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Wednesday, 16 August 2017

Admiral Group plc results for the six months ended 30 June 2017

Admiral Group PLC    

Published: 08:00 CEST 16-08-2017 /GlobeNewswire /Source: Admiral Group PLC / : ADM /ISIN: GB00B02J6398

Admiral Group plc results for the six months ended 30 June 2017

Admiral Group plc results for the six months ended 30 June 2017
16 August 2017

2017 Interim Results Highlights

 

30 June 2017

30 June 2016

% change

 

 

 

 

Group's share of profit before tax*1

£195 million

£193 million

+1%

Group statutory profit before tax

£193 million

£190 million

+2%

Earnings per share

57.3 pence

55.9 pence

+3%

Interim dividend

56.0 p/share

51.0 p/share (62.9 p/share including additional capital return)

+10%

Return on equity*1

55%

50%

+10%

 

 

 

 

Group turnover*1

£1.45 billion

£1.26 billion

+15%

Group net revenue

£0.55 billion

£0.51 billion

+8%

Group customers*1

5.46 million

4.82 million

+13%

UK insurance customers*1

4.34 million

3.90 million

+11%

International car insurance customers*1

961,200

757,900

+27%

 

 

 

 

Group's share of price comparison result*1

£3.1 million profit

£1.1 million loss

 

Statutory price comparison result

£2.4 million profit

£4.8 million loss

 

 

 

 

 

Solvency ratio (post dividend)*1, 2

214%

180%

+19%

Over 9,000 staff each receive free shares worth a total of £1,800 under the employee share scheme based on the interim 2017 results

*1Alternative Performance Measures - refer to the end of the report for definition and explanation.

*2Refer to capital structure and financial position section later in the report for further information.

Comment from David Stevens, Group Chief Executive Officer

"The first half of 2017 saw Admiral ambitious in pursuit of both immediate and longer-term growth opportunities.

"We've grown turnover and customer numbers in our existing businesses by over 13% while also delivering a first half of important "firsts" - the first loans originated on our new dedicated lending system, the first cars sold on Confused.com, the first vans directly underwritten in the UK and Spain.

"Most of the adverse impact from the increase in the costs of large injury claims, resulting from the change in the Ogden discount rate, was captured in our 2016 second half result. However, some extra costs carry into 2017. In these circumstances, we are happy to report a marginal increase in profitability and to deliver a more material increase in the underlying dividend."

Dividend

The Directors have declared an interim dividend of 56.0 pence per share, representing a normal dividend of 37.9 pence per share and a special dividend of 18.1 pence per share. The dividend will be paid on 6 October 2017.  The ex-dividend date is 7 September 2017 and the record date is 8 September 2017.

Management presentation

Analysts and investors will be able to access the Admiral Group management presentation which commences at 9.00 BST on Wednesday 16 August 2017 by dialling + 44 (0)20 3059 8125.  A copy of the presentation slides will be available at www.admiralgroup.co.uk

H1 2017 Group overview

Summary of the H1 2017 result

The Group has continued to grow strongly in the first six months of 2017 with turnover up 15% to £1.45 billion (H1 2016: £1.26 billion) and net revenue 8% higher at £0.55 billion (H1 2016: £0.51 billion). Customer numbers increased 13% to 5.46 million (30 June 2016: 4.82 million).

The Group's share of pre-tax profit increased to £194.5 million from £193.3 million whilst statutory profit before tax increased to £193.4 million (H1 2016: £189.5 million). Slightly higher UK Insurance profit, a lower loss in the International Insurance segment and an improved Price Comparison result were partially offset by higher other Group charges and business development costs.

The Group's UK Insurance business (private car, household and van) grew turnover by 11% to £1.14 billion (H1 2016: £1.03 billion) and customer numbers increased by 11% to 4.3 million from 3.9 million.

UK Insurance profit before tax was slightly higher at £226.2 million (H1 2016: £224.0 million) reflecting the adverse impact of the lower Ogden discount rate on current period claims costs and profit commission, as well as a number of other offsetting impacts.  The UK results are discussed in further detail below.

Outside the UK, Admiral's International Insurance businesses grew combined turnover by 39% to £221.9 million (H1 2016: £159.2 million).  Customer numbers also grew strongly by 27% to 961,200 (30 June 2016: 757,900). In aggregate the businesses reduced losses to £10.1 million from £12.9 million mainly due to reduced losses in the Group's US operation, Elephant Auto.

Finally, Admiral's Price Comparison businesses made a combined profit (excluding minority interests' shares) of £3.1 million (H1 2016: £1.1 million loss), mainly reflecting a reduced loss in the Group's US Price Comparison business, Compare.com. Confused.com in the UK continued to invest in its new focus on motor-related products and services, with increased marketing costs leading to a reduced profit of £4.5 million (H1 2016: £8.3 million). The international price comparison businesses reported a reduced aggregate loss of £1.4 million (H1 2016: loss £9.4 million) with growing profit in the European operations (£2.0 million, up from £0.7 million) offset by the loss in Compare.com of £3.4 million (H1 2016: loss £10.1 million).

Earnings per share
Earnings per share increased by 3% to 57.3 pence (H1 2016: 55.9 pence), the increase being broadly in line with the post-tax profit movements.

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 be held in the Group for solvency or buffers.

The Board has declared a total interim dividend of 56.0 pence per share (£157 million), as follows:

  • 37.9 pence per share normal dividend based on the policy of distributing 65% of post-tax profits; and

  • A special dividend of 18.1 pence per share.

The total 2017 interim dividend is 10% ahead of 2016's interim (51.0 pence per share, excluding the return of surplus capital of 11.9 pence per share that was paid with the 2016 interim). The payout ratio is 98% (Interim 2016 excluding the return of surplus capital: 91%).

The Group's solvency position remains strong at 214% after accounting for the interim dividend.

The payment date is 6 October 2017, ex-dividend date 7 September 2017 and record date 8 September 2017.

Investments and cash

Admiral's investment strategy was unchanged in 2017 and the Group continued to invest in the same asset classes as previous years.

The Group's key objective in relation to investments is capital preservation, with additional priorities including low volatility of returns and high levels of liquidity. All objectives continue to be met. The Group's Investment Committee performs regular reviews of its investment strategy to ensure it continues to deliver the objectives.

Cash and investments analysis

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Fixed income and debt securities

1,324.3

1,483.3

1,496.4

 

1,469.2

Money market funds and other fair value instruments

671.0

693.4

968.8

 

781.0

Cash deposits

247.5

178.7

130.0

 

170.0

Cash

216.0

295.4

348.6

 

326.6

Total

2,458.8

2,650.8

2,943.8

 

2,746.8

The credit quality of the underlying securities has not changed significantly.

Investment and interest income in the first half of 2017 was £23.3 million, a decrease of £10.1 million on 2016 (£33.4 million). The decrease is mainly due to the first half of 2016 benefiting from £9 million relating to movements in accruals relating to quota share reinsurance arrangements.  Excluding that impact, underlying income was broadly flat in the period.

The underlying rate of return (excluding the reinsurance accrual) on the Group's cash and investments was 1.2% (H1 2016: 1.4%).

Capital structure and financial position

Return on equity for the first half was 55%, up from 50% for the first half of 2016. The increase is due to a combination of an increase in post-tax profits and lower average equity. 

A key feature of the business model is the extensive use of co- and reinsurance across the Group. The Group's co-insurance and quota share reinsurance arrangements for the UK Car insurance business are in place until at least the end of 2018. In 2017 and 2018, the Group's net share is 22%.

Similar long term arrangements are in place in the Group's International Insurance operations and other UK Insurance businesses.

The Group continues to manage its capital to ensure that all entities within the Group 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 arising from claims including Periodic Payment Order (PPO) claims).

The Group continues to develop its partial internal model to form the basis of future capital requirements.  Due to an extension in model scope the regulatory application for approval is now expected in late 2018.

The majority of the Group's capital requirement is derived from its European insurance operations, Admiral Insurance (Gibraltar) Limited (AIGL) and Admiral Insurance Company Limited (AICL). The estimated (and unaudited) Solvency II position for the Group at the date of this report was as follows:

Group capital position

Group

£bn

Eligible Own Funds (pre 2017 interim dividend)

1.19

2017 interim dividend

0.16

Eligible Own Funds (post 2017 interim dividend)

1.03

Solvency II capital requirement

0.48

Surplus over regulatory capital requirement

0.55

Solvency ratio (post dividend)*1

214%

*1    Solvency ratio calculated on a volatility adjusted basis.

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.

Estimated sensitivities to the current Group solvency ratio are presented in the table below. These sensitivities cover the two most 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.

Solvency ratio sensitivities

UK Car - incurred loss ratio +5%

-26%

UK Car - 1 in 200 catastrophe event

-2%

UK Household - 1 in 200 catastrophe event

-3%

Interest rate - yield curve down 50 bps

-10%

Credit spreads widen 100 bps

-4%

Currency - 25% movement in euro and US dollar

-3%

ASHE - long term inflation assumption up 0.5%

-4%

Taxation

The tax charge reported in the Consolidated Income Statement is £31.5 million (H1 2016: £36.2 million), which equates to 16.3% (H1 2016: 19.1%) of profit before tax. The lower effective rate of taxation compared to the prior period results from lower losses in the Group's US businesses leading to a lower level of unrecognised deferred tax asset.

The Group's results are presented in the following sections as UK Insurance, International Car Insurance and Price Comparison.

UK Insurance

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Turnover*1

881.8

1,028.5

1,144.1

 

2,063.1

Total premiums written*1

802.3

933.6

1,022.6

 

1,862.6

Net insurance premium revenue

193.6

218.2

241.0

 

454.4

Underwriting profit*1

99.5

95.4

105.7

 

109.2

Profit commission and other income

120.4

128.6

120.5

 

229.3

UK Insurance profit before tax

219.9

224.0

226.2

 

338.5

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

Split of UK Insurance profit before tax

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Car

219.2

222.8

224.2

 

335.8

Household

0.7

1.2

1.6

 

2.7

Van

-

-

0.4

 

-

UK Insurance profit

219.9

224.0

226.2

 

338.5

 

Key performance indicators

 

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Cars insured at period end

3.18m

3.52m

3.77m

 

3.65m

Households insured at period end

0.24m

0.38m

0.55m

 

0.47m

Vans insured at period end

-

-

0.02m

 

-

Total UK Insurance customers

3.42m

3.90m

4.34m

 

4.12m


The key
highlights for the UK Insurance business for H1 2017 were:

  • Generally favourable conditions in motor and household markets with rates increasing (notably in Q2 in motor)

  • Improved competitiveness at new business and strong customer retention helped turnover increase by 11% to £1.14 billion (H1 2016: £1.03 billion) and customer numbers move 11% higher to 4.34 million (30 June 2016: 3.90 million)

  • UK Insurance profitability was slightly ahead of H1 2016 at £226.2 million (H1 2016: £224.0 million) with modest improvements in the Car and Household results and the first small profit from Van insurance

  • Significant releases from booked Car Insurance reserves, though less substantial on Admiral's original net share than H1 2016 (partly resulting from a cautious approach to loss ratio projections at 30 June 2017)

  • A reduced (though still significant and prudent) level of relative reserve margin strength in car insurance reserves (partly due to increased confidence over the impact of the change in Ogden rate to -0.75%)

  • A further increase in Household Insurance profit, though the total remains small in the context of the overall result, reflecting the continued substantial growth of the business and also a cautious approach to setting and releasing claims reserves and hence profit recognition

UK Car Insurance

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Turnover*1

857.9

993.2

1,082.9

 

1,987.0

Total premiums written*1

779.0

899.7

966.7

 

1,789.3

Net insurance premium revenue

188.9

210.7

229.7

 

437.4

Investment income

6.3

24.5

15.8

 

39.3

Net insurance claims

(69.3)

(108.9)

(108.4)

 

(304.7)

Net insurance expenses

(26.2)

(30.1)

(30.6)

 

(61.0)

Underwriting profit*1

99.7

96.2

106.5

 

111.0

Profit commission

44.2

41.7

28.8

 

52.7

Underwriting profit plus profit commission

143.9

137.9

135.3

 

163.7

Net other income

63.3

69.6

66.5

 

138.6

Instalment income

12.0

15.3

22.4

 

33.5

UK Car Insurance profit before tax

219.2

222.8

224.2

 

335.8

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

Split of underwriting profit

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Car insurance

91.5

85.5

99.7

 

93.6

Additional products

8.2

10.7

6.8

 

17.4

Underwriting profit

99.7

96.2

106.5

 

111.0


Key performance indicators

 

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Reported Car loss ratio*1,*2

58.2%

56.9%

66.5%

 

73.3%

Reported Car expense ratio*1,*3

17.4%

18.1%

16.4%

 

17.5%

Reported Car combined ratio*1

75.6%

75.0%

82.9%

 

90.8%

Written basis Car expense ratio

16.2%

17.0%

15.8%

 

16.5%

Reported total combined ratio*1,*4

73.1%

72.0%

81.3%

 

87.5%

Claims reserve releases - original net share*1,*5

 £50.0m

 £55.9m

 £44.9m

 

 £58.3m

Claims reserve releases - commuted reinsurance*1,*6

 £42.6m

 £12.8m

 £47.4m

 

 £17.1m

Total claims reserve releases

£92.6m

£68.7m

£92.3m

 

£75.4m

Other Revenue per vehicle

£64

£64

£61

 

£62

*1    Alternative Performance Measures - refer to the end of this report for definition and explanation
*2    Car loss ratio adjusted to exclude impact of reserve releases on commuted reinsurance contracts. Reconciliation in note 12b.
*3    Car expense ratio is calculated by including claims handling expenses that are reported within claims costs in the income statement. Reconciliation in note 12c.
*4    Reported total combined ratio includes additional products underwritten by Admiral.
*5    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.
*6    Commuted reinsurance shows releases on the proportion of the account that was originally ceded under quota share reinsurance contracts but has since been commuted and hence reported through underwriting and not profit commission.

The UK Car Insurance business benefited from continued success in attracting and retaining customers in the competitive UK market and this, together with higher average premiums, contributed to an increase in turnover of 9% to £1.08 billion (30 June 2016: £0.99 billion). The number of vehicles insured also grew by 7% to 3.77 million (30 June 2016: 3.52 million) with volumes improving in the second quarter.

The UK market saw sustained rate increases during 2016 which have continued into the first six months of 2017, particularly in the second quarter following the change in Ogden discount rate referred to below. Admiral increased its rates in December 2016 in advance of the Ogden change and has continued to do so throughout the first half.  

Whilst the business continued to grow in top line terms, UK Car Insurance profit was broadly flat at £224.2 million compared to £222.8 million for H1 2016, although the combined ratio was higher at 82.9% (H1 2016: 75.0%). Despite a number of offsetting items impacting the results, the main driver of the small increase in profitability is stable projected ultimate loss ratios during the first half of 2017 and resulting lower reserve releases than would have been the case had the projections improved materially as discussed further below. The main items affecting the results were:

  • The higher premium revenue was offset by a slightly higher current year loss ratio (shown in the table below) and therefore higher net claims costs;

  • Lower reserve releases on Admiral's original net share (approximately £15 million adverse impact) impacted by Ogden and discussed below;

  • Higher reserve releases on the portion of reserves originally reinsured but since commuted (approximately £35 million positive impact) also discussed below, leading to higher aggregate net reserve releases across original net and commuted shares.

  • Lower profit commission income (£12 million adverse impact) resulting from lower reserve releases (again Ogden impacted);

  • Lower investment return (£9 million adverse impact) as explained in the Investments and Cash section above.

Combined ratio and underwriting results

UK Car combined ratio

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Current year loss ratio, excluding releases

86.8%

85.9%

87.5%

 

87.7%

Reserve releases - original net share

28.5%

29.0%

21.0%

 

14.4%

Loss ratio net of releases - original net share*1

58.3%

56.9%

66.5%

 

73.3%

Expense ratio

17.4%

18.1%

16.4%

 

17.5%

Combined ratio - original net share*1

75.7%

75.0%

82.9%

 

90.8%

*1    Ratios calculated on original net share use the proportion of the portfolio that Admiral wrote on a net basis at the start of the underwriting year in question.

Change in UK discount rate ('Ogden')

On 27 February 2017, the UK Government announced the outcome of the review of the discount rate (referred to as the Ogden discount rate) used for calculating the value of lump sum personal injury compensation. The new rate is minus 0.75% and applies to all unsettled and new claims from 20 March 2017.

The estimated cost to Admiral, net of tax and reinsurance is approximately £150 million and is unchanged compared to six months earlier.  The majority of impact, in respect of premiums earned up to the date of change (£105 million pre-tax, £87 million post-tax), was recognised in the form of reduced 2016 profits (resulting from a higher booked 2016 year loss ratio and a significantly reduced level of reserve release in the second half of 2016). The balance, along with the impact on business written but unearned at the date of change, will be recognised in the form of lower reserve releases and profit commission in the current period and subsequent two to four financial years as the affected claims settle.

The UK Car Insurance actuarial best estimates reflect the new rate whilst the booked reserves in the financial statements continue to include a prudent and significant margin above the best estimates in line with the Group's reserving approach.

A consultation on the discount rate is due to conclude imminently and the Group looks forward to reviewing its conclusions when they are reported.

The reported UK Car combined ratio increased to 82.9% from 75.0% (both figures exclude the impact of reserve releases from commuted reinsurance contracts). The main reason for the increase is a lower reserve release in the current period.  The levels of releases in the first halves of 2015 and 2016 were above the long-term average for Admiral and were boosted by significant improvements in projected ultimate claims costs during those periods.

In the first half of 2017, projected ultimate claims costs on 2016 and prior accident years have remained stable and therefore not led to such high releases in 2017 to date.  The stable projected ultimate loss ratios are based on the new Ogden discount rate of -0.75% and are cautiously calculated for the most recent accident years.  The projections assume no improvement or further deterioration in discount rate that might result from the ongoing consultation. 

Note 5c (ii) to the financial statements analyses reserve releases in the period.

The slight increase in the current period loss ratio (87.5% v 85.9%) is partly due to Ogden and also the cautious booked position for the current year.

Although its relative size has decreased since the end of 2016 (when the impact of the Ogden change had yet to be reflected in the case reserves and hence a higher margin was appropriate), the financial statements continue to include a significant and prudent margin above the projected ultimate claims outcomes.

The reported expense ratio improved to 16.4% from 18.1% mainly reflecting the change in net retained share in the current period. The written basis expense ratio also decreased to 15.8% from 17.0%, reflecting the growth in written premium in the period.

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 booked loss ratios on Admiral's retained underwriting.

For H1 2017 profit commission revenue totals £28.8 million, down from £41.7 million in H1 2016. The decrease results from less substantial improvements in booked loss ratios on prior years than was the case in H1 2016 which in turn was largely due to the Ogden impact referred to above.

If reserve releases from business that was originally ceded under quota share reinsurance contracts that have since been commuted, are added to profit commission, the total for the first six months of 2017 would be £76.2 million compared to £54.5 million in H1 2016. This increase is a result of the comparative figure being adversely affected by the impact (£31 million) of the 2014 underwriting year commutation which was completed in the first half of 2016.  No quota share contracts were commuted in the first half of 2017 as a result of the change in discount rate, although the ultimate projections of all years continue to show profitable outcomes.

Note 5b to the financial statements analyses profit commission income by underwriting year.

Other Revenue
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 are:

  • 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 fees and referral income

  • Interest charged to customers paying for cover in instalments

Contribution from Other Revenue (net of costs) increased by 5% to £88.9 million (H1 2016: £84.9 million). Whilst there were a number of smaller offsetting changes within the total, the main reason for the increase is the growth in the portfolio in the year.

Other revenue was equivalent to £61 per vehicle (gross of costs; H1 2016: £64). The decrease reflects a change in allocation of reinsurer vehicle commission (the change effectively reallocates revenue to profit commission) offset by an increase in optional legal cover. Net Other Revenue (after deducting costs) per vehicle was £52 (H1 2016: £56).

UK Car Insurance Other Revenue - analysis of contribution:

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Contribution from additional products and fees

 84.6

 90.7

 94.3

 

 185.7

Contribution from additional products underwritten by Admiral*1

8.2

10.7

6.8

 

17.4

Instalment income

12.0

15.3

22.4

 

33.5

Other revenue

104.8

116.7

123.5

 

236.6

Internal costs

(21.3)

(21.1)

(27.8)

 

(47.1)

Net other revenue

83.5

95.6

95.7

 

189.5

Other revenue per vehicle*2

£64

£64

£61

 

£62

Other revenue per vehicle net of  internal costs

£55

£56

£52

 

£54

*1    Included in underwriting profit in income statement but re-allocated to Other Revenue for purpose of KPIs.
*2    Other revenue (before internal costs) divided by average active vehicles, rolling 12 month basis.

Instalment income
Instalment income reflects amounts charged to customers paying for cover in instalments. During the first half of 2017 Admiral earned £22.4 million from instalment income, up 46% on the prior period (H1 2016: £15.3 million). The main reason for this increase is a change to the co-insurance arrangements resulting in all instalment income from 2017 underwriting year onwards being retained by Admiral.  Other factors affecting the increase are increases in average premium and customer numbers.

Additional products underwritten by Admiral
Alongside the main motor insurance policy, there are a number of other products underwritten by Admiral that are provided to customers such as personal injury insurance, breakdown cover and car hire cover. Contribution from these products underwritten by Admiral during the first half of 2017 was £6.8 million (H1 2016: £10.7 million). This is included in underwriting profit in the income statement, but reallocated to Other Revenue for the purpose of management key performance indicators.

UK Household Insurance

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Turnover*1

23.9

35.3

48.3

 

76.1

Total premiums written*1

23.3

33.9

43.7

 

73.3

Underwriting loss*1

(0.2)

(0.9)

(0.6)

 

(1.8)

Profit commission and other income

0.9

2.1

2.2

 

4.5

UK Household insurance profit before tax

0.7

1.2

1.6

 

2.7

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

Key performance indicators

 

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Reported household loss ratio

68.1%

74.7%

68.7%

 

76.5%

Reported household expense ratio

36.2%

37.3%

36.8%

 

34.1%

Reported household combined ratio

104.3%

112.0%

105.5%

 

110.6%

Households insured at period end

239,000

381,800

548,200

 

468,700

The UK Household Insurance business continued its record of strong growth with the number of properties insured increasing by 44% to 548,200 (30 June 2016: 381,800). Turnover increased by 37% to £48.3 million (H1 2016: £35.3 million) and profit increased to £1.6 million (H1 2016: £1.2 million).

Both loss and expense ratios improved in the first half with the expense ratio continuing to significantly outperform the market.

During May 2017, the Group ceased operating its commercial vehicle insurance broker and started underwriting van insurance direct through two brands, Gladiator and Admiral Van. Admiral offers van insurance and associated products, typically to small businesses, via telephone and the internet, including price comparison websites.

International Car Insurance

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Turnover*1

110.3

159.2

221.9

 

365.9

Total premiums written*1

101.0

142.9

197.2

 

331.3

 

 

 

 

 

 

Net insurance premium revenue

29.7

39.4

58.2

 

91.3

Investment income

-

0.2

0.2

 

0.4

Net insurance claims

(25.4)

(32.7)

(47.3)

 

(75.5)

Net insurance expenses

(18.9)

(24.6)

(28.1)

 

(46.2)

 

 

 

 

 

 

Underwriting result*1

(14.6)

(17.7)

(17.0)

 

(30.0)

Net other income

3.4

4.8

6.9

 

10.6

 

 

 

 

 

 

International Car Insurance result

(11.2)

(12.9)

(10.1)

 

(19.4)

 

Key performance indicators

 

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Loss ratio*2

82%

80%

78%

 

76%

Expense ratio*2

55%

51%

45%

 

49%

Combined ratio*3

137%

131%

123%

 

125%

Combined ratio, net of Other revenue*4

126%

118%

112%

 

113%

Vehicles insured at period end

631,700

757,900

961,200

 

864,200

*1    Alternative 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 the reported combined ratio would be H1 2017: 130%; H1 2016: 145%; H1 2015: 149%.
*4    Combined ratio, net of Other Revenue is calculated on Admiral's net share of premiums and includes Other Revenue. Including the impact of reinsurer caps the reported combined ratio, net of Other Revenue would be H1 2017: 118%; H1 2016: 133%; H1 2015: 138%.

Geographical analysis*1

30 June 2017

Spain

Italy

France

US

Total

Vehicles insured at period end

208,100

462,500

112,500

178,100

961,200

Turnover (£m)

31.2

76.3

28.7

85.7

221.9

 

31 Dec 2016

Spain

Italy

France

US

Total

Vehicles insured at period end

189,200

415,500

91,500

168,000

864,200

Turnover (£m)

49.8

118.2

38.3

159.6

365.9

 

30 June 2016

Spain

Italy

France

US

Total

Vehicles insured at period end

169,850

362,250

75,400

150,400

757,900

Turnover (£m)

22.9

54.7

17.1

64.5

159.2

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

Admiral's international insurance businesses continued to grow materially, adding over 200,000 customers over the year since 30 June 2016, growth of 27%. Turnover grew by nearly 40% to £221.9 million (H1 2016: £159.2 million).  Turnover and customers in these businesses represent 16% (H1 2016: 16%) and 18% (30 June 2016: 13%) of the Group totals respectively.

A significant improvement in the Elephant Auto results contributed to the combined ratio net of other revenue improving to 112% from 118%.  ConTe also saw continued positive development of back year reserves.  The combined loss for the international insurance businesses improved to £10.1 million for the first six months of 2017 (H1 2016: £12.9 million).  The improved result at Elephant and further profit from ConTe were partly offset by losses in Spain and France due to the strong growth in those businesses.

The expense ratio has improved to 45% (H1 2016: 51%) though remains high in comparison to Admiral's UK business due to the acquisition costs associated with the strong growth and also the continued need to build scale.

The European insurance operations in Spain, Italy and France insured 783,100 vehicles at 30 June 2017 - 29% higher than a year earlier (30 June 2016: 607,500). Turnover was up 44% at £136.2 million (H1 2016: £94.7 million). The consolidated result of the European operations was a loss of £5.0 million (H1 2016: £2.1 million) with a small profit in Italy offset by investment in growth in Spain and France. The growth in Spain and France also impacted on the combined ratio net of other revenue (excluding the impact of reinsurer caps) which increased to 105% from 99%.

Admiral Seguros (Spain) which launched in 2006 operates under two main brands, Balumba and Qualitas Auto. Admiral Seguros focused on growth during the first six months of 2017 and at 30 June 2017 the business insured over 200,000 customers, 23% higher than at 30 June 2016.

The Group's largest international operation is ConTe in Italy, which insured 462,500 vehicles at 30 June 2017, 28% higher than a year earlier. ConTe was launched in 2008 and in the first six months of 2017 continued to experience positive development in the projected ultimate outcomes of most underwriting years allowing further reserve releases in H1 2017 and another reported profit.

Admiral's youngest and smallest international insurance business is L'olivier assurance auto, which launched in 2010 in France. L'olivier insured 112,500 vehicles at 30 June 2017, up almost 50% on the prior year and has focused on growth and accelerating brand development during the year.

In the USA, Admiral underwrites motor insurance in six states (Virginia, Maryland, Illinois, Texas, Indiana and Tennessee) through its Elephant Auto business, which launched at the end of 2009. At 30 June 2017 Elephant Auto insured over 178,000 vehicles, up 18% year-on-year. Turnover for the first half was £85.7 million, up 33% on the prior period (H1 2016: £64.5 million).

Elephant's loss in the period was £5.1 million, a significant reduction on the H1 2016 loss of £10.8 million.  Elephant improved both key operating ratios (the loss ratio showing significant improvement) despite the continued strong growth, whilst the current period result was also less impacted by severe weather experience compared to the first half of 2016. The combined ratio net of other revenue improved to 119% from 143%.

Price Comparison

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Revenue

 

 

 

 

 

Car insurance price comparison

42.6

48.6

55.2

 

97.7

Other

12.6

15.4

17.3

 

31.5

Total Revenue

55.2

64.0

72.5

 

129.2

Expenses

(63.8)

(68.8)

(70.1)

 

(132.1)

(Loss)/profit before tax

(8.6)

(4.8)

2.4

 

(2.9)

 

 

 

 

 

 

Confused.com profit

4.8

8.3

4.5

 

16.1

International price comparison result

(13.4)

(13.1)

(2.1)

 

(19.0)

 

(8.6)

(4.8)

2.4

 

(2.9)

Group's share of (loss)/profit before tax *1

 

 

 

 

 

Confused.com profit

4.8

8.3

4.5

 

16.1

International price comparison result

(8.8)

(9.4)

(1.4)

 

(13.4)

 

(4.0)

(1.1)

3.1

 

2.7

*1    Alternative Performance Measure - refer to the end of this report for definition and explanation

UK Price Comparison - Confused.com

In 2016 Confused.com started to differentiate itself by focussing on saving drivers time and money.  A new marketing campaign and range of new products have contributed to an improvement in brand awareness and increase in income from motor-related products.  However, this was, as expected, offset by a fall in income from non-motor products such as home and life insurance. 

Confused.com turnover remained broadly stable at £44.9 million (H1 2016: £44.0 million).  The high level of competition in the price comparison market, new marketing campaign and product development required a higher level of investment and contributed to lower profits in the period of £4.5 million (H1 2016: £8.3 million).

International Price Comparison

Admiral operates three price comparison businesses outside the UK: in Spain (Rastreator), France (LeLynx) and the US (Compare.com). Admiral Group owns 75% of Rastreator and 71% of Compare.com.

The combined revenue from the European operations increased by almost a third to £22.0 million (H1 2016: £16.7 million), reflecting continued growth in traffic and quotes provided to customers and improved conversion rates. Both Rastreator and LeLynx continue to enjoy strong brand recognition in their respective markets.

The Group's share of the combined result for Rastreator and LeLynx was a profit of £2.0 million (H1 2016: £0.7 million), the increase reflecting ongoing strong performance from Rastreator which continues to build on its multi-product strategy covering insurance, telephony and utilities amongst other product lines, and an improved result from Lelynx. Statutory profit before tax increased to £2.7 million (H1 2016: £1.2 million).

In the US, Compare.com had a successful first half, exceeding its target of 'marketing break-even' (revenue minus marketing expenses) in selected states by achieving that nationally.  The business delivered substantial improvements in its main key performance indicators, including reduced cost per quote and sale metrics while at the same time growing quote and sales volumes. 

As a result, Admiral's share of Compare.com's loss reduced significantly to £3.4 million before tax (H1 2016: £10.1 million) whilst statutory loss before tax decreased to £4.8 million (H1 2016: £14.2 million).

Compare.com's plans for the remainder of 2017 and beyond include continuing to scale marketing activity while further enhancing conversion.  Guidance for the full year 2017 loss for Compare.com (Admiral Group's share) is reduced to be in the range of $10-15 million.

The combined result for International Price Comparison was therefore a loss of £1.4 million (H1 2016: loss £9.4 million) - the profit from the European operations offset by investment in Compare.com. Statutory loss before tax was £2.1 million (H1 2016: loss £13.1 million).

Preminen, the Group's newest price comparison venture continues to explore the potential of price comparison in new markets overseas, in partnership with Mapfre.

Other Group items

£m

30 June 2015

30 June 2016

30 June 2017

 

31 Dec 2016

Other interest and investment income

3.3

8.7

7.3

 

13.4

UK Commercial van broking

1.0

0.8

0.7

 

2.0

Share scheme charges

(11.9)

(14.7)

(16.9)

 

(31.9)

Business development costs

(0.5)

(2.2)

(5.9)

 

(5.8)

Other central overheads

(4.7)

(3.8)

(3.9)

 

(4.1)

Finance charges

(5.5)

(5.6)

(5.6)

 

(11.4)

Other interest and investment income of £7.3 million (30 June 2016: £8.7 million) includes £5.4 million (H1 2016: £Nil) of realised gains on investments held by the Group parent company and unrealised losses of £1.1million (H1 2016: £5.5 million unrealised gains) in respect of forward foreign exchange contracts.

Share scheme charges relate to the Group's two employee share schemes (refer to note 8 to the financial statements). The increase in the charge is due to an increase in the number of awards reflecting the increasing Group headcount.

Business development costs include costs associated with potential new ventures, including investment in Admiral Loans (see below) and Preminen.

Finance charges of £5.6 million (30 June 2016: £5.6 million) mainly represent interest on the £200 million subordinated notes issued in July 2014 (refer to note 6 to the financial statements).

Admiral Loans

During the first half of 2017, the Group successfully rolled out the first release of its new technology platform for Admiral Loans.  The business currently distributes unsecured personal loans through the price comparison channel and also direct to consumers via the Admiral website. 

Initial trials have returned encouraging results and consistent with other new business launches, the Group will employ a test and learn approach and expects advances to customers to remain insignificant in the context of the Group balance sheet during 2017.  The Group expects the business to make small losses in its early phase mostly as a result of high fixed costs relative to the current scale of the business.

Principal Risks and Uncertainties

Admiral has performed a robust assessment of the principal risks facing the Group, including those which would threaten its business model, future performance, liquidity and solvency.  The result of this assessment is that the principal risks and uncertainties are consistent with those reported in the Group's 2016 Annual Report and Accounts, pages 40-43.

UK Exit from the European Union ('Brexit')

The precise timetable for and details of the implementation of the Brexit referendum decision continue to remain unclear at the date of this report.

Brexit brings risks to the Group including:

  • The potential for market volatility, particularly in interest and exchange rates

  • the potential for the uncertainty or the emerging terms of exit to trigger or exacerbate less favourable economic conditions in the UK and other countries in which Admiral operates (though it is worth noting that car insurance has tended to be resilient to economic downturns) 

  • potential changes to or withdrawal of the right of UK financial services firms to trade in Europe without the need for locally regulated entities ('passporting')

  • potential changes to the rules relating to the free movement of people between the UK and the remaining EU member states

The Group continues to develop its plans to be able to deal with the withdrawal of passporting, should this transpire and, recognising that other issues may emerge over time, will continue to closely monitor developments over the coming months and years.

At present, the Group does not foresee a material adverse impact on day to day operations (including customers or staff), nor does it expect the costs associated with any Group restructure to be material in the context of the Group.

Regulatory update

Admiral's businesses operate in numerous regulated markets across the world.  Rules and legislation continue to develop and Admiral works closely with all of its regulators on these matters.

In particular during 2017 Admiral has worked closely with the FCA on renewal transparency, governance and information security and with the PRA on internal model development and the impact of the new Ogden discount rate.

Ongoing legislative and regulatory matters include:

Issue

Notes

Change in the Ogden discount rate and ongoing consultation over its future (new rate effective March 2017, consultation ongoing)

  • Significant impact on costs of lump sum claims with future loss element and the impact on PPO propensity rates

  • Continued uncertainty over outcome of consultation process

  • Refer to UK Insurance commentary above

Government measures to reduce whiplash claims costs (expected 2018)

  • The Civil Liability bill aims to reduce the frequency and cost of small injury claims in the motor market

General Data Protection Regulation ('GDPR') and the UK Data Protection Bill (effective May 2018)

  • Widespread changes to data and privacy laws

FCA rules on enhanced transparency in insurance renewals (effective April 2017)

  • New rules from the FCA requiring disclosure of prior year price on renewal documentation

Insurance Intermediation Directive ('IDD') (to be implemented in the UK in 2018)

  • Updated rules governing distribution of insurance products by insurers and intermediaries

FCA Senior Management and Certification Regime (SM&CR) (expected to come into effect during 2018)

  • New rules on how individuals working in financial services are regulated

  • Will replace the current FCA Approved Persons regime


Disclaimer on forward-looking statements

Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and assumptions and are subject to a number of known and unknown risks and uncertainties that may cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward-looking statements.

Persons receiving this announcement should not place undue reliance on forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standard, the Group does not undertake to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Condensed consolidated income statement (unaudited)

 

 

 

6 months ended:

Year ended:

 

 

 

30 June 2017

30 June 2016

31 December 2016

 

Note:

 

£m

£m

£m

 

 

 

 

 

 

Insurance premium revenue

 

 

796.6

635.8

1,353.6

Insurance premium ceded to reinsurers

 

 

(495.3)

(376.1)

(804.8)

Net insurance premium revenue

5

 

301.3

259.7

548.8

 

 

 

 

 

 

Other revenue

7

 

196.0

176.2

360.6

Profit commission

5

 

30.0

42.2

54.3

Investment and interest income

6

 

23.3

33.4

53.1

 

 

 

 

 

 

Net revenue

 

 

550.6

511.5

1016.8

 

 

 

 

 

 

Insurance claims and claims handling expenses

 

 

(612.7)

(400.0)

(1,103.8)

Insurance claims and claims handling expenses recoverable from reinsurers

 

 

447.8

 251.6

709.2

Net insurance claims

 

 

(164.9)

(148.4)

(394.6)

 

 

 

 

 

 

Operating expenses and share scheme charges

8

 

(359.5)

(316.9)

(648.8)

Operating expenses and share scheme charges recoverable from co- and reinsurers

8

 

172.8

148.9

316.4

Net operating expenses and share scheme charges

 

 

(186.7)

(168.0)

(332.4)

 

 

 

 

 

 

Total expenses

 

 

(351.6)

(316.4)

(727.0)

 

 

 

 

 

 

Operating profit

 

 

199.0

195.1

289.8

 

 

 

 

 

 

Finance costs

6

 

(5.6)

(5.6)

(11.4)

Profit before tax

 

 

193.4

189.5

278.4

 

 

 

 

 

 

Taxation expense

9

 

(31.5)

(36.2)

(64.3)

 

 

 

 

 

 

Profit after tax

 

 

161.9

153.3

214.1

 

 

 

 

 

 

Profit after tax attributable to:

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

163.2

157.4

222.2

Non-controlling interests

 

 

(1.3)

(4.1)

(8.1)

 

 

 

 

 

 

 

 

 

161.9

153.3

214.1

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

11

 

57.3p

55.9p

78.7p

 

 

 

 

 

 

Diluted

11

 

57.2p

55.8p

78.5p

 

 

 

 

 

 

Dividends declared and paid (total)

11

 

143.7

175.4

349.8

Dividends declared and paid (per share)

11

 

50.5p

63.4p

126.3p


Condensed
consolidated statement of comprehensive income (unaudited)

 

 

 

 

6 months ended:

Year ended:

 

 

 

30 June 2017

30 June 2016

31 December 2016

 

 

 

£m

£m

£m

 

 

 

 

 

 

Profit for the period

 

 

161.9

153.3

214.1

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Items that are or may be reclassified to profit or loss

 

 

 

 

 

Movements in fair value reserve

 

 

17.5

20.9

30.3

Deferred tax charge in relation to movement in fair value reserve

 

 

(4.1)

-

(0.5)

Exchange differences on translation of foreign operations 

 

 

(4.0)

12.1

21.2

 

 

 

 

 

 

Other comprehensive income for the period, net of income tax

 

 

9.4

33.0

51.0

 

 

 

 

 

 

Total comprehensive income for the period

 

 

171.3

186.3

265.1

 

 

 

 

 

 

Total comprehensive income for the period attributable to:

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

172.8

189.2

271.3

Non-controlling interests

 

 

(1.5)

(2.9)

(6.2)

 

 

 

 

 

 

 

 

 

171.3

186.3

265.1

 

Condensed consolidated statement of financial position (unaudited)

 

 

As at:

 

 

 

30 June 2017

30 June 2016

31 December 2016

 

Note:

 

£m

£m

£m

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Property and equipment

10

 

31.4

33.9

32.0

Intangible assets

10

 

158.3

156.2

162.3

Deferred income tax

9

 

6.3

25.4

8.4

Reinsurance assets

5

 

1,460.9

914.1

1,126.4

Insurance and other receivables

6, 10

 

965.0

697.4

784.9

Financial investments

6

 

2,595.2

2,355.4

2,420.2

Cash and cash equivalents

6

 

348.6

295.4

326.6

 

 

 

 

 

 

Total assets

 

 

5,565.7

4,477.8

4,860.8

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

Share capital

11

 

0.3

0.3

0.3

Share premium account

 

 

13.1

13.1

13.1

Fair value reserve

 

 

41.5

19.2

28.1

Foreign exchange reserve

 

 

19.9

15.3

23.7

Retained profit and loss

 

 

545.7

600.6

505.7

 

 

 

 

 

 

Total equity attributable to equity holders of the parent

 

 

620.5

648.5

570.9

 

 

 

 

 

 

Non-controlling interests

 

 

9.3

14.1

10.8

 

 

 

 

 

 

Total equity

 

 

629.8

662.6

581.7

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Insurance contracts

5

 

3,054.1

2,484.2

2,749.5

Subordinated and other financial liabilities

6

 

223.9

223.9

224.0

Trade and other payables

6, 10

 

1,635.9

1,070.8

1,292.2

Current tax liabilities

 

 

22.0

36.3

13.4

 

 

 

 

 

 

Total liabilities

 

 

4,935.9

3,815.2

4,279.1

 

 

 

 

 

 

Total equity and total liabilities

 

 

5,565.7

4,477.8

4,860.8

 

Condensed consolidated cash flow statement (unaudited)

 

 

6 months ended:

Year ended:

 

  

30 June 2017

30 June 2016

31 December 2016

 

Note:

£m

£m

£m

 

 

 

 

 

Profit after tax

 

161.9

153.3

214.1

Adjustments for non-cash items:

 

 

 

 

- Depreciation

10

5.0

5.2

10.5

- Amortisation of software

10

7.3

5.5

12.6

- Other gains and losses

 

-

1.2

-

- Share scheme charges

 

18.7

14.2

33.2

- Investment and interest income

6

(23.3)

(33.4)

(53.1)

- Finance costs

6

5.6

5.6

11.4

- Taxation expense

9

31.5

36.2

64.3

Change in gross insurance contract liabilities

 

304.6

189.2

454.5

Change in reinsurance assets

 

(334.5)

(35.4)

(247.7)

Change in insurance and other receivables

 

(177.8)

(164.7)

(254.6)

Change in trade and other payables, including tax and social security

 

 343.7

 56.8

279.9

Cash flows from operating activities, before movements in investments

 

342.7

233.7

525.1

 

 

 

 

 

Purchases of financial instruments

 

(347.8)

(142.7)

(646.6)

Proceeds on disposal/ maturity of financial instruments

 

206.1

157.0

616.9

Interest and investment income received

 

4.6

5.6

11.6

Cash flows from operating activities, net of movements in investments

 

205.6

253.6

507.0

 

 

 

 

 

Taxation payments

 

(21.9)

(36.6)

(76.4)

Taxation receipts

 

-

1.1

1.8

Net cash flow from operating activities

 

183.7

218.1

432.4

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Purchases of property, equipment and software

 

(9.7)

(17.3)

(31.6)

Net cash used in investing activities

 

(9.7)

(17.3)

(31.6)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Non-controlling interest capital contribution

 

-

(0.2)

(0.2)

Proceeds on issue of financial liabilities

 

-

-

-

Finance costs paid

 

(5.6)

(5.5)

(11.3)

Repayment of finance lease liabilities

 

0.1

(1.7)

(3.4)

Equity dividends paid

11

(143.7)

(175.4)

(349.8)

Net cash used in financing activities

 

(149.2)

(182.8)

(364.7)

 

 

 

 

 

Net increase in cash and cash equivalents

 

24.8

18.0

36.1

 

 

 

 

 

Cash and cash equivalents at 1 January

 

326.6

265.3

265.3

Effects of changes in foreign exchange rates

 

(2.8)

12.1

25.2

 

 

 

 

 

Cash and cash equivalents at end of period

6

348.6

295.4

326.6

 

Condensed consolidated statement of changes in equity (unaudited)

 

 

Attributable to the owners of the company

 

 

 

Share capital

Share premium account

Fair value reserve

Foreign exchange reserve

Retained profit and loss

  Total

NCI*1

Total equity

 

£m

£m

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

 

At 1 January 2016

0.3

13.1

(1.7)

4.4

599.6

615.7

17.2

632.9

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

157.4

157.4

(4.1)

153.3

Other comprehensive income

 

 

 

 

 

 

 

 

Movements in fair value reserve

-

-

20.9

-

-

20.9

-

20.9

Currency translation differences

-

-

-

10.9

-

10.9

1.2

12.1

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

20.9

10.9

157.4

 189.2

(2.9)

186.3

 

 

 

 

 

 

 

 

 

Transactions with equity-holders

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

(175.4)

(175.4)

-

(175.4)

Share scheme credit

-

-

-

-

14.2

14.2

-

14.2

Deferred tax credit on share scheme credit

 -

 -

 -

 -

 4.8

 4.8

-

4.8

Contributions by NCIs

-

-

-

-

-

-

(0.2)

(0.2)

 

 

 

 

 

 

 

 

 

Total transactions with equity-holders

-

-

-

-

(156.4)

 (156.4)

(0.2)

(156.6)

 

 

 

 

 

 

 

 

 

As at 30 June 2016

0.3

13.1

19.2

15.3

600.6

648.5

14.1

662.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016

0.3

13.1

(1.7)

4.4

599.6

615.7

17.2

632.9

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

222.2

222.2

(8.1)

214.1

Other comprehensive income

 

 

 

 

 

 

 

 

Movements in fair value reserve

-

-

30.3

-

-

30.3

-

30.3

Deferred tax charge in relation to movement in fair value reserve

-

-

(0.5)

-

-

(0.5)

-

(0.5)

Currency translation differences

-

-

-

19.3

-

19.3

1.9

21.2

 

 

 

 

 

 

 

 

 

Total comprehensive income for  the period

-

-

29.8

19.3

222.2

271.3

(6.2)

265.1

 

 

 

 

 

 

 

 

 

Transactions with equity-holders

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

(349.8)

(349.8)

-

(349.8)

Share scheme credit

-

-

-

-

33.2

33.2

-

33.2

Deferred tax credit on share scheme credit

-

-

-

-

0.5

0.5

-

0.5

Contributions by NCIs

-

-

-

-

-

-

(0.2)

(0.2)

Changes in ownership interests without a change in control

-

-

-

-

-

-

-

-

 

 

 

 

 

 

 

 

 

Total transactions with equity-holders

-

-

-

-

(316.1)

(316.1)

(0.2)

(316.3)

 

 

 

 

 

 

 

 

 

As at 31 December 2016

0.3

13.1

28.1

23.7

505.7

570.9

10.8

581.7

 

 

Attributable to the owners of the company

 

 

 

Share capital

Share premium account

Fair value reserve

Foreign exchange reserve

Retained profit and loss

  Total

NCI*1

Total equity

 

£m

£m

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

 

At 1 January 2017

0.3

13.1

28.1

23.7

505.7

570.9

10.8

581.7

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

163.2

163.2

(1.3)

161.9

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

Movements in fair value reserve

-

-

17.5

-

-

17.5

-

17.5

Deferred tax charge in relation to movement in fair value reserve

-

-

(4.1)

-

-

(4.1)

-

(4.1)

Currency translation differences

-

-

-

(3.8)

-

(3.8)

(0.2)

(4.0)

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

13.4

(3.8)

163.2

172.8

(1.5)

171.3

 

 

 

 

 

 

 

 

 

Transactions with equity-holders

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

(143.7)

(143.7)

-

(143.7)

Share scheme credit

-

-

-

-

18.7

18.7

-

18.7

Deferred tax credit on share scheme credit

-

-

-

-

1.8

1.8

-

1.8

 

 

 

 

 

 

 

 

 

Total transactions with equity-holders

-

-

-

-

(123.2)

(123.2)

-

(123.2)

 

 

 

 

 

 

 

 

 

As at 30 June 2017

0.3

13.1

41.5

19.9

545.7

620.5

9.3

629.8

 

 

 

 

 

 

 

 

 


[*1]       Non-controlling interests

Notes to the financial statements (unaudited)

1.         General information

Admiral Group plc is a Company incorporated in the United Kingdom and registered in England and Wales. Its registered office is at Ty Admiral, David Street, Cardiff CF10 2EH and its shares are listed on the London Stock Exchange.

The condensed interim financial statements comprise the results and balances of the Company and its subsidiaries (the Group) for the six-month period ended 30 June 2017 and the comparative periods for the six-months ended 30 June 2016 and the year ended 31 December 2016.  This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 

As required by the FCA's Disclosure and Transparency Rules, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2016.

The financial statements of the Company's subsidiaries are consolidated in the Group financial statements.  In accordance with IAS 24, transactions or balances between Group companies that have been eliminated on consolidation are not reported as related party transactions. 

The comparative figures for the financial year ended 31 December 2016 are not the Company's statutory accounts for that financial year.  Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies.  The report of the auditors was:

  1. unqualified;

  2. did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and

  3. did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The accounts have been prepared on a going concern basis.  In considering the appropriateness of this assumption, the Board have reviewed the Group's projections for the next twelve months and beyond. Further information is given in the Basis of preparation below.

2.         Basis of preparation

The condensed set of interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2016.  A number of other IFRS and interpretations have been endorsed by the EU in the period to 30 June 2017 and although they have been adopted by the Group, none of them has had a material impact on the Group's financial statements.

The Group's assessment of the impact of standards that have yet to be adopted remains consistent with that reported on page 93 of the Group's 2016 Annual Report.

The accounts have been prepared on a going concern basis. In considering this requirement, the Directors have taken into account the following:

  • The Group's projections for the next 12 months and beyond, in particular the profit forecasts, regulatory capital surpluses and levels and sources of liquidity.

  • The risks included on the Group's risk register that could impact on the Group's financial performance, levels of liquidity and solvency over the next 12 months.

  • The risks on the Group's risk register that could be a threat to the Group's business model and capital adequacy.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report in the 2016 Annual Report. An update to the Group's principal risks and uncertainties since the 2016 year end is included in the  review preceding these financial statements. In addition, the Governance report in the 2016 Annual Report includes the Directors' statement on the viability of the Group over a three year period.

Following consideration of the above, the Directors have reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future, a period not less than 12 months from the date of this report, and that it is therefore appropriate to adopt the going concern basis in preparing the financial statements.

The accounting policies set out in the notes to the financial statements have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements.

The financial statements are prepared on the historical cost basis, except for the revaluation of financial assets classified as fair value through profit or loss or as 'available for sale'. The Group and Company financial statements are presented in pounds sterling, rounded to the nearest £0.1 million.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control 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 that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

The preparation of financial statements requires management to make judgements, estimates and 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 be reasonable 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 period in which the estimate is reviewed if this revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. To the extent that a change in an accounting estimate gives rise to changes in assets and liabilities, it is recognised by adjusting the carrying amount of the related asset or liability in the period of the change.

3.         Critical accounting judgements and estimates

The Group's 2016 Annual Report provides full details of significant judgements and estimates used in the application of the Group's accounting policies.  There have been no additional critical judgements or estimates applied in the period. Note 5 below provides further information as to the changes in the estimates with respect to the calculation of insurance reserves. 

4.         Operating segments

The Group has four reportable segments; UK Insurance, International Car Insurance, Price Comparison and Other, as set out on page 96 of the Group's 2016 Annual Report.  During the period, the Group launched a UK Van Insurance product that is included within the UK Insurance segment. The results from the Group's commercial van broker Gladiator continue to be presented within the 'Other' segment.

Segment revenues and results for the 6 months ended 30 June 2016 have been represented to include UK Household Insurance within the UK insurance segment in order to align with the reportable segments noted above.

Segment income, results and other information

An analysis of the Group's revenue and results for the period ended 30 June 2017, by reportable segment, are shown below. The accounting policies of the reportable segments are consistent with those presented in the notes to the 2016 Group financial statements.

 

30 June 2017

 

 

UK Insurance

International Car Insurance

Price Comparison

Other

Eliminations*2

Segment total

 

 

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

Turnover*1

 

1,144.1

221.9

72.5

7.2

(10.5)

1,435.2

 

 

 

 

 

 

 

 

Net insurance premium revenue

241.0

60.3

-

0.0

-

301.3

 

 

 

 

 

 

 

 

Other revenue and profit commission

148.7

8.1

72.5

7.2

(10.5)

226.0

 

 

 

 

 

 

 

 

Investment and interest income

15.8

0.2

-

-

-

16.0

 

 

 

 

 

 

 

 

Net revenue

 

405.5

68.6

72.5

7.2

(10.5)

543.3

 

 

 

 

 

 

 

 

Net insurance claims

(116.5)

(48.4)

-

-

-

(164.9)

 

 

 

 

 

 

 

 

Expenses

 

(62.8)

(30.3)

(70.1)

(6.5)

10.5

(159.2)

 

 

 

 

 

 

 

 

Segment profit / (loss) before tax

226.2

(10.1)

2.4

0.7

-

219.2

 

 

 

 

 

 

 

 

Other central revenue and expenses, including share scheme charges

 

(27.5)

Interest and investment income

 

 

 

 

7.3

Finance costs

 

 

 

 

 

 

(5.6)

 

 

 

 

 

 

 

 

Consolidated profit before tax

 

 

 

 

193.4

 

 

 

 

 

 

 

 

Taxation expense

 

 

 

 

 

 

(31.5)

 

 

 

 

 

 

 

 

Consolidated profit after tax

 

 

 

 

161.9

 

 

 

 

 

 

 

 

[*1] Turnover is an Alternative Performance Measure and consists of total premiums written (including co-insurers share) and Other revenue. Refer to note 12 for further information.

[*2] Eliminations are in respect of the intra-group trading between the Group's price comparison and UK and International car insurance entities.

 

Revenue and results for the corresponding reportable segments for the period ended 30 June 2016 are shown below.

 

Represented

 

30 June 2016

 

 

UK Insurance

International Car Insurance

Price Comparison

Other

Eliminations*2

Segment total

 

 

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

Turnover*1

 

1,028.5

159.2

64.0

9.0

(9.8)

1,250.9

 

 

 

 

 

 

 

 

Net insurance premium revenue

218.2

41.3

-

0.2

-

259.7

 

 

 

 

 

 

 

 

Other revenue and profit commission

150.1

5.6

64.0

8.5

(9.8)

218.4

 

 

 

 

 

 

 

 

Investment and interest income

24.5

0.2

-

-

-

24.7

 

 

 

 

 

 

 

 

Net revenue

 

392.8

47.1

64.0

8.7

(9.8)

502.8

 

 

 

 

 

 

 

 

Net insurance claims

(114.5)

(33.7)

-

(0.2)

-

(148.4)

 

 

 

 

 

 

 

 

Expenses

 

(54.3)

(26.3)

(68.8)

(7.7)

9.8

(147.3)

 

 

 

 

 

 

 

 

Segment profit / (loss) before tax

224.0

(12.9)

(4.8)

0.8

-

207.1

 

 

 

 

 

 

 

 

Other central revenue and expenses, including share scheme charges

 

(20.7)

Interest and investment  income

 

 

8.7

Finance costs

 

 

 

 

 

 

(5.6)

 

 

 

 

 

 

 

 

Consolidated profit before tax

 

 

 

 

189.5

 

 

 

 

 

 

 

 

Taxation expense

 

 

 

 

(36.2)

 

 

 

 

 

 

 

 

Consolidated profit after tax

 

 

 

 

153.3

 

 

 

 

 

 

 

 

Revenue and results for the corresponding reportable segments for the year ended 31 December 2016 are shown below.

 

 

31 December 2016

 

 

UK Insurance

International Car Insurance

Price Comparison

Other

Eliminations*2

Segment total

 

 

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

 

Turnover*1

 

2,063.1

365.9

129.2

17.6

(20.8)

2,555.0

 

 

 

 

 

 

 

 

Net insurance premium revenue

454.4

94.3

-

0.1

-

548.8

 

 

 

 

 

 

 

 

Other revenue and profit commission

277.2

12.6

129.2

16.7

(20.8)

414.9

 

 

 

 

 

 

 

 

Investment and interest income

39.3

0.4

-

-

-

39.7

 

 

 

 

 

 

 

 

Net revenue

 

770.9

107.3

129.2

16.8

(20.8)

1,003.4

 

 

 

 

 

 

 

 

Net insurance claims

(317.9)

(76.5)

-

(0.2)

-

(394.6)

 

 

 

 

 

 

 

 

Expenses

 

(114.5)

(50.2)

(132.1)

(14.7)

20.8

(290.7)

 

 

 

 

 

 

 

 

Segment profit / (loss) before tax

338.5

(19.4)

(2.9)

1.9

-

318.1

 

 

 

 

 

 

 

 

Other central revenue and expenses, including share scheme charges

 

(41.7)

Interest and investment income

 

 

 

 

13.4

Finance costs

 

 

 

 

 

 

(11.4)

 

 

 

 

 

 

 

 

Consolidated profit before tax

 

 

 

 

278.4

 

 

 

 

 

 

 

 

Taxation expense

 

 

 

 

(64.3)

 

 

 

 

 

 

 

 

Consolidated profit after tax

 

 

 

 

214.1

 

 

 

 

 

 

 

 

Segment revenues

The UK and International Car Insurance reportable segments derive all insurance premium income from external policyholders. Revenue within these segments is not derived from an individual policyholder that represents 10% or more of the Group's total revenue.

The total of Price Comparison revenues from transactions with other reportable segments is £10.5 million (H1 2016: £9.8 million, FY 2016: £20.8 million) which has been eliminated on consolidation.  There are no other transactions between reportable segments.

Revenues from external customers for products and services is consistent with the split of reportable segment revenues as shown above.

Information about geographical locations

All material revenues from external customers, and net assets attributed to a foreign country relating to car insurance are shown within the International Car Insurance reportable segment shown above. The revenue and results of the three International Price Comparison businesses; Rastreator, LeLynx and compare.com are not yet material enough to be presented as a separate segment.

Segment assets and liabilities

The segment assets and liabilities at 30 June 2017, 30 June 2016 and 31 December 2016 are as follows:

 

As at 30 June 2017

 

UK Insurance£m

International Car Insurance£m

Price Comparison£m

Other£m

Eliminations£m

Total£m

Property and equipment

25.6

4.4

1.4

-

-

31.4

Intangible assets

69.8

23.3

1.6

63.6

-

158.3

Reinsurance assets

1,192.6

268.1

-

0.2

-

1,460.9

Insurance and other receivables

897.5

142.1

23.1

(31.0)

(66.7)

965.0

Financial investments

2,323.6

49.7

7.7

-

-

2,381.0

Cash and cash equivalents

196.9

98.6

30.1

6.1

-

331.7

Reportable segment assets

4,706.0

586.2

63.9

38.9

(66.7)

5,328.3

Insurance contract liabilities

2,632.2

421.5

-

0.4

-

3,054.1

Trade and other payables

1,492.5

124.5

13.1

5.8

-

1,635.9

Reportable segment liabilities

4,124.7

546.0

13.1

6.2

-

4,690.0

Reportable segment net assets

581.3

40.2

50.8

32.7

(66.7)

638.3

Unallocated assets and liabilities

 

 

 

 

 

(8.5)

Consolidated net assets

 

 

 

 

 

629.8

 

 

 

As at 30 June 2016

 

UK Insurance£m

International Car Insurance£m

Price Comparison£m

Other£m

Eliminations£m

Total£m

Property and equipment

29.2

3.4

1.3

-

-

33.9

Intangible assets

72.8

17.7

2.0

63.7

-

156.2

Reinsurance assets

710.9

202.9

-

0.3

-

914.1

Insurance and other receivables

651.9

58.5

36.9

(50.0)

0.1

697.4

Financial investments

2,075.9

58.1

-

-

-

2,134.0

Cash and cash equivalents

131.7

102.3

43.1

9.2

-

286.3

Reportable segment assets

3,672.4

442.9

83.3

23.2

0.1

4,221.9

Insurance contract liabilities

2,154.3

324.9

-

5.0

-

2,484.2

Trade and other payables

961.9

78.0

15.0

15.9

-

1,070.8

Reportable segment liabilities

3,116.2

402.9

15.0

20.9

-

3,555.0

Reportable segment net assets

556.2

40.0

68.3

2.3

0.1

666.9

Unallocated assets and liabilities

 

 

 

 

 

(4.3)

Consolidated net assets

 

 

 

 

 

662.6

 

 

As at 31 December 2016

 

UK Insurance£m

International Car Insurance£m

Price Comparison£m

Other£m

Eliminations£m

Total£m

Property and equipment

26.8

4.0

1.2

-

-

32.0

Intangible assets

73.8

23.0

1.8

63.7

-

162.3

Reinsurance assets

881.4

244.7

-

0.3

-

1,126.4

Insurance and other receivables

890.3

132.8

14.8

(185.6)

(67.4)

784.9

Financial investments

2,145.0

45.6

12.2

-

-

2,202.8

Cash and cash equivalents

178.0

100.6

33.0

8.0

-

319.6

Reportable segment assets

4,195.3

550.7

63.0

(113.6)

(67.4)

4,628.0

Insurance contract liabilities

2,359.9

385.4

-

4.2

-

2,749.5

Trade and other payables

1,147.7

122.1

11.3

11.1

-

1,292.2

Reportable segment liabilities

3,507.6

507.5

11.3

15.3

-

4,041.7

Reportable segment net assets

687.7

43.2

51.7

(128.9)

(67.4)

586.3

Unallocated assets and liabilities

 

 

 

 

 

(4.6)

Consolidated net assets

 

 

 

 

 

581.7

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.

There is an asymmetrical allocation of assets and income to the reportable segments, in that the interest earned on cash and cash equivalent assets deployed in the UK Insurance, Price Comparison and International Car Insurance segments is not allocated in arriving at segment profits. This is consistent with regular reporting to the Board of Directors.

Eliminations represent inter-segment funding and balances included in insurance and other receivables.

5.         Premium, Claims and Profit Commissions

5a.        Net insurance premium revenue

 

30 June 2017

30 June 2016

31 December 2016

 

£m

£m

£m

 

 

 

 

Total insurance premiums including co-insurance

1,219.8

1,076.5

2,193.9

 

 

 

 

Group gross written premiums

928.7

717.8

1,482.0

Outwards reinsurance premiums

(627.0)

(425.2)

(883.6)

 

 

 

 

Net insurance premiums written

301.7

292.6

598.4

 

 

 

 

Change in gross unearned premium provision

(132.1)

(82.3)

(128.4)

Change in reinsurers' share of unearned premium provision

131.7

49.4

78.8

 

 

 

 

Net insurance premium revenue

301.3

259.7

548.8

The Group's share of its insurance business was underwritten by Admiral Insurance (Gibraltar) Limited, Admiral Insurance Company Limited and Elephant Insurance Company. All contracts are short-term in duration, lasting for 12 months or less.

 

5b.       Profit commission

UK Car Insurance:

30 June 2017

30 June 2016

31 December 2016

 

£m

£m

£m

Underwriting year:

 

 

 

2011 & prior

10.7

5.1

16.7

2012

10.9

14.8

9.6

2013

7.2

21.8

26.4

2014

-

-

-

2015

-

-

-

2016

-

-

-

2017

-

-

-

 

 

 

 

Total profit commission (UK Car)

28.8

41.7

52.7

 

 

 

 

 

 

 

UK Household Insurance:

30 June 2017

30 June 2016

31 December 2016

 

£m

£m

£m

Underwriting year:

 

 

 

2015

0.6

0.5

0.7

2016

0.6

-

0.9

 

 

 

 

Total profit commission (UK Household)

1.2

0.5

1.6

 

 

 

 

 

5c.        Reinsurance assets and insurance contract liabilities

(i)         Analysis of recognised amounts:

 

30 June 2017

30 June 2016

31 December 2016

 

£m

£m

£m

Gross:

 

 

 

Claims outstanding*1

2,202.3

1,819.9

2,030.8

Unearned premium provision

851.8

664.3

718.7

Total gross insurance liabilities

3,054.1

2,484.2

2,749.5

 

 

 

 

Recoverable from reinsurers:

 

 

 

Claims outstanding

905.2

523.9

701.6

Unearned premium provision

555.7

390.2

424.8

Total reinsurers' share of insurance liabilities

1,460.9

914.1

1,126.4

 

 

 

 

Net:

 

 

 

Claims outstanding*2

1,297.1

1,296.0

1,329.2

Unearned premium provision

296.1

274.1

293.9

 

 

 

 

Total insurance liabilities - net

1,593.2

1,570.1

1,623.1

 

[*1]            Gross claims outstanding at 30 June 2017 is presented before the deduction of salvage and subrogation recoveries totalling £43.5 million (H1 2016: £30.4 million, FY 2016: £37.7 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 (iii) below.

 (ii)       Analysis of gross and net claims reserve releases:

The following table analyses the impact of movements in prior year claims provisions on a gross and net basis.  This data is presented on an underwriting year basis.

 

30 June 2017

30 June 2016

31 December 2016

Gross

£m

£m

£m

Underwriting year:

 

 

 

2012 & prior

47.7

34.8

41.7

2013

20.4

42.4

49.3

2014

17.0

47.0

42.8

2015

9.8

9.2

1.9

2016

7.4

-

-

 

 

 

 

Total gross release (UK Insurance)

102.3

133.4

135.7

Total gross release (International Car Insurance)

11.7

9.2

21.0

 

 

 

 

Total gross release

114.0

142.6

156.7

 

 

 

30 June 2017

30 June 2016

31 December 2016

Net

£m

£m

£m

Underwriting year:

 

 

 

2012 & prior

47.7

34.8

41.7

2013

20.4

42.4

49.3

2014

17.0

(12.3)

(16.4)

2015

4.1

3.8

0.8

2016

3.1

-

-

 

 

 

 

Total net release (UK Insurance)

92.3

68.7

75.4

Total net release (International Car Insurance)

5.2

4.4

9.9

 

 

 

 

Total net release

97.5

73.1

85.3

 

 

 

 

Releases on Admiral's original net share

44.9

55.9

58.3

Releases on commuted quota share reinsurance contracts

 47.4

 12.8

17.1

 

 

 

 

Total net release (UK Insurance) as above

92.3

68.7

75.4

 

Releases on commuted quota share contracts are analysed by underwriting year as follows:

 

 

30 June 2017

30 June 2016

31 December 2016

 

£m

£m

£m

Underwriting year:

 

 

 

2011 & prior

11.9

3.9

11.3

2012

13.7

16.0

11.3

2013

11.9

24.7

28.8

2014

9.9

(31.8)

(34.3)

Total releases on commuted quota share reinsurance contracts

 47.4

 12.8

 17.1

 

 

 

31 December:

30 June

UK Car Insurance loss ratio development

2012

2013

2014

2015

2016

2017

Underwriting year (UK car only)

 

 

 

 

 

 

2012

84%

78%

 73%

66%

64%

62%

2013

-

85%

82%

76%

70%

68%

2014

-

-

92%

89%

84%

82%

2015

-

-

-

87%

87%

86%

2016

-

-

-

-

88%

87%

 

(iii)       Reconciliation of movement in claims provision:

 

 

 

30 June 2017

 

Gross

Reinsurance

Net

 

£m

£m

£m

 

 

 

 

Claims provision at 1 January 2017

2,030.8

(701.6)

1,329.2

 

 

 

 

Claims incurred (excluding releases)

709.3

(452.3)

257.0

Reserve releases

(114.0)

16.5

(97.5)

Movement in claims provision due to commutation

-

-

-

Claims paid and other movements

(423.8)

232.2

(191.6)

 

 

 

 

Claims provision at 30 June 2017

2,202.3

(905.2)

1,297.1

 

 

 

 

30 June 2016

 

Gross

Reinsurance

Net

 

£m

£m

£m

 

 

 

 

Claims provision at 1 January 2016

1,725.0

(544.8)

1,180.2

 

 

 

 

Claims incurred (excluding releases)

603.2

(387.3)

215.9

Reserve releases

(142.6)

69.5

(73.1)

Movement in claims provision due to commutation

-

186.2

186.2

Claims paid and other movements

(365.7)

152.5

(213.2)

 

 

 

 

Claims provision at 30 June 2016

1,819.9

(523.9)

1,296.0

 

 

 

31 December 2016

 

Gross

Reinsurance