Admiral Group Limited Results for Six Months to June 2004
24 August 2004
Strong First Half At Admiral Group
Admiral Group, the financial services intermediary, announces today a 30.5% increase in adjusted core profit for the six months ended 30 June 2004 to £45.3 million. Aggregate group turnover, comprising total premiums written, gross other income and allocated investment income, rose 30.2% to £269.3 million (2003 H1: £206.8 million).
This performance was underpinned by the rapid growth of elephant.co.uk, strong growth in premiums at Diamond, and growth of the Admiral brand. The result is based upon an excellent underwriting performance and ongoing success in selling ancillary products.
The highlights of the result include:
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Commenting on the interim results, Henry Engelhardt, Chief Executive of Admiral, said: “The growth in revenues and profit in the first half of 2004 underlines the strength of our business model and the continued effectiveness of our distribution strategy. We are delighted we have significantly increased our customer base, revenue and profit in the first six months, while at the same time generating very positive cash flow.”
Core profit, stated before tax, amortisation, interest and dividends, amounted to £51.3 million (2003 H1: £33.9 million). Adjusting the result to remove the contribution from profit commission earned in 2003 but recognised in the six months to 30 June 2004, core profit increased 30.5% to £45.3 million (2003 H1: £34.7 million).
During the six months to 30 June 2004, the Group intermediated total premiums for itself and its underwriting partners worth £233.3 million (2003 H1: £179.0 million), driven mainly by substantial growth in sales originated from the internet. Admiral’s retained earned premiums, net of co-insurance and reinsurance, increased to £50.0 million (2003 H1: £35.4 million).*
Compared to the first half of 2003, Admiral has seen a significant increase in the proportion of revenue derived from intermediary business. Gross income from the sale of ancillary products on behalf of third parties rose to £28.7 million (2003 H1: £21.3 million).
The first half of 2004 saw a continued excellent underwriting performance on the underwriting result. Excluding claims handling expenses, the reported loss ratio and the combined ratio for the first half of 2004 were 63.9% and 77.5%, respectively.
Admiral is a strongly cash generative business which currently has limited need for capital to support its organic growth. The Group’s balance sheet is conservatively managed and cash reserves have been built up over time. Accordingly, the Board of directors declared the payment of net exceptional interim dividends during the period totalling £52 million.
In April, Admiral announced its intention to seek a listing for the Group’s ordinary shares on the London Stock Exchange in the Autumn of 2004, subject to market conditions. This remains the Group’s intention.
* Admiral currently retains 25% of the underwriting risk on its motor
insurance portfolio, with the remainder being borne by its co-insurance and
reinsurance partners.
NOTES TO EDITOR
Admiral is a fast growing financial services intermediary with a track record of profitability. The business was founded in 1993. Admiral principally sells private motor insurance, together with ancillary products such as breakdown cover and cover for legal expenses.
Admiral markets direct to the public in the UK through its four core brands, each of which targets specific customer profiles: the Admiral brand (younger drivers, London and the South East); elephant.co.uk (internet users); Diamond (women); and Bell Direct (credit card payers).
Admiral’s motor insurance is underwritten primarily by third party insurers with Admiral controlling all pricing and underwriting decisions and administration. The Group also retains a proportion (currently 25%, net of quota share reinsurance) of the underwriting risk on its motor insurance portfolio for its own account.
Admiral’s revenues comprise:
- intermediary income received from:
- the sale of ancillary products underwritten by third parties; and
- profit commissions based on the volume and profitability of insurance sold on behalf of third party insurance providers
- premium income from the proportion of own-account underwriting retained by the Group.
Admiral’s four core brands in more detail are:
Admiral – the Group’s original brand was launched in 1993 and targets drivers under 40 or those with higher insurance group vehicles, typically living in London or the South East. As at 30 June 2004, Admiral had 296,000 policies in force.
elephant.co.uk – was established in 2000 and targets internet users. Elephant.co.uk has expanded rapidly and contributed to approximately 28% of Group written premium in 2003. As at 30 June 2004, elephant.co.uk had 298,000 policies in force.
Diamond – the brand was set up in 1997 to target female drivers, especially those in London and the South East. As at 30 June 2004, Diamond had 252,000 policies in force.
Bell Direct – the brand was established in 1997 and targets people who pay for motor insurance through credit cards. As at 30 June 2004, Bell Direct had 65,000 policies in force.
Admiral fosters a people-oriented culture through the promotion of an equality policy, fun atmosphere, community feel and strong communication.