Admiral takes £105mn hit from UK’s Ogden change in 2016 results
Admiral has said that its 2016 profit before tax was £284.3 million in 2016, a drop of 25 percent compared to 2015.
However, without the costs of the latest Ogden personal injury discount rate change, the group’s profit before tax would have been £389.7 million.
The UK’s government has decided on February 27 to change the Ogden discount rate to -0.75 percent from 2.5 percent. The so-called Ogden tables are used to calculate compensation awards for serious personal injuries. The change exceeded the level expected by the industry.
CEO David Stevens said: “My first full year as CEO, and after 25 years of almost uninterrupted profit growth under my predecessor, profits are down a quarter! Not exactly a flying start!”
"On the other hand our ability to grow our businesses rapidly, both in the UK and overseas, and to absorb the shock of an eccentric government decision on discount rates while delivering a 37 percent return on equity and again paying a substantial dividend is a tribute to the health of the business and resilience of our model."
The group’s turnover in 2016 was £2.58 billion, up 22 percent compared to 2015.
During 2016, the Admiral's UK insurance business, consisting of UK Car and UK Household, enjoyed favourable market conditions, the company said. Customer numbers reached 4.1 million compared to 3.6 million in 2015. The UK Insurance business accounts for 80 percent of group turnover and customers.
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