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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