Plan Trust for the purposes of this share scheme
resulting in cumulative shares issued to the Trust at 31 December 2021 of 13,017,372 (31 December 2020: 12,384,715). Of theshares issued, 4,078,496 remain in the Trust at 31 December 2021 (2020: 4,331,860). These shares are entitled to receive dividends.
2,230,000 (2020: 2,250,000) shares were issued to the Admiral Group Employee Benefit Trust for the purposes of the Discretionary
Free Share Scheme resulting in cumulative shares issued to the Trust of 27,941,948 (31 December 2020: 25,711,948). Of the sharesissued 4,767,112 remain in the Trust at 31 December 2021 (2020: 5,447,441) to be used for future vesting, the remaining issued
shares having vested.
The balance of awards made to employees under the Discretionary Free Share Scheme that have not either vested or lapsed is
7,981,132 (2020: 8,277,428).
The Trustees have waived the right to dividend payments, other than to the extent of 0.001 pence per share, unless and to theextent otherwise directed by the Company from time to time.
There is one class of share with no unusual restrictions.

288

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
12. Share capital continued
12e. Objectives, policies and procedures for managing capital
The Group’s capital management policy defines the Board oversight, risk appetite and tier structure of the Group’s capital in
addition to management actions that may be taken in respect of capital, such as dividend payments.
The Group aims to operate a capital-efficient business model by transferring a significant proportion of underwriting risk toco‑insurance and reinsurance partners. This in turn reduces the amount of capital the Group needs to retain to operate and growand allows the Group to distribute the majority of its earnings as dividends.
The Board has determined that it will hold capital as follows:• Sufficient Solvency II Own Funds to meet all of the Group’s Solvency II capital requirements (over a 1 year and ultimate time
horizon).
• An additional contingency to cover unforeseen events and losses that could realistically arise. This risk appetite buffer isassessed via stress testing performed on an annual basis and is calibrated in relation to the one-year regulatory SCR.
The Group’s current risk appetite buffer is 30% above the regulatory SCR. This forms the lower bound of the longer-term solvency
target operating range of 130% to 150%.
The Group’s dividend policy is to:• Pay a normal dividend equal to 65% of post-tax profits for the period• Pay a special dividend calculated with reference to distributable reserves and surplus capital held above the risk appetite buffer.
This policy gives the Directors flexibility in managing the Group’s capital.
As noted above, the Group’s regulatory capital position is calculated under the Solvency II Framework. The Solvency Capital
Requirement (SCR) is based on the Solvency II Standard Formula, with a capital-add-on to reflect limitations in the Standard
Formula with respect to Admiral’s risk profile (predominately in respect of profit commission arrangements in co-and reinsurance
agreements and risks relating to Periodic Payment Order (PPO) claims).

Solvency ratio (unaudited)
At the date of this report (3 March 2022), the Group’s regulatory solvency ratio, calculated using a capital add-on that has not been
subject to regulatory approval, is 195% (2020: 187%). This includes the recognition of the 2021 final dividend of 118 pence pershare (2020: 86 pence per share).
The Group’s 2021 Solvency and Financial Condition Report (SFCR) will, when published, disclose a solvency ratio that is calculated
at the balance sheet date rather than annual report date, using the capital add-on that was most recently subject to regulatory
approval. The estimated and unaudited SFCR solvency ratio is 181%, with the reconciliation between this ratio and the 195% noted
above being as follows:
31 December
2021£m

31 December
2020£mRegulatory Solvency Ratio (Unaudited)
195%

187%

Change in valuation date

Solvency Ratio reported in the Annual Report

(5%)

(5%)

Other (including impact of updated, unapproved capital add-on)

(9%)

24%

181%

206%

Solvency Ratio to be reported in the SFCR

Subsidiaries
The Group manages the capital of its subsidiaries to ensure that all entities within the Group are able to continue as going
concerns and also to ensure that regulated entities meet regulatory requirements with an appropriate risk appetite buffer. Excess
capital above these levels within subsidiaries is paid up to the Group holding company in the form of dividends on a regular basis.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

289

12f. Group related undertakings
The parent company’s subsidiaries are as follows:
Class ofshares held

% ownership

Principal
activity

Ordinary95

Legal company

Ordinary

100

Insurance intermediary

EUI Limited*2

Ordinary

100

Insurance intermediary

Admiral Insurance Company Limited

Ordinary

100

Insurance company

Admiral Life Limited

Ordinary

100

Dormant*1

Admiral Syndicate Limited

Ordinary

100

Dormant*1

Admiral Syndicate Management Limited

Ordinary

100

Dormant*1

Bell Direct Limited

Ordinary

100

Dormant*1

Diamond Motor Insurance Services Limited

Ordinary

100

Dormant*1

Elephant Insurance Services Limited

Ordinary

100

Dormant*1

Admiral Financial Services Limited

Ordinary

100

Financial services company

Ordinary

100

Insurance company

Ordinary

100 (indirect)

Insurance intermediary

Ordinary

100

Insurance company

Ordinary

100

Insurance intermediary

Subsidiary

Incorporated in England and Wales
Registered office: Floor 3 No. 3 Capital Quarter, Cardiff, CF10 4BZ
Admiral Law Limited
Registered office: Floor 4 No. 3 Capital Quarter, Cardiff, CF10 4BZ
Able Insurance Services Limited
Registered office: Tŷ Admiral, David Street, Cardiff, CF10 2EH

Incorporated in Gibraltar
Registered office: 1st Floor, 24 College Lane, Gibraltar, GX11 1AA
Admiral Insurance (Gibraltar) Limited
Incorporated in France
Registered office: 4 Rue Marceau 92300 Levallois Perret
Pioneer Intermediary Europe Services
Incorporated in Spain
Registered office: Calle Rodriguez Marin, 61 28028 Madrid
Admiral Europe Compañía de Seguros, S.A.
Registered office: Calle Albert Einstein, 10 41092 Sevilla
Admiral Intermediary Services S.A.*3
Incorporated in the United States of America
Registered office: Deep Run 1, Suite 400, 9950 Mayland Drive, Henrico,
VA 23233
Elephant Insurance Company

Ordinary

100 (indirect)

Insurance company

Grove General Agency Inc

Ordinary

100 (indirect)

Insurance intermediary

Platinum General Agency Inc

Ordinary

100 (indirect)

Insurance intermediary

Elephant Insurance Services LLC

Ordinary

100 (indirect)

Insurance intermediary

Elephant Holding Company LLC

Ordinary

100

Holding company

compare.com Insurance Agency LLC

Ordinary

70.98 (indirect)

Internet-based comparison site

Inspop USA LLC

Ordinary

70.98

Holding company

Registered office: Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801

Registered office: 6802 Paragon Place Suite 410 Richmond, VA 23230

290

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
12. Share capital continued
Class ofshares held

% ownership

Principal
activity

Seren One Limitedn/a0

Special purpose entity

Seren Two Limitedn/a0

Special purpose entity

Subsidiary

Subsidiaries by virtue of control
The related undertakings below are subsidiaries in accordance withIFRS 10, as Admiral can exercise dominant influence or control over them:
Registered office: 10th Floor, 5 Churchill Place, London, E14 5HU*1 Exempt from audit under S480 of Companies Act 2006.
*2 EUI Limited has branches in India and Canada.
*3 Admiral Intermediary Services S.A. has branches in Italy and France.

For further information on how the Group conducts its business across the UK, Europe and the US, refer to the Strategic Report.

12g. Related party transactions
The Board considers that only the Executive and Non-Executive Directors of Admiral Group plc are key management personnel.
A summary of the remuneration of key management personnel is as follows, with further detail relating to the remuneration andshareholdings of key management personnel set out in the Directors’ Remuneration Report.
Key management personnel received short term employee benefits in the year of £3,077,686 (2020: £2,522,280), postemployment benefits of £30,643 (2020: £22,999) and share-based payments of £2,149,734 (2020: £2,249,425). 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%.

12h. Post balance sheet events
No events have occurred since the reporting date that materially impact these financial statements.

13. Discontinued operations
13a. Accounting policy
Disposal groups are classified as held for sale in accordance with IFRS 5 if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. A discontinued operation
is a component of the business that has been disposed of or is classified as held for sale and represents a separate major line ofbusiness or is part of a single co-ordinated plan to dispose of such a line of business.
The assets and liabilities of a disposal group classified as held for sale are presented separately from the other assets and liabilities
in the Statement of Financial Position. The results of discontinued operations are presented separately in the Statement ofComprehensive Income. The result comprises the profit or loss after tax from discontinued operations and other comprehensive
income attributable to discontinued operations.

Company overview

Strategic report

Corporate governance

Financial statements

291

Additional information

13b. Description
On the 29 December 2020, the Group announced that it had reached an agreement with ZPG Comparison Services Holdings
UK Limited (‘RVU’) that RVU would purchase the Penguin Portals Group (‘Penguin Portals’, comprising online comparison portals
Confused.com, Rastreator.com and LeLynx.fr and the Group’s technology operation Admiral Technologies) and its 50% share ofPreminen Price Comparison Holdings Limited (‘Preminen’). MAPFRE would also sell its 25% holding in Rastreator and 50% holding in
Preminen as part of the transaction.
Management considered these entities to meet the definition of a disposal group as set out under IFRS 5 above. The disposalgroup is included within the ‘Discontinued (comparison)’ operating segment as stated in note 4.
On the 30 April 2021, the Group announced that, following regulatory and competition authority approvals, RVU had completed
the purchase of the Penguin Portals Group and acquired Admiral’s 50% share of Preminen. MAPFRE also sold its 25% holding in
Rastreator and 50% holding in Preminen to RVU. The total transaction value was settled in cash on completion.

13c. Financial performance and cash flow information
Financial information relating to the discontinued operations for the financial year ending 31 December 2021 and 2020 are
presented below. The results for the financial year ending 31 December 2021 relates to the profit earned prior to completion on
30 April 2021, and the gain recognised on disposal.
31 December 2021

31 December 2020

Gross
£m

Eliminations
£m

Net
£m

Gross
£m

Eliminations
£m

Net
£m

67.2

(7.6)

59.6

183.9

(22.0)

161.9

–

–

–

–

–

–

Net revenue

67.2

(7.6)

59.6

183.9

(22.0)

161.9

Operating expenses and share scheme charges(55.8)

7.6(48.2)(154.4)22.0(132.4)

Operating profit

11.4

–

11.4

29.5

–

29.5

Finance costs

(0.1)

–

(0.1)

(0.1)

–

(0.1)

Gain on disposal sale of Comparison entities held for sale

404.4

–

404.4

–

–

–

Profit before tax from discontinued operations

415.7

–

415.7

29.4

–

29.4

(2.3)

–

(2.3)

(3.6)

–

(3.6)

413.4

–

413.4

25.8

–

25.8

Revenue (Other revenue)
Interest income

Taxation expense
Profit after tax from discontinued operations

Due to the availability of certain tax reliefs on the gain of the comparison businesses sold, the effective tax rate for 2021 fordiscontinued operations is lower than the current standard corporate tax rate.
Operating expenses and share scheme charges include £0.4 million (2020: £3.1 million) of share scheme expenses that are notincluded in the segmental result in note 4. The net cash flows incurred by the disposal group are as follows:
31 December
2021£m

31 December
2020£m

Net cash inflow from operating activities

10.6

36.1

Net cash (outflow) from investing activities

(0.2)

(1.0)

Net cash (outflow) from financing activities(22.6)(15.9)Net cash (outflow)/inflow from discontinued operations(12.2)

19.2

292

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
13. Discontinued Operations continued
13d. Assets disposed ofConsideration received consisted of cash only and was received at the point of completion. The total consideration received by theGroup in cash was £471.8 million. This excludes any costs incurred by the Group in relation to the sale. The total gain on disposal is£404.4 million.
The carrying amount of assets and liabilities as at the date of sale (30 April 2021) are outlined below. The comparative balanceis the assets classified as held for sale as at 31 December 2020. All assets previously held for sale have been disposed of as at
31 December 2021.

Note

30 April
2021£m

31 December
2020£mAssetsProperty and equipment

11b

5.4

5.9

Intangible assets

11c

1.1

1.2

Deferred tax asset

10c

4.2

4.2

Trade and other receivables

41.9

18.2

Corporation tax asset

0.2–

Cash and cash equivalents

41.3

53.5

Assets associated with disposal group held for sale

94.1

83.0

Trade and other payables

33.3

24.9

Lease liabilities

3.6

4.1

–

5.0

36.9

34.0

Liabilities

Corporation tax liability
Liabilities directly associated with disposal group held for sale

13e. Gain on disposal
31 December
2021£mGross sales proceeds
Accrued sale proceeds less dividends received prior to disposal and costs to sell recharged from purchaser

508.1
(7.4)

Non-controlling interest share of sales proceeds(28.9)

Total Admiral Group cash received (note 13d)

471.8

Costs to sell incurred by seller, out of proceeds(17.6)

Proceeds to Admiral, net of minority interests and transaction costs

454.2

Assets held for sale (note 13d)(57.2)

Non-controlling interest share of assets held for sale
Other adjustments
Gain on disposal of comparison entities held for sale

6.6
0.8
404.4

Company overview

Strategic report

Corporate governance

Financial statements

293

Additional information

14. Reconciliations
The following tables reconcile significant key performance indicators and non-GAAP measures included in the Strategic Report toitems included in the financial statements.

14a. Reconciliation of continuing operations turnover to reported gross premiums written and other revenue as per
the financial statements

Gross premiums written after co-insurance per note 5a of financial statements
Premiums underwritten through co-insurance arrangements
Total premiums written
Other revenue*1
Admiral Loans interest income
Other*2
Turnover as per note 4a of financial statements* *1 3Intra-group income elimination*4
Total turnover – continuing operations* *1 3

31 December
2021£m

Re-presented
31 December
2020£m

2,513.6

2,344.0

585.1

613.2

3,098.7

2,957.2

314.8

329.4

36.6

36.8

3,450.1

3,323.4

57.2

42.4

3,507.3

3,365.8

0.2

0.2

3,507.5

3,366.0*1 Continuing operations.
*2 Other reconciling items represent co-insurer and reinsurer shares of Other Revenue in the Group’s Insurance businesses outside of UK Car Insurance.
*3 See note 14d for the impact of the Stay at Home premium refund issued to UK motor insurance customers on Turnover in H1 2020.
*4 Intra-group income elimination relates to comparison income earned in the Group from other Group companies.

14b. Reconciliation of claims incurred to reported loss ratios, excluding releases on commuted reinsurance
December 2021

Net insurance claims (note 5)

UK Motor£m

UK Home£mInt. Ins
£m

Other
£m

Group
£m

86.1

31.8

170.8

43.6

332.3

Deduct claims handling costs(12.1)

(1.4)

(8.9)

(0.5)

(22.9)

Prior year release/strengthening – net original share

128.1

1.8

16.4

2.2

148.5

Prior year release/strengthening – commuted share

189.2

0.7

–

–

189.9

Impact of reinsurer caps

–

–

1.0

–

1.0

Impact of weather events

–

(1.1)

–

–

(1.1)

Attritional current period claims

391.3

31.8

179.3

45.3

647.7

Net insurance premium revenue

496.5

49.1

221.0

88.4

855.0

Loss ratio – current period attritional

78.8%

64.8%

81.1%

–

75.8%

–

2.2%

–

–

0.1%

Loss ratio – current period weather events
Loss ratio – prior year release/strengthening (net original share)(25.8%)(3.7%)(7.4%)–(17.4%)

Loss ratio – reported

53.0%

63.3%

73.7%

–

58.5%

294

Admiral Group plc Annual Report and Accounts 2021

Notes to the financial statements continued
For the year ended 31 December 2021
14. Reconciliations continued
14b. Reconciliation of claims incurred to reported loss ratios, excluding releases on commuted reinsurance continued
UK Motor£m

UK Home£mInt. Ins
£m

Other
£m

Group
£m

Net insurance claims (note 5)

97.1

29.3

139.3

27.5

293.2

Deduct claims handling costs(12.3)

(1.3)

(9.8)

–

(23.4)

Prior year release/strengthening – net original share

104.3

2.8

18.6

–

125.7

Prior year release/strengthening – commuted share

137.3

–

–

–

137.3

–

–

1.9

–

1.9

December 2020

Impact of reinsurer caps
Impact of weather events

–

(2.3)

–

–

(2.3)

Attritional current period claims

326.4

28.5

150.0

27.5

532.4

Net insurance premium revenue

451.4

43.2

204.2

52.8

751.6

Loss ratio – current period attritional

72.3%

65.9%

73.4%

–

70.8%

–

5.3%

–

–

0.3%

Loss ratio – prior year release/strengthening (net original share)(23.1%)(6.4%)(9.1%)–(16.7%)

Loss ratio – reported

49.2%

64.8%

64.3%

–

54.4%

Loss ratio – current period weather events

14c. Reconciliation of expenses related to insurance contracts to reported expense ratios
UK Motor£m

UK Home£mInt. Ins
£m

Other
£m

Group
£m

Net insurance expenses (note 9)

136.7

17.9

91.3

16.8

262.7

Restructure costs*(41.6)

(4.4)

–

–

(46.0)

Claims handling costs

12.1

1.4

8.9

0.5

22.9

–

–

0.3

–

0.3

December 2021

1

Intra-group expenses elimination*2

Impact of reinsurer caps

(10.1)

–

(1.7)

–

(11.8)Net IFRS 16 finance costs

0.5

–

0.1

–

0.6

Adjusted net insurance expenses

97.6

14.9

98.9

17.3

228.7

Net insurance premium revenue

496.5

49.1

221.0

88.4

855.0

Expense ratio – reported

19.7%

30.3%

44.8%

–

26.7%

UK Motor£m

UK Home£mInt. Ins
£m

Other
£m

Group
£m

Net insurance expenses (note 9)

76.7

11.4

78.5

9.2

175.8

Claims handling costs

12.3

1.3

9.8

–

23.4

–

–

0.2

–

0.2

Impact of reinsurer caps

–

–

1.1

–

1.1

Net IFRS 16 finance costs

0.5

–

0.1

–

0.6

Adjusted net insurance expenses

89.5

12.7

89.7

9.2

201.1

December 2020

Intra-group expenses elimination*2

Net insurance premium revenue

451.4

43.2

204.2

52.8

751.6

Expense ratio – reported

19.8%

29.4%

43.9%

–

26.8%

*1 Restructure costs of £8.0 million relate to ancillary costs. Total restructure costs incurred within UK insurance are £54.0m.
*2	T he intra-group expenses elimination amount relates to aggregator fees charges by the Group’s comparison business, Compare.com to other Group companies: given the re-presentationof other comparison businesses to discontinued operations, those expenses are now included in net insurance expenses in note 9, as acquisition costs.

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

295

14d. Reconciliation of Impact of Stay at Home premium refund issued to UK Motor Insurance customers on turnover,total written premiums, gross written premiums and net insurance premium revenue
31 December
2020£mTotal Stay at Home premium refund issued to UK Motor insurance customers

110.0

Insurance premium tax(12.7)

Impact of premium refund on turnover and total written premium

97.3

Co-insurer share of premium refund(27.3)

Impact of premium refund on gross written premium and gross earned premium

70.0

Reinsurer share of premium refund on reinsurers’ written and earned premium(48.9)

Impact of premium refund on net insurance premium revenue (written and earned)

21.1

Whilst the impact on premium in the prior period is £21.1 million, the ultimate impact is expected to be the substantial majorityof the total premium refunded due to the Group’s co- and reinsurance profit commission arrangements. The majority of this wasreflected in 2020.

14e. Reconciliation of earnings per share, continuing operations excluding restructure costs
31 December
2021£mProfit for the financial year after taxation attributable to equity shareholders – continuing operations

585.0

Post-tax impact of restructure costs

46.3

Profit for the financial year after restructure costs and taxation attributable to equity shareholders – continuing operations

631.3

Weighted average number of shares – basic
Earnings per share, continuing operations excluding restructure costs

297,480,041
212.2p296

Admiral Group plc Annual Report and Accounts 2021

Parent Company financial statements
Parent Company Income Statement
Year ended

Administrative expenses

Note

31 December
2021£m

31 December
2020
£m

2

(19.7)(21.6)(19.7)(21.6)

630.4

475.2

Operating loss
Investment and interest income

3

Impairment expense

4Gain on disposal of subsidiaries
Interest payable

6

Profit before tax
Taxation credit

7

Profit after tax(16.0)(10.5)

445.2

0.0(11.3)(12.2)

1,028.6

430.9

3.3

4.9

1,031.9

435.8

Parent Company Statement of Comprehensive Income
Year ended

Profit for the period

31 December
2021£m

31 December
2020£m

1,031.9435.8(10.1)

4.3

Other comprehensive income
Items that are or may be reclassified to profit or loss
Movements in fair value reserve
Deferred tax in relation to movement in fair value reserve
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period

7

0.8

(0.8)

(9.3)

3.5

1,022.6

439.3

Company overview

Strategic report

Corporate governance

Financial statements

297

Additional information

Parent Company Statement of Financial Position
As at

Note

31 December
2021£m

31 December
2020£m

Investments in group undertakings

4

315.1

327.3

Intangible assets

5

0.4

0.4

Financial investments

6

557.0

281.0

Corporation tax asset

7

3.5

4.7

Trade and other receivables

8

187.1

193.3

Cash and cash equivalents

6

ASSETS

Total assets

11.2

9.5

1,074.3

816.2

EQUITY
Share capital

10

Share premium accountFair value reserve

10

0.3

0.3

13.1

13.1

14.1

23.4

Retained earnings

447.3

73.0

Total equity

474.8

109.8

LIABILITIES
Subordinated and other financial liabilities

6

224.3

224.3

Deferred tax

7

4.3

5.2

Trade and other payables

9

370.9

476.9

599.5

706.4

1,074.3

816.2

Total liabilities
Total equity and total liabilities

The accompanying notes form part of these financial statements.
These financial statements were approved by the Board of Directors on 3 March 2022 and were signed on its behalf by:

Geraint Jones
Chief Financial Officer
Admiral Group plc
Company Number: 03849958

298

Admiral Group plc Annual Report and Accounts 2021

Parent Company financial statements continued
Parent Company Statement of Changes in Equity
Share
capital£mSharepremium
account£m

Fair value
reserve£m

Retainedearnings£m

Total
equity£m

At 1 January 2020

0.3

13.1

19.9

8.9

42.2

Profit for the period

–

–

–

435.8

435.8

–

–

4.3

–

4.3

–

–

(0.8)

–

(0.8)

–

–

3.5

435.8

439.3

Note

Other comprehensive income
Movements in Fair Value Reserve
Deferred tax charge in relation to movements
in Fair Value Reserve

7

Total comprehensive income/(expense) for the period
Transactions with equity holders
Dividends

10

–

–

–

(425.7)(425.7)

Issues of share capital

10

–

–

–

–

–

Share scheme credit

–

–

–

53.8

53.8

Deferred tax on share scheme credit

–

–

–

0.2

0.2

Total transactions with equity holders

–

–

–

(371.7)(371.7)As at 31 December 2020

0.3

13.1

23.4

73.0

109.8

At 1 January 2021

0.3

13.1

23.4

73.0

109.8

Profit for the period

–

–

–

1,031.9

1,031.9––(10.1)–(10.1)

–

–

0.8

–

0.8

–

–

(9.3)

1,031.9

1,022.6

Other comprehensive income
Movements in Fair Value Reserve
Deferred tax charge in relation to movements
in Fair Value Reserve

7

Total comprehensive income for the period
Transactions with equity holders
Dividends

10

–

–

–

(720.9)(720.9)Issues of share capital

10

–

–

–

–

–

Share scheme credit

–

–

–

63.1

63.1

Deferred tax on share scheme credit

–

–

–

0.2

0.2

Total transactions with equity holders

–

–

–

(657.6)(657.6)

0.3

13.1

14.1

447.3

474.8

As at 31 December 2021

Company overview

Strategic report

Corporate governance

Financial statements

Additional information

299

Notes to the Parent Company Financial Statements
For the year ended 31 December 2021
1. Accounting policies
1.1 Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework(FRS 101). The financial statements are prepared on the historical cost basis except for the revaluation of financial assets classified
as fair value through the profit or loss.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements ofInternational Financial Reporting Standards as adopted by the EU (‘Adopted IFRSs’) but makes amendments where necessary
in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has
been taken.

1.2 Changes to accounting policies
There were no significant changes to accounting policies in the period.

1.3 Disclosure exemptions applied under FRS 101
The Company has taken advantage of the following disclosure exemptions under FRS 101:
• FRS 101.8 (d): the requirement of IFRS 7 Financial Instruments: Disclosure to make disclosures about financial instruments.
• FRS 101.8 (f): the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in
respect of:Ȳ paragraph 118(3) of IAS 38 Intangible Assets.
• FRS 101.8 (g): the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1
Presentation of Financial Statements to produce a cash flow statement, a third balance sheet and to make an explicit andunreserved statement of compliance with IFRSs.
• FRS 101.8 (h): the requirements of IAS 7 Statements of Cash Flows to produce a cash flow statement.
• FRS 101.8 (i): the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors toinclude a list of new IFRSs that have been issued but that have yet to be applied.
• FRS 101.8 (k): the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between
two or more members of a group, provided that any subsidiary which is a party to transaction is wholly owned by such a member.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in thesefinancial statements.

1.4 Going concern
The financial statements have been prepared on a going concern basis. In considering the appropriateness of this assumption,
the Board have reviewed the Company’s projections for the next twelve months and beyond, including cash flow forecasts andregulatory capital surpluses.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence forthe foreseeable future. Thus, they continue to adopt the going concern basis in preparing the annual financial statements.

1.5 Critical accounting judgements and key source of estimation uncertainty
In applying the Company’s accounting policies as described below, management consider there to be a key source of estimation
uncertainty within the impairment testing of the Company’s investments in group undertakings. Management recognises theestimation involved in determining whether the carrying value of the investment may be supported by the recoverable amountcalculation based on the ‘value in use’ of the asset (the net present value of future cash-flows arising from the asset).
In calculating the net present value of future cash-flows, management has made assumptions over the timing and amount ofunderlying profit projections of the relevant undertakings, long term growth rates in those projections and the discount rateapplied to these projections that is appropriate to reflect the market’s view of the risk of the relevant investment. Sensitivity ofthese assumptions is also considered in calculating the net present value and suitably incorporated in management’s valuations.
Sensitivity of the key estimates can be found within note 4.
No key accounting judgements have been made in the process of applying the Company’s accounting policies.

300

Admiral Group plc Annual Report and Accounts 2021

Notes to the Parent Company Financial Statements continued
For the year ended 31 December 2021
1. Accounting policies continued
1.6 Shares in Group undertakings
Shares in Group undertakings are valued at cost less any provision for impairment in value.
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to theCompany’s investments in subsidiaries. When necessary, the entire carrying amount of the investment is tested for impairment
in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use andfair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of
the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable
amount of the investment subsequently increases. See note 4 to these financial statements for further detail.

1.7 Employee share schemes
The Company operates a number of share schemes for employees of the Group’s subsidiaries. For equity settled schemes, the fairvalue of the employee services received in exchange for the grant of free shares under the schemes is recognised as an increasein equity in the Company. A corresponding intercompany charge is made to the subsidiaries whose employees receive the freeshares. For further detail, see note 9 in the consolidated financial statements.

1.8 Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are regarded as recoverable. They are regarded as recoverable to theextent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be sufficient taxable
profits from which the future reversal of the underlying timing differences can be deducted.

1.9 Financial assets and financial liabilities
Under IFRS 9, classification and subsequent measurement of financial assets depend on:• The Company’s business model for managing the asset; and• The cash flow characteristics of the asset.
Based on these factors, the Company classifies its financial assets into one of the three categories below:• Amortised cost: assets held for collection of contractual cash flows where the cash flows represent solely payments of principal
and interest, that are not designated as FVTPL.
• Fair value through other comprehensive income (FVOCI): Financial assets that are held for collection of contractual cash flows
and selling the assets, where the assets’ cash flows represent solely payments of principal and interest, and that are notdesignated at FVTPL.
• Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI, or which aredesignated as FVTPL at initial recognition.
In line with the above:• Gilts and other debt securities are measured at FVOCI. Unrealised changes in the fair value of these assets are recognised in
Other Comprehensive Income (OCI). The recognition of impairment gains or losses and interest revenue are recognised in the
profit or loss.
• Investments measured at FVTPL are primarily money market funds. Interest income is recognised in the income statement.
The expected credit loss model is used to calculate any impairment to be recognised for all assets measured at amortised cost, as
well as financial investments measured at FVOCI. Impairment is measured using the simplified approach. Most of the investments
held at amortised cost and FVOCI are of investment grade.
Cash and cash equivalents include cash in hand and deposits held at call with banks. All cash and cash equivalents are measured atamortised cost.
The Company’s financial liabilities comprise of subordinated notes which are held at amortised cost using the effective
interest method.

Company overview

Strategic report

Corporate governance

Financial statements

301

Additional information

1.10 Intangible assets
Purchased software licences are classified as an intangible asset and stated in the balance sheet at a cost less accumulated
amortisation. Software is amortised from the point at which the asset is operational and is amortised over the licence period.

1.11 Trade and other receivables
Trade and other receivables are measured at amortised cost, less any impairment.

1.12 Trade and other payables
Trade and other payables are measured at amortised cost.

2. Administrative expenses
Included within administrative expenses are recharges of £4.2 million (2020: £3.3 million) relating to employees within the Group
who perform services on behalf of the Company. No staff are directly employed by the Company.

3. Investment and interest income
31 December
2021£m

31 December
2020
£m

626.0

470.0

Dividend income from subsidiary undertakings
Interest income – other

0.3

1.0

Interest income at effective interest rate

4.1

4.2

Total investment and interest income

630.4

475.2

4. Investments in Group undertakings£m

Investments in subsidiary undertakings:
At 1 January 2020

301.4

Additions

36.4

Impairment
At 31 December 2020
Additions(10.5)
327.3*1
13.0

Disposals(9.2)

Impairment(16.0)At 31 December 2021

315.1

*1 Of this amount, £9.2 million relates to Assets held for sale. See note 11 for further detail.

A full list of the Company’s subsidiaries is disclosed in note 12 of the consolidated financial statements.
The additions to investments in the period of £13.0 million relate to the following:• Further investment in Elephant Insurance Company (‘Elephant’) (£9.0 million);• Further investment in Able Insurance Services Limited (‘Able’) (£4.0 million).
An annual impairment review is performed over the carrying value of the investments in subsidiary undertakings, which involves
comparing the carrying amount to the estimated recoverable amount. The recoverable amount is the greater of the fair value ofthe asset less costs to sell, and the value in use of the subsidiary, calculated using cash flow projections based on financial budgets
approved by the Group Board.

302

Admiral Group plc Annual Report and Accounts 2021

Notes to the Parent Company Financial Statements continued
For the year ended 31 December 2021
4. Investments in Group undertakings continued
Elephant
In 2021 a non-cash impairment loss of £14.1 million (2020: £9.1 million) has been recognised by the parent company in respect of
its investment in the Group’s US insurance business Elephant. The impairment charge is to reflect the loss incurred during 2021 tobring the value of the investment to its recoverable amount, being its fair value less costs to sell (equivalent to net asset value), of£25.8 million (2020: £30.6 million). The impairment charge is presented within the ‘Impairment losses’ line of the parent company
income statement.
The carrying value is based on fair value less costs of disposal, for which the net assets has been used as a reasonableapproximation, using tier 3 of the fair value hierarchy. Due to limitations on evidential market information and restrictions inreadily available information, net assets have been used to estimate fair value less costs to sell.
As the valuation is based on net assets, any movement in future profits will impact the investment held. The Board continues tosupport Elephant in the achievement of its goals.

Compare.com
In 2021 a non-cash impairment loss of £1.9 million (2020: £1.4 million) has been recognised by the parent company in respect of
its investment in the Group’s US comparison business compare.com. The impairment charge is to reflect the loss incurred during2021 to bring the value of the investment to its recoverable amount, being its fair value less costs to sell (equivalent to the Group’s
share of net asset value), of £1.8 million (2020: £3.7 million). The impairment charge is presented within the ‘Impairment losses’ lineof the parent company income statement.
The carrying value is based on fair value less costs of disposal, for which the Group’s share of net assets has been used as areasonable approximation following a review of the carrying value of those assets compared to fair value, using tier 3 of the fairvalue hierarchy.
The Board continues to support compare.com in the achievement of its goals, though there remains uncertainty over theprospects of the business.

5. Intangible assets
Software
£m

Total
£m

0.4

0.4

–

–

Cost
At 1 January 2021
Additions
Disposal
At 31 December 2021

–

–

0.4

0.4

Amortisation
At 1 January 2021––

Charge for the year––

Disposal––

At 31 December 2021––

At 31 December 2020

0.4

0.4

At 31 December 2021

0.4

0.4

Net Book Value

Additional information

303

31 December
2021£m

31 December
2020£mGilts (level 1 of the IFRS 13 hierarchy)

166.4

177.3

Debt securities (level 1 of the IFRS 13 hierarchy)

242.0

–

408.4

177.3

148.6

103.7

148.6

103.7

557.0

281.0

187.1

193.3

Company overview

Strategic report

Corporate governance

Financial statements

6. Financial assets and liabilities
The Company’s financial instruments can be analysed as follows:

Investments classified as FVOCI

Investments classified as FVTPL
Money market and other similar funds (level 1 of the IFRS 13 hierarchy)
Total financial investments
Financial assets held at amortised cost
Trade and other receivables (Note 8)
Cash and cash equivalents

11.2

9.5

Total financial assets

755.3

483.8

Subordinated notes

204.3

204.3

Other borrowings

20.0

20.0

Trade and other payables (Note 9)

370.9

476.9

Total financial liabilities

595.2

701.2

Financial liabilities

The amortised cost carrying amount of deposits and receivables is a reasonable approximation of fair value.
The table below compares the carrying value of subordinated notes (as per the Statement of Financial Position) with the fair valueof the subordinated notes using a level one valuation:
31 December 2021

31 December 2020

Carrying
amount
£m

Fair
value
£m

Carrying
amount
£m

Fair
value
£m

204.3

217.1

204.3

222.9

Financial liabilities
Subordinated notes

The subordinated notes were issued on 25 July 2014 at a fixed rate of 5.5%, with a redemption date of 25 July 2024.
Total interest payable of £11.3 million (2020: £12.2 million) was recognised, of which £11.1 million (2020: £11.1 million) was inrelation to the subordinated loan notes.

304

Admiral Group plc Annual Report and Accounts 2021

Notes to the Parent Company Financial Statements continued
For the year ended 31 December 2021
7. Taxation
7a. Taxation credit
31 December
2021£m

31 December
2020
£m

(3.5)

(4.7)

Current tax
Corporation tax credit on profits for the year
Change in provision relating to prior periods

0.1

(0.4)

Current tax credit

(3.4)

(5.1)

Current period deferred taxation movement

0.1

0.2

Change in provision relating to prior periods

–

–

(3.3)

(4.9)

31 December
2021£m

31 December
2020£m

1,028.6

430.9

195.4

81.9

4.8

2.5

(203.5)(89.3)

(3.3)

(4.9)

Deferred tax

Total tax credit per income statement

Factors affecting the total tax credit are:Profit before tax
Corporation tax thereon at effective UK corporation tax rate of 19.0% (2020: 19.0%)
Expenses and provisions not deductible for tax purposes
Non-taxable income
Total tax credit for the period as above

At the year end, the corporation tax asset was £3.5 million (2020: £4.7 million).

Company overview

Strategic report

Corporate governance

Financial statements

305

Additional information

7b. Deferred income tax liability
Analysis of deferred tax liability
Taxtreatmentof shareschemes£mCapitalallowances£m

Carriedforwardlosses£m

Fair value
reserve£m

Otherdifferences
£m

Total
£m

Balance brought forward at 1 January 2020

(0.2)

–

–

4.6

–

4.4

Tax treatment of share scheme charges through income
or expense

0.2

–

–

–

–

0.2

Tax treatment of share scheme charges through reserves

(0.2)

–

–

–

–

(0.2)

–

–

–

0.8

–

0.8

Balance carried forward at 31 December 2020

Movement in fair value reserve

(0.2)

–

–

5.4

–

5.2

Tax treatment of share scheme charges through income
or expense

0.1

–

–

–

–

0.1

Tax treatment of share scheme charges through reserves

(0.2)

–

–

–

–

(0.2)

–

–

–

(0.8)

–

(0.8)

(0.3)

–

–

4.6

–

4.3

Movement in fair value reserve
Balance carried forward at 31 December 2021

The average effective rate of tax for 2021 is 19.0% (2020: 19.0%). An increase to the main rate of corporation tax in the UK to 25%
was announced in the 2021 Budget and is expected to come into effect in the year ending 2023. This will increase the Company’s
future tax charge accordingly.
The deferred tax liability at 31 December 2021 has been calculated based on the rate at which each timing difference is most likely
to reverse.

8. Trade and other receivables
31 December
2021£m

31 December
2020
£m

1.6

1.0

Amounts owed by subsidiary undertakings

185.5

192.3

Total trade and other receivables

187.1

193.3

Trade and other receivables

Held within amounts owed by subsidiary undertakings is £184.5 million (2020: £176.5 million) which relate to loans with formal
agreements in place between the parent and the subsidiary. The estimated credit losses of these loans has been considered andany expected credit loss is considered to be immaterial due to the assessment of credit risk being low due to the positive net valueof assets of the subsidiaries and future trading projections.
Of the above amount, £151.0 million is due in greater than one year (2020: £101.0 million).

306

Admiral Group plc Annual Report and Accounts 2021

Notes to the Parent Company Financial Statements continued
For the year ended 31 December 2021
9. Trade and other payables
31 December
2021£m

31 December
2020
£m

9.5

8.5

Amounts owed to subsidiary undertakings

361.4

468.4

Total trade and other payables

370.9

476.9

Trade and other payables

Held within amounts owed to subsidiary undertakings is £0.5 million (2020: £38.5 million) which relate to loans with formal
agreements in place between the parent and the subsidiary.

10. Share capital and reserves
Capital within the Company is comprised of share capital and the share premium account, the fair value reserve (which reflects
movements in the fair value of assets classified as FVOCI) and retained earnings. Further information can be found within note 12of the consolidated financial statements.

10a. Share capital
31 December
2021£m

31 December
2020
£m

0.5

0.5

0.3

0.3

0.3

0.3

Authorised
500,000,000 ordinary shares of 0.1 pence
Issued, called up and fully paid
299,554,720 (2020: 296,692,063) ordinary shares of 0.1 pence

10b. Dividends
Dividends were proposed, approved and paid as follows:
31 December
2021£m

31 December
2020£m

Proposed March 2020 (77.0 pence per share, 56.3 pence per share approved April 2020 and paid June 2020)

–

162.3

Declared August 2020 (91.2 pence per share, including 20.7 pence per share deferred, paid October 2020)

–

263.4

Proposed March 2021 (86.0 pence per share, approved April 2021 and paid June 2021)

250.8

–

Declared August 2021 (161.0 pence per share, paid October 2021)

470.1

–

Total dividends

720.9

425.7

The dividends proposed in March (approved in April) represent the final dividends paid in respect of the 2019 and 2020 financial
years. The dividends declared in August are interim distributions in respect of 2020 and 2021.
A final dividend of 118.0 pence per share (£346.5 million) has been proposed in respect of the 2021 financial year. Refer to the
Chairman’s Statement and Strategic Report for further detail.
The profit and loss account of the parent company does not include any unrealised profits, therefore the amount available for
distribution by reference to these accounts is £447.3 million. The Group also has substantial retained profits in its subsidiarycompanies which are expected to flow up to the parent company in due course, such that surplus cash generated can continue tobe returned to shareholders.

Company overview

Strategic report

Corporate governance

Financial statements

307

Additional information

11. Assets held for sale
On 29 December 2020, Admiral Group plc (‘the Group’) announced that it had reached an agreement with ZPG Comparison Services
Holdings UK Limited (‘RVU’) that RVU will purchase the Penguin Portals Group (‘Penguin Portals’, comprising online comparison
portals Confused.com, Rastreator.com and LeLynx.fr and the Group’s technology operation Admiral Technologies) and its 50%
share of Preminen Price Comparison Holdings Limited (‘Preminen’). MAPFRE would also sell its 25% holding in Rastreator and 50%
holding in Preminen as part of the transaction.
These entities are determined to be the disposal group. Further information can be found within the consolidated accounts.
On 30 April 2021, the Group announced that, following regulatory and competition authority approvals, RVU had completed thepurchase of the Penguin Portals Group and acquired the Group’s 50% share of Preminen. MAPFRE also sold its 25% holding in
Rastreator and 50% holding in Preminen to RVU. The transaction was settled in cash on completion.
The assets held for sale as at 31 December 2020 are presented below:

Note

31 December
2020
£m

4

9.2

AssetsInvestments in subsidiary undertakings
Assets associated with disposal group held for sale

9.2

There are no associated liabilities with the disposal group.

12. Related party transactions
The Company has taken advantage of the exemptions permitted by Financial Reporting Standard 101.8 (k) and not disclosed
details of transactions with other wholly owned group undertakings. Transactions with group undertakings that are not wholly
owned by Admiral Group plc are disclosed below.

compare.com Insurance Agency LLC (Subsidiary undertaking)Transaction
Value
2021
£m

Balance at
31 December
2021 due/(to)related party£mTransaction
Value
2020
£m

Balance at
31 December
2020 due/(to)related party
£m

0.2

4.5

0.3

4.2

The balance owed from compare.com relates to a convertible loan issued for which interest is being accrued.

308

Admiral Group plc Annual Report and Accounts 2021

Notes to the Parent Company Financial Statements continued
For the year ended 31 December 2021
13. Guarantees and contingent liabilities
During 2018, a Special Purpose Entity (SPE) was set up in order to secure additional funding for the Admiral Loans business, witha second such SPE set up in October 2021. The Company acts as guarantor for certain operational performance conditions of its
subsidiary, AFSL, as seller and servicer for the SPEs, and indemnifies AFSL in respect of any amount that would have been payable
by AFSL for non-compliance with such performance conditions.
One of the Group's previously owned subsidiaries was subject to a Spanish Tax Audit which concluded with the Tax Authority
denying the application of the VAT exemption relating to insurance intermediary services. The Company has appealed thisdecision via the Spanish Courts and is confident in defending its position which is, in its view, in line with the EU Directive andis also consistent with the way similar supplies are treated throughout Europe. Whilst the Company is no longer part of theAdmiral Group, the contingent liability which the Company is exposed to has been indemnified by the Admiral Group up to acap of £22 million.
A number of the Group’s contractual arrangements with reinsurers include features that, in certain scenarios, allow for reinsurers
to recover losses incurred to date. The overall impact of such scenarios would not lead to an overall net economic outflow from
Admiral Group plc.

14. Post balance sheet events
No events have occurred since the reporting date that materially impact these financial statements.

15. Continued application of Financial Reporting Standard (FRS) 101 – Reduced Disclosure Framework
Following the first time application of FRS 101 Reduced Disclosure Framework in 2015, the Board considers that it is in thebest interests of the Group for Admiral Group plc to continue to apply the FRS 101 Reduced Disclosure Framework in future
periods. A shareholder or shareholders holding in aggregate 5% or more of the total allotted shares in Admiral Group plc may
serve objections to the use of the disclosure exemptions on Admiral Group plc, in writing, to its registered office (Tŷ Admiral,
David Street, Cardiff CF10 2EH) no later than 30 June 2022.

Company overview

Strategic report

Corporate governance

Financial statements

309

Additional information

Consolidated financial summary (unaudited)
Basis of preparation
The figures below are as stated in the Group financial statements preceding this financial summary and issued previously. Only
selected lines from the income statement and balance sheet have been included.

Income statement
2021
£m

2020
£m

2019*1
£m

2018
£m

2017
£m

3,098.7

2,957.2

2,938.6

2,766.4

2,499.4

Net insurance premium revenue

855.0

751.6

709.4

671.8

619.1

Other revenue

345.3

359.0

348.8

460.6

401.1

Profit commission

304.5

134.0

114.9

93.2

67.0

Total premiums

45.2

60.7

35.7

36.0

41.7

Net revenue

Investment and interest income

1,550.0

1,305.3

1,208.8

1,261.6

1,128.9

Net insurance claims(332.3)(293.2)(359.3)(350.1)(347.1)Net expenses(492.3)(391.6)(331.9)(424.0)(366.9)Operating profit

725.4

620.5

517.6

487.5

414.9

Net finance costs(11.9)(12.3)(12.5)(11.3)(11.4)

Profit before tax from continuing operations

713.5

608.2

505.1

–

–

Profit before tax from discontinued operations

415.7

29.4

17.5

–

–

1,129.2

637.6

522.6

476.2

403.5

2021
£m

2020*1
£m

2019
£m

2018
£m

2017
£m

Property and equipment

103.2

146.3

154.4

28.1

31.3

Intangible assets

179.9

167.9

160.3

162.0

159.4

Profit before tax from continuing and discontinued operations*1 Re-presented from financial year 2019 to reflect discontinued operations.

Balance sheet

Deferred income tax

9.3

3.3

–

0.2

0.3

Corporation tax asset

10.6

17.9

–

–

–

Reinsurance assets

2,176.1

2,083.2

2,071.7

1,883.5

1,637.6

Insurance and other receivables

1,208.5

1,200.2

1,227.7

1,082.0

939.7

Loans and advances to customers

556.8

359.8

455.1

300.2

66.2

Financial investments

3,742.6

3,506.0

3,234.5

2,969.7

2,697.8

Cash and cash equivalents

372.7

351.7

281.7

376.8

326.8

Total assets

8,359.7

7,836.3

7,585.4

6,802.5

5,859.1

Equity1,408.5

1,123.4

918.6

771.1

655.8

Insurance contracts

4,215.0

4,081.3

3,975.0

3,736.4

3,313.9

670.9

488.6

530.1

444.2

224.0

1,960.0

2,016.1

1,975.9

1,801.5

1,641.6

105.3

126.9

137.1

–

–

–

–

0.4

–

–

Subordinated and other financial liabilities
Trade and other payables
Lease liabilities
Deferred income tax
Current tax liabilities
Total equity and total liabilities*1 Balance sheet is shown on a total group basis (including discontinued operations).

–

–

48.3

49.3

23.8

8,359.7

7,836.3

7,585.4

6,802.5

5,859.1

310

Admiral Group plc Annual Report and Accounts 2021

Additional
Information

Quick navigation
312 Glossary

311

Chris’
story

We sit down with Chris, to talk about joining the Admiral
Future Leaders Programme.
Hello! My name is Chris Last and I’ve
been here at Admiral for around nine
years. I’ve recently joined Admiral’s
Future Leaders Programme and prior
to that I was running contact
centre operations at our US
subsidiary, Elephant.
The Future Leaders Programme is ayear-long placement that has
participants take on the responsibilities
of an International Business
Development Manager. I work closelywith the group senior leadership teamon strategy, particularly relating todigital improvements, our productportfolio and preparing for the future.
I joined the Admiral graduate scheme
shortly after completing a business
degree at the University of South
Wales. I was placed into a newly
created digital team, an incredible
experience. It was exciting to help
Admiral transform from a call centre
focused business to the much moretech savvy company you see today.

Through my time here I’ve moved
around many different roles and have
had the opportunity to work closelywith most areas of the business. The
one thing I love most about Admiralis how the Company encourages
people to broaden their knowledge bystepping out of their comfort zone.
I’ve always been big on learning anddevelopment, becoming the best
version of myself. Admiral has driven
me to become better every day.
The Company has funded a bunchof different qualifications, helped
sponsor my MBA and encouraged
me to apply for positions that would
keep my learning curve steep. All thewhile, they provided mentorship,coaching and a phenomenalleadership team to learn from.
I always say I’m incredibly
fortunate to have grown up in
Admiral. I joined from a small
town, with no insurance knowledge
and little business experience.

The Company
has funded abunch of different
qualifications, helped
sponsor my MBA andencouraged me toapply for positions
that would keep mylearning curve steep.

I now get to work with some of thebrightest minds in business, fromsome of the top business schools,
each with incredible talents,
experiences, and backgrounds.

312

Admiral Group plc Annual Report and Accounts 2021

Glossary
Alternative Performance Measures
Throughout this report, the Group uses a number of Alternative Performance Measures (APMs); measures that are not requiredor commonly reported under International Financial Reporting Standards, the Generally Accepted Accounting Principles (GAAP)
under which the Group prepares its financial statements.
These APMs are used by the Group, alongside GAAP measures, for both internal performance analysis and to help shareholders
and other users of the Annual Report and financial statements to better understand the Group’s performance in the period incomparison to previous periods and the Group’s competitors.
The table below defines and explains the primary APMs used in this report. Financial APMs are usually derived from financial
statement items and are calculated using consistent accounting policies to those applied in the financial statements, unlessotherwise 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 beconsidered as a supplement rather than a substitute for GAAP measures.
TurnoverTurnover is defined as total premiums written (as below), other revenue and income from Admiral Loans. It isreconciled to financial statement line items in note 14a to the financial statements. It has been redefined in thecurrent period to exclude revenue from discontinued operations.
This measure has been presented by the Group in every Annual Report since it became a listed Group in 2004. It
reflects the total value of the revenue generated by the Group and analysis of this measure over time provides
a clear indication of the size and growth of the Group.
The measure was developed as a result of the Group’s business model. The UK Car insurance business has
historically shared a significant proportion of the risks with Munich Re, a third-party reinsurance Group, througha co-insurance arrangement, with the arrangement subsequently being replicated in some of the Group’s
international insurance operations. Premiums and claims accruing to the external co-insurer are not reflected in
the Group’s income statement and therefore presentation of this metric enables users of the Annual Report to see
the scale of the Group’s insurance operations in a way not possible from taking the income statement in isolation.

Total Premiums Written

Total premiums written are the total forecast premiums, net of forecast cancellations written in theunderwriting year within the Group, including co-insurance. It is reconciled to financial statement line items innote 14a to the financial statements.
This measure has been presented by the Group in every Annual Report since it became a listed Group in 2004. It
reflects the total premiums written by the Group’s insurance intermediaries and analysis of this measure overtime provides a clear indication of the growth in premiums, irrespective of how co-insurance agreements havechanged over time.
The reasons for presenting this measure are consistent with that for the Turnover APM noted above.
As noted in the Turnover metric above, in 2020 a reduction of £97 million has been reflected within 2020 total
premiums written, to reflect the Stay at Home premium rebate.

Group profit before tax

Group profit before tax represents profit before tax from continuing operations, excluding restructure costs.

Earnings per share, continuing Earnings per share from continuing operations before restructure costs represents the profit after tax attributable
operations
to equity shareholders excluding restructure costs, divided by the weighted average number of basic shares.
Underwriting result(profit or loss)

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

Company overview

Loss Ratio

Strategic report

Corporate governance

Financial statements

Additional information

313

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 inorder to more clearly present the underlying performance of the Group and operating segments within theGroup. The calculations of these are presented within note 14b to the accounts and explanation is as follows.
UK reported motor loss ratio: Within the UK insurance segment the Group separately presents motor ratios,
i.e. excluding the underwriting of other products that supplement the car insurance policy. The motor ratio isadjusted 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 the income statement.
International insurance loss ratio: As for the UK Motor loss ratio, the international insurance loss ratiospresented exclude the underwriting of other products that supplement the car insurance policy. The motor
ratio is adjusted to exclude the claims element of the impact of reinsurer caps as inclusion of the impact of the
capping of reinsurer claims costs would distort the underlying performance of the business.
Group loss ratios: Group loss ratios are reported on a consistent basis as the UK and international ratios noted
above. Adjustments are made to i) exclude the impact of reserve releases on commuted reinsurance contracts,ii) exclude claims handling costs that are reported within claims costs in the income statement and iii) exclude
the claims element of the impact of international reinsurer caps.

Expense Ratio

Reported expense ratios are expressed as a percentage of net operating expenses divided by net
earned premiums.
There are a number of instances within the Annual Report where adjustments are made to this calculation inorder to more clearly present the underlying performance of the Group and operating segments within theGroup. The calculations of these are presented within note 14c to the accounts and explanation is as follows.
UK reported motor expense ratio: Within the UK insurance segment the Group separately presents motor
ratios, i.e. excluding the underwriting of other products that supplement the car insurance policy. The
motor ratio is adjusted to i) include claims handling costs that are reported within claims costs in the income
statement, ii) include intra-group aggregator fees charged by the UK comparison business to the UK insurance
business and iii) exclude the expense element of the impact of reinsurer caps as inclusion of the impact of
the capping of reinsurer expenses would distort the underlying performance of the business, and iv) exclude
restructure costs.
International insurance expense ratio: As for the UK Motor loss ratio, the international insurance expense
ratios presented exclude the underwriting of other products that supplement the car insurance policy. The
motor ratio is adjusted to i) exclude the expense element of the impact of reinsurer caps as inclusion of the
impact of the capping of reinsurer expenses would distort the underlying performance of the business andii) include intra-group aggregator fees charged by the overseas comparison businesses to the international
insurance businesses.
Group expense ratios: Group expense ratios are reported on a consistent basis as the UK and 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 the expense element of the impact of reinsurer caps.

Combined Ratio

Reported combined ratios are the sum of the loss and expense ratios as defined above. Explanation of thesefigures is noted above and reconciliation of the calculations are provided in notes 14b and 14c.

Return on Equity

Return on equity is calculated as profit after tax from continuing operations, before restructure costs, forthe period attributable to equity holders of the Group divided by the average total equity attributable toequity holders of the Group in the year excluding any net assets related to discontinued operations, including
the exclusion of the net proceeds from sale still to be distributed. This average is determined by dividing the
opening and closing positions for the year by two. It has been redefined in the current period to exclude theimpact of discontinued operations.

Group Customers

Group customer numbers reflect the total number of cars, households and vans on cover at the end of the year,
across the Group, and the total number of travel insurance and loans customers.
This measure has been presented by the Group in every Annual Report since it became a listed Group in 2004. It
reflects the size of the Group’s customer base and analysis of this measure over time provides a clear indicationof the growth. It is also a useful indicator of the growing significance to the Group of the different lines ofbusiness and geographic regions.

Effective Tax Rate

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

314

Admiral Group plc Annual Report and Accounts 2021

Glossary continued
Additional Terminology
There are many other terms used in this report that are specific to the Group or the markets in which it operates. These aredefined as follows:
Accident year

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

Actuarial best estimate

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

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

Claims reserves

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

Co-insurance

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

Commutation

An agreement between a ceding insurer and the reinsurer that provides for the valuation, payment, andcomplete discharge of all obligations between the parties under a particular reinsurance contract.
The Group typically commutes UK motor insurance quota share contracts after 24-36 months from the startof an underwriting year where it makes economic sense to do so. Although an individual underwriting year may
be profitable, the margin held in the financial statement claims reserves may mean that an accounting loss
on commutation must be recognised at the point of commutation of the reinsurance contracts. This loss oncommutation unwinds in future periods as the financial statement loss ratios develop to ultimate.

Insurance market cycle

The tendency for the insurance market to swing between highs and lows of profitability over time, with thepotential 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 via salvage and subrogation arrangements
or under reinsurance contracts. It includes both claims payments and movements in claims reserves.

Net insurance premium revenue Also referred to as net earned premium. The element of premium, less reinsurance premium, earned in the period.
Net promoter score

NPS is currently measured based on a subset of customers responding to a single question: On a scale of
0-10 (10 being the best score), how likely would you recommend our company to a friend, family or colleague
through phone, online or email. Answers are then placed in 3 groups; Detractors: scores ranging from 0 to 6;
Passives/neutrals: scores ranging from 7 to 8; Promoters: scores ranging from 9 to 10 and the final NPS scoreis : % of promoters - % of detractors.

Ogden discount rate

The discount rate used in calculation of personal injury claims settlements in the UK.

Periodic Payment Order (PPO)

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

Premium

A series of payments are made by the policyholder, typically monthly or annually, for part of or all of theduration of the contract. Written premium refers to the total amount the policyholder has contracted for,whereas earned premium refers to the recognition of this premium over the life of the contract.

Profit commission

A clause found in some reinsurance and co-insurance agreements that provides for profit sharing.

Reinsurance

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

Scaled Agile

Scaled agile is a framework that uses a set of organisational and workflow patterns for implementing agile
practices at an enterprise scale. Scaled agile at Admiral represents the ability to drive agile at the team level
whilst applying the same sustainable principles of the Group.

Securitisation

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

Special Purpose Entity (SPE)An entity that is created to accomplish a narrow and well-defined objective. There are specific restrictions orlimitations around ongoing activities. The Group uses an SPE set up under a securitisation programme.

Ultimate loss ratio

A projected actuarial best estimate loss ratio for a particular accident year or underwriting year.

Underwriting year

The year in which an insurance policy was incepted.

Underwriting year basis

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

Written/Earned basis

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

Registered OfficeTŷ AdmiralDavid Street
Cardiff
CF10 2EH
www.admiralgroup.co.uk