Henry Engelhardt (Chief Executive) Kevin Chidwick (Finance Director, appointed 4 September 2006)
Chairman’s statement 2006 was a year when we not only continued to develop our direct UK private motor business but also moved forward significantly our outlined strategy to identify profitable opportunities that exploit the knowledge, skills, and resources attaching to that core business.
• Produced a combined ratio of 87% up from 85% in 2005
Will history repeat itself? One might look at 2007 as one looked at 1998. At the end of 1997 it was clear to one and all that the market was unprofitable and that price increases were required. But prices didn’t move in 1998 while claims costs rose, and most industry observers gave up hope that the market would ever move, predicting a future of perpetual losses. It was only in 1999, when everyone had seemingly given up on the market altogether, that it began to move. When prices did start to rise in 1999 they went up fast, some 20% in that year alone.
New co-insurance and reinsurance arrangements, 2007 onwards During 2007, the Group concluded the successful renegotiation of the long-term UK motor reinsurance treaty with Great Lakes, and also put in place new quota share reinsurance arrangements for 2007 and beyond. The new Great Lakes contract will run until the end of 2014 at the earliest, and the percentage of business underwritten under the contract will decline by 5% per annum until 2011, so that in that year and beyond, Great Lakes will underwrite 40% of the total.
The number of quotes the UK direct brands gave showed another large increase in 2006 – up almost 60% from 9.7m to 15.4m. Continued and substantial growth in Confused.com (further detail below) and other aggregator volume were the principal reasons.
Confused enjoyed a year of substantial growth in 2006. Increased media activity led to an increase in the number of quotes provided by Confused of almost 120%, from 4.1m in 2005 to 9.0m in 2006. Revenue (including payments from Admiral Group brands) increased by around 150% to £38.5m.
Taxation The total taxation charge reported in the income statement is £43.6m (2005: £34.8m), representing 29.6% (2005: 29.1%) of pre-tax profit. The lower effective rate in 2005 arose from utilisation of losses brought forward.
approve all proposals for expenditure of over £30,000 on non-audit services. The policy was last reviewed on 5 December 2006. The Group’s auditors, KPMG Audit plc, provide some non-audit services, the majority of which comprise compliance services on the various taxation issues within the Group, and are not considered by the Committee to compromise their independence as auditors. The level of non-audit fees is reviewed at each Committee meeting and details are included in note 10 to the Report and Accounts.
Internal Audit The Internal Audit function assists management by providing it with timely, independent assurance that the controls established are operating effectively. This includes regular reviews of internal control systems and business processes, including compliance systems and procedures and identification of control weakness and recommendations to management on improvements.
Remuneration for the year ended 31 December 2006 was as follows: Executive Directors
Disability The Group gives fair consideration to all applicants. The abilities and aptitudes of the applicant will be considered with regard to the requirement of the job for which he or she has applied. Employees who find themselves no longer able to carry out the job for which they are employed will be given individual consideration. Depending on the nature, severity, and duration of the disability, they may be considered for an alternative post within the Group. Admiral continues to train and encourage the career development of all disabled persons in its employment.
The Project Team will review the Group’s processes with a view to consuming less natural resource per employee; recycle more of the waste produced; and ensure that waste that cannot be recycled is disposed of in compliance with relevant legislation. The Group is committed to improving its performance in the following areas: • Minimising consumption of natural resources, including energy, water and other raw materials
We have not been able to accurately assess the CO2 emissions generated by the Group’s direct activities. Improved measurement of resource usage will enable the Project Team to provide estimated CO2 emissions for 2007.
• Screen savers on all PCs • Communicating the advantages of switching PCs off each evening
A central booking facility is provided for staff to request train and airline tickets, avoiding the need for them to fund the costs up front and to encourage staff to use the service.
Director responsible for pricing in 1996 and claims and pricing in 1999. He was appointed as
F in a n c ia l st a te m e n ts 52 -5�
Profit after tax attributable to equity holders of the Company 103,722 84,720
Investment income: Investment income from financial assets comprises interest income and net gains (both realised and unrealised) on financial assets classified as fair value through profit and loss.
k) Loans and borrowings Interest bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the life of the borrowings on an effective interest basis.
Interest continues to be charged on amounts drawn down based on LIBOR plus a margin.
646,634 of these were issued to the Admiral Group Share Incentive Plan Trust for the purposes of this share scheme. These shares are entitled to receive dividends.
Deferred tax asset 5 4 6. Loans Full details of the Company’s debt are included in the consolidated financial statements above. The note, whilst prepared under IFRS also conforms to UK GAAP.