Admiral Group plc Results for the Six Months Ended 30 June 2009
25 August 2009
Admiral announces another record half year profit and continued good
growth. Profit before tax at £105.3 million was 5% ahead of H1 2008,
whilst turnover rose 17% to £540.1 million. The Board is declaring a
record interim dividend payment of 27.7p per share.
H1 2009 Highlights
* Group profit before tax up 5% at £105.3 million (H1 2008: £100.3
million)
* Interim dividend of 27.7p per share (2008 interim: 26.0p)
* Group turnover* up 17% at £540.1 million (H1 2008: £463.4
million)
* Group net revenue up 19% at £243.1 million (H1 2008: £204.0
million)
* Number of Group customers up 18% to 1.92 million from 1.63
million at 30 June 2008
* Profit from UK car insurance up 18% to £101.2 million (H1 2008:
£86.0 million)
* UK ancillary income per vehicle steady at £71 (H1 2008: £71)
* Confused.com revenue up 10% at £40.2 million (H1 2008 £36.6
million), profits reduced to £11.0 million from £15.6 million
* Turnover from outside the UK £24.5 million (up 64%) and 100,500
customers
* Rastreator.es, our Spanish price comparison site, successfully
launched in Spain in March 2009
* Employee Share Scheme - over £4.5 million shares will be
distributed to over 3,000 staff based on the H1 2009 result
* Turnover is defined as total premiums written (including
co-insurers' share) and other revenue
Comment from Henry Engelhardt, Group Chief Executive
"Wow! Considering the general economic climate and pathetic
investment returns this was an outstanding result. Once again, I'm
happy to announce an all-time record for profits; that the business
continued its strong growth; and that we will soon pay a record
dividend.
"Key to our success was the great result turned in by the UK car
insurance business. We increased the number of customers by 17% by
giving a combination of competitive prices and great service. As
well as growing the number of customers we increased premium rates by
around 5.5% in the first half of 2009, meaning current rates are
around 8% higher than 12 months ago.
"As the UK business goes from strength to strength we have continued
to invest in our long-term future by developing our operations
outside the UK. Overall we now have over 100,000 customers outside
the UK, in Spain, Germany and Italy and these businesses contributed
£24.5m of turnover in the first six months of the year. On 30 March
we launched Rastreator, our Spanish price comparison site. Looking
to the future, we are working on the launch of a direct car insurance
operation in the USA, based in Richmond, Virginia, which will be
called Elephant. We are also starting work on two further price
comparison operations in Italy and France.
"Confused.com started the year well, increasing revenue against a
backdrop of a UK price comparison market which remains highly
competitive.
"It's a great set of numbers for the first half of the year, and I'm
very pleased to say that, as a result, every member of staff will
receive £1,500 of free shares in the Group, worth over £4.5 million
in total."
Comment from Alastair Lyons, Group Chairman
"With a further advance in first half profits we are delighted once
again to be able to declare an increase in our interim dividend, now
at 27.7 pence per ordinary share. This represents 97% of after-tax
earnings for the first six months of 2009, testament to the strength
of Admiral's capital-efficient cash-generative business model."
Interim dividend
The interim dividend of 27.7p per share will be paid on 21 October
2009. The ex-dividend date is 7 October 2009, the record date 9
October 2009.
Management presentation
Analysts and investors will be able to access the Admiral Group
management presentation which commences at 9.30am on Tuesday 25
August 2009 by dialling +44 (0)1452 556 620 and using participant
code 24931002. A copy of the presentation slides will be available
at www.admiralgroup.co.uk.
Summary Financial Review
Group key performance indicators and financial highlights
Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Turnover* £540.1m £463.4m £910.2m
Net revenue £243.1m £204.0m £422.8m
Number of customers 1.92m 1.63m 1.75m
Loss ratio 67.0% 65.0% 64.7%
Expense ratio 22.0% 20.8% 21.8%
Combined ratio 89.0% 85.8% 86.5%
Profit before tax £105.3m £100.3m £202.5m
Earnings per share 28.5p 27.3p 54.9p
* Turnover (a non-GAAP measure) is defined as total premiums written
(including co-insurers' share) and other revenue
The number of customers across the Group increased by 18% to 1.92
million at 30 June 2009 compared to the same date last year. The
increase in customer numbers was the main contributor to a 17% rise
in turnover, up to £540.1 million from £463.4 million. Net revenue
rose 19% to £243.1 million.
The key underwriting ratios increased slightly in the first half of
2009 compared to the same period in 2008 - the combined ratio moving
up to 89% from 86%. However the effect of this was outweighed by
significantly higher profit commission and growth in ancillary income
in line with the increase in UK turnover.
Profit before tax rose 5% to £105.3 million from £100.3 million,
whilst earnings per share rose 4% to 28.5p from 27.3p.
UK Car Insurance
The most mature and by some margin the largest part of the Group is
the UK car insurance business. We sell car insurance to private
individuals both directly (on the internet or by phone), and via
price comparison websites. We trade through four brands - Admiral,
Bell, Diamond and elephant.co.uk.
The business performed very positively in the first half of 2009,
generating strong growth in turnover (up 15% to £470.1 million) and
profits (up 18% to £101.2 million):
Non-GAAP format income statement - UK Car Insurance:
£m Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Turnover*1 470.1 407.2 804.9
______ ______ ______
Total premiums written*2 404.6 350.1 690.2
______ ______ ______
Net insurance premium revenue 94.6 73.5 161.9
Investment income 5.7 8.9 17.1
Net insurance claims (63.6) (48.0) (105.1)
Net insurance expenses (14.2) (10.9) (26.0)
______ ______ ______
Underwriting profit 22.5 23.5 47.9
Profit commission 22.7 14.3 34.7
Net ancillary income 51.5 44.1 89.0
Other revenue 4.5 4.1 8.3
______ ______ ______
UK car insurance business profit
before tax 101.2 86.0 179.9
______ ______ ______
*1 Turnover (a non-GAAP measure) comprises total premiums written
(including co-insurers' share) and other revenue
*2 Total premiums written (non-GAAP) includes premium underwritten by
co-insurers
Key performance indicators:
Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Reported loss ratio 64.2% 62.0% 62.0%
Reported expense ratio 17.9% 18.1% 19.0%
Reported combined ratio 82.1% 80.1% 81.0%
Written basis expense ratio 16.7% 17.2% 17.0%
Claims reserve releases £18.4m £18.4m £38.0m
Releases as % of premium 19.4% 25.0% 23.5%
Profit commission as % of premium 24.0% 19.4% 21.4%
Vehicles insured at period-end 1.73m 1.48m 1.59m
Ancillary income per vehicle £70.8 £71.1 £70.7
Co-insurance and reinsurance arrangements
In 2009, Admiral underwrites 27.5% of the UK premium (in line with
2008). 50% of the UK total is underwritten by the Munich Re Group
(specifically Great Lakes Reinsurance (UK) Plc) through a long-term
co-insurance agreement, and 22.5% was proportionally reinsured to
Swiss Re (10.0%), Hannover Re (6.25%) and New Re (6.25%).
The nature of the Great Lakes co-insurance agreement is such that 50%
of all motor premium and claims for the 2009 year accrues directly to
Great Lakes and does not appear in the Group's income statement.
Similarly, Great Lakes reimburses the Group for its proportional
share of expenses incurred in acquiring and administering the motor
business.
The profit commission terms in the agreements allow Admiral to
participate to a large extent in the profitability of the total
underwriting, and the most recent reinsurance contracts allow for a
significant proportion of the profit to be remitted back to Admiral.
UK Car Insurance Financial Performance
The first half of 2009 saw strong growth in the main UK business,
with the number of vehicles insured rising by almost 17% to 1.73
million compared to 30 June 2008. Total premiums written grew 16% to
£404.6 million from £350.1 million.
Admiral increased rates for new business and renewals by around 5.5%
in the first half of 2009, meaning current rates are around 8% higher
than 12 months ago. However, a continued shift in the mix of the
portfolio towards lower average premium business contributed to
average written premiums remaining relatively flat in the first half
of 2009 compared to the same period last year.
Internal data on the competitiveness of Admiral's rates against other
insurers suggests that market rates moved broadly in line with
Admiral in the first half of the year.
Underwriting profit declined slightly, to £22.5 million from £23.5
million, mostly as a result of lower investment income. Positive
back year claims reserve development continued during the period,
though whilst the absolute value of releases remained the same at
£18.4 million, the relative impact reduced to 19% of net premium
revenue from 25% in the same period last year.
The combined ratio, net of releases increased to 82.1% from 80.1%.
If the impact of releases is excluded, the accident year combined
ratio improved to 101.5% from 105.1%, reflecting a better projection
of the current year than the equivalent position last year.
Latest results for the UK private market (according to EMB actuaries)
showed a worsening combined ratio in 2008 of 108% up from 104% in
2007 (Admiral's UK ratio net of releases was 81% in 2008). If the
positive impact of releases is excluded, the market ratio remained
flat at around 115%.
Admiral's UK expense ratio improved slightly to just under 18% (the
UK market in 2008 reported a worsening expense ratio of over 30%,
again according to EMB).
Counteracting the slight fall in underwriting profit was the
significant increase in profit commission income, which rose by
around 60% to £22.7 million from £14.3 million. This is a reflection
of the much more remunerative profit commission terms on the
co-insurance and reinsurance contracts in effect for the most recent
underwriting years.
The total of profit commission and Admiral's own underwriting profits
shows a significant improvement compared to the same period last year
- an increase of 20% to £45.3 million from £37.8 million.
On the Group's own underwriting, we continue to reserve initially on
a conservative basis, above actuarial projections of ultimate
outcomes. This results in a significant margin being held in claims
reserves to allow for any unforeseen adverse development in open
claims and creates a position whereby Admiral makes above industry
average reserve releases.
In addition to these releases, there is a significant amount of
revenue not yet recognised arising from profit commissions earned on
the premiums that Admiral does not underwrite itself. Proportionally
these balances have become much more significant and consequently we
now consider it more appropriate to consider these two parts together
when we determine the quantum of reserve releases. We seek to
achieve a consistent level of overall prudence.
Net income from ancillary products and services continues to be a
major source of UK and Group profits. UK net ancillary profit
increased in line with the number of vehicles insured (around 17%) to
£51.5 million from £44.1 million. As these figures suggest,
ancillary income per vehicle in the 12 months to June 2009 was
consistent with the equivalent figure at June 2008 (at £71), and
there were no major changes in the component elements.
It is also worth noting that although Admiral does not underwrite all
the car insurance generated for its own account, it does retain all
ancillary income generated.
Price Comparison
The Group owns Confused.com, the UK's leading price comparison
website for car insurance. Confused also offers comparison services
for other insurance and financial products.
The Group has launched a new business in Spain (Rastreator.es) and is
in the process of developing new European operations for launch over
the next year.
Non-GAAP format income statement - Price Comparison:
£m Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Revenue:
Motor 31.3 29.8 52.9
Other 8.9 6.8 13.2
______ ______ ______
Total 40.2 36.6 66.1
Operating expenses (29.2) (21.0) (40.5)
______ ______ ______
Operating profit 11.0 15.6 25.6
______ ______ ______
Operating margin 27% 43% 39%
______ ______ ______
At the end of 2008, Confused launched its rebuilt website alongside a
new media campaign. Since the start of 2009, Confused has further
increased its marketing spend in order to protect its market share,
whilst maintaining an acceptable level of profitability.
The new campaign has been a success, and Confused has delivered a
substantially higher number of quotes in the first half of 2009
compared to previous periods. The number of sales of motor and other
products also increased. Data suggests that Confused's market share
has stabilised at around one third of the car insurance price
comparison market.
Overall, Confused's revenue grew by 10% compared to the first half of
last year, to £40.2 million. Motor revenue increased by 5% to £31.3
million, whilst other income rose around 30% to £8.9 million.
The proportion of revenue represented by non-motor has shown
sustained growth, as Confused seeks to broaden its product offerings:
H1 06 H1 07 H1 08 H1 09
Non-motor revenue % of total revenue 11% 14% 19% 22%
Increased media spend in the first half of 2009 has been the major
factor underlying a 39% increase in operating expenses to £29.2
million. The operating margin has suffered as a result, decreasing
from 39% in 2008 as a whole to 27% in the first half of 2009.
Confused made an operating profit of £11.0 million in the first half
of 2009.
Rastreator
The Group successfully launched its new Spanish price comparison
business - Rastreator.es - in Madrid, Spain in May 2009. However, it
is very early days for Rastreator which has not yet marketed in a
meaningful way. A TV campaign is planned for later this year, which
should significantly boost Rastreator's presence. Post-launch income
and expenses for Rastreator are not significant.
Other price comparison operations
The Group is preparing to launch two new price comparison businesses,
in France and Italy, within the next twelve months.
Non-UK Car Insurance
An important part of the Group's long-term strategy is to establish
profitable, growing and sustainable businesses outside the UK.
Balumba.es was launched in Spain in 2006, AdmiralDirekt.de followed
in Germany a year later, and most recently ConTe.it started trading
in Italy in 2008.
The Group is well advanced in preparing for a launch in the US later
in 2009 or early next year.
Non-UK Car Insurance Financial Performance
Non-GAAP format income statement:
£m Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Turnover 24.5 14.7 29.7
______ ______ ______
Total premiums written 22.6 13.0 26.0
______ ______ ______
Net insurance premium revenue 5.9 3.5 7.9
Investment income 0.1 0.2 0.7
Net insurance claims (6.5) (4.5) (9.5)
Net insurance expenses (5.2) (2.7) (6.2)
______ ______ ______
Underwriting result (5.7) (3.5) (7.1)
Net ancillary income 1.4 1.3 2.8
Other revenue 0.2 0.1 0.2
______ ______ ______
Non-UK Car Insurance result
(before tax) (4.1) (2.1) (4.1)
______ ______ ______
Note - Pre-launch costs excluded
Key performance indicators:
Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Loss ratio 112% 128% 120%
Expense ratio 89% 78% 78%
Combined ratio 201% 206% 198%
Vehicles insured at period-end 100,500 69,900 73,700
Ancillary income per policy �42 �62 �59
Refer below for comments on each business.
Co-insurance and reinsurance arrangements
Underwriting arrangements for Balumba, AdmiralDirekt and ConTe are
similar, with the Munich Re Group underwriting 65% of the risks in
each. Admiral retains the remaining 35%.
The contracts contain profit commission clauses that allow Admiral to
participate in the profitability of the business written by Munich
Re, when each business reaches profitability on a cumulative basis.
Non-UK Car Insurance financial commentary
The combined turnover from the three non-UK businesses grew in the
first half of 2009 - up 67% to £24.5 million. The number of vehicles
insured also rose strongly, by around 44% to just over 100,000.
However, at this stage in their development (Balumba, the oldest
does not turn three until October 2009), these businesses are not yet
of a scale or maturity to be profitable.
Taken together, the non-UK operations are a relatively small part of
the Group overall, contributing 5% of premiums and customers, whilst
the combined loss represents less than 4% of Group profit before tax
for the period. Good progress is being made however, and management
are satisfied with the results to date.
Analysis of selected indicators:
Six months ended 30 June 2009 Balumba AdmiralDirekt ConTe Total
Total premiums written (£m) 8.1 11.4 3.1 22.6
Vehicles insured at period-end 48,100 37,500 14,900 100,500
Result (£m) (1.0) (2.2) (0.9) (4.1)
Year ended 31 December 2008 Balumba AdmiralDirekt ConTe Total
Total premiums written (£m) 20.8 4.3 0.9 26.0
Vehicles insured at period-end 55,400 15,000 3,300 73,700
Result (£m) (1.2) (2.3) (0.6) (4.1)
Balumba
The significant rate increases put through during 2008 to achieve the
improvement in Balumba's loss ratio shown below, and the consequent
drop in conversion and retention rates have resulted in a fall in the
number of vehicles insured over the past twelve months.
Underwriting year
2007 2008 2009
After 6 months 149% 108% 79%
After 18 months 136% 108% -
After 30 months 134% - -
Whilst the loss ratio has improved on underwriting and accident year
bases, the reduced size of Balumba's vehicle base has increased the
expense ratio. As a consequence, Balumba experienced a relatively
flat combined ratio of around 160% for the first six months of 2009
compared to 2008 as a whole.
AdmiralDirekt
AdmiralDirekt has grown its customer base significantly since the end
of 2008 and compared to the same time last year. Written premium is
correspondingly significantly higher than in 2008. The significant
increase in the size of the portfolio means AdmiralDirekt now has
more meaningful data with which to prepare for the forthcoming
renewal season.
ConTe
Having only just passed its first birthday at the half year-end,
ConTe's numbers are still small as would be expected, with less than
15,000 vehicles on cover at the end of June 2009. Early indications
are positive, with loss ratios for both 2008 and 2009 underwriting
years below 100% at 30 June 2009.
New US insurance business
Work is well advanced on preparing to launch a US car insurance
business later in 2009 or early in 2010. The business will trade as
Elephant and will be based in Virginia, which is where it will
initially trade.
Other Group Items
Gladiator - Non-GAAP income statement and KPIs:
£m Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Revenue 5.3 4.9 9.5
Expenses (3.9) (3.4) (6.7)
______ ______ ______
Operating profit 1.4 1.5 2.8
______ ______ ______
Operating margin 26% 31% 29%
Customer numbers 89,400 75,800 84,900
Although Gladiator (the Group's commercial vehicle insurance broker)
has continued to grow its customer base (up 18% compared to 30 June
2008, 5% on 31 December 2008), competition has intensified in UK
commercial van insurance in 2009, and consequently growth has
slowed. Gladiator's operating margin has also reduced, falling to
26% from 29% in 2008 as a whole.
Gladiator has reacted by improving its systems and further widening
the scope of its distribution.
Other income statement items
(Non-GAAP)
£m Six months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Group net interest income 1.1 3.5 6.6
Share scheme charges (3.4) (3.0) (5.9)
Expansion costs (1.0) (0.4) (0.8)
Other central overhead (0.8) (0.8) (1.6)
The most significant item to note above is the substantial drop in
net interest income - falling 69% to £1.1 million. This is entirely
due to the fall in interest rates, predominantly in the UK, over the
second half of 2008 and into 2009.
Expansion costs relate to pre-launch expenses incurred in developing
the Group's international operations. These were higher than in the
first half of 2008, reflecting the costs incurred in launching
Rastreator and also the ongoing work in the US.
Investments
The key objectives of the Group's investment strategy continue to be:
1. Capital preservation
2. Low volatility in returns
3. High levels of liquidity
As shown below, there has been little change in where funds are
invested during the first half of 2009 compared to 2008. The
majority of funds continue to be invested in either AAA-rated money
market funds (cash-like returns, same day liquidity, low risk, good
diversification) or term cash deposits (all with original maturities
of less than one year in strongly rated banks).
Cash and investments holdings analysis:
30 June 2009
UK car Price Non-UK car Other Total
insurance comparison insurance
£m £m £m £m £m
Liquidity money market 324.3 - 25.0 41.0 390.3
funds
Long term cash deposits 100.0 - - - 100.0
Cash 52.6 15.0 17.6 11.0 96.2
______ ______ ______ ______ ______
Total 476.9 15.0 42.6 52.0 586.5
______ ______ ______ ______ ______
30 June 2008
UK car Price Non-UK car Other Total
insurance comparison insurance
£m £m £m £m £m
Liquidity money market 356.9 - 15.9 - 372.8
funds
Cash 118.2 12.0 7.9 15.2 153.3
______ ______ ______ ______ ______
Total 475.1 12.0 23.8 15.2 526.1
______ ______ ______ ______ ______
31 December 2008
UK car Price Non-UK car Other Total
insurance comparison insurance
£m £m £m £m £m
Liquidity money market 287.3 - 23.5 - 310.8
funds
Long term cash deposits 100.0 - - - 100.0
Short term cash 4.0 - - - 4.0
deposits
Cash 46.4 15.6 18.2 60.1 140.3
______ ______ ______ ______ ______
Total 437.7 15.6 41.7 60.1 555.1
______ ______ ______ ______ ______
As noted, the Group has seen a sharp fall in investment and interest
income, mirroring the substantial fall in interest rates in the UK
(most of the Group's funds are held in sterling). Total investment
and interest income fell to £6.9 million in H1 2009 - down 45% on the
£12.5 million recognised in the first half of last year. The average
rate of return on invested sterling funds and funds on deposit was
1.8% in the first half of 2009, compared to 5.1% in 2008 as a whole
(and 5.5% in H1 2008). The Group has suffered no impairments on any
of its invested assets.
Meaningful increases in returns are not anticipated until market
interest rates begin to rise again.
Taxation
The taxation charge reported in the income statement is £29.9
million, which equates to 28.4% of profit before tax, close to the
general rate of corporation tax in the UK.
Earnings per share
Basic earnings per share rose by 4% to 28.5p from 27.3p. The growth
rate is largely in line with the increase in pre-tax profit.
Dividend
The Directors have declared an interim dividend for 2009 of 27.7p per
share. In line with the Group's dividend strategy, this is made up
of a 12.8p normal element (based on 45% of post-tax profits) and a
14.9p special element, based on surplus capital held at 30 June 2009.
The payment is 7% higher than the 2008 interim dividend.
The payment date is 21 October 2009, ex-dividend date 7 October and
record date 9 October.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group's businesses
remain consistent with those disclosed in the 2008 Annual Report.
Condensed consolidated income statement
6 months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Note £m £m £m
Insurance premium revenue 3 178.9 139.1 301.4
Insurance premium ceded to 3 (78.4) (62.1) (131.6)
reinsurers ______ ______ ______
Net insurance premium revenue 100.5 77.0 169.8
Other revenue 4 113.0 100.2 193.9
Profit commission 5 22.7 14.3 34.7
Investment and interest income 6 6.9 12.5 24.4
______ ______ ______
Net revenue 243.1 204.0 422.8
Insurance claims and claims handling
expenses (129.4) (102.2) (213.8)
Insurance claims and claims handling 59.2 49.8 99.2
expenses recovered from reinsurers ______ ______ ______
Net insurance claims (70.2) (52.4) (114.6)
Expenses 7 (64.2) (48.2) (99.8)
Share scheme charges 20 (3.4) (3.1) (5.9)
______ ______ ______
Total expenses (137.8) (103.7) (220.3)
Profit before tax 105.3 100.3 202.5
Taxation expense 8 (29.9) (28.4) (57.6)
______ ______ ______
Profit after tax attributable to 75.4 71.9 144.9
equity ______ ______ ______
holders of the Company
Earnings per share:
Basic 9 28.5p 27.3p 54.9p
______ ______ ______
Diluted 9 28.4p 27.3p 54.9p
______ ______ ______
Dividends paid (total) 10 69.6 60.5 128.5
Dividends paid (per share) 10 26.5p 23.2p 49.2p
Condensed consolidated statement of comprehensive income
6 months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Note £m £m £m
Profit for the period 75.4 71.9 144.9
Other comprehensive income
Exchange differences on
translation
of foreign operations (6.5) 0.8 9.9
______ ______ ______
Other comprehensive income for the
period, net of income tax (6.5) 0.8 9.9
______ ______ ______
Total comprehensive income
for the period 68.9 72.7 154.8
______ ______ ______
Condensed consolidated balance sheet
As at:
30 June 30 June 31 December
2009 2008 2008
Note £m £m £m
ASSETS
Property, plant and equipment 11 11.5 8.8 11.0
Intangible assets 12 78.2 71.3 75.7
Reinsurance assets 14 195.7 155.9 170.6
Deferred tax 17 - 1.5 -
Financial assets 13 688.2 536.6 586.9
Trade and other receivables 15 36.2 26.8 25.5
Cash and cash equivalents 16 96.2 153.3 144.3
______ ______ ______
Total assets 1,106.0 954.2 1,014.0
______ ______ ______
EQUITY
Share capital 20 0.3 0.3 0.3
Share premium account 13.1 13.1 13.1
Other reserves 3.8 1.2 10.3
Retained earnings 264.4 241.0 251.8
______ ______ ______
Total equity 281.6 255.6 275.5
______ ______ ______
LIABILITIES
Insurance contracts 14 491.2 412.8 439.6
Deferred tax 17 12.2 - 10.3
Trade and other payables 18 293.1 255.1 270.1
Current tax liabilities 27.9 30.7 18.5
______ ______ ______
Total liabilities 824.4 698.6 738.5
______ ______ ______
Total equity and total 1,106.0 954.2 1,014.0
liabilities ______ ______ ______
Condensed consolidated statement of cash flows
6 months ended Year ended
30 June 30 June 31 December
2009 2008 2008
Note £m £m £m
Profit after tax 75.4 71.9 144.9
Adjustments for non-cash items:
- Depreciation 2.4 1.7 3.7
- Amortisation of software 0.8 0.5 1.4
- Accrued income on investments
and deposits (1.0) 0.1 0.8
- Share scheme charge 6.4 6.0 11.3
Change in gross insurance contract 51.6 49.7 76.5
liabilities
Change in reinsurance assets (25.1) (24.2) (38.9)
Change in trade and other
receivables, (33.3) (23.3) (36.5)
including from policyholders
Change in trade and other
payables, 22.6 15.7 30.7
including tax and social security
Taxation expense 29.9 28.4 57.6
______ ______ ______
Cash flows from operating
activities, 129.7 126.5 251.5
before movements in investments
Net cash flow into investments (78.5) (37.3) (76.0)
held at fair ______ ______ ______
value
Cash flows from operating
activities, net of 51.2 89.2 175.5
movements in investments
Taxation payments (18.1) (27.8) (56.9)
______ ______ ______
Net cash flow from operating 33.1 61.4 118.6
activities
Cash flows from investing
activities:
Purchases of property, plant and
equipment (5.7) (4.0) (11.3)
and software
Proceeds from the disposals of
property, 0.2 - -
plant, equipment and software ______ ______ ______
Net cash used in investing (5.5) (4.0) (11.3)
activities
Cash flows from financing
activities:
Capital element of new finance 0.7 0.3 0.5
leases
Repayment of finance lease (0.3) (0.5) (0.7)
liabilities
Equity dividends paid (69.6) (60.5) (128.5)
______ ______ ______
Net cash used in financing (69.2) (60.7) (128.7)
activities
Net decrease in cash and cash
equivalents (41.6) (3.3) (21.4)
Cash and cash equivalents at 1 144.3 155.8 155.8
January
Effects of changes in foreign (6.5) 0.8 9.9
exchange rates ______ ______ ______
Cash and cash equivalents at end
of 96.2 153.3 144.3
period 16 ______ ______ ______
Condensed consolidated statement of changes in equity
Share Foreign Retained
Share premium exchange profit and Total
capital account reserve loss equity
£m £m £m £m £m
At 1 January 2008 0.3 13.1 0.4 223.8 237.6
Profit for the period - - - 71.9 71.9
Other comprehensive
income
Currency translation - - 0.8 - 0.8
differences ______ ______ ______ ______ ______
Total comprehensive
income for - - 0.8 71.9 72.7
the period ______ ______ ______ ______ ______
Transactions with
equity-holders
Dividends - - - (60.5) (60.5)
Share scheme credit - - - 6.0 6.0
Deferred tax charge on - - - (0.2) (0.2)
share scheme credit ______ ______ ______ ______ ______
Total transactions with - - - (54.7) (54.7)
equity-holders ______ ______ ______ ______ ______
As at 30 June 2008 0.3 13.1 1.2 241.0 255.6
______ ______ ______ ______ ______
At 1 January 2008 0.3 13.1 0.4 223.8 237.6
Profit for the period - - - 144.9 144.9
Other comprehensive
income
Currency translation - - 9.9 - 9.9
differences ______ ______ ______ ______ ______
Total comprehensive
income for - - 9.9 144.9 154.8
the period ______ ______ ______ ______ ______
Transactions with
equity-holders
Dividends - - - (128.5) (128.5)
Share scheme credit - - - 11.3 11.3
Deferred tax credit on
share scheme credit - - - 0.3 0.3
Total transactions with - - - (116.9) (116.9)
equity-holders ______ ______ ______ ______ ______
As at 31 December 2008 0.3 13.1 10.3 251.8 275.5
______ ______ ______ ______ ______
Condensed consolidated statement of changes in equity (continued)
Share Foreign Retained
Share premium exchange profit and Total
capital account reserve loss equity
£m £m £m £m £m
At 1 January 2009 0.3 13.1 10.3 251.8 275.5
Profit for the period - - - 75.4 75.4
Other comprehensive income
Currency translation - - (6.5) - (6.5)
differences ______ ______ ______ ______ ______
Total comprehensive income - - (6.5) 75.4 68.9
for the period ______ ______ ______ ______ ______
Transactions with
equity-holders
Dividends - - - (69.6) (69.6)
Share scheme credit - - - 6.4 6.4
Deferred tax credit on - - - 0.4 0.4
share scheme credit ______ ______ ______ ______ ______
Total transactions with - - - (62.8) (62.8)
equity-holders ______ ______ ______ ______ ______
As at 30 June 2009 0.3 13.1 3.8 264.4 281.6
______ ______ ______ ______ ______
Notes to the condensed interim financial statements
1. General information and basis of preparation
Admiral Group plc is a Company incorporated in England and Wales.
Its registered office is at Capital Tower, Greyfriars Road, Cardiff
CF10 3AZ 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 2009 and the comparative periods for
the 6-month period ended 30 June 2008 and the year ended 31 December
2008. 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 Disclosure and Transparency Rules of the
Financial Services Authority, 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 2008.
The financial statements of the Company's subsidiaries are
consolidated in the Group financial statements. The Company controls
100% of the voting share capital of all its subsidiaries. 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 2008
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 (i) unqualified, (ii) did not include a reference to any matters
to which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under
section 237 (2) or (3) of the Companies Act 1985.
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, including cash flow forecasts and regulatory capital
surpluses. The Group has no debt.
Accounting policies
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 2008, except for the
application of revised IAS1 Presentation of financial statements
(2007) which became effective on 1 January 2009. Numerous other IFRS
and interpretations have been endorsed by the EU in the period to 1
June 2009 and although they have been adopted by the Group, none of
them has had a material impact on the Group's financial statements.
The revised presentation required by IAS1 results in the consolidated
statement of recognised income and expense being replaced by a new
consolidated statement of comprehensive income which presents all
non-owner changes in equity. A consolidated statement of changes in
equity is also brought forward to the primary statements, having
previously been included in the notes. This statement presents all
owner and non-owner changes in equity. Comparative information has
been re-presented so that it is also in conformity with the revised
standard.
Since the change in accounting policy only impacts the presentation
of financial statements, there is no impact on earnings per share.
Critical accounting judgements and estimates
The Group's 2008 annual report provides full details of significant
judgements and estimates used in the application of the Group's
accounting policies. There have been no significant changes to these
judgements and estimates during the period.
Estimation techniques used in calculation of claims provisions:
Estimation techniques are used in the calculation of the provisions
for claims outstanding, which represents a projection of the ultimate
cost of settling claims that have occurred prior to the balance sheet
date and remain unsettled at the balance sheet date.
The key area where these techniques are used relates to the ultimate
cost of reported claims. A secondary area relates to the emergence
of claims that occurred prior to the balance sheet date, but had not
been reported at that date.
The estimates of the ultimate cost of reported claims are based on
the setting of claim provisions on a case-by-case basis.
These provisions are compared with projected ultimate costs using a
variety of different projection techniques (including incurred and
paid chain ladder and an average cost of claim approach) to allow an
actuarial assessment of their likely accuracy and to include
allowance for unreported claims.
The most significant sensitivity in the use of the projection
techniques arises from any future step change in claims costs, which
would cause future claim cost inflation to deviate from historic
trends. This is most likely to arise from a change in the regulatory
or judicial regime that leads to an increase in awards or legal costs
for bodily injury claims that is significantly above or below the
historical trend.
The claims provisions are subject to independent review by the
Group's actuarial advisors.
Refer to note 14 for an analysis on the changes in estimates of
claims provisions for each underwriting year.
2. Operating segments
The Group has four reportable segments, as described below. These
segments represent the principal split of business that is regularly
reported to the Group's Board of Directors, which is considered to be
the Group's chief operating decision maker in line with IFRS 8,
Operating Segments.
UK Car Insurance
The segment consists of the underwriting of private car insurance and
the generation of ancillary income 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 income are not
independent of each other and are performed as one business. This
mirrors the approach taken in management reporting.
Price Comparison
The segment relates to the Group's price comparison websites;
Confused.com in the UK and the Rastreator.es in Spain. Rastreator was
launched in May 2009 and is therefore included in the price
comparison segment for the first time in H1 2009.
Non-UK Car Insurance
The segment consists of the underwriting of private car insurance and
the generation of ancillary income outside of the UK. It specifically
covers the Group's Balumba.es, AdmiralDirekt.de and ConTe.it
operations in Spain, Germany and Italy respectively.
Other
The 'Other' segment includes the Gladiator Commercial Van Insurance
broking operation in addition to certain central expenses, overseas
development expenses, share scheme costs, finance charges and
interest. None of these are reportable segments based on their
immateriality.
Segment income, results and other information
30 June 2009
UK Car Price Non-UK Other Eliminations Segment
Insurance Comparison Car total
Insurance
£m £m £m £m £m £m
Turnover* 470.1 40.2 24.5 5.3 - 540.1
______ ______ ______ ______ ______ ______
Net 188.6 40.2 8.0 6.3 - 243.1
revenue ______ ______ ______ ______ ______ ______
Profit / 101.2 11.0 (4.1) (2.8) - 105.3
(loss) ______ ______ ______ ______ ______ ______
before tax
Reportable 1,019.6 29.4 85.2 56.9 ((85.1) 1,106.0
segment ______ ______ ______ ______ ______ ______
assets
30 June 2008
UK Car Price Non-UK Other Eliminations Segment
Insurance Comparison Car total
Insurance
£m £m £m £m £m £m
Turnover * 407.2 36.6 14.7 4.9 - 463.4
______ ______ ______ ______ ______ ______
Net 153.8 36.6 5.2 8.4 - 204.0
revenue ______ ______ ______ ______ ______ ______
Profit / 86.0 15.6 (2.1) 0.8 - 100.3
(loss) ______ ______ ______ ______ ______ ______
before tax
Reportable 827.8 22.3 22.1 128.9 (46.9) 954.2
segment ______ ______ ______ ______ ______ ______
assets
31 December 2008
UK Car Price Non-UK Other Eliminations Segment
Insurance Comparison Car total
Insurance
£m £m £m £m £m £m
Turnover * 804.9 66.1 29.7 9.5 - 910.2
______ ______ ______ ______ ______ ______
Net 328.3 66.1 12.2 16.2 - 422.8
revenue ______ ______ ______ ______ ______ ______
Profit / 179.9 25.6 (4.1) 1.1 - 202.5
(loss) ______ ______ ______ ______ ______ ______
before tax
Reportable 930.8 23.2 88.0 65.9 (93.9) 1,014.0
segment ______ ______ ______ ______ ______ ______
assets
* Turnover is a non-GAAP measure and consists of total premiums
written (including co-insurers share) and other revenue.
Segment revenues
The UK and Non-UK 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 £6.7m (H1 2008: £6.0m, Full year 2008:
£11.0m). These amounts have not been eliminated in order to avoid
distorting expense and combined ratios which are key indicators of
insurance business.
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 are shown within the Non-UK Car
Insurance reportable segment shown above.
3. Net insurance premium revenue
30 30 31
June June December
2009 2008 2008
£m £m £m
Total motor insurance premiums before co- 427.1 363.2 716.3
insurance ______ ______ ______
Group gross premiums written after 222.2 170.2 334.6
co-insurance
Outwards reinsurance premiums (105.0) (71.2) (140.2)
______ ______ ______
Net insurance premiums written 117.2 99.0 194.4
Change in gross unearned premium provision (43.3) (31.1) (33.2)
Change in reinsurers' share of unearned 26.6 9.1 8.6
premium ______ ______ ______
provision
Net insurance premium revenue 100.5 77.0 169.8
______ ______ ______
The Group's share of the UK, Spanish, German and Italian private
motor insurance business was underwritten by Admiral Insurance
(Gibraltar) Limited (AIGL) and Admiral Insurance Company Limited
(AICL). All contracts are short-term in duration, lasting for 10 or
12 months.
4. Other revenue
30 30 31
June June December
2009 2008 2008
£m £m £m
Ancillary revenue 62.8 54.6 109.8
Price Comparison revenue 40.2 36.6 66.1
Gladiator revenue 5.3 4.9 9.5
Instalment income 4.7 4.1 8.5
______ ______ ______
Total other revenue 113.0 100.2 193.9
______ ______ ______
Ancillary revenue is primarily made up of commissions and fees earned
on sales of insurance products (underwritten by external parties) and
services complementing the motor policy.
5. Profit commission
30 30 31
June June December
2009 2008 2008
£m £m £m
Underwriting year:
2004 & prior 0.7 4.3 8.1
2005 1.9 5.7 8.9
2006 3.1 3.6 9.2
2007 12.5 0.7 8.5
2008 4.2 - -
2009 0.3 - -
______ ______ ______
22.7 14.3 34.7
______ ______ ______
6. Investment and interest income
30 30 31
June June December
2009 2008 2008
£m £m £m
Net investment return 5.8 9.0 17.7
Interest receivable 1.1 3.5 6.7
______ ______ ______
Total investment and interest income 6.9 12.5 24.4
______ ______ ______
7. Expenses
30 June 2009 30 June 2008
Insurance Other Total Insurance Other Total
contracts contracts
£m £m £m £m £m £m
Acquisition of
insurance 8.2 - 8.2 5.4 - 5.4
contracts
Administration and 11.2 44.8 56.0 8.2 34.6 42.8
marketing costs ______ ______ ______ ______ ______ ______
Sub-total 19.4 44.8 64.2 13.6 34.6 48.2
Share scheme - 3.4 3.4 - 3.1 3.1
charges ______ ______ ______ ______ ______ ______
Total expenses 19.4 48.2 67.6 13.6 37.7 51.3
______ ______ ______ ______ ______ ______
31 December 2008
Insurance Other Total
contracts
£m £m £m
Acquisition of insurance contracts 12.5 - 12.5
Administration and marketing costs 19.7 67.6 87.3
______ ______ ______
Sub-total 32.2 67.6 99.8
Share scheme charges - 5.9 5.9
______ ______ ______
Total expenses 32.2 73.5 105.7
______ ______ ______
The £11.2m (H1 2008: £8.2m Full year 2008: £19.7m) administration and
marketing costs allocated to insurance contracts is principally made
up of salary costs.
Analysis of other administration and marketing costs:
30 30 31
June June December
2009 2008 2008
£m £m £m
Ancillary sales expenses 9.9 9.0 17.9
Confused.com operating expenses 29.2 21.0 40.6
Gladiator operating expenses 3.9 3.4 6.7
Central overheads and expansion costs 1.8 1.2 2.4
______ ______ ______
Total 44.8 34.6 67.6
______ ______ ______
The gross amount of expenses, before recoveries from co-insurers and
reinsurers is £125.9m (H1 2008: £100.3m Full year 2008: £211.2m).
This amount can be reconciled to the total expenses and share scheme
charges above of £67.6m (H1 2008: £51.3m Full year 2008: £105.7m) as
follows:
30 30 31
June June December
2009 2008 2008
£m £m £m
Gross expenses 125.9 100.3 211.2
Co-insurer share of expenses (37.7) (34.6) (72.8)
______ ______ ______
Expenses, net of co-insurer share 88.2 65.7 138.4
Adjustment for deferral of acquisition costs (2.5) (2.1) (6.0)
______ ______ ______
Expenses, net of co-insurer share (earned 85.7 63.6 132.4
basis)
Reinsurer share of expenses (earned basis) (18.1) (12.3) (26.7)
______ ______ ______
Total expenses and share scheme charges 67.6 51.3 105.7
______ ______ ______
Reconciliation of expenses related to insurance contracts to reported
expense ratio:
30 30 31
June June December
2009 2008 2008
£m £m £m
Insurance contract expenses from above 19.4 13.6 32.2
Add: claims handling expenses 2.8 2.4 4.7
______ ______ ______
Adjusted expenses 22.2 16.0 36.9
Net insurance premium revenue 100.5 77.0 169.8
Reported expense ratio 22.0% 20.8% 21.8%
______ ______ ______
8. Taxation
30 30 31
June June December
2009 2008 2008
£m £m £m
UK Corporation tax
Current charge at 28% (comparative periods,
28.5%) 27.6 28.5 50.1
Over provision relating to prior periods - - - (4.7)
corporation tax ______ ______ ______
Current tax charge 27.6 28.5 45.4
Deferred tax
Current period deferred taxation movement 2.3 (0.1) 12.1
Over provision relating to prior periods - - 0.1
deferred tax ______ ______ ______
Total tax charge per income statement 29.9 28.4 57.6
______ ______ ______
The charge has been calculated using the expected annual average
effective tax rate.
Factors affecting the tax charge are:
30 30 31
June June December
2009 2008 2008
£m £m £m
Profit before taxation 105.3 100.3 202.5
______ ______ ______
Corporation tax thereon at 28% (comparative
periods 28.5%) 29.5 28.6 57.7
Expenses and provisions not deductible for tax
purposes - - 0.4
Other temporary differences 0.4 (0.2) (0.4)
Adjustments relating to prior periods - - (0.1)
______ ______ ______
Tax charge for the period as above 29.9 28.4 57.6
______ ______ ______
9. Earnings per share
30 30 31
June June December
2009 2008 2008
£m £m £m
Profit for the period after 75.4 71.9 144.9
taxation
Weighted average number of shares 265,074,506 263,186,944 263,821,341
- basic
Earnings per share - basic 28.5p 27.3p 54.9p
______ ______ ______
Weighted average number of shares 265,524,506 263,596,944 264,188,008
- diluted
Earnings per share - diluted 28.4p 27.3p 54.9p
______ ______ ______
10. Dividends
Dividends were declared and paid as follows:
30 30 31
June June December
2009 2008 2008
£m £m £m
March 2008 (23.2p per share, paid May 2008) - 60.5 60.5
July 2008 (26.0p per share, paid September - - 68.0
2008)
March 2009 (26.5p per share, paid May 2009) 69.6 - -
______ ______ ______
Total dividends 69.6 60.5 128.5
______ ______ ______
The dividends declared in March 2008 and March 2009 represent the
final dividends paid in respect of the 2007 and 2008 financial years
(September 2008 - interim payment for 2008).
11. Property, plant and equipment
Improvements Computer Office Furniture Total
to short equipment equipment and
leasehold fittings
buildings
£m £m £m £m £m
Cost
At 1 January 2008 2.7 13.3 5.0 2.0 23.0
Additions 0.5 1.7 0.5 0.1 2.8
Disposals - - - - -
______ ______ ______ ______ ______
At 30 June 2008 3.2 15.0 5.5 2.1 25.8
______ ______ ______ ______ ______
Depreciation
At 1 January 2008 1.3 9.2 3.3 1.5 15.3
Charge for the year 0.3 0.9 0.4 0.1 1.7
Disposals - - - - -
______ ______ ______ ______ ______
At 30 June 2008 1.6 10.1 3.7 1.6 17.0
______ ______ ______ ______ ______
Net book amount
At 30 June 2008 1.6 4.9 1.8 0.5 8.8
______ ______ ______ ______ ______
Cost
At 1 January 2008 2.7 13.3 5.0 2.0 23.0
Additions 1.3 3.5 1.8 0.4 7.0
Disposals - - - - -
______ ______ ______ ______ ______
At 31 December 2008 4.0 16.8 6.8 2.4 30.0
______ ______ ______ ______ ______
Depreciation
At 1 January 2008 1.3 9.2 3.3 1.5 15.3
Charge for the year 0.6 1.9 0.9 0.3 3.7
Disposals - - - - -
______ ______ ______ ______ ______
At 31 December 2008 1.9 11.1 4.2 1.8 19.0
______ ______ ______ ______ ______
Net book amount
At 31 December 2008 2.1 5.7 2.6 0.6 11.0
______ ______ ______ ______ ______
Cost
At 1 January 2009 4.0 16.8 6.8 2.4 30.0
Additions 0.2 2.1 0.4 0.3 3.0
Disposals - (0.1) - - (0.1)
______ ______ ______ ______ ______
At 30 June 2009 4.2 18.8 7.2 2.7 32.9
______ ______ ______ ______ ______
Depreciation
At 1 January 2009 1.9 11.1 4.2 1.8 19.0
Charge for the year 0.4 1.4 0.5 0.1 2.4
Disposals - - - - -
______ ______ ______ ______ ______
At 30 June 2009 2.3 12.5 4.7 1.9 21.4
______ ______ ______ ______ ______
Net book amount
At 30 June 2009 1.9 6.3 2.5 0.8 11.5
______ ______ ______ ______ ______
The net book value of assets held under finance leases is as follows:
30 30 31
June June December
2008 2008 2008
£m £m £m
Computer equipment 1.7 1.9 1.6
______ ______ ______
12. Intangible assets
Goodwill Deferred Software Total
acquisition
costs
£m £m £m £m
Carrying amount:
At 1 January 2008 62.3 4.6 2.1 69.0
Additions - 5.1 1.2 6.3
Amortisation charge - (3.5) (0.5) (4.0)
______ ______ ______ ______
At 30 June 2008 62.3 6.2 2.8 71.3
______ ______ ______ ______
At 1 January 2008 62.3 4.6 2.1 69.0
Additions - 14.6 4.3 18.9
Amortisation charge - (10.8) (1.4) (12.2)
Disposals - - - -
______ ______ ______ ______
At 31 December 2008 62.3 8.4 5.0 75.7
Additions - 6.3 2.7 9.0
Amortisation charge - (5.6) (0.8) (6.4)
Disposals - - (0.1) (0.1)
______ ______ ______ ______
At 30 June 2009 62.3 9.1 6.8 78.2
______ ______ ______ ______
Goodwill relates to the acquisition of Group subsidiary EUI Limited
(formerly Admiral Insurance Services Limited) in November 1999. It is
allocated solely to the UK Car Insurance segment. As described in the
accounting policies within the 2008 annual report, the amortisation
of this asset ceased on transition to IFRS on 1 January 2004. All
annual impairment reviews since the transition date have indicated
that the estimated recoverable value of the asset is greater than the
carrying amount and therefore no impairment losses have been
recognised. No evidence has arisen during the 6 month period to 30
June 2009 to suggest that an interim impairment review is required.
13. Financial instruments
The Group's financial instruments can be analysed as follows:
30 30 31
June June December
2009 2008 2008
£m £m £m
Investments held at fair value 390.3 372.8 310.8
Held to maturity deposits with credit 100.0 - 100.0
institutions
Receivables - amounts owed by policyholders 197.9 163.8 176.1
______ ______ ______
Total financial assets as per consolidated
balance sheet 688.2 536.6 586.9
Trade and other receivables 36.2 26.8 25.5
Cash and cash equivalents 96.2 153.3 144.3
______ ______ ______
820.6 716.7 756.7
______ ______ ______
Financial liabilities:
Trade and other payables 293.1 255.1 270.1
______ ______ ______
All receivables from policyholders are due within 12 months of the
balance sheet date.
All investments held at fair value are invested in AAA-rated money
market liquidity funds. These funds (spread across five very large
managers) target a 7-day LIBID return with capital security and low
volatility and continue to achieve these goals.
14. Reinsurance assets and insurance contract liabilities
A) Analysis of recognised amounts:
30 30 31
June June December
2009 2008 2008
£m £m £m
Gross:
Claims outstanding 292.8 260.4 282.3
Unearned premium provision 198.4 152.4 157.3
______ ______ ______
Total gross insurance liabilities 491.2 412.8 439.6
______ ______ ______
Recoverable from reinsurers:
Claims outstanding 103.8 90.6 103.8
Unearned premium provision 91.9 65.3 66.8
______ ______ ______
Total reinsurers' share of insurance 195.7 155.9 170.6
liabilities ______ ______ ______
Net:
Claims outstanding 189.0 169.8 178.5
Unearned premium provision 106.5 87.1 90.5
______ ______ ______
Total insurance liabilities - net 295.5 256.9 269.0
______ ______ ______
B) Analysis of net claims reserve releases:
The following table analyses the impact of movements in prior year
claims provisions, in terms of their net value, and their impact on
the reported loss ratio. This data is presented on an underwriting
year basis.
Six months ended
30 31 30 31 30
June December June December June
2007 2007 2008 2008 2009
£m £m £m £m £m
Underwriting year:
2000 - 0.7 - 0.4 -
2001 0.5 1.0 - 0.5 0.5
2002 0.6 0.7 - - 0.3
2003 1.4 1.8 1.4 0.9 0.7
2004 4.7 2.9 2.9 3.5 (0.6)
2005 5.1 7.5 7.1 3.9 2.4
2006 - 2.6 4.9 5.6 5.1
2007 - - 2.1 4.8 4.4
2008 - - - - 5.6
______ ______ ______ ______ ______
Total net release 12.3 17.2 18.4 19.6 18.4
Net insurance premium revenue 71.6 70.6 77.0 92.8 100.5
Release as % of net premium 17.2% 24.3% 23.8% 21.1% 18.3%
revenue
Financial year ended 31 December
2004 2005 2006 2007 2008
£m £m £m £m £m
Underwriting year:
2000 1.5 0.4 1.1 0.7 0.4
2001 3.0 5.0 1.9 1.5 0.5
2002 3.2 5.2 2.3 1.3 -
2003 1.5 4.6 5.1 3.2 2.3
2004 - 2.1 7.9 7.6 6.4
2005 - - 2.6 12.6 11.0
2006 - - - 2.6 10.5
2007 6.9
______ ______ ______ ______ ______
Total net release 9.2 17.3 20.9 29.5 38.0
Net insurance premium revenue 107.5 139.5 145.0 142.2 169.8
Release as % of net premium 8.5% 12.4% 14.4% 20.7% 22.4%
revenue
C) Reconciliation of movement in net claims reserve:
30 30 31
June June December
2009 2008 2008
£m £m £m
Net claims reserve at start of period 178.5 166.5 166.5
Net claims incurred 67.4 50.1 109.8
Net claims paid (56.9) (46.8) (97.8)
______ ______ ______
Net claims reserve at end of period 189.0 169.8 178.5
______ ______ ______
D) Reconciliation of movement in net unearned premium provision:
30 30 31
June June December
2009 2008 2008
£m £m £m
Net unearned premium provision at start of 90.5 64.9 64.9
period
Written in the period 117.2 99.0 194.4
Earned in the period (101.2) (76.8) (168.8)
______ ______ ______
Net unearned premium provision at end of 106.5 87.1 90.5
period ______ ______ ______
15. Trade and other receivables
30 30 31
June June December
2009 2008 2008
£m £m £m
Trade receivables 32.4 24.2 22.3
Prepayments and accrued income 3.8 2.6 3.2
______ ______ ______
Total trade and other receivables 36.2 26.8 25.5
______ ______ ______
16. Cash and cash equivalents
30 30 31
June June December
2009 2008 2008
£m £m £m
Cash at bank and in hand 96.2 153.3 140.3
Cash on short term deposit - - 4.0
______ ______ ______
Total cash and cash equivalents 96.2 153.3 144.3
______ ______ ______
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.
17. Deferred tax
30 30 31
June June December
2009 2008 2008
£m £m £m
Liability/ (asset) brought forward at start of 10.3 (1.6) (1.6)
period
Movement in period - through income statement 2.3 (0.1) 12.2
Movement in period - through equity (0.4) 0.2 (0.3)
______ ______ ______
Liability/ (asset) carried forward at end of 12.2 (1.5) 10.3
period ______ ______ ______
The net balance provided at the end of the period is analysed as
follows:
30 30 31
June June December
2009 2008 2008
£m £m £m
Tax treatment of share scheme charges (2.2) (1.4) (2.4)
Capital allowances - 0.1 -
Other differences (0.1) (0.2) (0.1)
Unremitted overseas income 14.5 - 12.8
______ ______ ______
Deferred tax liability / (asset) at end of 12.2 (1.5) 10.3
period ______ ______ ______
The amount of deferred tax income / (expense) recognised in the
income statement for each of the temporary differences reported above
is:
Amounts credited to income or expense 30 30 31
June June December
2009 2008 2008
£m £m £m
Tax treatment of Lloyd's Syndicates - 0.5 0.5
Tax treatment of share scheme charges (0.6) (0.4) 0.1
Capital allowances - - 0.1
Other differences - - (0.1)
Unremitted overseas income (1.7) - (12.8)
______ ______ ______
Net deferred tax (charged)/ credited to income (2.3) 0.1 (12.2)
______ ______ ______
18. Trade and other payables
30 30 31
June June December
2009 2008 2008
£m £m £m
Trade payables 6.6 11.0 10.8
Amounts owed to co-insurers and reinsurers 157.8 136.8 147.9
Finance leases due within 12 months 0.5 0.2 0.2
Finance leases due after 12 months 0.1 - -
Other taxation and social security liabilities 10.7 11.6 9.5
Other payables 28.9 20.5 18.8
Accruals and deferred income (see below) 88.5 75.0 82.9
______ ______ ______
Total trade and other payables 293.1 255.1 270.1
______ ______ ______
Analysis of accruals and deferred income:
30 30 31
June June December
2009 2008 2008
£m £m £m
Premium receivable in advance of policy 50.6 40.2 45.6
inception
Accrued expenses 33.8 28.7 29.3
Deferred income 4.1 6.1 8.0
______ ______ ______
Total accruals and deferred income as above 88.5 75.0 82.9
______ ______ ______
19. Obligations under finance leases
At 30 June 2009 At 30 June 2008
Analysis of Minimum Interest Principal Minimum Interest Principal
finance lease lease lease
liabilities: payments payments
£m £m £m £m £m £m
Less than one 0.5 - 0.5 0.2 - 0.2
year
Between one
and five 0.1 - 0.1 - - -
years ______ ______ ______ ______ ______ ______
0.6 - 0.6 0.2 - 0.2
______ ______ ______ ______ ______ ______
At 31 December 2008
Minimum Interest Principal
lease
payments
£000 £000 £000
Less than one year 0.2 - 0.2
Between one and five years - - -
______ ______ ______
0.2 - 0.2
______ ______ ______
The average term of leases outstanding is 16 months. All leases are
on a fixed repayment basis and no arrangements have been entered into
for contingent rental payments.
The fair value of the Group's lease obligations approximates to their
carrying amount.
20. Share capital
30 30 31
June June December
2009 2008 2008
£m £m £m
Authorised:
500,000,000 ordinary shares of 0.1p 0.5 0.5 0.5
______ ______ ______
Issued, called up and fully paid:
266,121,510 ordinary shares of 0.1p 0.3 - -
264,541,810 ordinary shares of 0.1p - - 0.3
262,375,407 ordinary shares of 0.1p - 0.3 -
______ ______ ______
0.3 0.3 0.3
______ ______ ______
During the first half of 2009, 1,579,690 new ordinary shares of 0.1p
were issued to the trusts administering the Group's share schemes.
395,742 of these were issued to the Admiral Group Share Incentive
Plan (SIP) Trust for the purposes of this share scheme. These shares
are entitled to receive dividends.
1,183,948 shares were issued to the Admiral Group Employee Benefit
Trust for the purposes of the Admiral Group Senior Executive
Restricted Share Plan (also known as the Discretionary Free Share
Scheme or DFSS). The Trustees have waived the right to dividend
payments, other than to the extent of 0.001p per share, unless and to
the extent otherwise directed by the Company from time to time.
Rights to dividends have now been waived on a total of 4,741,948
ordinary shares in issue.
Staff share schemes:
Analysis of share scheme costs (per income statement):
30 30 31
June June December
2009 2008 2008
£m £m £m
SIP charge 1.5 1.2 2.5
DFSS charge 1.9 1.9 3.4
______ ______ ______
Total share scheme charges 3.4 3.1 5.9
______ ______ ______
The share scheme charges reported above are net of the co-insurance
share and therefore differ from the gross credit to reserves reported
in the statement of changes in equity (£6.4m).
The consolidated cashflow statement also shows the gross charge in
the reconciliation between 'profit after tax' and 'cashflows from
operating activities'. The co-insurance share of the charge is
included in the 'change in trade and other payables' line.
Number of free share awards committed at 30 June 2009:
Awards Vesting
outstanding date
(*)
SIP H1 06 scheme 350,811 September 2009
SIP H2 06 scheme 277,538 March 2010
SIP H1 07 scheme 353,444 September 2010
SIP H2 07 scheme 337,770 March 2011
SIP H1 08 scheme 352,732 September 2011
SIP H2 08 scheme 477,603 March 2012
SIP H1 09 scheme 450,000 September 2012
DFSS 2006 scheme - 2nd Award 105,369 September 2009
DFSS 2007 scheme - 1st Award 1,210,781 April 2010
DFSS 2007 scheme - 2nd Award 26,350 December 2010
DFSS 2008 scheme - 1st Award 1,306,681 April 2011
DFSS 2008 scheme - 2nd Award 86,902 November 2011
DFSS 2009 scheme - 1st Award 1,311,015 April 2012
______
Total awards committed 6,646,996
______
* - being the maximum number of awards expected to be made before
accounting for expected staff attrition.
During the six months ended 30 June 2009, awards under the SIP H2 06
scheme and the DFSS 2006 (1st award) scheme vested. The total number
of awards vesting for each scheme is as follows:
Number of free share awards vesting during the six months ended 30
June 2009:
Original Awards
Awards vested
SIP H2 05 scheme 350,034 288,517
DFSS 2006 scheme 1st award 603,720 543,079
______ ______
21. Financial commitments
The Group was committed to total minimum obligations under operating
leases on land and buildings as follows:
30 30 31
June June December
Operating leases expiring: 2009 2008 2008
£m £m £m
Within one years - - -
Within two to five years 3.6 1.9 4.1
Over five years 31.9 26.0 31.6
______ ______ ______
Total commitments 35.5 27.9 35.7
______ ______ ______
Operating lease payments represent rentals payable by the Group for
its office properties.
In addition, the Group had contracted to spend the following on
property, plant and equipment at the end of each period:
30 30 31
June June December
2009 2008 2008
£m £m £m
Expenditure contracted to - - 0.9
______ ______ ______
22. Related party transactions
There were no related party transactions occurring during the six
months ended 30 June 2009 that require disclosure. Details relating
to the remuneration and shareholdings of key management personnel
were set out in the remuneration report of the 2008 annual report.
Key management personnel are able to obtain discounted motor
insurance at the same rates as all other Group staff, typically at a
reduction of 15%.
The Board considers that only the Board of Directors of Admiral Group
plc are key management personnel.
Responsibility statement of the directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the EU;
* the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal risks
and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the entity during that period;
and any changes in the related party transactions described in the
last annual report that could do so.
By order of the Board,
Henry Engelhardt Kevin Chidwick
Chief Executive Officer Finance Director
20 August 2009 20 August 2009
Independent review report to Admiral Group plc
Introduction
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 30 June 2009 which comprises the Condensed consolidated
income statement, the Condensed consolidated statement of
comprehensive income, the Condensed consolidated balance Sheet,
Condensed consolidated statement of cashflows, the Condensed
consolidated statement of changes in equity and the related
explanatory notes. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR") of
the UK's Financial Services Authority ("the UK FSA"). Our review has
been undertaken so that we might state to the company those matters
we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review
work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the DTR
of the UK FSA.
As disclosed in note 1, the annual financial statements of the Group
are prepared in accordance with IFRSs as adopted by the EU. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued
by the Auditing Practices Board for use in the UK. A review of
interim financial information consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us
to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2009 is
not prepared, in all material respects, in accordance with IAS 34 as
adopted by the EU and the DTR of the UK FSA.
Chris Moulder
for and on behalf of KPMG Audit Plc
Chartered Accountants
Marlborough House
Fitzalan Court
Fitzalan Road
Cardiff
CF24 0TE
24 August 2009
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