Admiral posts solid results boosted by reinsurance led by Munich Re
UK insurer Admiral Group posted solid growth and a big increase in profits in 2017 as it also detailed some changes to its reinsurance programme.
The company made a pre-tax profit of £405.4 million in 2017, a 43 percent increase on the £284.3 million it made a year earlier; its turnover increased by 15 percent to £2.96 billion.
David Stevens, group chief executive of Admiral, said: “It’s 25 years since the launch of Admiral. 2016 was only the second year we’d ever reported a year on year fall in profits. So it’s great to be back in the groove, with a 23rd year of ‘record profits’.
“Beyond the pure financials, there’s also a lot going on that helps build the longer-term prosperity of the group – notably our investment in widening our product range (van, travel, loans in 2017) in a way that helps us attract more customers, and understand and serve better both new & existing customers.
“Whilst lots of things have changed, some things have remained the same, including the importance we attach to our staff’s well-being. After 17 years of featuring highly as one of the Best Places To Work in the UK, and 15 years in the European rankings, 2017 saw us make it onto the “Best Places in the World” rankings, coming a creditable 23rd.”
In its annual report, Admiral also detailed tweaks it has made to its reinsurance programme. It noted that it has co-insurance and quota share reinsurance arrangements for the UK Car insurance business in place until at least the end of 2019. Under these, its net retained share of that business is 22 percent, which is a decrease on the 25 percent it previously retained before 2017.
Munich Re will underwrite 40 percent of the business (through co-insurance and quota share reinsurance arrangements) until at least the end of 2020. Some 30 percent of this total is on a co-insurance basis, with the remaining 10 percent under a quota share reinsurance agreement from 2017 onwards. The Group also has other quota share reinsurance arrangements confirmed to the end of 2019 covering 38 percent of the business written.
The company also noted that in 2017 it increased its excess of loss cover as a result of the anticipated change in Ogden discount rate and the potential impact on large claims. For 2018, the Group has reduced this level of cover to be back in line with more recent levels.
Finally, Admiral also noted that the structure of its reinsurance programme allows it to earn material amounts of profit commission revenue from co- and reinsurance partners, depending on the profitability of the insurance business.
This increased in 2017 when Admiral recognised UK car insurance profit commission revenue of £64.7 million up from £52.7 million in 2016. It said the increase from 2016 arose mainly due to the improvements in the booked loss ratios on prior years, although both 2017 and 2016 profit commission was impacted by the change in the Ogden rate.
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