Admiral Group Fiscal Year Pretax Profit GBP202.5 Million Vs GBP182.1 Million
March 03 2009 - 2:55AM
Dow Jones News
Admiral Group plc Tuesday announced a full year pretax profit of
GBP202.5 million for the 12 months to Dec. 31, compared to GBP182.1
million for the same period last year.
Henry Engelhardt, Group Chief Executive, said, ""Life is
certainly not without its challenges. Although Confused.com had a
fine year, with profits of GBP26 million, there is fierce
competition in this sector and margins are being squeezed. In
addition, there is plenty of work to do in our direct operations in
Spain and Germany, where loss ratios are still too high.
Engelhardt added, "Confused had a pretty good year. However, as
predicted, competition was fierce and as a result profits reduced
from GBP37 million in 2007 to GBP26 million in 2008. The spend on
TV and press by price comparison sites has gone from approximately
GBP5.5 million in 2006 to GBP51 million in 2007 to GBP76 million in
2008. Confused's portion of this spend has gone from virtually 100%
in 06, to a third of the spend in 07 to around a fifth of the spend
in 08. Simply put, competition has taken a lot of profit out of
this market through increased marketing costs, despite continued
growth in the number of people using price comparison sites."
The dominance of price comparison sites as the method of choice
for buying car insurance in the U.K. is reflected by:
* The fact that in 2008 73% of Admiral's new business originated
through price comparison sites, up from 50% in 2007, up from 30% in
2006.
* TV and press advertising by price comparison sites as a
percentage of all car insurance TV and press advertising rose from
35% in 2007 to 52% in 2008.
* The fact that only one brand has yet to have a presence on any
price comparison site and that's Direct Line. Even all the other
RBS insurance brands have joined price comparison panels.
Engelhardt said, "But enough whinging about what a tough world
it is, let me tell you what Confused is doing to respond. First, we
took the better part of 2008 to rebuild the quote engine. It's now
faster and easier for the customer. It also looks better. Second,
we've launched a new TV campaign which, given the number of times
people have seen the old campaign over the last few years, will
certainly be welcomed by the British public.
"Third, we are improving Confused's offerings of other products.
In particular we're seeing growth in household insurance and energy
comparisons. It is very hard to predict Confused's result for 2009,
the sector remains under intense competitive pressures. However,
the market is still growing and this, coupled with the changes
Confused made at the end of 2008, has resulted in Confused
producing the biggest number of car insurance quotes ever in
January 2009. But, I'm sorry to say, it was not a record month for
profits."
He added, "The missing data point to the future is how much
money each of the competitors in this sector is willing to spend in
2009 to try and reach, or grow, profitability. If January is
anything to go by then Britain will be seeing a lot of price
comparison advertising during the year!"
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