TIDMADM
Admiral Group plc results for the six months ended 30 June 2018
15 August 2018
2018 Interim Results Highlights
30 June 2018 30 June 2017 % change
Group's share of profit before
tax(*1) GBP212 million GBP195 million +9%
Group statutory profit before tax GBP211 million GBP193 million +9%
Earnings per share 61.6 pence 57.3 pence +8%
Interim dividend 60.0 p/per share 56.0p/per share +7%
Return on equity(*1) 54% 55% -2%
Group turnover(*1) GBP1.66 billion GBP1.45 billion +14%
Group net revenue GBP0.60 billion GBP0.55 billion +9%
Group customers(*1) 6.23 million 5.46 million +14%
UK Insurance Customers(*1) 5.07 million 4.34 million +17%
International Car Insurance
customers(*1) 1.12 million 0.96 million +17%
Group's share of Price Comparison
profit(*1) GBP3.5 million GBP3.1 million +13%
Statutory Price Comparison profit GBP2.6 million GBP2.4 million +8%
Solvency ratio (post dividend) 196% 214%
Over 10,000 staff each receive free shares worth GBP1,800 under the
employee share scheme based on the interim 2018 results
*1Alternative Performance Measures - refer to the end of the report for
definition and explanation.
Comment from David Stevens, Group Chief Executive Officer
'Zut alors! Nos opérations européennes sont rentables! Or
probably more accurately, given that over half of our European customers
are Italian - le nostre compagnie Europee sono in profitto! Moreover,
the European insurers delivered overall profitability whilst growing the
business by almost a fifth in a year.
But that's not the only important milestone in the first half, which was
characterised by substantial growth across almost all our businesses.
Most importantly, the core UK car insurance business continues to grow
both in terms of profit and customer numbers. Early in 2018 we passed
the four million mark for cars on cover - the car that hit the milestone
was a Peugeot 108; our first 25 years ago was an Isuzu Piazza.
All of this is underpinned by our strong culture and hard-working,
customer-focused staff, and we are proud to have been named the 3(rd)
Best Company to Work For in the UK, as well as the 10(th) Best Workplace
in Europe and 3(rd) in Italy.'
Dividend
The Directors have declared an interim dividend of 60.0 pence,
representing a normal dividend of 40.8 pence per share and a special
dividend of 19.2 pence per share. The dividend will be paid on 5 October
2018. The ex-dividend date is 6 September 2018 and the record date is 7
September 2018.
Management presentation
Analysts and investors will be able to access the Admiral Group
management presentation which commences at 9.00 BST on Wednesday 15
August 2018 by dialling + 44 (0)20 3059 5868. A copy of the presentation
slides will be available at www.admiralgroup.co.uk
H1 2018 Group overview
30 30 30 31
GBPm June 2016 June 2017 June 2018 Dec 2017
Turnover (GBPbn) *1 1.26 1.45 1.66 2.96
Net insurance premium revenue 259.7 301.3 323.7 619.1
Investment return (Insurance) 24.8 16.2 16.4 33.2
Underwriting profit*1 77.7 88.9 93.4 177.7
Investment return (Other) 8.6 7.1 1.1 8.5
Profit commission 42.2 30.0 29.6 67.0
Net interest income from
Admiral Loans - 0.1 3.9 1.2
Net other revenue and expenses
(Insurance) 91.2 97.4 124.1 207.6
Net other revenue and expenses
(Non Insurance) (24.6) (24.5) (35.8) (47.1)
Operating profit 195.1 199.0 216.3 414.9
Group Statutory profit before
tax 189.5 193.4 210.7 403.5
Group's Share of profit before
tax*1 193.3 194.5 211.7 405.4
Analysis of profit:
UK Insurance 223.6 225.8 247.0 465.5
International Insurance (12.9) (10.1) (0.6) (14.3)
Price Comparison (1.1) 3.1 3.5 7.1
Other*2 (16.3) (24.3) (38.2) (52.9)
Group's Share of profit before
tax*1 193.3 194.5 211.7 405.4
Key metrics:
Group loss ratio*1 59.5% 68.0% 65.2% 66.2%
Group expense ratio*1 22.7% 22.0% 22.2% 21.5%
Group combined ratio*1 82.2% 90.0% 87.4% 87.7%
Group customer numbers (m) 4.82 5.46 6.23 5.73
Earnings per share 55.9 p 57.3 p 61.6 p 117.2 p
Dividends 51.0 p 56.0 p 60.0 p 114.0 p
Return on Capital Employed*1 50% 55% 54% 55%
Solvency Ratio 180% 214% 196% 205%
*1Alternative Performance Measures - refer to the end of the report for
definition and explanation.
*2 "Other" includes Admiral Loans and other central costs
Key highlights for the Group results in H1 2018 include:
-- Strong growth with turnover up 14% to GBP1.66 billion (H1
2017: GBP1.45 billion) and customer numbers 14% higher at 6.23 million
(30 June 2017: 5.46 million)
-- Group share of pre-tax profits of GBP211.7 million (H1 2017:
GBP194.5 million) and statutory profit before tax of GBP210.7 million
(H1 2017: GBP193.4 million) both grew strongly by 9%, with increases in
underwriting profit and net other revenue in the insurance businesses
more than offsetting Group items such as share scheme charges and the
Admiral Loans result
-- UK Insurance business, including UK Motor (Car and Van),
Household and Travel, delivered strong growth in turnover to GBP1.32
billion (H1 2017: GBP1.14 billion) with customer numbers reaching 5.07
million (30 June 2017: 4.34 million)
-- Admiral's share of UK Insurance profit increased by 9% to
GBP247.0 million with UK motor profits again growing strongly to
GBP249.5 million (H1 2017: GBP224.2 million)
-- UK Household saw very strong growth in turnover and customer
numbers, with the overall result (GBP1.9 million loss; H1 2017: GBP1.6
million profit) impacted by weather events in the period
-- Reduced losses in International Insurance businesses of
GBP0.6 million (significantly improved from a loss of GBP10.1 million in
H1 2017), whilst growing combined turnover by 17% to GBP260.1 million
(H1 2017: GBP221.9 million) and customer numbers by 17% to 1.12 million
(30 June 2017: 0.96 million)
-- European insurance businesses recorded an aggregate profit of
GBP2.5 million in the period (H1 2017: GBP 5.0 million loss)
-- Price Comparison made a combined profit (excluding minority
interests' shares) of GBP3.5 million (H1 2017: GBP3.1 million), the main
contributor being Confused.com with an increased profit of
GBP5.8 million (H1 2017: GBP4.5 million)
-- International price comparison businesses reported a higher
aggregate loss of GBP2.3 million (H1 2017: GBP1.4 million loss) with
reduced profit in the European operations (GBP0.9 million, down from
GBP2.0 million) and a similar loss in Compare.com of GBP3.2 million (H1
2017: loss GBP3.4 million)
Earnings per share
Earnings per share increased by 8% to 61.6 pence (H1 2017: 57.3 pence),
broadly in line with the increase in pre-tax profits.
Dividends and solvency
The Group's dividend policy is to pay 65% of post-tax profits as a
normal dividend and to pay a further special dividend comprising
earnings not required to be held in the Group for solvency or buffers.
The Board has declared a total interim dividend of 60.0 pence per share
(GBP169 million), representing 97% of first half earnings, split as
follows:
-- 40.8 pence per share normal dividend, based on
the dividend policy of distributing 65% of post- tax profits; plus
-- A special dividend of 19.2 pence per share.
The total 2018 interim dividend is 7% ahead of the prior period's 56.0
pence per share. The payment date is 5 October 2018, ex-dividend date 6
September 2018 and record date 7
September 2018.
The Group maintained a strong solvency ratio at 196% (post-dividend),
which has reduced from 205% at 2017 year end. This is primarily as a
result of an increased solvency capital requirement (in turn mainly due
to growth in premiums and reserves in the core UK Car insurance
business). Further detail is provided later in the report.
The Group's results are presented in the following sections as:
-- UK Insurance - including UK Motor (Car and Van),
Household, Travel
-- International Car Insurance - including L'olivier
(France), Admiral Seguros (Spain), ConTe (Italy),
Elephant (US)
-- Price Comparison - including LeLynx (France),
Rastreator (Spain), Compare.com (US)
UK Insurance
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Turnover(*1) 1,028.5 1,144.1 1,319.1 2,354.0
Total premiums written(*1) 933.6 1,022.6 1,167.1 2,098.0
Net insurance premium revenue 218.2 241.0 254.6 491.6
Underwriting profit(*1) 95.2 105.7 101.6 206.2
Profit commission and other income 128.4 120.1 145.4 259.3
UK Insurance profit before tax 223.6 225.8 247.0 465.5
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
Split of UK Insurance profit before tax
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Motor 222.4 224.2 249.5 461.0
Household 1.2 1.6 (1.9) 4.5
Travel - - (0.6) -
UK Insurance profit 223.6 225.8 247.0 465.5
Key performance indicators
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Vehicles insured at period end 3.52m 3.79m 4.26m 3.96m
Households insured at period end 0.38m 0.55m 0.78m 0.66m
Travel Insurance customers - - 0.03m -
Total UK Insurance customers 3.90m 4.34m 5.07m 4.62m
Key highlights for the UK insurance business for H1 2018 include:
-- Continued strong growth in customers and turnover
in both Motor and Household with market rates falling in motor but
continuing to increase in home
-- An 11% increase in UK Motor profit to GBP249.5
million mainly as a result of growth in ancillary revenue and instalment
income
-- Household loss of GBP1.9 million (H1 2017: GBP1.6
million profit), impacted by weather events
-- Small loss from recently launched Travel
insurance product
UK Motor Insurance financial review
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Turnover(*1) 993.2 1,095.7 1,247.2 2,242.4
Total premiums written(*1) 899.7 978.9 1,102.3 1,997.0
Net insurance premium revenue 192.9 214.7 221.1 433.2
Investment income 24.5 15.8 15.8 32.6
Net insurance claims (102.4) (100.9) (104.1) (214.2)
Net insurance expenses (29.5) (30.1) (33.9) (59.7)
Underwriting profit(*1*2) 85.5 99.5 98.9 191.9
Profit commission 41.7 28.8 30.8 64.7
Underwriting profit and profit
commission 127.2 128.3 129.7 256.6
Net other revenue(*3) 95.2 95.9 119.8 204.4
UK Motor Insurance profit before tax 222.4 224.2 249.5 461.0
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
*2 Underwriting profit excludes contribution from underwritten
ancillaries (included in net other revenue)
*3 Net other revenue includes instalment income and contribution from
underwritten ancillaries and is analysed later in the report
Key performance indicators
30 June 30 June 30 June 31 Dec
2016 2017 2018 2017
Reported Motor loss
ratio(*1,*2) 56.9% 66.6% 60.3% 64.1%
Reported Motor expense
ratio(*1,*3) 18.1% 16.5% 17.9% 16.2%
Reported Motor combined ratio 75.0% 83.1% 78.2% 80.3%
Written basis Motor expense
ratio 17.0% 15.8% 17.1% 15.8%
Reported loss ratio before
releases 85.9% 87.5% 85.9% 85.3%
Claims reserve releases -
original net share(*1,*4) GBP55.9m GBP44.9m GBP56.5m GBP92.1m
Claims reserve releases -
commuted reinsurance(*1,*5) GBP12.8m GBP47.4m GBP35.2m GBP73.8m
Total claims reserve releases GBP68.7m GBP92.3m GBP91.7m GBP165.9m
Vehicles insured at period end 3.52m 3.79m 4.26m 3.96m
Other Revenue per vehicle GBP64 GBP61 GBP67 GBP64
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
*2 Motor loss ratio adjusted to exclude impact of reserve releases on
commuted reinsurance contracts.
Reconciliation in note 12b.
*3 Motor expense ratio is calculated by including claims handling
expenses that are reported within claims costs in the income statement.
Reconciliation in note 12c.
*4 Original net share shows reserve releases on the proportion of the
portfolio that Admiral wrote on a net basis at the start of the
underwriting year in question.
*5 Commuted reinsurance shows releases on the proportion of the account
that was originally ceded under quota share reinsurance contracts but
has since been commuted and hence reported through underwriting profit
and not profit commission.
By 30 June 2018, the Group had ceased operating a Commercial Vehicle
insurance broker and completed migration of customers underwritten
directly through two van insurance brands, Gladiator and Admiral Van.
Admiral offers van insurance and associated products, typically to small
businesses, via telephone and the internet, including price comparison
websites. The results of the Van operation are included within UK Motor.
UK Motor profit increased by 11% for the first six months of 2018 to
GBP249.5 million (H1 2017: GBP224.2 million) whilst the reported
combined ratio improved to 78.2% (H1 2017: 83.1%). The results compared
to H1 2017 were impacted by a number of factors:
o Net insurance premium revenue was 3% higher at GBP221.1 million
mainly resulting from the larger portfolio
o Investment income was in line at GBP15.8 million
o The current period loss ratio was slightly improved at 85.9%
(H1 2017: 87.5%) primarily reflecting a lower loss ratio for the 2017
underwriting year compared to 2016 at the same point. Admiral continues
to reflect a cautious approach to setting reserves early in their
development.
o Continued positive development of prior year claims costs led
to increased releases on original net share of reserves (GBP56.5 million,
26% of premium compared to GBP44.9 million, 21% of premium in H1 2017)
o Releases on reserves originally reinsured but since commuted
lower at GBP35.2 million
(v GBP47.4 million in H1 2017) resulting from accounting impact of
commutation in the current period where there was no such commutation in
the comparative period
o The growth in the vehicle base contributed to an increase in
the underlying expense base. The change in the Group's net retained
share from 25% to 22% in 2017 meant that the prior year earned expense
ratio (16.5%) benefitted from the reduction in administration cost in
the period. Excluding the impact of this change, the earned ratio would
be broadly flat with HY 2018 (17.9%)
o Other revenue (including ancillary products underwritten by
Admiral) and instalment income were higher (GBP119.8 million v GBP95.9
million in H1 2017) resulting from growth and changes to arrangement
with Munich Re where Admiral now retains all instalment income
A favourable claims environment and positive results in 2017 contributed
to declining prices in the motor market in the first half of 2018.
Despite this backdrop, Admiral grew its business strongly with no change
to base rates in the current period. Turnover was 14% higher at GBP1.25
billion (H1 2017: GBP1.10 billion) whilst net revenue rose 9% to
GBP425.9 million (H1 2017: GBP390.5 million). The numbers of cars
insured exceeded four million and vans insured moved past 200,000,
leading to 12% growth in total customers to 4.26 million (30 June 2017:
3.79 million).
Claims and reserves
Notable claims trends for Admiral and the market in the first half of
2018 include slightly higher overall frequency, a slowdown in the rate
of improvement in injury claims frequency and continuing elevated levels
of inflation in property damage claims costs. Large bodily injury claims
costs were also less positive in H1 2018 than the same period in 2017
(which was notably benign), exacerbated by the current Ogden discount
rate.
The Group continues to reserve conservatively, setting claims reserves
in the financial statements well above actuarial best estimates to
create a margin held to allow for unforeseen adverse development.
As noted above, the Group experienced continued positive development of
claims costs on previous underwriting years and this led to another
significant release of reserves in the financial statements in the
period (GBP56.5 million on Admiral's original net share, up from GBP44.9
million). The margin held in reserves remains prudent and significant
though is slightly lower than the comparative period-end, reflecting the
reduction in uncertainty around the reserves.
Change in UK discount rate ('Ogden')
In February 2017, the UK Government announced the outcome of the review
of the discount rate (referred to as the Ogden discount rate) used for
calculating the value of lump sum personal injury compensation. The rate
changed to minus 0.75% and applied to all unsettled and new claims from
March 2017.
The estimated cost to Admiral, net of tax and reinsurance, of the change
is approximately GBP150 million. Most of the impact has been reflected
in the income statement. The actuarial best estimate reserves continue
to reflect the minus 0.75% rate.
The Government's review of the discount rate and the process by which
the rate is set (via the Civil Liability Bill) continues to progress
through Parliament though the outcome and timing remain uncertain.
The table below shows the estimated sensitivity of profit before tax and
solvency ratio to different Ogden
rates. The profit impact presented is the estimated total impact of the
change on the Group's pre-tax profit on an ultimate basis. It should be
noted that not all of the impact would necessarily be recognised
immediately.
Impact on Profit before Impact on Solvency
Tax (GBPm)(*1) Ratio (%)(*2)
Increase in Ogden discount rate of 75 basis points
(to 0%) 94 +7%
Increase in Ogden discount rate of 125 basis points
(to 0.5%) 141 +9%
Increase in Ogden discount rate of 175 basis points
(to 1%) 179 +13%
Decrease in Ogden discount rate of 75 basis points
(to minus 1.5%) (115) -18%
*1 The impacts on profit before tax are stated net of co-insurance and
reinsurance and include the impact on net insurance claims along with
the associated profit commission movements that result from the change
in the Ogden rate.
*2 Estimated impact on solvency ratio is based on the change in Own
Funds and SCR resulting from change in the Ogden rate and is presented
before the impact of changes in interim dividend.
Co- and reinsurance and profit commission
The proportional co- and reinsurance arrangements in place for the motor
business are the same as those reported in the 2017 Annual Report and
will continue into 2019.
At 30 June 2018, all private car quota share reinsurance for
underwriting years up to and including 2016 has been commuted, meaning
Admiral assumes a higher net risk for these years than had the
reinsurance been left in place. The 2016 contracts and the remainder of
the 2015 contracts were commuted during H1 2018. Admiral generally
elects to commute reinsurance where it makes economic sense to do so.
In H1 2018 profit commission of GBP30.8 million was recognised, up
slightly from GBP28.8 million in the prior period. If reserve releases
from business that was originally ceded under quota share reinsurance
contracts that have since been commuted are added to profit commission,
the total for H1 2018 is GBP66.0 million compared to GBP76.2 million in
H1 2017, a decrease of 13%. This decrease is due to the accounting
impact of the commutations completed in the current period (a reduction
in releases on the share of reserves that were originally reinsured but
have since been commuted of GBP31.9 million due to the current booked
result of that underwriting year being loss making).
No commutations were completed in H1 2017 due to the Ogden uncertainty
at that time. The ultimate projections of all underwriting years
continue to show profits.
Note 5 to the financial statements analyses profit commission income and
reserve releases by underwriting year.
Other Revenue and Instalment Income
Admiral generates Other Revenue from a portfolio of insurance products
that complement the core car insurance product, and also fees generated
over the life of the policy.
The most material contributors to net Other Revenue continue to be:
-- Profit earned from motor policy upgrade products
underwritten by Admiral, including breakdown, car hire and personal
injury covers
-- Revenue from other insurance products, not
underwritten by Admiral
-- Fees such as administration and cancellation fees
-- Interest charged to customers paying for cover in
instalments
Overall contribution (Other Revenue net of costs plus instalment income)
increased by 25% to
GBP119.8 million (H1 2017: GBP95.9 million). Whilst there were a number
of smaller offsetting changes within the total, the main reasons for the
increase were higher instalment income primarily due to changes in the
arrangements with Munich Re such that Admiral now retains all instalment
income on the car insurance business compared to 60% previously, plus
the growth in the size of the business.
Other revenue was equivalent to GBP67 per vehicle (gross of costs; H1
2017: GBP61), the increase being substantially due to the increase in
instalment income noted above. Net Other Revenue (after deducting costs)
per vehicle was GBP57 (H1 2017: GBP52).
UK Motor Insurance Other Revenue - analysis of contribution:
30 30 30
June June June 31 Dec
GBPm 2016 2017 2018 2017
Contribution from additional products & fees 89.6 93.4 105.6 187.2
Contribution from additional products underwritten
by Admiral(*1) 10.6 6.8 5.9 14.7
Instalment income 15.3 22.5 37.5 56.1
Other revenue 115.5 122.7 149.0 258.0
Internal costs (20.3) (26.8) (29.2) (53.6)
Net other revenue 95.2 95.9 119.8 204.4
Other revenue per vehicle(*2) GBP64 GBP61 GBP67 GBP64
Other revenue per vehicle net of internal costs GBP56 GBP52 GBP57 GBP54
*1 Included in underwriting profit in income statement but re-allocated
to Other Revenue for purpose of KPIs.
*2 Other revenue (before internal costs) divided by average active
vehicles, rolling 12 month basis.
UK Household Insurance
GBPm 30 June 2016 30 June 2017 30 June 2018 31 Dec 2017
Turnover(*1) 35.3 48.3 68.3 111.6
Total premiums
written(*1) 33.9 43.7 61.3 101.0
Net insurance premium
revenue 7.5 11.0 14.7 23.1
Underwriting
loss(*1*2) (0.9) (0.6) (2.9) (0.8)
Profit commission and
other income 2.1 2.2 0.8 5.0
Contribution from
underwritten
ancillaries - - 0.2 0.3
UK Household
insurance
profit/(loss) 1.2 1.6 (1.9) 4.5
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
*2 Underwriting loss excluding contribution from underwritten
ancillaries
Key performance indicators
30 June 2016 30 June 2017 30 June 2018 31 Dec 2017
Reported household
loss ratio(*1) 74.7% 68.7% 87.6% 73.5%
Reported household
expense ratio(*1) 37.3% 36.8% 32.1% 30.0%
Reported household
combined ratio(*1) 112.0% 105.5% 119.7% 103.5%
Impact of extreme
weather(*2) (GBPm) - - 7.5 -
Households insured at
period end 381,800 548,200 778,100 659,800
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
*2 Extreme weather is calculated from the uplift in the average
weather-related claim cost per policy observed in the current period
compared to the prior period, and therefore assumes that 'normal'
weather was experienced in the prior period.
The UK household market has experienced several years of declining
profitability and whilst new business prices appear to have gradually
increased over the past year or so, overall premium levels are broadly
flat. The UK experienced two spells of unusually bad weather in the
period which have adversely impacted the results of insurers including
Admiral.
Admiral's Household business continued to grow substantially, increasing
the number of homes insured by over 40% to 778,100 (30 June 2017:
548,200), with a similar increase in turnover to GBP68.3 million (H1
2017: GBP48.3 million). Admiral increased rates modestly in the first
half of the year.
The volume of new business policies sold in the market continued to
increase as more households changed insurer, and the share of these
sales made via the price comparison channel also continued to increase.
Admiral enjoyed strong customer retention and new business volumes and
saw an increasing share of new business sales made either directly or
via cross sell to existing Admiral customers within the Group's
MultiCover product offering.
The severe weather meant that the business recorded a loss for the first
half of GBP1.9 million (H1 2017: profit of GBP1.6 million). Adjusting
for normal weather experience the result would have been a profit of
GBP5.6 million.
The reported loss ratio of 87.6% (H1 2017: 68.7%) included around 25
percentage points of weather impact, whilst the loss ratio net of
weather showed continued improvement, moving to 62.3% from 68.7% as a
result of improved ultimate outcomes of prior accident years. Admiral's
expense ratio also continued to improve (32.1%, down from 36.8%) and
similar to the motor business, significantly outperforms the market.
International Car Insurance
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Turnover(*1) 159.2 221.9 260.1 449.8
Total premiums written(*1) 142.9 197.2 234.0 401.4
Net insurance premium revenue 39.4 58.2 66.2 123.0
Investment income 0.2 0.2 0.6 0.6
Net insurance claims (32.7) (47.3) (49.7) (94.1)
Net insurance expenses (24.6) (28.1) (25.3) (58.0)
Underwriting result(*1) (17.7) (17.0) (8.2) (28.5)
Net other income 4.8 6.9 7.6 14.2
International Car Insurance result (12.9) (10.1) (0.6) (14.3)
Key performance indicators
30 June 30 June 30 June 31 Dec
2016 2017 2018 2017
Loss ratio(*2) 79.7% 77.6% 77.8% 76.4%
Expense ratio(*2) 50.9% 45.4% 39.4% 44.2%
Combined ratio(*3) 130.6% 123.0% 117.2% 120.6%
Combined ratio, net of Other revenue(*4) 118.4% 111.2% 105.8% 109.1%
Vehicles insured at period end 0.76m 0.96m 1.12m 1.03m
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
*2 Loss ratios and expense ratios have been adjusted to remove the
impact of reinsurer caps so the underlying performance of the business
is transparent.
*3 Combined ratio is calculated on Admiral's net share of premiums and
excludes Other Revenue. It excludes the impact of reinsurer caps.
Including the impact of reinsurer caps the reported combined ratio would
be H1 2018: 113%; H1 2017: 130%; H1 2016: 145%.
*4 Combined ratio, net of Other Revenue is calculated on Admiral's net
share of premiums and includes Other Revenue. Including the impact of
reinsurer caps the reported combined ratio, net of Other Revenue would
be H1 2018: 102%; H1 2017: 118%; H1 2016: 133%.
Geographical analysis(*1)
30 June 2018 Spain Italy France US Total
Vehicles insured at period end 0.23m 0.54m 0.15m 0.20m 1.12m
Turnover (GBPm) 33.8 86.8 39.1 100.4 260.1
30 June 2017 Spain Italy France US Total
Vehicles insured at period end 0.21m 0.46m 0.11m 0.18m 0.96m
Turnover (GBPm) 31.2 76.3 28.7 85.7 221.9
31 Dec 2017 Spain Italy France US Total
Vehicles insured at period end 0.22m 0.50m 0.13m 0.18m 1.03m
Turnover (GBPm) 61.5 154.6 59.2 174.5 449.8
*1 Alternative Performance Measures - refer to the end of this report
for definition and explanation
International Car Insurance financial performance
Admiral's international insurance businesses continued to grow strongly,
with customer numbers surpassing the one million mark, 17% higher than a
year earlier. Turnover grew by 17% to GBP260.1 million (H1 2017:
GBP221.9 million).
The combined ratio improved to 105.8% (H1 2017: 111.2%). Continued
improvement in all operations' prior year claims costs and expense
ratios combined with higher net insurance premium revenue resulted in a
greatly reduced loss of GBP0.6 million for the first six months of 2018
(H1 2017: loss of GBP10.1 million).
The expense ratio improved to 39.4% (H1 2017: 45.4%) as all businesses
grew and continued to pursue operational efficiencies. The expense ratio
continues to appear high in comparison to
Admiral's UK business because of high acquisition costs as the
businesses grow and also the
continued need to build scale.
The European insurance operations in Spain, Italy and France insured
0.92m vehicles at 30 June 2018
- 18% higher than a year earlier (30 June 2017: 0.78m). Turnover was up
17% at GBP159.7 million (H1 2017: GBP136.2 million). The consolidated
result of the businesses was a profit of GBP2.5 million (H1 2017: loss
of GBP5.0 million) consisting of continuing profitability in Italy and
lower losses in France and Spain. The combined ratio net of other
revenue (excluding the impact of reinsurer caps) improved to 99% from
105% due to the improved claims experience and expense ratio.
Admiral Seguros (Spain) which launched in 2006 operates under two brands,
Balumba and Qualitas Auto. Admiral Seguros focused on sustainable growth
in a competitive market during the first six months of 2018, including
improvements in the customer journey and digital capabilities. The
business grew by 12% to 233,300 customers (30 June 2017: 208,100).
The Group's largest international operation, ConTe in Italy, celebrated
10 years of operation in H1 2018 and increased its vehicles insured by
17% to 539,600 at the end of the period. ConTe continued to experience
positive development in the projected ultimate outcomes of most
underwriting years allowing further reserve releases in H1 2018 and
another reported profit. ConTe continues to hold a prudent margin in its
claims reserves above actuarial best estimate. The company has also seen
improvements in its expense ratio through operational efficiencies and
technology improvements.
L'olivier - assurance auto, Admiral's French operation which launched in
2010, continued to pursue growth and increased vehicle count by 36% to
152,600 at 30 June 2018. L'olivier continues to focus on growth,
accelerating brand development and improving customer experience through
digital improvements during the period. L'olivier also experienced
positive prior year claims cost development in the first half.
Admiral underwrites motor insurance in six states (Virginia, Maryland,
Illinois, Texas, Indiana and Tennessee) through its Elephant Auto
business, which launched at the end of 2009. At 30 June 2018 Elephant
insured over 200,000 vehicles, up by 12% year-on-year. Turnover was
GBP100.4 million, up 17% on the prior year (GBP85.7 million). Elephant
again reduced its loss for the period (to GBP3.1 million from GBP5.0
million in H1 2017) despite the positive growth. Elephant continues to
see improvements in customer persistency and the focus of the business
on loss ratio and cost control translated into a continued improvement
in the combined ratio net of other revenue of 115% (119% in H1 2017).
Price Comparison
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Revenue
Car insurance price comparison 48.6 55.2 57.0 108.8
Other 15.4 17.3 19.6 34.8
Total Revenue 64.0 72.5 76.6 143.6
Expenses (68.8) (70.1) (74.0) (138.2)
Profit/(loss) before tax (4.8) 2.4 2.6 5.4
Confused.com profit 8.3 4.5 5.8 10.1
International price comparison result (13.1) (2.1) (3.2) (4.7)
(4.8) 2.4 2.6 5.4
Group's share of profit/(loss) before
tax(*1)
Confused.com profit 8.3 4.5 5.8 10.1
International price comparison result (9.4) (1.4) (2.3) (3.0)
(1.1) 3.1 3.5 7.1
*1 Alternative Performance Measure - refer to the end of this report for
definition and explanation
Whilst the UK price comparison market remained very competitive in the
first six months of 2018, Confused.com's turnover increased by 6% to
GBP47.7 million (H1 2017: GBP44.9 million) as a result of the focus on
its driver-centric strategy, supported by the launch of new products
including Car Finance comparison. During the first half of 2018
Confused.com continued to improve its customer proposition and
experience and saw an improvement in marketing efficiencies, thereby
increasing profits to GBP5.8 million (H1 2017: GBP4.5 million). In
addition, the business continued to invest in its technology platform to
support current projects and future growth opportunities.
Admiral operates several price comparison businesses outside the UK
including Rastreator (Spain), LeLynx (France) and Compare.com (US).
Admiral Group owns 75% of Rastreator, with the remaining 25% owned by
Mapfre. Admiral Group owns 71% of Compare.com, with the remaining 29%
owned by White Mountains and Mapfre.
Combined revenue for the European operations in the first half of 2018
increased by 5% to GBP23.0 million (H1 2017: GBP22.0 million) in
competitive markets. The Group's share of the combined result
for Rastreator and LeLynx was a lower profit of GBP0.9 million (H1 2017:
GBP2.0 million), the decrease reflecting investment in a more
diversified product range as well as a more competitive market
environment, including a new entrant spending on marketing in France.
The Group continues to invest in Compare.com, its US comparison
operation based in Virginia. During the first half of 2018 Admiral's
share of Compare.com's loss marginally reduced to GBP3.2 million before
tax (H1 2017: GBP3.4 million) reflecting a continued focus on efficient
marketing and reducing acquisition costs within a competitive market
environment. Compare will continue to pursue this strategy in the second
half of the year and the Group expects its share of the loss for the
full year to be in the range of $8 million to $13 million.
The combined result for International Price Comparison was therefore a
loss of GBP2.3 million (H1 2017: loss GBP1.4 million) - the profit from
the European operations offset by investment in Compare.com, albeit at
lower loss levels.
Preminen, the Group's newest price comparison operation continues to
explore the potential of price comparison in new markets overseas, in
partnership with Mapfre. The result for Preminen is included in business
development costs in 'Other Group Items' below.
Other Group Items
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Share scheme charges (14.7) (16.9) (21.6) (35.2)
Loans - (1.6) (6.4) (4.4)
Other investment return 8.7 7.3 1.1 8.4
Business development costs (1.8) (4.3) (2.0) (5.2)
Other central overheads (3.8) (3.9) (3.3) (6.2)
Finance charges (5.5) (5.6) (5.6) (11.4)
UK Commercial van broking 0.8 0.7 (0.4) 1.1
Group's share of other group items (16.3) (24.3) (38.2) (52.9)
Admiral Loans continues to grow which is reflected in the increased loss
of GBP6.4m (further detail in next section). Share scheme charges relate
to the Group's two employee share schemes (refer to note 8 in the
financial statements). The increase in the charge is due to a change in
vesting assumptions for variable awards.
Other interest and investment income in H1 2017 included a GBP5.4
million realised gain from the sale of investments held by the Group
which was not repeated in H1 2018.
Business development costs include costs associated with potential new
ventures, including continued investment in Preminen, the Group's price
comparison incubator which has fledgling subsidiaries operating in
Mexico and Turkey.
Finance charges of GBP5.6 million (H1 2017: GBP5.6 million) reflect
interest on the GBP200 million subordinated notes issued in July 2014
(refer to note 6 to the financial statements).
The UK commercial vehicle result relates to the Gladiator van broking
business which has fully migrated to being underwritten within the UK
Insurance business of the Group and is now included in the UK Motor
result.
Admiral Loans
Admiral Loans launched in 2017, and currently distributes unsecured
personal loans and car finance products through the price comparison
channel and also direct to consumers via the Admiral website.
The Group employs a prudent test and learn approach regarding growth in
customers and loan advances, consistent with other new business
launches. Initial results are encouraging, and the business has grown
significantly since launch, although the Group expects the business to
make modest losses in its early phase as a result of the upfront
accounting for acquisition costs as opposed to interest income earned on
loans which is spread over the life of the loans.
Admiral is encouraged with the performance of the business and the
credit quality of the loans portfolio.
At the end of the first half Admiral Loans completed a further external
funding facility in the form of bank warehousing that will enable the
business to continue growing well into 2019.
Capital structure and financial position
Admiral's capital-efficient and profitable model led to a return on
equity of 54% (H1 2017: 55%). A continuing key feature of the business
model is the extensive use of co- and reinsurance across the Group. The
Group's co-insurance and quota share reinsurance arrangements for the UK
Car insurance business are in place until at least the end of 2019. In
2018 and 2019, the Group's net retained share of the UK private car
insurance business is 22%.
Similar long-term arrangements are in place in the Group's International
Insurance operations and
UK Household Insurance business.
The Group continues to manage its capital to ensure that all entities
within the Group are able to continue as going concerns and that
regulated entities comfortably meet regulatory capital requirements.
Surplus capital within subsidiaries is paid up to the Group holding
company in the form of dividends.
The Group's regulatory capital is based on the Solvency II Standard
Formula, with a capital add-on to reflect recognised limitations in the
Standard Formula with respect to Admiral's business (predominantly in
respect of profit commission arrangements in co- and reinsurance
agreements and risks arising from claims including Periodic Payment
Order (PPO) claims).
The Group continues to develop its partial internal model to form the
basis of future capital requirements. The Group intends to submit an
application for approval to use the internal model to calculate capital
requirements either at the end of 2018 or in early 2019.
The estimated (and unaudited) Solvency II position for the Group at the
date of this report was as follows:
Group capital position
Group GBPbn
Eligible Own Funds (pre 2018 interim dividend) 1.23
2018 interim dividend 0.17
Eligible Own Funds (post 2018 interim dividend) 1.06
Solvency II capital requirement(*1) 0.54
Surplus over regulatory capital requirement 0.52
Solvency ratio (post dividend)(*2) 196%
*1 Solvency capital requirement includes updated capital add-on which is
subject to regulatory approval.
*2 Solvency ratio calculated on a volatility adjusted basis.
The Group maintained a strong solvency ratio at 196% (post-dividend),
which has reduced from 205% at 2017 year end. This is primarily as a
result of an increased solvency capital requirement (in turn mainly due
to growth in premiums and reserves in the core UK Car insurance
business). Own Funds are marginally lower than at 2017 year end partly
as a result of a slightly lower level of additional capital generated
between the balance sheet date and the date of this report when compared
with year end.
The Group's capital includes GBP200 million ten year dated subordinated
bonds. The rate of interest is fixed at 5.5% and the bonds mature in
July 2024. The bonds qualify as tier two capital under the Solvency II
regulatory regime.
Estimated sensitivities to the current Group solvency ratio are
presented in the table below. These sensitivities cover the two most
material risk types, insurance risk and market risk, and within these
risks cover the most significant elements of the risk profile. Aside
from the catastrophe events, estimated sensitivities have not been
calibrated to individual return periods.
Solvency ratio sensitivities
HY'18 YE'17
UK Motor - incurred loss ratio +5% -25% -26%
UK Motor - 1 in 200 catastrophe event -3% -3%
UK Household - 1 in 200 catastrophe event -3% -2%
Interest rate - yield curve down 50 bps -12% -11%
Credit spreads widen 100 bps -4% -4%
Currency - 25% movement in euro and US dollar -3% -3%
ASHE - long term inflation assumption up 0.5% -4% -4%
Investments and cash
Admiral's investment strategy was unchanged in H1 2018 and the Group
continued to invest in the same asset classes as previous years.
The main focus of the Group's strategy is capital preservation, with
additional priorities including low volatility of returns and high
levels of liquidity. All objectives continue to be met. The Group's
Investment Committee performs regular reviews of the strategy to ensure
it remains appropriate.
Cash and investments analysis
30 June 30 June 30 June 31 Dec
GBPm 2016 2017 2018 2017
Fixed income and debt securities 1,483.3 1,496.4 1,542.5 1,493.5
Money market funds and other fair value
instruments 693.4 968.8 1,203.8 1,074.3
Cash deposits 178.7 130.0 130.0 130.0
Cash 295.4 348.6 309.5 326.8
Total 2,650.8 2,943.8 3,185.8 3,024.6
Investment return in the first half of 2018 was GBP17.2 million, a
decrease of GBP6.1 million on H1 2017 (GBP23.3 million). The decrease
primarily arises due to the first half of 2017 benefiting from
GBP5.4 million relating to realised gains on the sale of investments
held by the Group.
The underlying rate of return on the Group's cash and investments was
1.3% (H1 2017: 1.2%).
The Group continues to generate significant amounts of cash and its
capital-efficient business model enables the distribution of the
majority of post-tax profits as dividends.
Taxation
The tax charge reported in the H1 Consolidated Income Statement is
GBP34.8 million (H1 2017: GBP31.5 million), which equates to 16.5% (H1
2017: 16.3%) of profit before tax.
UK Exit from the European Union ('Brexit')
On 23 June 2016, the UK voted in a referendum to leave the EU. At the
date of this report, the timetable for and details of the implementation
of this decision remain unclear.
Brexit brings additional risks, particularly the possibility of a 'no
deal' Brexit, to the Group including:
-- potential for market volatility, particularly in
interest and exchange rates
-- the potential for the uncertainty or the emerging
terms of exit regarding Brexit to trigger or exacerbate less favourable
economic conditions in the UK and other countries in which Admiral
operates (though it is worth noting that car insurance has tended to be
resilient to economic downturns)
-- potential changes to or withdrawal of the right
of UK financial services firms to trade in Europe without the need for
locally regulated entities ('passporting')
-- potential changes to the rules relating to the
free movement of people between the UK and EU member states
The Group does not currently foresee a material adverse impact on day to
day operations (including customers or staff), whilst recognising that
other issues may emerge over time.
During the first half of 2018 Admiral received approval for its
applications to establish insurance and intermediary companies in Spain.
From the start of 2019 Admiral's European insurance businesses will
operate through these newly licensed entities. Work on establishing new
licensed entities for
the Group's European price comparison operations will be carried out in
the second half of 2018 with an intention to commence trading in those
entities at the start of 2019.
The cost of the restructuring activity is not expected to be material to
the Group and no material impact on the Group's regulatory capital
position is envisaged.
Principal Risks and Uncertainties
Admiral has performed a robust assessment of the principal risks facing
Admiral, including those which would threaten its business model, future
performance, liquidity and solvency. The result of this assessment is
that the principal risks and uncertainties are consistent with those
reported in the Group's 2017 Annual Report and Accounts, pages 33-37.
Disclaimer on forward-looking statements
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
assumptions and are subject to a number of known and unknown risks and
uncertainties that may cause actual events or results to differ
materially from any expected future events or results expressed or
implied in these forward-looking statements.
Persons receiving this announcement should not place undue reliance on
forward-looking statements. Unless otherwise required by applicable law,
regulation or accounting standard, the Group does not undertake to
update or revise any forward-looking statements, whether as a result of
new information, future developments or otherwise.
Condensed consolidated income statement (unaudited)
6
months
ended: Year ended:
31
30 June 30 June December
2018 2017 2017
Note: GBPm GBPm GBPm
Insurance premium revenue 1,002.6 796.6 1,729.9
Insurance premium ceded to reinsurers (678.9) (495.3) (1,110.8)
Net insurance premium revenue 5 323.7 301.3 619.1
Other revenue 7 223.4 195.9 399.9
Profit commission 5 29.6 30.0 67.0
Interest income 5.1 0.1 1.6
Interest expense (0.9) - (0.4)
Net interest income from loans 4.2 0.1 1.2
Investment return 6 17.2 23.3 41.7
Net revenue 598.1 550.6 1,128.9
Insurance claims and claims handling expenses (717.5) (612.7) (1,308.8)
Insurance claims and claims handling expenses recoverable
from reinsurers 537.3 447.8 961.7
Net insurance claims (180.2) (164.9) (347.1)
Operating expenses and share scheme charges 8 (429.1) (359.5) (753.5)
Operating expenses and share scheme charges recoverable
from co- and reinsurers 8 227.5 172.8 386.6
Net operating expenses and share scheme charges (201.6) (186.7) (366.9)
Total expenses (381.8) (351.6) (714.0)
Operating profit 216.3 199.0 414.9
Finance costs 6 (5.6) (5.6) (11.4)
Profit before tax 210.7 193.4 403.5
Taxation expense 9 (34.8) (31.5) (71.9)
Profit after tax 175.9 161.9 331.6
Profit after tax attributable to:
Equity holders of the parent 177.2 163.2 334.2
Non-controlling interests (1.3) (1.3) (2.6)
175.9 161.9 331.6
Earnings per share:
Basic 11 61.6p 57.3p 117.2p
Diluted 11 61.5p 57.2p 117.0p
Dividends declared and paid (total) 11 163.3 143.7 300.3
Dividends declared and paid (per share) 11 58.0p 51.5p 107.5p
Condensed consolidated statement of comprehensive income (unaudited)
6 months ended: Year ended:
30 June 2018 30 June 2017 31 December 2017
GBPm GBPm GBPm
Profit for the period 175.9 161.9 331.6
Other comprehensive income
Items that are or may be reclassified to profit or
loss
Movements in fair value reserve (15.1) 17.5 12.4
Deferred tax charge in relation to movement in fair
value reserve 0.4 (4.1) (4.1)
Exchange differences on translation of foreign
operations (0.8) (4.0) (8.0)
Other comprehensive (expense)/income for the period,
net of income tax (15.5) 9.4 0.3
Total comprehensive income for the period 160.4 171.3 331.9
Total comprehensive income for the period attributable
to:
Equity holders of the parent 161.8 172.8 334.8
Non-controlling interests (1.4) (1.5) (2.9)
160.4 171.3 331.9
Condensed consolidated statement of financial position (unaudited)
As at:
30 June 30 June 31 December
2018 2017 2017
Note: GBPm GBPm GBPm
ASSETS
Property and equipment 10 28.1 31.4 31.3
Intangible assets 10 162.8 158.3 159.4
Deferred income tax 9 4.4 6.3 0.3
Reinsurance assets 5 1,608.5 1,460.9 1,637.6
Insurance and other receivables 6, 10 1,124.8 953.6 939.7
Loans and advances to customers 6, 10 214.2 11.4 66.2
Financial investments 6 2,876.3 2,595.2 2,697.8
Cash and cash equivalents 6 309.5 348.6 326.8
Total assets 6,328.6 5,565.7 5,859.1
EQUITY
Share capital 11 0.3 0.3 0.3
Share premium account 13.1 13.1 13.1
Fair value reserve 21.7 41.5 36.4
Foreign exchange reserve 15.3 19.9 16.0
Retained profit and loss . 620.0 545.7 580.3
Total equity attributable to equity holders of the
parent 670.4 620.5 646.1
Non-controlling interests 8.3 9.3 9.7
Total equity 678.7 629.8 655.8
LIABILITIES
Insurance contracts 5 3,543.5 3,054.1 3,313.9
Subordinated and other financial liabilities 6 404.0 223.9 224.0
Trade and other payables 6, 10 1,664.0 1,635.9 1,641.6
Current tax liabilities 38.4 22.0 23.8
Total liabilities 5,649.9 4,935.9 5,203.3
Total equity and total liabilities 6,328.6 5,565.7 5,859.1
Condensed consolidated cash flow statement (unaudited)
6 months ended: Year ended:
30 June 31 December
30 June 2018 2017 2017
Note: GBPm GBPm GBPm
Profit after tax 175.9 161.9 331.6
Adjustments for non-cash items:
- Depreciation 10 6.1 5.0 10.1
- Amortisation of software 10 7.5 7.3 13.8
- Share scheme charges 21.9 18.7 35.6
- Investment return 6 (17.2) (23.3) (41.7)
- Finance costs 6 5.6 5.6 11.4
- Taxation expense 9 34.8 31.5 71.9
Change in gross insurance contract liabilities 229.6 304.6 564.4
Change in reinsurance assets 29.1 (334.5) (511.2)
Change in insurance and other receivables (188.1) (168.7) (154.3)
Change in loans and advances to customers (148.0) (9.1) (63.9)
Change in trade and other payables, including tax
and
social security 22.4 343.7 349.5
Cash flows from operating activities, before
movements in investments 179.6 342.7 617.2
Purchases of financial instruments (538.2) (347.8) (549.2)
Proceeds on disposal/ maturity of financial instruments 358.7 206.1 311.8
Interest and investment income received 4.0 4.6 8.0
Cash flows from operating activities, net of movements
in investments 4.1 205.6 387.8
Taxation payments (21.0) (21.9) (55.9)
Net cash flow from operating activities (16.9) 183.7 331.9
Cash flows from investing activities:
Purchases of property, equipment and software (11.0) (9.7) (22.7)
Net cash used in investing activities (11.0) (9.7) (22.7)
Cash flows from financing activities:
Non-controlling interest capital contribution - - 1.8
Increase in financial liabilities 180.0 - -
Finance costs paid (6.1) (5.6) (11.2)
Repayment of finance lease liabilities - 0.1 0.1
Equity dividends paid 11 (163.3) (143.7) (300.3)
Net cash used in financing activities 10.6 (149.2) (309.6)
Net (decrease) / increase in cash and cash equivalents (17.3) 24.8 (0.4)
Cash and cash equivalents at 1 January 326.8 326.6 326.6
Effects of changes in foreign exchange rates - (2.8) 0.6
Cash and cash equivalents at end of period 6 309.5 348.6 326.8
Condensed consolidated statement of changes in equity (unaudited)
Attributable to the owners of the company
Share Foreign
Pre- Fair Ex- Retained
Share capital mium account value reserve change reserve profit and loss Total NCI(*1) Total equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2017 0.3 13.1 28.1 23.7 505.7 570.9 10.8 581.7
Profit for the period - - - - 163.2 163.2 (1.3) 161.9
Other comprehensive income
Movements in fair value reserve - - 17.5 - - 17.5 - 17.5
Deferred tax charge in relation to
movement in fair value reserve - - (4.1) - - (4.1) - (4.1)
Currency translation differences - - - (3.8) - (3.8) (0.2) (4.0)
Total comprehensive income for the period - - 13.4 (3.8) 163.2 172.8 (1.5) 171.3
Transactions with equity-holders
Dividends - - - - (143.7) (143.7) - (143.7)
Share scheme credit - - - - 18.7 18.7 - 18.7
Deferred tax credit on share scheme
credit - - - - 1.8 1.8 - 1.8
Total transactions with equity-holders - - - - (123.2) (123.2) - (123.2)
As at 30 June 2017 0.3 13.1 41.5 19.9 545.7 620.5 9.3 629.8
At 1 January 2017 0.3 13.1 28.1 23.7 505.7 570.9 10.8 581.7
Profit for the period - - - - 334.2 334.2 (2.6) 331.6
Other comprehensive income
Movements in fair value reserve - - 12.4 - - 12.4 - 12.4
Deferred tax charge in relation to
movement in fair value reserve - - (4.1) - - (4.1) - (4.1)
Currency translation differences - - - (7.7) - (7.7) (0.3) (8.0)
Total comprehensive income for the period - - 8.3 (7.7) 334.2 334.8 (2.9) 331.9
Transactions with equity-holders
Dividends - - - - (300.3) (300.3) - (300.3)
Share scheme credit - - - - 37.9 37.9 - 37.9
Deferred tax credit on share scheme
credit - - - - 2.8 2.8 - 2.8
Contributions by NCIs - - - - - - 1.8 1.8
Total transactions with equity-holders - - - - (259.6) (259.6) 1.8 (257.8)
As at 31 December 2017 0.3 13.1 36.4 16.0 580.3 646.1 9.7 655.8
Attributable to the owners of the company
Share Fair Foreign Retained
Share capital premium account value reserve exchange reserve profit and loss Total NCI(*1) Total equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2018 0.3 13.1 36.4 16.0 580.3 646.1 9.7 655.8
Profit for the period - - - - 177.2 177.2 (1.3) 175.9
Other comprehensive income
Movements in fair value reserve - - (15.1) - - (15.1) - (15.1)
Deferred tax charge in relation to
movement in fair value reserve - - 0.4 - - 0.4 - 0.4
Currency translation differences - - - (0.7) - (0.7) (0.1) (0.8)
Total comprehensive income for the period - - (14.7) (0.7) 177.2 161.8 (1.4) 160.4
Transactions with equity-holders
Dividends - - - - (163.3) (163.3) - (163.3)
Share scheme credit - - - - 24.9 24.9 - 24.9
Deferred tax credit on share scheme
credit - - - - 0.9 0.9 - 0.9
Total transactions with equity-holders - - - - (137.5) (137.5) - (137.5)
As at 30 June 2018 0.3 13.1 21.7 15.3 620.0 670.4 8.3 678.7
[*1] Non-controlling interests
Notes to the financial statements (unaudited)
1. General information
Admiral Group plc (the "Company") is a company incorporated in the
United Kingdom and registered in England and Wales. Its registered
office is at Ty Admiral, David Street, Cardiff, CF10 2EH and its shares
are listed on the London Stock Exchange.
The condensed interim financial statements comprise the results and
balances of the Company and its subsidiaries (the Group) for the
six-month period ended 30 June 2018 and the comparative periods for the
six-months ended 30 June 2017 and the year ended 31 December 2017. This
condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU, unless
otherwise stated.
As required by the FCA's Disclosure and Transparency Rules, the
condensed set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the
preparation of the Company's published consolidated financial statements
for the year ended 31 December 2017, except where new accounting
standards apply as noted below.
The financial statements of the Company's subsidiaries are consolidated
in the Group financial statements. In accordance with IAS 24,
transactions or balances between Group companies that have been
eliminated on consolidation are not reported as related party
transactions.
The comparative figures for the financial year ended 31 December 2017
are not the Company's statutory accounts for that financial year. Those
accounts have been reported on by the Company's auditors and delivered
to the registrar of companies. The report of the auditors was:
1. unqualified;
2. did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report; and
3. did not contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The accounts have been prepared on a going concern basis. In considering
the appropriateness of this assumption, the Board have reviewed the
Group's projections for the next twelve months and beyond. Further
information is given in note 2 below.
2. Basis of preparation
The condensed set of interim financial statements have been prepared
applying the accounting policies and presentation that were applied in
the preparation of the Company's published consolidated financial
statements for the year ended 31 December 2017, other than for the
adoption of new standards as outlined below.
A number of other IFRS and interpretations have been endorsed by the EU
in the period to 30 June 2018 and although they have been adopted by the
Group, none of them has had a material impact on the
Group's financial statements.
The Group's assessment of the impact of standards that have yet to be
adopted remains consistent with
that reported on page 99 of the Group's 2017 Annual Report.
The accounts have been prepared on a going concern basis. In considering
this requirement, the Directors have taken into account the following:
-- The Group's projections for the next 12 months and beyond, in particular
the profit forecasts,
regulatory capital surpluses and levels and sources of liquidity;
-- The risks included on the Group's risk register that could impact on the
Group's financial
performance, levels of liquidity and solvency over the next 12 months;
and
-- The risks on the Group's risk register that could be a threat to the
Group's business model and
capital adequacy.
The Group's business activities, together with the factors likely to
affect its future development,
performance and position are set out in the Strategic Report in the 2017
Annual Report. An update to
the Group's principal risks and uncertainties since the 2017 year end is
included in the review preceding these financial statements. In addition,
the Governance Report in the 2017 Annual Report includes the Directors'
statement on the viability of the Group over a three year period.
Following consideration of the above, the Directors have reasonable
expectation that the Group has adequate resources to continue in
operation for the foreseeable future, a period not less than 12 months
from the date of this report, and that it is therefore appropriate to
adopt the going concern basis in preparing the financial statements.
The accounting policies set out in the notes to the financial statements
have, unless otherwise stated, been applied consistently to all periods
presented in these Group financial statements.
The financial statements are prepared on the historical cost basis,
except for the revaluation of financial assets classified as fair value
through profit or loss or fair value through other comprehensive income.
The Group and Company financial statements are presented in pounds
sterling, rounded to the nearest
GBP0.1 million.
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. In assessing control, the
Group takes into consideration potential voting rights that are
currently exercisable. The acquisition date is the date on which control
is transferred to the acquirer. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that
control commences until the date that control ceases. Losses applicable
to the non-controlling interests in a subsidiary are allocated to the
non-controlling interests even if doing so causes the non-controlling
interests to have a deficit balance.
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis
of making the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in
which the estimate is reviewed if this revision affects only that period,
or in the period of the revision and future periods if the revision
affects both current and future periods. To the extent that a change in
an accounting estimate gives rise to changes in assets and liabilities,
it is recognised by adjusting the carrying amount of the related asset
or liability in the period of the change.
Adoption of new accounting standards
On 1 January 2018, new standards IFRS 15 "Revenue from Contracts with
Customers" and IFRS 9 "Financial Instruments" became effective and were
adopted by the Group. The impact of the transition to these new
standards is provided below.
IFRS 9
During the year the Group has applied IFRS 9 Financial Instruments with
a date of initial application of 1 January 2018, which resulted in
changes in accounting policies and the potential for adjustments to the
amounts previously recognised in the financial statements in respect of
financial instruments.
As permitted by the transitional provisions of IFRS 9 the Group elected
not to restate comparative figures. Any adjustments to the carrying
amounts of financial assets and liabilities at the date of transition
would be recognised in the opening retained earnings and other reserves
of the current period. There were no material impacts of transition and
as a result no adjustments have been made to comparative figures.
The adoption of IFRS 9 has resulted in changes to the Group's accounting
policies for recognition, classification and measurement of financial
assets and financial liabilities and impairment of financial assets.
Set out below are disclosures relating to the impact of the adoption of
IFRS 9 on the Group. Further details of the specific IFRS 9 accounting
policies applied in the period (as well as previous IAS 39 accounting
policies applied in the comparative period) are described in more detail
in note 6.
a) Impact of transition
On transition to IFRS 9, the Group have not identified any
material adjustments. As a result, no restatement or reconciliation
has been provided between the opening balances under IAS 39 and IFRS 9.
b) Classification and measurement of financial instruments
The measurement category and the carrying amount of financial assets and
liabilities in accordance with IAS 39 and IFRS 9 at 1 January 2018 are
as follows:
IAS 39 IFRS 9
Carrying Measurement Carrying
Measurement Category Amount (GBPm) Category (GBPm) Amount (GBPm)
Financial Assets
Government gilts Available for sale (FVOCI) 173.8 FVOCI 173.8
Debt securities Available for sale (FVOCI) 1,319.7 FVOCI 1,319.7
Deposits with credit Loans and receivables
institutions (Amortised cost) 130.0 Amortised cost 130.0
FVTPL
Money-market funds FVTPL 1,071.9 (mandatory) 1,071.9
Equity instruments FVTPL 2.6 FVOCI 2.6
Cash and cash Loans and receivables
equivalents (Amortised cost) 326.8 Amortised cost 326.8
Trade and other Loans and receivables
receivables (Amortised cost) 202.1 Amortised cost 202.1
Derivative financial
instruments FVTPL 2.4 FVTPL 2.4
Insurance receivables Loans and receivables
(Amortised cost) 737.6 Amortised cost 737.6
Loans and advances Loans and receivables
to customers (Amortised cost) 66.2 Amortised cost 66.2
It can be seen from the above that there is no material difference in
the carrying amount of financial instruments under IAS 39 and IFRS 9.
The classification and measurement of all financial assets has also
remained consistent other than equity investments which have been
elected to be treated as FVOCI as permitted under IFRS 9. There is no
material impact to the income statement as a result.
There were no changes to the classification and measurement of financial
liabilities. Financial liabilities consist of subordinated notes, trade
and other payables and a credit facility of GBP200m of which GBP200m was
drawn down as at 30 June 2018 (31 December 2017: GBP200m of which GBP20m
was drawn down). These are measured at amortised cost under IAS 39 and
this has not changed under IFRS 9.
IFRS 15
During the year the Group has applied IFRS 15 Revenue from Contracts
with Customers with a date of initial application of 1 January 2018. The
core principle of IFRS 15 is that an entity should recognise revenue to
depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services.
The Group has opted to apply IFRS 15 retrospectively using the
cumulative effect method i.e. by recognising the cumulative effect of
initially applying IFRS 15 as an adjustment to the opening balance of
equity as at 1 January 2018. Therefore, the comparative information has
not been restated and continues to be reported under IAS 18 and IAS 11.
No material differences in the accounting treatment between these
standards have been identified.
The Group has not identified any material impact on the consolidated
financial statements for the year ending 31 December 2018 as a result of
adopting IFRS 15 and therefore no transition adjustment is presented.
3. Critical accounting judgements and estimates
The Group's 2017 Annual Report provides full details of significant
judgements and estimates used in the application of the Group's
accounting policies. There have been no additional critical judgements
or estimates applied in the period. Note 5 provides further information
as to the changes in the estimates with respect to the calculation of
insurance reserves.
4. Operating segments
The Group has four reportable segments; UK Insurance, International Car
Insurance, Price Comparison and Other, as set out on page 102 of the
Group's 2017 Annual Report.
Segment income, results and other information
An analysis of the Group's revenue and results for the period ended 30
June 2018, by reportable segment, are shown below. The accounting
policies of the reportable segments are consistent with those presented
in the notes to the 2017 Group financial statements.
30 June
2018
International
UK Car Price Segment
Insurance Insurance Comparison Other Eliminations(*2) total
GBPm GBPm GBPm GBPm GBPm GBPm
Turnover(*1) 1,319.1 260.1 76.6 6.2 (10.5) 1,651.5
Net insurance premium revenue 254.6 69.1 - - - 323.7
Other revenue, profit commission and net interest
income on loans 176.7 9.0 76.6 5.1 (10.2) 257.2
Investment return 15.8 0.6 - - (0.3) 16.1
Net Revenue 447.1 78.7 76.6 5.1 (10.5) 597.0
Net insurance claims (129.0) (51.2) - - - (180.2)
Expenses (70.5) (28.1) (74.0) (13.1) 10.5 (175.2)
Segment profit/
(loss) before tax 247.6 (0.6) 2.6 (8.0) - 241.6
Other central revenue and expenses, including share
scheme charges (26.4)
Interest and investment income 1.1
Finance costs (5.6)
Consolidated profit before tax 210.7
Taxation expense (34.8)
Consolidated profit after tax 175.9
[*1] Turnover is an Alternative Performance Measure and consists of
total premiums written (including co-insurers share) and other revenue.
Refer to note 12 for further information.
[*2] Eliminations are in respect of the intra-group trading between the
Group's Price Comparison and UK and International Car Insurance entities,
and intra-group interest between the UK Insurance and Other segments.
Revenue and results for the corresponding reportable segments for the
period ended 30 June 2017 are shown below.
Re-presented
30 June 2017
International
UK Car Price Segment
Insurance Insurance Comparison Other Eliminations(*2) total
GBPm GBPm GBPm GBPm GBPm GBPm
Turnover(*1) 1,144.1 221.9 72.5 7.2 (10.5) 1,435.2
Net insurance premium revenue 241.0 60.3 - - - 301.3
Other revenue, profit commission and net interest
income on loans 148.7 8.1 72.5 7.2 (10.5) 226.0
Investment return 15.8 0.2 - - - 16.0
Net Revenue 405.5 68.6 72.5 7.2 (10.5) 543.3
Net insurance claims (116.5) (48.4) - - - (164.9)
Expenses (62.8) (30.3) (70.1) (6.5) 10.5 (159.2)
Segment profit/
(loss) before tax 226.2 (10.1) 2.4 0.7 - 219.2
Other central revenue and expenses, including share
scheme charges (27.5)
Interest and investment income 7.3
Finance costs (5.6)
Consolidated profit before tax 193.4
Taxation expense (31.5)
Consolidated profit after tax 161.9
Revenue and results for the corresponding reportable segments for the
year ended 31 December 2017 are shown below.
Re-presented
31 December 2017
International
UK Car Price Segment
Insurance Insurance Comparison Other Eliminations(*2) total
GBPm GBPm GBPm GBPm GBPm GBPm
Turnover(*1) 2,354.0 449.8 143.6 10.8 (19.8) 2,938.4
Net insurance premium revenue 491.6 127.5 - - - 619.1
Other revenue, profit commission and net interest
income on loans 316.8 16.7 143.6 10.8 (19.8) 468.1
Investment return 32.6 0.6 - - - 33.2
Net Revenue 841.0 144.8 143.6 10.8 (19.8) 1,120.4
Net insurance claims (250.1) (97.0) - - - (347.1)
Expenses (124.3) (62.1) (138.2) (8.4) 19.8 (313.2)
Segment profit/
(loss) before tax 466.6 (14.3) 5.4 2.4 - 460.1
Other central revenue and expenses, including share
scheme charges (53.7)
Interest and investment income 8.5
Finance costs (11.4)
Consolidated profit before tax 403.5
Taxation expense (71.9)
Consolidated profit after tax 331.6
Segment revenues
The UK and International Car Insurance reportable segments derive all
insurance premium income from external policyholders. Revenue within
these segments is not derived from an individual policyholder that
represents 10% or more of the Group's total revenue.
The total of Price Comparison revenues from transactions with other
reportable segments is GBP10.5 million (H1 2017: GBP10.5 million, FY
2017: GBP19.8 million) which has been eliminated on consolidation. There
are no other transactions between reportable segments.
Revenues from external customers for products and services is consistent
with the split of reportable segment revenues as shown above.
Information about geographical locations
All material revenues from external customers, and net assets attributed
to a foreign country relating to car insurance are shown within the
International Car Insurance reportable segment shown above. The revenue
and results of the three International Price Comparison businesses;
Rastreator, LeLynx and compare.com are not yet material enough to be
presented as a separate segment.
5. Premium, Claims and Profit Commissions
5a. Net insurance premium revenue
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Total insurance premiums including co-insurance 1,401.1 1,219.8 2,499.4
Group gross written premiums 1,085.7 928.7 1,927.7
Outwards reinsurance premiums (733.4) (627.0) (1,299.7)
Net insurance premiums written 352.3 301.7 628.0
Change in gross unearned premium provision (83.1) (132.1) (197.8)
Change in reinsurers' share of unearned premium
provision 54.5 131.7 188.9
Net insurance premium revenue 323.7 301.3 619.1
The Group's share of its insurance business was underwritten by Admiral
Insurance (Gibraltar) Limited, Admiral Insurance Company Limited and
Elephant Insurance Company. All contracts are short-term in duration,
lasting for 12 months or less.
5b. Profit commission
30 30 31
June June December
UK Car Insurance: 2018 2017 2017
GBPm GBPm GBPm
Underwriting year:
2013 & prior 13.8 28.8 64.7
2014 - - -
2015 5.9 - -
2016 11.1 - -
2017 - - -
2018 - - -
Total UK motor profit commission 30.8 28.8 64.7
Total UK household profit commission (1.2) 1.2 2.3
Total profit commission 29.6 30.0 67.0
5c. Reinsurance assets and insurance contract liabilities
(i) Analysis of recognised amounts:
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Gross:
Claims outstanding(*1) 2,556.1 2,202.3 2,403.2
Unearned premium provision 987.4 851.8 910.7
Total gross insurance liabilities 3,543.5 3,054.1 3,313.9
Recoverable from reinsurers:
Claims outstanding 950.0 905.2 1,028.8
Unearned premium provision 658.5 555.7 608.8
Total reinsurers' share of insurance
liabilities 1,608.5 1,460.9 1,637.6
Net:
Claims outstanding(*2) 1,606.1 1,297.1 1,374.4
Unearned premium provision 328.9 296.1 301.9
Total insurance liabilities - net 1,935.0 1,593.2 1,676.3
[*1] Gross claims outstanding at 30 June 2018 is presented before the
deduction of salvage and subrogation recoveries totalling GBP50.9
million (30 June 2017: GBP43.5 million, 31 December 2017: GBP42.7
million).
[*2] Admiral typically commutes quota share reinsurance contracts in its
UK Car Insurance business 24-36 months following the start of the
underwriting year. After commutation, claims outstanding from these
contracts are included in Admiral's net claims outstanding balance.
Refer to note (iii) below.
(ii) Analysis of gross and net claims reserve releases:
The following table analyses the impact of movements in prior year
claims provisions on a gross and net basis. This data is presented on an
underwriting year basis.
30 30 31
June June December
2018 2017 2017
Gross GBPm GBPm GBPm
Underwriting year:
2013 & prior 25.6 68.1 132.8
2014 12.8 17.0 25.5
2015 35.8 9.8 32.0
2016 42.1 7.4 23.7
2017 24.0 - -
Total gross release (UK Motor Insurance) 140.3 102.3 214.0
Total gross release (UK Household Insurance) 4.1 - 1.6
Total gross release (International Car Insurance) 16.3 11.7 23.2
Total gross release 160.7 114.0 238.8
30 30 31
June June December
2018 2017 2017
Net GBPm GBPm GBPm
Underwriting year:
2013 & prior 25.6 68.1 132.8
2014 12.8 17.0 25.5
2015 27.3 4.1 (2.4)
2016 18.6 3.1 10.0
2017 7.5 - -
Total net release (UK Motor Insurance) 91.8 92.3 165.9
Total net release (UK Household Insurance) 1.2 - 0.5
Total net release (International Car Insurance) 6.0 5.2 9.5
Total net release 99.0 97.5 175.9
Releases on Admiral's original net share 63.8 50.1 102.1
Releases on commuted quota share reinsurance
contracts 35.2 47.4 73.8
Total net release (UK Insurance) as above 99.0 97.5 175.9
Releases on the share of reserves originally reinsured but since
commuted are analysed by underwriting year as follows:
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Underwriting year:
2013 & prior 14.2 37.5 74.7
2014 7.5 9.9 14.9
2015 12.4 - (15.8)
2016 1.1 - -
Total releases on commuted quota share reinsurance
contracts 35.2 47.4 73.8
UK Car Insurance loss ratio development is as follows:
31 December: 30 June
UK Car Insurance loss ratio development 2013 2014 2015 2016 2017 2018
Underwriting year (UK car only)
2014 - 92% 89% 84% 81% 79%
2015 - - 87% 87% 83% 79%
2016 - - - 88% 84% 80%
2017 - - - - 87% 83%
2018 - - - - - 92%
(iii) Reconciliation of movement in claims provision:
30 June 2018
Gross Reinsurance Net
GBPm GBPm GBPm
Claims provision at 1 January 2018 2,403.2 (1,028.8) 1,374.4
Claims incurred (excluding releases) 858.7 (585.5) 273.2
Reserve releases (160.7) 61.7 (99.0)
Movement in claims provision due to commutation - 310.4 310.4
Claims paid and other movements (545.1) 292.2 (252.9)
Claims provision at 30 June 2018 2,556.1 (950.0) 1,606.1
30 June 2017
Gross Reinsurance Net
GBPm GBPm GBPm
Claims provision at 1 January 2017 2,030.8 (701.6) 1,329.2
Claims incurred (excluding releases) 709.3 (452.3) 257.0
Reserve releases (114.0) 16.5 (97.5)
Movement in claims provision due to commutation - - -
Claims paid and other movements (423.8) 232.2 (191.6)
Claims provision at 30 June 2017 2,202.3 (905.2) 1,297.1
31 December 2017
Gross Reinsurance Net
GBPm GBPm GBPm
Claims provision at 1 January 2017 2,030.8 (701.6) 1,329.2
Claims incurred (excluding releases) 1,512.1 (1,000.2) 511.9
Reserve releases (238.8) 62.9 (175.9)
Movement in claims provision due to commutation - 109.1 109.1
Claims paid and other movements (900.9) 501.0 (399.9)
Claims provision at 31 December 2017 2,403.2 (1,028.8) 1,374.4
1. Reconciliation of movement in net unearned premium provision:
Gross Reinsurance Net
GBPm GBPm GBPm
Unearned premium provision 1 January 2018 910.7 (608.8) 301.9
Written in the period 1,085.7 (733.4) 352.3
Earned in the period (1,009.0) 683.7 (325.3)
Unearned premium provision at 30 June 2018 987.4 (658.5) 328.9
Gross Reinsurance Net
GBPm GBPm GBPm
Unearned premium provision 1 January 2017 718.7 (424.8) 293.9
Written in the period 928.7 (627.0) 301.7
Earned in the period (795.6) 496.1 (299.5)
Unearned premium provision at 30 June 2017 851.8 (555.7) 296.1
Gross Reinsurance Net
GBPm GBPm GBPm
Unearned premium provision 1 January 2017 718.7 (424.8) 293.9
Written in the period 1,927.7 (1,299.7) 628.0
Earned in the period (1,735.7) 1,115.7 (620.0)
Unearned premium provision at 31 December
2017 910.7 (608.8) 301.9
6. Investments
Accounting policies under IFRS 9
Initial recognition and measurement
At initial recognition, the Group measures financial assets and
liabilities at fair value plus or minus, in the case of financial
instruments not measured at fair value through profit and loss, directly
attributable transaction costs. Transaction costs of financial
instruments measured at fair value through profit and loss are expensed
to the profit and loss when incurred.
An expected credit loss allowance is then recognised for assets measured
at amortised cost and investments in debt instruments measured at fair
value through other comprehensive income.
Financial assets
1. Classification and subsequent measurement
The classification and subsequent measurement of the financial asset
under IFRS 9 depends on:
(a) the Group's business model for managing the financial assets
and
(a) the contractual cash flow characteristics of the financial
asset.
Based on these factors, the financial asset is classified into one of
the following categories:
-- Amortised cost - assets which are held in order
to collect contractual cash flows, and the contractual terms of the
financial asset give rise to cash flows which are solely payments of
principal and interest on the principal amount outstanding (SPPI), where
the asset is not designated as FVTPL.
The carrying amount is adjusted by the expected credit loss allowance.
Interest income from these assets is included in 'Interest return' using
the effective interest rate method. For the Group these include deposits
with credit institutions, cash and cash equivalents, insurance
receivables, trade and other receivables and loans and advances to
customers.
-- Fair value through other comprehensive income
(FVOCI) - assets which are held both to collect contractual cash flows
and to sell the asset, where the contractual terms of the financial
asset give rise to cash flows which are solely payments of principal and
interest on the principal amount outstanding (SPPI), where the asset is
not designated as FVTPL.
Movements in the carrying amount are taken through OCI, with the
exception of recognition of impairment gains or losses, interest revenue
and foreign exchange gains or losses which are recognised in profit or
loss. For the Group these assets include government gilts and debt
securities. In addition, IFRS 9 allows an irrevocable election at
initial recognition to designate equity investments at FVOCI that
otherwise would be held at FVTPL, provided these are not held for
trading. The Group has made this election for certain equity
investments.
-- Fair value through profit or loss (FVTPL) -
assets which do not meet the criteria for amortised cost or FVOCI, or
which are designated as FVTPL. For the Group these assets include
investment liquidity funds investing in short duration assets and
derivative financial instruments.
A gain or loss on a debt instrument measured at FVTPL which is not part
of a hedging relationship is recognised in profit or loss and presented
within 'Investment return' in the period in which it arises.
1. Impairment
Loans and advances to customers
IFRS 9 outlines an expected credit loss model for impairments, which
replaces the incurred loss model under IAS 39. The expected credit loss
model is a three stage model based on forward looking information
regarding changes in the credit quality since origination. Credit risk
is measured using a probability of default (PD), exposure at default
(EAD) and loss given default (LGD). The three stages of the model are
defined as follows:
o Stage 1 - no significant increase in credit risk of the
financial asset since inception;
o Stage 2 - significant increase in credit risk of the financial
asset since inception;
o Stage 3 - financial asset is credit impaired.
For instruments in stage 1, the allowance is calculated as the expected
credit losses that result from default events possible within 12 months
after the reporting date. For instruments in stages 2 and 3 the
allowance is calculated as the expected credit loss on a lifetime basis.
Significant increase in credit risk
A significant increase in credit risk is deemed to have occurred where:
o The loan is 1 to 3 loan payments in arrears, excluding those 1-
5 days in arrears;
o Two or more payments are overdue elsewhere, other than within
the Admiral loans business;
o The loan is up to date but has cured during the last 3 months,
after being in arrears for at least 6 days.
The Group does not intend to rebut the presumption within IFRS 9 that
loans which are 30 days past due have experienced a significant increase
in credit risk.
A loan is deemed to be credit impaired where 4 or more payments have
been missed, or where there is a confirmed IVA agreement or debt
collection agency instruction. The Group do not intend to rebut the
presumption within IFRS 9 that default has occurred when an exposure is
greater than 90 days past due.
Write-off policy
Loans are written off where there is no reasonable expectation of
recovery. The Group's policy is to write off all default balances which
are 6 or more payments overdue to their net realisable value, defined by
expected recovery. Individual cases such as recovery through an IVA will
be considered separately.
Expected credit loss models
The expected credit loss is the product of the probability of default
(PD), exposure at default (EAD) and loss given default (LGD), defined as
follows:
-- Probability of Default (PD): The likelihood of an
account default.
-- Exposure at Default (EAD): The amount of balance
at the time of default.
-- Loss Given Default (LGD): The amount of the asset
lost if a borrower defaults.
Forward-looking information
The ECL calculation relies heavily on forward-looking information. In
order to stress the underlying assumptions in the calculation, scenarios
have been produced to include a 'Base Case', a 'Downturn' and an
'Upturn' scenario which will be assessed every six months.
Other assets
Under IFRS 9 the ECL model is applied to all assets measured at
amortised cost, as well as debt instruments measured at FVOCI.
Government gilts and debt securities are measured at FVOCI and as such
fall under the scope of the ECL model.
The fair value of the gilts and debt securities is calculated with
reference to quoted market valuations and as such take into account
future expected credit losses. As a result, no material impairment
provision is required.
The Group's deposits with credit institutions are held with well rated
institutions. As such, the fair value approximates to the book value of
the investment based on the interest rates of the instruments, credit
risk movements and durations of the assets. There is no history of
significant impairment losses arising. The amortised cost carrying
amount of receivables is therefore a reasonable approximation of fair
value and no further material impairment provision has been recognised.
Trade and other receivables are measured at amortised cost, being made
up of multiple types of receivable. Where a provision is required for
these receivables, it is calculated in line with the simplified method
for trade receivables per IFRS 9, whereby lifetime expected credit
losses are recognised irrelevant of the credit risk. In this case, the
provision is based on historic experience of write-offs for each
receivable, which are not material.
Insurance receivables are also measured at amortised cost. Given the
short-term duration of these assets no significant impairment provision
has been recognised.
1. De-recognition
A financial asset is derecognised when the rights to receive cash flows
from that asset have expired, or when the Group transfers the asset and
all the attached substantial risks and rewards relating to the asset to
a third party.
1. Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call
with banks and other short-term deposits with original maturities of
three months or less. All cash and cash equivalents are measured at
amortised cost.
Financial Liabilities
1. Classification and subsequent measurement
Subsequent measurement of financial liabilities is at amortised cost
using the effective interest method. Movements in the amortised cost are
recognised through the income statement.
1. De-recognition
A financial liability is derecognised when the obligation under that
liability is discharged, cancelled or expires.
6a. Investment return
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Investment return:
On assets classified as FVTPL 1.8 0.9 1.9
On debt securities classified as FVOCI 13.0 13.4 27.9
On deposits with credit institutions 1.3 1.9 3.4
On government gilt assets 2.0 2.6 4.6
Net realised gains:
Realised gains on sale of gilt assets - 5.4 5.4
Net unrealised gains/(losses):
Unrealised losses on forward contracts (1.4) (1.1) (2.3)
Interest receivable on cash and cash equivalents 0.5 0.2 0.8
Total investment return(*1) 17.2 23.3 41.7
[*1] Total investment return excludes GBP0.3 million of intra-group
interest (30 June 2017: nil, 31 December 2017: nil)
6b. Finance costs
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Interest payable on subordinated loan notes 5.6 5.6 11.4
Total finance costs 5.6 5.6 11.4
6c. Financial assets and liabilities
The Group's financial instruments can be analysed as follows:
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Financial investments mandatorily measured at FVTPL
Money market funds 1,200.4 965.2 1,069.3
Derivative financial instruments 0.9 3.6 2.4
Financial investments classified as FVOCI
Government gilts 170.9 174.6 173.8
Debt securities 1,371.6 1,321.8 1,319.7
Equity investments 2.5 - 2.6
Financial investments measured at amortised
cost
Deposits with credit institutions 130.0 130.0 130.0
Total financial investments 2,876.3 2,595.2 2,697.8
Other financial assets measured at amortised
cost
Cash and cash equivalents 309.5 348.6 326.8
Insurance receivables 865.6 740.7 737.6
Trade and other receivables 259.2 212.9 202.1
Loans and advances to customers 214.2 11.4 66.2
Total financial assets 4,524.8 3,908.8 4,030.5
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Financial liabilities:
Subordinated notes 204.0 203.9 204.0
Other borrowings 200.0 20.0 20.0
Trade and other payables 1,664.0 1,635.9 1,641.6
Total financial liabilities 2,068.0 1,859.8 1,865.6
All investments held at fair value at the end of the period are invested
in AA-rated money market liquidity funds.
The measurement of investments at the end of the period, for the
majority investments held at fair value, is based on active quoted
market values (level one). Equity investments held at fair value are
measured at level three of the fair value hierarchy. No further
information is provided due to the immateriality of the balance at 30
June 2018.
Deposits are held with well rated institutions; as such the approximate
fair value is the book value of the investment as impairment of the
capital is not expected. There is no quoted market for these holdings
and as such a level two valuation is used. The book value of deposits is
GBP130.0 million (2017: GBP130.0 million).
The amortised cost carrying amount of receivables is a reasonable
approximation of fair value.
The fair value of subordinated notes (level one valuation) at 30 June
2018 is GBP219.3 million (H1 2017:
GBP223.4 million, FY 2017: GBP229.2 million).
6d. Cash and cash equivalents
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Cash at bank and in hand 308.9 348.6 325.3
Short-term deposits 0.6 - 1.5
Total cash and cash equivalents 309.5 348.6 326.8
Cash and cash equivalents includes cash in hand, deposits held at call
with banks, and other short-term deposits with original maturities of
three months or less.
7. Other revenue
The Group has applied IFRS 15 using the cumulative effect method
therefore the comparative information has not been restated and
continues to be reported under IAS 18 and IAS 11. No material
differences in the accounting treatment between these standards has been
identified.
7a. Accounting policy
Revenue is credited to the income statement over the period matching the
Group's obligations to provide services. Where the Group has no
remaining obligations, the revenue is recognised immediately. An
allowance is made for expected cancellations where the customer may be
entitled to a refund of the amount charged.
Commission from the provision of insurance intermediary services is
credited to revenue on the sale of the underlying insurance policy.
There has been no change in revenue recognition from the comparative
period, as revenue recognition was in line with the requirements of IFRS
15.
7b. Nature of goods and services
The following is a description of the principle activities within the
scope of IFRS 15 from which the Group generates its other revenue.
Products and Nature, timing of satisfaction of performance obligations
services and significant
payment terms
Profit The performance obligation is the provision of insurance
commission from intermediary services.
co-insurers Profit commission revenue is calculated as a proportion
of the ultimate profitability of individual underwriting
years. Uncertainty over the ultimate profitability
of an underwriting year results in the recognition
of profit commission revenue being constrained through
the use of margin for uncertainty within the calculation
of underwriting year profit. This ensures that at
any point in time, in line with the requirements of
IFRS 15, there is a high probability that there will
be no significant reversal of revenue in any financial
period. Further detail on the recognition of profit
commission is included in note 5.
Price The performance obligation is the provision of insurance
Comparison intermediary
services, at which point the performance obligation
is met. Revenue is therefore recognised at a point
in time.
Commission on The performance obligation is the provision of insurance
underlying intermediary services, at which point the performance
products obligation is met. Revenue is therefore recognised
at a point in time. Payment of the commission is
due within 30 days of the period close.
Administration The performance obligation is the change requested
fees being made to the underlying policy, at which point
the performance obligation is met.
Revenue is therefore recognised at a point in time
and is collected
immediately or in line with direct debit instalments.
Revenue from The performance obligation is the pursuit of the compensation
law firms from the other side's insurer (OSI) on behalf of the
customer. Revenue is therefore recognised over time
using inputs and the expected value method. Inputs
including hours incurred and a 12 month realisable
rate are used to calculate the expected value of revenue.
Payment is due
within 28 days of invoice.
7c. Disaggregation of revenue
In the following tables, other revenue is disaggregated by primary
geographical market, major products/service lines and timing of revenue
recognition. The total revenue disclosed in the table of
GBP253.0 million (H1 2017: GBP225.9 million, FY 2017: GBP466.9 million)
represents total other revenue and profit commission and is
disaggregated into the segments included in note 4.
30 June 2018
International Price
UK Insurance Car Insurance Comparison Other Total
GBPm GBPm GBPm GBPm GBPm
Major products
Price
Comparison(*1) - - 66.1 - 66.1
Instalment
income 38.1 1.3 - - 39.4
Fee and
commission
revenue 88.3 7.7 - - 96.0
Revenue from law
firms 15.8 - - - 15.8
Other 5.0 - - 1.1 6.1
Total other
revenue 147.2 9.0 66.1 1.1 223.4
Profit
commission 29.6 - - - 29.6
Total other
revenue and
profit
commission 176.8 9.0 66.1 1.1 253.0
Timing of
revenue
recognition
Point in time 122.7 7.7 66.1 1.1 197.6
Over time 17.2 - - - 17.2
Revenue outside
the scope of
IFRS 15 36.9 1.3 - - 38.2
176.8 9.0 66.1 1.1 253.0
30 June 2017
International Price
UK Insurance Car Insurance Comparison Other Total
GBPm GBPm GBPm GBPm GBPm
Major products
Price
Comparison(*1) - - 62.0 - 62.0
Instalment
income 22.5 1.3 - - 23.8
Fee and
commission
revenue 77.2 6.8 - - 84.0
Revenue from law
firms 14.4 - - - 14.4
Other 4.6 - - 7.1 11.7
Total other
revenue 118.7 8.1 62.0 7.1 195.9
Profit
commission 30.0 - - - 30.0
Total other
revenue and
profit
commission 148.7 8.1 62.0 7.1 225.9
Timing of
revenue
recognition
Point in time 109.1 6.8 62.0 7.1 185.0
Over time 15.9 - - - 15.9
Revenue outside
the scope of
IFRS 15 23.7 1.3 - - 25.0
148.7 8.1 62.0 7.1 225.9
31 December 2017
International Price
UK Insurance Car Insurance Comparison Other Total
GBPm GBPm GBPm GBPm GBPm
Major products
Price
Comparison(*1) - - 123.8 - 123.8
Instalment
income 56.6 2.6 - - 59.2
Fee and
commission
revenue 156.2 14.1 - - 170.3
Revenue from law
firms 28.8 - - - 28.8
Other 8.2 - - 9.6 17.8
Total other
revenue 249.8 16.7 123.8 9.6 399.9
Profit
commission 67.0 - - - 67.0
Total other
revenue and
profit
commission 316.8 16.7 123.8 9.6 466.9
Timing of
revenue
recognition
Point in time 226.1 14.1 123.8 9.6 373.6
Over time 31.8 - - - 31.8
Revenue outside
the scope of
IFRS 15 58.9 2.6 - - 61.5
316.8 16.7 123.8 9.6 466.9
[*1] Price comparison revenue excludes GBP10.5 million (30 June 2017:
GBP10.5 million, 31 December 2017: GBP19.8 million) of income from other
Group companies.
Instalment income and profit commission from reinsurers is not within
the scope of IFRS 15 Revenue from Contracts with Customers due to the
nature of the income.
8. Expenses
8a. Operating expenses and share scheme charges
30 June 2018
Recoverable
from co-
and
Gross reinsurers Net
GBPm GBPm GBPm
Acquisition of insurance contracts(*1) 62.1 (49.3) 12.8
Administration and other marketing costs (insurance
contracts) 209.5 (166.3) 43.2
Insurance contract expenses 271.6 (215.6) 56.0
Administration and other marketing costs (other) 123.7 - 123.7
Share scheme charges 33.8 (11.9) 21.9
Total expenses and share scheme charges 429.1 (227.5) 201.6
30 June 2017
Recoverable
from co-
and
Gross reinsurers Net
GBPm GBPm GBPm
Acquisition of insurance contracts 72.5 (58.6) 13.9
Administration and other marketing costs (insurance
contracts) 143.2 (103.9) 39.3
Insurance contract expenses 215.7 (162.5) 53.2
Administration and other marketing costs (other) 116.4 - 116.4
Share scheme charges 27.4 (10.3) 17.1
Total expenses and share scheme charges 359.5 (172.8) 186.7
31 December 2017
Recoverable
from co-
and
Gross reinsurers Net
GBPm GBPm GBPm
Acquisition of insurance contracts(*1) 122.0 (93.3) 28.7
Administration and other marketing costs (insurance
contracts) 353.5 (274.5) 79.0
Insurance contract expenses 475.5 (367.8) 107.7
Administration and other marketing costs (other) 223.6 - 223.6
Share scheme charges 54.4 (18.8) 35.6
Total expenses and share scheme charges 753.5 (386.6) 366.9
[*1] Acquisition of insurance contracts expense excludes GBP10.5 million
(H1 2017: GBP10.5 million, FY 2017: GBP19.8 million) of price comparison
fees from other Group companies.
The GBP43.2 million (H1 2017: GBP39.3 million, FY 2017: GBP79.0 million)
administration and marketing costs allocated to insurance contracts is
principally made up of salary costs.
Analysis of other administration and other marketing costs
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Expenses relating to additional products and services 32.1 29.4 58.9
Price Comparison operating expenses 74.0 70.1 138.2
Loans operating expenses 10.3 1.7 5.6
Other expenses 7.3 15.2 20.9
Total 123.7 116.4 223.6
Refer to note 12 for a reconciliation between insurance contract
expenses and the reported expense ratio.
8b. Staff share schemes
Analysis of share scheme costs (per income statement):
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Share Incentive Plan (SIP) charge 5.9 5.6 6.7
Discretionary Free Share Scheme (DFSS) charge 16.0 11.5 28.9
Total share scheme charges 21.9 17.1 35.6
The share scheme charges reported above are net of the co- and
reinsurers share of the cost and therefore differ from the gross charge
reported in the gross credit to reserves reported in the consolidated
statement of changes in equity (H1 2018: GBP24.9 million, H1 2017:
GBP18.7 million, FY 2017: GBP37.9 million).
The consolidated cash flow statement also shows the gross charge in the
reconciliation between 'profit after tax' and 'cash flows from operating
activities'. The co-insurance share of the charge is included in the
'change in trade and other payables' line.
9. Taxation
9a. Taxation
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
UK corporation tax
Current charge at 19.00% (2017: 19.25%) 37.2 31.6 68.8
(Over)/under provision relating to prior periods 0.4 - (3.7)
Current tax charge 37.6 31.6 65.1
Deferred tax
Current period deferred taxation movement (2.8) (0.1) 3.1
Under provision relating to prior periods - - 3.7
Total tax charge per income statement 34.8 31.5 71.9
Factors affecting the total tax charge are:
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Profit before taxation 210.7 193.4 403.5
Corporation tax thereon at 19.0% (2017: 19.25%) 40.0 37.2 77.7
Expenses and provisions not deductible for tax
purposes - 0.5 0.9
Non-taxable income (2.7) (2.8) (5.7)
Impact of change in UK tax rate on deferred tax
balances (0.6) - 0.3
Adjustments relating to prior periods 0.4 - (0.8)
Impact of different overseas tax rates (4.1) (5.9) (5.7)
Unrecognised deferred tax 1.9 3.5 5.2
Other differences (0.1) (1.0) -
Tax charge for the period as above 34.8 31.5 71.9
9b. Deferred income tax asset
Tax
treatment Carried
of share Capital forward Other
Analysis of deferred tax asset schemes allowances losses differences Total
GBPm GBPm GBPm GBPm GBPm
Balance brought forward at 1 January 2017 5.7 (2.4) 4.9 0.2 8.4
Tax treatment of share scheme charges through income
or expense 1.5 - - - 1.5
Tax treatment of share scheme charges through reserves 1.9 - - - 1.9
Capital allowances - (1.7) - - (1.7)
Carried forward losses - - - - -
Other difference - - - (3.8) (3.8)
Balance carried forward 30 June 2017 9.1 (4.1) 4.9 (3.6) 6.3
Balance brought forward at 1 January 2017 5.7 (2.4) 4.9 0.2 8.4
Tax treatment of share scheme charges through income
or expense (2.4) - - - (2.4)
Tax treatment of share scheme charges through reserves 2.8 - - - 2.8
Capital allowances - (2.1) - - (2.1)
Carried forward losses - - (2.0) - (2.0)
Movement in fair value reserve - - - (4.1) (4.1)
Other difference - - - (0.3) (0.3)
Balance carried forward 31 December 2017 6.1 (4.5) 2.9 (4.2) 0.3
Tax treatment of share scheme charges through income
or expense 3.2 - - - 3.2
Tax treatment of share scheme charges through reserves 0.9 - - - 0.9
Capital allowances - 0.1 - - 0.1
Carried forward losses - - - - -
Other difference - - - (0.1) (0.1)
Balance carried forward 30 June 2018 10.2 (4.4) 2.9 (4.3) 4.4
The UK corporation tax rate reduced from 20% to 19% on 1 April 2017. The
average effective rate of tax for 2018 is 19.0% (2017: 19.25%). A
further reduction to the main rate of corporation tax to 17% (effective
from 1 April 2020) was enacted on 15 September 2016. This will reduce
the Group's future current tax charge accordingly. The deferred tax
asset at 30 June 2018 has been calculated based on the rate at which
each timing difference is most likely to reverse.
The deferred tax asset relating to carried forward losses of GBP2.9
million relates to losses incurred in the Group's US Price Comparison
business compare.com, and is calculated at the local US rate of tax
(21%). The recognised asset has been limited to the amount supported by
forecast cash flows over the next five
years. The forecasts and underlying assumptions have been reviewed and
approved by the Board. In addition, the forecasts have been stressed for
both revenue and profit reductions and the asset remains recoverable
under the stressed scenarios.
At 30 June 2018 the Group had unused tax losses amounting to GBP173.7
million (H1 2017: GBP152.6 million, FY 2017: GBP166.1 million), relating
to the Group's US businesses Elephant Auto and compare.com, for which no
deferred tax asset has been recognised.
10. Other assets and other liabilities
10a. Property and equipment
Furniture
Leasehold Computer Office and
improvements equipment equipment fittings Total
GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January
2017 27.6 52.1 17.0 9.4 106.1
Additions 1.0 2.0 1.5 0.2 4.7
Disposals (0.2) - - - (0.2)
Foreign
exchange
movement - (0.1) 0.1 - -
At 30 June
2017 28.4 54.0 18.6 9.6 110.6
Depreciation
At 1 January
2017 12.4 40.5 14.1 7.1 74.1
Charge for
the year 1.3 2.5 0.5 0.7 5.0
Disposals - - - - -
Foreign
exchange
movement - - 0.1 - 0.1
At 30 June
2017 13.7 43.0 14.7 7.8 79.2
Net book
amount
At 30 June
2017 14.7 11.0 3.9 1.8 31.4
Cost
At 1 January
2017 27.6 52.1 17.0 9.4 106.1
Additions 1.1 5.4 2.6 0.6 9.7
Disposals - (0.1) - (0.1) (0.2)
Foreign
exchange
movement - (0.2) 0.1 (0.1) (0.2)
At 31
December
2017 28.7 57.2 19.7 9.8 115.4
Depreciation
At 1 January
2017 12.4 40.5 14.1 7.1 74.1
Charge for
the year 2.5 5.6 1.0 1.0 10.1
Disposals - (0.1) - - (0.1)
Foreign
exchange
movement - (0.1) 0.1 - -
At 31
December
2017 14.9 45.9 15.2 8.1 84.1
Net book
amount
At 31
December
2017 13.8 11.3 4.5 1.7 31.3
Cost
At 1 January
2018 28.7 57.2 19.7 9.8 115.4
Additions 0.2 2.3 0.9 - 3.4
Disposals - (0.1) (0.1) - (0.2)
Transfers (0.5) - - - (0.5)
Foreign
exchange
movement (0.1) - (0.1) - (0.2)
At 30 June
2018 28.3 59.4 20.4 9.8 117.9
Depreciation
At 1 January
2018 14.9 45.9 15.2 8.1 84.1
Charge for
the year 1.2 3.3 1.1 0.4 6.0
Disposals - (0.1) (0.1) - (0.2)
Foreign
exchange
movement (0.1) - - - (0.1)
At 30 June
2018 16.0 49.1 16.2 8.5 89.8
Net book
amount
At 30 June
2018 12.3 10.3 4.2 1.3 28.1
10b. Intangible assets
Deferred acquisition
Goodwill costs Software Total
GBPm GBPm GBPm GBPm
Carrying amount:
At 1 January 2017 62.3 23.4 76.6 162.3
Additions - 22.4 5.0 27.4
Amortisation charge - (24.5) (7.3) (31.8)
Disposals - - - -
Foreign exchange movement - (0.2) 0.6 0.4
At 30 June 2017 62.3 21.1 74.9 158.3
At 1 January 2017 62.3 23.4 76.6 162.3
Additions - 46.0 13.0 59.0
Amortisation charge - (48.4) (13.8) (62.2)
Disposals - - - -
Foreign exchange movement - (0.4) 0.7 0.3
At 31 December 2017 62.3 20.6 76.5 159.4
Additions - 26.3 7.4 33.7
Amortisation charge - (23.3) (6.4) (29.7)
Disposals - - (1.1) (1.1)
Transfers - - 0.5 0.5
Foreign exchange movement - - - -
At 30 June 2018 62.3 23.6 76.9 162.8
Goodwill relates to the acquisition of Group subsidiary EUI Limited
(formerly Admiral Insurance Services Limited) in November 1999. It is
allocated solely to the UK Car Insurance segment. The amortisation of
this asset ceased on transition to IFRS on 1 January 2004. All annual
impairment reviews since the transition date have indicated that the
estimated recoverable value of the asset is greater than the carrying
amount and therefore no impairment losses have been recognised. Refer to
the accounting policy for goodwill in the 2017 financial statements for
further information.
10c. Insurance and other receivables
30 20
June June
2018 2017 31 December 2017
GBPm GBPm GBPm
Insurance Receivables(*1) 865.6 740.7 737.6
Trade receivables 224.1 181.8 172.9
Contract assets 22.8 19.5 20.8
Prepayments and accrued income 12.3 11.6 8.4
Total insurance and other receivables 1,124.8 953.6 939.7
[*1] Insurance receivables at 30 June 2018 include GBP50.9 million in
respect of salvage and subrogation recoveries (H1 2017: GBP43.5 million,
FY 2017: GBP42.7 million).
The Group has taken the opportunity to re-present the analysis of
insurance and other receivables in line with the adoption of IFRS 9,
resulting in the separation of contract assets from trade receivables.
10d. Loans and advances to customers
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Loans and advances to customers 219.5 11.6 67.4
Provision on loans and advances to customers (5.3) (0.2) (1.2)
Total loans and advances to customers 214.2 11.4 66.2
Loans and advances to customers relate to the Admiral Loans business.
10e. Trade and other payables
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Trade payables 34.3 24.4 39.8
Amounts owed to co-insurers 169.8 225.2 130.7
Amounts owed to reinsurers 967.5 958.6 1,026.8
Other taxation and social security liabilities 74.4 67.1 62.0
Other payables 198.6 176.6 140.9
Accruals and deferred income 219.4 184.0 241.4
Total trade and other payables 1,664.0 1,635.9 1,641.6
Of amounts owed to reinsurers, GBP873.7 million (H1 2017: GBP860.1
million, FY 2017: GBP938.4 million) is held under funds withheld
arrangements.
11. Share capital
11a. Dividends
Dividends were declared and paid as follows.
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
March 2017 (51.5 pence per share, paid June 2017) - 143.7 143.7
August 2017 (56.0 pence per share, paid October 2017) - - 156.6
March 2018 (58.0 pence per share, paid June 2018) 163.3 - -
Total dividends 163.3 143.7 300.3
The dividend declared in March 2017 represented the final dividend paid
in respect of the 2016 financial year (August 2017 - interim dividend
for 2017). The dividend declared in March 2018 was the final dividend
paid in respect of the 2017 financial year.
An interim dividend of 60.0 pence per share (GBP169 million) has been
declared in respect of the 2018 financial year.
11b. Earnings per share
30 30 31
June June December
2018 2017 2017
Profit for the period after taxation attributable
to equity shareholders (GBPm) 177.2 163.2 334.2
Weighted average number of shares - basic 287,511,161 284,587,560 285,164,396
Unadjusted earnings per share - basic 61.6p 57.3p 117.2p
Weighted average number of shares - diluted 288,172,467 285,144,904 285,751,149
Unadjusted earnings per share - diluted 61.5p 57.2p 117.0p
The difference between the basic and diluted number of shares at the end
the period (being 661,306; H1 2017: 557,344, FY 2017: 586,753) relates
to awards committed, but not yet issued under the Group's share schemes.
11c. Share capital
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Authorised:
500,000,000 ordinary shares of 0.1p 0.5 0.5 0.5
Issued, called up and fully paid:
287,214,262 ordinary shares of 0.1p - - 0.3
284,782,447 ordinary shares of 0.1p - 0.3 -
287,741,113 ordinary shares of 0.1p 0.3 - -
0.3 0.3 0.3
During the first half of 2018, 526,851 (30 June 2017: 430,177; 31
December 2017: 2,861,992) new ordinary shares of 0.1p were issued to the
trusts administering the Group's share schemes.
526,851 (30 June 2017: 430,177; 31 December 2017: 811,992) of these were
issued to the Admiral Group Share Incentive Plan Trust for the purposes
of this share scheme.
No shares (30 June 2017: nil; 31 December 2017: 2,050,000) were issued
to the Admiral Group Employee Benefit Trust for the purposes of the
Discretionary Free Share Scheme.
11d. Objectives, policies and procedures for managing capital
The Group manages its capital to ensure that all entities within the
Group are able to continue as going concerns and also to ensure that
regulated entities comfortably meet regulatory requirements. Excess
capital above these levels within subsidiaries is paid up to the Group
holding company in the form of dividends on a regular basis.
The Group's dividend policy is to pay 65% of post-tax profits as a
normal dividend and to pay a further special dividend comprising
earnings not required to be held in the Group for solvency or buffers.
Refer to the financial review for further information about the Group's
capital structure and financial
position.
11e. Related party transactions
Details relating to the remuneration and shareholdings of key management
personnel are set out in the Directors' Remuneration Report within the
Group's 2017 Annual Report. Key management personnel are able to obtain
discounted motor insurance at the same rates as all other Group staff,
typically at a reduction of 15%.
The Board considers that Executive and Non-Executive Directors of
Admiral Group plc are key management personnel. Aggregate compensation
for the Executive and Non-Executive Directors is disclosed in the
Directors' Remuneration Report in the 2017 Annual Report.
12. Reconciliations
The following tables reconcile significant KPIs and Alternative
Performance Measures included in the financial review above to items
included in the financial statements.
12a. Reconciliation of turnover to reported total premiums written
and other revenue as per the financial statements
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Gross Premiums Written after co-insurance as per note
5a of financial statements 1,085.7 928.7 1,927.7
Premiums underwritten through co-insurance arrangements 315.4 291.1 571.7
Total Premiums Written before co-insurance arrangements
per note 5a of financial statements 1,401.1 1,219.8 2,499.4
Other revenue 223.4 195.9 399.9
Interest Income- Admiral Loans 5.1 0.1 1.6
1,629.6 1,415.8 2,900.9
Other(*1) 21.9 19.4 37.5
Turnover as per note 4 of financial statements 1,651.5 1,435.2 2,938.4
Intra-group income elimination(*2) 10.5 10.5 19.8
Total turnover 1,662.0 1,445.7 2,958.2
[*1] Other reconciling items represent co-insurer and reinsurer shares
of other revenue in the Group's
Insurance businesses outside of UK Car Insurance.
[*2] Intra-group income elimination relates to price comparison income
earned in the Group from other Group companies.
12b. Reconciliation of claims incurred to reported loss ratio,
excluding releases on commuted reinsurance
UK UK UK UK Int. Int. Int.
June 2018 Motor Home Other Total Car Other Total Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net insurance claims 104.1 13.1 11.8 129.0 49.7 1.5 51.2 180.2
Deduct claims handling costs (5.8) (0.2) - (6.0) - - - (6.0)
Prior year release/strengthening -
net original share 56.5 1.2 - 57.7 6.1 - 6.1 63.8
Prior year release/strengthening - commuted share 35.2 - - 35.2 - - - 35.2
Impact of reinsurer caps - - - - 1.8 - 1.8 1.8
Impact of weather events (Home) - (3.7) - (3.7) - - - (3.7)
Attritional current period claims 190.0 10.4 11.8 212.2 57.6 1.5 59.1 271.3
Net earned premium 221.1 14.7 18.8 254.6 66.2 2.9 69.1 323.7
Loss ratio - current period attritional 85.9% 70.7% - 83.3% 87.0% - - 83.8%
Loss ratio - current period weather events - 25.3% - 1.5% - - - 1.1%
Loss ratio - prior year release/strengthening (net
original share) (25.6%) (8.4%) - (22.7%) (9.1%) - - (19.7%)
Loss ratio - reported 60.3% 87.6% - 62.1% 77.8% - - 65.2%
UK UK UK UK Int. Int. Int.
June 2017 Motor Home Other Total Car Other Total Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net insurance claims 100.9 7.7 7.9 116.5 47.2 1.2 48.4 164.9
Deduct claims handling costs (5.3) (0.1) - (5.4) - - - (5.4)
Prior year release/strengthening -
net original share 44.9 - - 44.9 5.2 - 5.2 50.1
Prior year release/strengthening - commuted share 47.4 - - 47.4 - - - 47.4
Impact of reinsurer caps - - - - (2.0) - (2.0) (2.0)
Impact of weather events (Home) - - - - - - - -
Attritional current period claims 187.9 7.6 7.9 203.4 50.4 1.2 51.6 255.0
Net earned premium 214.7 11.0 15.3 241.0 58.2 2.1 60.3 301.3
Loss ratio - current period attritional 87.5% 68.7% - 84.4% 86.6% - - 84.6%
Loss ratio - current period weather events - - - - - - - -
Loss ratio - prior year release/strengthening (net
original share) (20.9%) - - (18.6%) (9.0%) - - (16.6%)
Loss ratio - reported 66.6% 68.7% - 65.8% 77.6% - - 68.0%
UK UK UK UK Int. Int. Int.
December 2017 Motor Home Other Total Car Other Total Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net insurance claims 214.2 17.4 18.5 250.1 94.1 2.9 97.0 347.1
Deduct claims handling costs (10.7) (0.4) - (11.1) - - - (11.1)
Prior year release/strengthening -
net original share 92.1 0.5 - 92.6 9.5 - 9.5 102.1
Prior year release/strengthening - commuted share 73.8 - - 73.8 - - - 73.8
Impact of reinsurer caps - - - - (0.1) - (0.1) (0.1)
Impact of weather events (Home) - - - - - - - -
Attritional current period claims 369.4 17.5 18.5 405.4 103.5 2.9 106.4 511.8
Net earned premium 433.2 23.1 35.3 491.6 123.0 4.5 127.5 619.1
Loss ratio - current period attritional 85.3% 75.6% - 82.5% 84.2% - - 82.7%
Loss ratio - current period weather events - - - - - - - -
Loss ratio - prior year release/strengthening (net
original share) (21.2%) (2.1%) - (18.8%) (7.8%) - - (16.5%)
Loss ratio - reported 64.1% 73.5% - 63.7% 76.4% - - 66.2%
12c. Reconciliation of expenses related to insurance contracts to
reported expense ratio
UK UK UK UK Int. Int. Int.
June 2018 Motor Home Other Total Car Other Total Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net insurance
expenses 27.0 4.0 1.5 32.5 22.1 1.4 23.5 56.0
Claims handling
costs 5.8 0.2 - 6.0 - - - 6.0
Intra-group
expenses
elimination(*1) 6.9 0.4 - 7.3 3.2 - 3.2 10.5
Impact of
reinsurer caps - - - - 0.8 - 0.8 0.8
Other
adjustment(*2) - - - - - (1.4) (1.4) (1.4)
Adjusted net
insurance
expenses 39.7 4.6 1.5 45.8 26.1 - 26.1 71.9
Net earned
premium 221.1 14.7 18.8 254.6 66.2 2.9 69.1 323.7
Expense ratio -
reported 17.9% 32.1% - 18.0% 39.4% - 37.8% 22.2%
UK UK UK UK Int. Int. Int.
June 2017 Motor Home Other Total Car Other Total Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net insurance
expenses 23.8 3.6 0.6 28.0 24.2 1.0 25.2 53.2
Claims handling
costs 5.3 0.1 - 5.4 - - - 5.4
Intra-group
expenses
elimination(*1) 6.3 0.3 - 6.6 3.9 - 3.9 10.5
Impact of
reinsurer caps - - - - (1.7) - (1.7) (1.7)
Other
adjustment(*2) - - - - - (1.0) (1.0) (1.0)
Adjusted net
insurance
expenses 35.4 4.0 0.6 40.0 26.4 - 26.4 66.4
Net earned
premium 214.7 11.0 15.3 241.0 58.2 2.1 60.3 301.3
Expense ratio -
reported 16.5% 36.8% - 16.6% 45.4% - 43.8% 22.0%
UK UK UK UK Int. Int. Int.
December 2017 Motor Home Other Total Car Other Total Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net insurance
expenses 47.8 5.8 1.7 55.3 50.8 1.6 52.4 107.7
Claims handling
costs 10.7 0.4 - 11.1 - - - 11.1
Intra-group
expenses
elimination(*1) 11.8 0.7 - 12.5 7.3 - 7.3 19.8
Impact of
reinsurer caps - - - - (3.7) - (3.7) (3.7)
Other
adjustment(*2) - - - - - (1.6) (1.6) (1.6)
Adjusted net
insurance
expenses 70.3 6.9 1.7 78.9 54.4 - 54.4 133.3
Net earned
premium 433.2 23.1 35.3 491.6 123.0 4.5 127.5 619.1
Expense ratio -
reported 16.2% 30.0% 16.1% 44.2% 42.6% 21.5%
[*1] The intra-group expenses elimination amount relates to aggregator
fees charged by the Group's price
comparison entities to other Group companies.
[*2] Other adjustments relate to additional products underwritten in the
Group's International Car Insurance businesses. The contribution from
these products is reported as ancillary income and as such the amounts
are excluded for the purpose of calculation of expense ratios.
12d. Reconciliation of reported profit before tax to adjusted
profit before tax
30 30 31
June June December
2018 2017 2017
GBPm GBPm GBPm
Reported profit before tax per the condensed consolidated
income statement 210.7 193.4 403.5
Non-controlling interest share of profit before tax 1.0 1.1 1.9
Group's share of profit before tax 211.7 194.5 405.4
13. Statutory information
The financial information set out above does not constitute the
Company's statutory accounts. Statutory accounts for 2017 have been
delivered to the registrar of companies, and those for 2018 will be
delivered in due course. The auditors have reported on those accounts;
their reports were (i) unqualified, (ii) did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a statement
under section 498 (2) or
(3) of the Companies Act 2006.
Glossary
Alternative Performance Measures
Throughout this report, the Group uses a number of Alternative
Performance Measures (APMs); measures that are not required or commonly
reported under International Financial Reporting Standards, the
Generally Accepted Accounting Principles (GAAP) under which the Group
prepares its financial statements.
These APMs are used by the Group, alongside GAAP measures, for both
internal performance analysis and to help shareholders and other users
of the Group's financial statements to better understand the Group's
performance in the period in comparison to previous periods and the
Group's competitors.
The table below defines and explains the primary APMs used in this
report. Financial APMs are usually derived from financial statement
items and are calculated using consistent accounting policies to those
applied in the financial statements, unless otherwise stated. Non
financial KPIs incorporate information that cannot be derived from the
financial statements but provide further insight into the performance
and financial position of the Group.
APMs may not necessarily be defined in a consistent manner to similar
APMs used by the Group's
competitors. They should be considered as a supplement rather than a
substitute for GAAP measures.
Turnover Turnover is defined as total premiums written (as
below) and other revenue. It is reconciled to financial
statement line items in note 12a to the financial
statements.
This measure has been presented by the Group in every
financial report since it became a listed Group in
2004. It reflects the total value of the revenue generated
by the Group and analysis of this measure over time
provides a clear indication of the growth in this
revenue.
The measure was developed as a result of the Group's
business model. The core UK Car Insurance business
has historically shared a significant proportion of
the risks with Munich Re, a third party insurance
Group, through a co-insurance arrangement, with the
arrangement subsequently being replicated in some
of
the Group's International Insurance operations. Premiums
and claims accruing to the external co-insurer are
not reflected in the Group's income statement and
therefore presentation of this metric enables users
of the financial reports to see the scale of the Group's
insurance operations in a way not possible from taking
the income statement in isolation.
Total premiums Total premiums written are the premiums written within
written the Group, including co- insurance. It is reconciled
to financial statement line items in note 12a to the
financial statements.
This measure has been presented by the Group in every
financial report since it became a listed Group in
2004. It reflects the total premiums written by the
Group's insurance intermediaries and analysis of this
measure over time provides a clear indication of the
growth in premiums, irrespective of how co-insurance
agreements have changed over time.
The reasons for presenting this measure are consistent
with that for the Turnover APM noted above.
Group's share of profit Group's share of profit before tax represents profit
before tax before tax, excluding the impact of non-controlling
interests. It is reconciled to statutory profit before
tax in note 12d to the financial statements.
This measure is useful in presenting the limit of
the Group's exposure to the expenditure incurred in
starting up new businesses and demonstrates the 'test-
and-learn' strategy employed by the Group to expansion
into new territories.
Underwriting result (profit For each insurance business an underwriting result
or loss) is presented showing the segment result prior to the
inclusion of profit commission, other income contribution
and instalment income. It demonstrates the insurance
result, i.e. premium revenue and investment income
less claims incurred and insurance
expenses.
Loss ratio Reported loss ratios are expressed as a percentage
of claims incurred divided by net earned premiums.
There are a number of instances within the Annual
Report where adjustments are made to this calculation
in order to more clearly present the underlying performance
of the Group and operating segments within the Group.
The calculations of these are presented within note
12b to the accounts and explanation is as follows.
UK reported car insurance loss ratio: Within the UK
Insurance segment we separately present motor ratios,
i.e. excluding the underwriting of other products
that supplement the car insurance policy. The motor
ratio is adjusted to i) exclude the impact of reserve
releases on commuted reinsurance contracts and ii)
exclude claims handling costs that are reported within
claims costs in the income statement.
International Insurance loss ratio: As for the UK
motor loss ratio, the International Insurance loss
ratios presented exclude the underwriting of other
products that supplement the car insurance policy.
The motor ratio is adjusted to exclude the claims
element of the impact of reinsurer caps as inclusion
of the impact of the capping of reinsurer claims costs
would distort the underlying performance of the business.
Group loss ratios: Group loss ratios are reported
on a consistent basis as the UK and international
ratios noted above. Adjustments are made to i) exclude
the impact of reserve releases on commuted reinsurance
contracts, ii) exclude claims handling costs that
are reported within claims costs in the income statement
and
iii) exclude the claims element of the impact of international
reinsurer caps.
Expense ratio Reported expense ratios are expressed as a percentage
of net operating expenses divided by net earned premiums.
There are a number of instances within the Annual
Report where adjustments are made to this calculation
in order to more clearly present the underlying performance
of the Group and operating segments within the Group.
The calculations of these are presented within note
12c to the accounts and explanation is as follows.
UK reported car expense ratio: Within the UK Insurance
segment we separately present motor ratios, i.e. excluding
the underwriting of other products that supplement
the car insurance policy. The motor ratio is adjusted
to i) include claims handling costs that are reported
within claims costs in the income statement and ii)
include intra-group aggregator fees charged by the
UK price comparison business to the UK Insurance business.
International Insurance expense ratio: As for the
UK car loss ratio, the International Insurance expense
ratios presented exclude the underwriting of other
products that supplement the car insurance policy.
The car ratio is adjusted to i) exclude the expense
element of the impact of reinsurer caps as inclusion
of the impact of the capping of reinsurer expenses
would distort the underlying performance of the business
and ii) include intra-group aggregator fees charged
by the overseas price comparison businesses to the
international insurance businesses.
Group expense ratios: Group expense ratios are reported
on a consistent basis as the UK and international
ratios noted above. Adjustments are made to i) include
claims handling costs that are reported within claims
costs in the income statement, ii) include intra-group
aggregator fees charged by the Group's price
comparison businesses to the Group's insurance businesses
and iii) exclude the
expense element of the impact of international reinsurer
caps.
Combined ratio Reported combined ratios are the sum of the loss and expense
ratios as defined above. Explanation of these figures is noted
above and reconciliation of the calculations are provided in
notes 12b and 12c.
Return on equity Return on equity is calculated as profit after tax
for the period attributable to equity holders of the
Group divided by the average total equity attributable
to equity holders of the Group in the year. This average
is determined by dividing the opening and closing
positions for the year by two.
The relevant figures for this calculation can be found
within the consolidated statement of changes in equity.
Group customers Group customer numbers are the total number of car,
household, van and travel policyholders within the
Group, combined with active loans customers.
This measure has been presented by the Group in every
Annual Report since it became a listed Group in 2004.
It reflects the size of the Group's customer base
and analysis of this measure over time provides a
clear indication of the growth. It is also a useful
indicator of the growing significance to the Group
of the
different lines of business and geographic regions.
Effective tax rate Effective tax rate is defined as the approximate tax
rate derived from dividing the Group's profit before
tax by the tax charge going through the income statement.
It is a measure historically presented by the Group
and enables users to see how the tax cost incurred
by the Group compares over time and to current
corporation tax rates.
Additional Terminology
There are many other terms used in this report that are specific to the
Group or the markets in which it operates. These are defined as follows:
Accident year The year in which an accident occurs, also referred
to as the earned basis.
Actuarial best The probability-weighted average of all future claims
estimate and cost scenarios calculated using historical data,
actuarial methods and judgement.
ASHE 'Annual Survey of Hours and Earnings' - a statistical
index that is typically used for calculating inflation
of annual payment amounts under Periodic Payment Order
(PPO) claims settlements.
Claims A monetary amount set aside for the future payment
reserves of incurred claims that have not yet been settled,
thus representing a balance sheet liability.
Co-insurance An arrangement in which two or more insurance companies
agree to underwrite insurance business on a specified
portfolio in specified proportions. Each co- insurer
is directly liable to the policyholder for their proportional
share.
Commutation An agreement between a ceding insurer and the reinsurer
that provides for the valuation, payment, and complete
discharge of all obligations between the parties under
a particular reinsurance contract.
Insurance The tendency for the insurance market to swing between
market cycle highs and lows of profitability over time, with the
potential to influence premium rates (also known as
the "underwriting cycle").
Net claims The cost of claims incurred in the period, less any
claims costs recovered under reinsurance contracts.
It includes both claims payments and movements in
claims reserves.
Net insurance Also referred to as net earned premium. The element
premium of premium, less reinsurance premium, earned in the
revenue period.
Ogden discount The discount rate used in calculation of personal
rate injury claims settlements. The rate is set by the
Lord Chancellor, the most recent rate of minus 0.75%
being announced on 27 February 2017.
Periodic A compensation award as part of a claims settlement
Payment Order that involves making a series of annual payments to
(PPO) a claimant over their remaining life to cover the
costs of the care they will require.
Premium A series of payments are made by the policyholder,
typically monthly or annually, for part of or all
of the duration of the contract. Written premium refers
to the total amount the policyholder has contracted
for, whereas earned premium
refers to the recognition of this premium over the
life of the contract.
Profit A clause found in some reinsurance and coinsurance
commission agreements that provides
for profit sharing.
Reinsurance Contractual arrangements whereby the Group transfers
part or all of the insurance risk accepted to another
insurer. This can be on a quota share basis (a percentage
share of premiums, claims and expenses) or an excess
of loss basis (full reinsurance for claims over an
agreed value).
Ultimate loss A projected ratio for a particular accident year or
ratio underwriting year, often used in the calculation of
underwriting profit and profit commission.
Underwriting The year in which the latest policy term was incepted.
year
Underwriting Also referred to as the written basis. Claims incurred
year basis are allocated to the calendar year in which the policy
was underwritten. Underwriting year basis results
are calculated on the whole account (including co-insurance
and reinsurance shares) and include all premiums,
claims, expenses incurred and other revenue (for example
instalment income and commission income relating to
the sale of products that are ancillary to the main
insurance policy) relating to policies incepting in
the relevant underwriting year.
Written/Earned A policy can be written in one calendar year but earned
basis over a subsequent calendar year.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has
been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU;
-- the interim management report includes a fair
review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the
financial position or performance of the entity during that period; and
any changes in the related party transactions described in the last
annual report that could do so.
By order of the Board,
Geraint Jones
Chief Financial Officer
14 August 2018
INDEPENDENT REVIEW REPORT TO ADMIRAL GROUP PLC
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 30 June 2018 which comprises the condensed consolidated
income statement, the condensed consolidated statement of comprehensive
income, the condensed consolidated statement of financial position, the
condensed consolidated cash flow statement, the condensed consolidated
statement of changes in equity and related notes 1 to 13. We have read
the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Financial Reporting Council. Our
work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report
and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company,
for our review work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the half-yearly financial report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
The annual financial statements of the group are prepared in accordance
with IFRSs as adopted by the European Union. As disclosed in note 1, the
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" as adopted by the
European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued
by the Financial Reporting Council for use in the United Kingdom. A
review of interim financial information consists of making inquiries,
primarily of persons responsible for financial and accounting matters,
and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2018 is
not prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
14 August 2018
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Admiral Group PLC via Globenewswire
http://www.admiralgroup.co.uk
(END) Dow Jones Newswires
August 15, 2018 02:00 ET (06:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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