Admiral Group ("Admiral") today announces that it has signed new reinsurance
contracts with Munich Re and Hannover Re for its new car insurance operation in
the USA, Elephant Insurance ("Elephant"). Admiral also announces that it has
extended its long-term coinsurance and reinsurance arrangements with Munich Re
for its UK, Spanish and Italian businesses, while the existing agreement for the
German business remains in place.
These partnership arrangements build further on the successful risk and profit
sharing model which has been at the heart of Admiral's success in its
established UK business.
Munich Re and Hannover Re have both entered into quota share reinsurance
contracts with Elephant from 1(st) January 2010. Munich Re and Hannover Re will
each take one third of the USA risks and Admiral will retain one third for its
own account. Both agreements are intended to be long term. The Hannover Re
contract is for up to 10 years whilst the Munich Re agreement is for up to 15
years. Both agreements include break clauses at earlier dates. Further details
are contractually confidential.
In Europe, Admiral has extended its reinsurance agreements with Munich Re in
both Spain and Italy to a total of 15 years. Both agreements have also been
revised to include a stronger alignment of long term interests and higher profit
commissions for Admiral if results are very positive.
In the UK Admiral has extended its current agreement with Munich Re for 2
further years to at least the end of 2016. Munich Re will retain 40% of
Admiral's UK risks for these additional years. Admiral has committed to retain
at least 25% for the duration of this agreement whilst the allocation of the
balance is at Admiral's discretion.
Commenting on these developments, Admiral Chief Executive, Henry Engelhardt,
said: "This is a very good day for Admiral Group. These deals will help us
perpetuate our model that minimises risk and consistently produces a high return
on capital. We believe it is in our shareholders best interest to reduce our
risk, particularly in the early development stage of a business, in return for
sacrificing some of the profit down the road. This helps us to couple good
growth with solid dividends.
"We have a long-standing relationship with Munich Re that now is likely to go on
past 2020. We are very pleased that an organisation of such stature would have
the faith in us to commit to such a long-term agreement. We hope to reward this
faith by producing substantial profits for them in the future. We are also
pleased to increase our co-operation with Hannover Re. Hannover has been a
growing part of our UK reinsurance programme over the last two years and we look
forward to continuing our mutually beneficial relationship for many years to
come.
"It is an exciting time to be part of the Admiral Group given our growth and
geographical expansion and we are very pleased to be working with Munich Re and
Hannover Re to build growing, profitable, sustainable businesses in Europe and
the USA."
For further information, please contact:
Admiral 029 2043 4394
Alistair Hargreaves
Financial Dynamics 020 7269 7200
Rob Bailhache
[HUG#1374072]