Admiral Group plc results for the six months ended 30 June 2019

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Around 10,000 staff receive free shares worth up to £1,800 under the employee share scheme based on the interim 2019 results.

If it’s a can’t-put-down, read-in-one-go page-turner that you’re after, then I’m afraid our half-year results don’t fit the bill. Frankly, they are a bit dull. Turnover up mid-single digits, profit up low-single digits. Hardly “hold the front page”.

However, for dedicated aficionados who look behind the headlines, there’s some reward for reading on. Profit growth, even if modest, is more exciting considering the £33 million Ogden headwind. Low growth in UK Motor policy count reflects a consciously reduced competitiveness, as we price rationally in the face of any rising claims costs across the market as a whole.

And potentially lost amidst the worthy tome that is the UK, there’s the racier continental novella that is the European insurance business which has delivered another profitable half year whilst adding a record 209,000 customers over the last year (and 125,000 over the last six months alone).

Plus, there’s a chapter devoted to Admiral’s emerging Loans business – not the fully finished article, but an encouraging debut from a young talent.

The Board has declared an interim dividend of 63.0 pence, representing a normal dividend of 41.8 pence per share and a special dividend of 21.2 pence per share. The dividend will be paid on 4 October 2019. The ex-dividend date is 5 September 2019 and the record date is 6  September 2019.

Analysts and investors will be able to access the Admiral Group management presentation which commences at 9.00 BST on Wednesday 14 August 2019 by registering at the following link . A copy of the presentation slides will be available at

Key highlights for the Group results in H1 2019 include:

Earnings per share is 2% higher than in H1 2018 at 63.0 pence (H1 2018: 61.6 pence), broadly consistent with the growth in pre-tax profit. The adverse Ogden impact reduced earnings per share by 10.0 pence.

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 63.0 pence per share (approximately £180 million), split as follows:

The total 2019 interim dividend is 5% ahead of the 2018 interim dividend (60.0 pence per share), with a pay-out ratio of 100% of Earnings per share.  The 100% payout is higher than usual and is a result of the Group’s strong capital position at 30 June 2019.  The payment date is 4 October 2019, ex-dividend date 5 September 2019 and record date 6 September 2019.

The Group maintained a strong solvency ratio at 190% (post-dividend), which has reduced from 194% at 31 December 2018. Both Own Funds and the SCR increased in the period, with the SCR increase reflecting the one-off change in treatment resulting from the implementation of IFRS 16, the new leases accounting standard, and an increase in the capital requirement for the Loans business.  

Highlights for the UK insurance business for H1 2019 include:

UK Motor profit was broadly flat for the first six months of 2019 at £251.7 million (H1 2018: £249.5 million). Whilst the reported combined ratio rose to 86.5% (H1 2018: 78.2%), this was offset by a higher level of claims reserve releases from commuted reinsurance and profit commission. Net other revenue was also broadly consistent with the prior period, though includes a number of offsetting movements.

Highlights for the period were as follows:

There is some evidence that Motor market rates have increased modestly in the latter part of H1 2019, with pressure from claims inflation likely being a driver. Over the last 12 months, Admiral has increased its rates ahead of the market, prioritising margin over growth. Turnover increased marginally to £1.26 billion (H1 2018: £1.25 billion) whilst net revenue rose 2% to £436.1 million (H1 2018: £425.9 million). The number of vehicles insured increased by 2% to 4.33 million (30 June 2018: 4.26 million).

Notable claims trends for the market in the first half of 2019 include slightly higher overall frequency, a flattening out in injury claims frequency and continuing elevated levels of damage claims costs primarily as a result of advances in technology.  Admiral experienced similar overall claims inflation to the market. Large bodily injury claims experience (in terms of frequency and total cost) for Admiral was more favourable in H1 2019 than in 2018.

The Group continues to reserve conservatively, setting claims reserves in the financial statements significantly 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 accident years and this led to another significant release of reserves in the financial statements in the period (£50.0 million on Admiral’s original net share net of the adverse impact of Ogden, H1 2018: £56.5 million). The margin held in reserves remains prudent and at a consistent level to 31 December 2018.

Following the recent announcement by the UK Government, the Ogden discount rate which is used in setting personal injury compensation, was changed to minus 0.25% from the existing minus 0.75% rate that had been in place since February 2017. The change came into effect on 5 August 2019 and the minus 0.25% rate is likely to remain in place for the next five years.

The minus 0.25% rate is 25 basis points lower than the assumed rate of 0% that was used in setting best estimate claims reserves at 31 December 2018.

The total impact of the new Ogden rate on profit is expected to be approximately £50-60 million. The current period impact on profit is £33.3 million and is shown through higher claims incurred and lower profit commission. The remaining amount is expected to flow through in future periods through recognition of unearned premium and lower profit commission.

Admiral makes significant use of proportional risk sharing agreements, where insurers outside the Group underwrite a majority of the risk generated, either through co-insurance or quota share reinsurance contracts. The Group’s net retained share of that business is 22%. These arrangements include profit commission terms which allow Admiral to retain a significant portion of the profit generated. The proportional co- and reinsurance arrangements in place for the motor business are the same as those reported in the 2018 Annual Report and will continue into 2020. Admiral tends to commute its UK Car Insurance quota share reinsurance contracts for an underwriting year 24 months from inception, assuming there is sufficient confidence in the profitability of the business covered by the reinsurance contract.

As at 30 June 2019, all UK car quota share reinsurance contracts for underwriting years up to and including 2016 have been commuted, along with the majority of contracts for the 2017 underwriting year, 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. The majority of the contracts relating to the 2017 underwriting year were commuted in H1 2019.

In H1 2019 profit commission of £35.0 million was recognised, increased from £30.8 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 2019 is £87.8 million compared to £66.0 million in H1 2018, an increase of 33%. This increase is due to positive development on prior underwriting years and a reduced loss on commutation.

Note 5 to the financial statements analyses profit commission income and reserve releases by underwriting year.

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:

           Overall contribution (Other Revenue net of costs plus instalment income) decreased marginally to£117.7 million (H1 2018: £119.8 million). Whilst there were a number of smaller offsetting changes within the total, the main reason for the slight decrease is reduced optional ancillary contribution, partly reflecting more transactions completing digitally and changes to the customer journey. This was offset slightly by increased instalment income primarily arising from growth in the underlying vehicle book.

Other revenue was equivalent to £66 per vehicle (gross of costs; H1 2018: £67) and Net Other revenue (after deducting costs) per vehicle was £56 (H1 2018: £57).

Admiral’s Household business continued to grow strongly, increasing the number of homes insured by 18% to 920,900 (30 June 2018: 778,100), with a similar increase in turnover to £80.0 million (H1 2018: £68.3 million). New business market volumes continued to increase with more customers shopping around and switching insurer, particularly through the growing comparison channel. Admiral saw an increasing share of new business volumes through comparison as well as direct and via cross sell to existing Admiral customers with the Group’s MultiCover product offering.

The first half of 2019 experienced better weather than the previous period, resulting in a profit of £4.2 million (H1 2018: £1.9 million loss). Claims inflation continues albeit with milder weather and subsidence at more normal levels compared to the same period in 2018.

This resulted in a better reported loss ratio of 66.8% (H1 2018: 87.6%) which was also positively impacted by favourable emerging experience on the 2018 accident year. Admiral’s expense ratio also continued to improve (30.1%, down from 32.1%) and similar to the motor business, significantly outperforms the market expense ratio of around 45%.

Admiral’s international insurance businesses continued to grow strongly, with customer numbers 21% higher than a year earlier. Turnover grew by 23% to £319.5 million (H1 2018: £260.1 million).

The combined ratio, net of other revenue improved to 103.3% (H1 2018: 105.8%). Higher net insurance premium revenue together with continued improvement in the European operations’ prior year claims costs was offset by higher current year claims costs in Elephant. H1 2018 also benefitted from a favourable impact of reinsurer caps.  This resulted in a higher loss of £2.7 million for the first six months of 2019 (H1 2018: loss of £0.6 million).

The expense ratio improved to 38.4% (H1 2018: 39.4%) as all businesses grew and continued to pursue operational efficiencies.

The European insurance operations in Spain, Italy and France insured 1.13m vehicles at 30 June 2019 – 23% higher than a year earlier (30 June 2018: 0.92m). Turnover was up 23% at £196.8 million (H1 2018: £159.7 million). The consolidated result of the businesses was a profit of £3.5 million (H1 2018: profit of £2.5 million) driven by continued profitability in Italy. The combined ratio net of other revenue (excluding the impact of reinsurer caps) improved materially to 93% from 99% due to the improved claims experience and expense ratio.

Admiral Seguros (Spain) focused on sustainable growth and increased retention in a competitive market during the first six months of 2019, together with improvements in the customer journey and digital capabilities. The business grew by 18% to 274,600 customers over the past year (30 June 2018: 233,300).

The Group's largest international operation, ConTe in Italy, increased vehicles insured by 22% to 656,000 (30 June 2018: 539,600). The company also invested in media spend with the launch of a new TV advertising campaign which has contributed to brand awareness and subsequent growth.

L'olivier - assurance auto (France) continued to pursue growth and exceeded the 200,000 vehicle mark, growing by 34% to 203,800 at 30 June 2019. L’olivier also focused on brand development and improving customer experience through digital improvements during the period. The company also launched a niche household insurance brand, Homebrella, starting with modest volume in line with the Admiral test and learn approach.

In the US, Admiral underwrites motor insurance in six states (Virginia, Maryland, Illinois, Texas, Indiana and Tennessee) through its Elephant Auto business, which increased vehicles insured by 11% to 221,900 at 30 June 2019. Turnover was up 22% to £122.7 million (H1 2018: £100.4 million). Elephant had a higher loss of £6.2 million (from £3.1 million in H1 2018) due to deterioration in loss ratio in H1 as a result of higher claims inflation. Elephant has increased rates materially in response.

Elephant continues to focus on cost control and improving customer service through the digital channel, which has contributed to continued improvement in the expense ratio. Overall, the combined ratio net of other revenue increased slightly to 116% (115% in H1 2018).

Whilst the UK comparison market remained competitive in the first half of 2019, performed very strongly, with turnover increasing by 14% to £54.2 million (H1 2018: £47.7 million) as a result of growth in market share in both motor and household insurance. continued to improve the customer and product proposition, and also saw increases in brand awareness and media effectiveness. Profit increased to £8.7 million (H1 2018: £5.8 million). The business also continued to invest in technology to support current projects and future growth opportunities.

Admiral operates several comparison businesses outside the UK including Rastreator (Spain), LeLynx (France), and (US). In addition, the 2019 comparison result includes Preminen, the Group’s newest comparison operation, which was previously included in business development costs in ‘Other Group items’. The Group owns 75% of Rastreator, with the remaining 25% owned by Mapfre. The Group owns 59.25% of, with the remaining 40.75% owned by minority interests.  The Group owns 50% of Preminen, with the other 50% owned by Mapfre.

Admiral announced in April 2019 the proposed acquisition of Acierto, a digital insurance broker in Spain, by Rastreator in partnership with Oakley Capital. The joint venture is still subject to approval by the EU antitrust authorities, and hence the acquisition and subsequent accounting for the joint operation will be completed after approval.

Combined revenue for the European operations in the first half of 2019 increased by 9% to £25.0 million (H1 2018: £23.0 million). The Group’s share of the combined result for Rastreator and LeLynx was a profit of £2.1 million (H1 2018: £0.9 million). The result shows an improvement in both businesses whilst they continued to invest in a more diversified product range in the context of a competitive market environment.

During the first half of 2019 in the US, Admiral’s share of’s loss reduced to £2.8 million before tax (H1 2018: £3.2 million), partly as a result of Admiral’s reduced shareholding (from 71% to 59.25%) with the total result being broadly flat. continued to experience challenging market conditions and the business subsequently downsized to a smaller team and more agile approach to adapt to these market conditions.

A non-cash impairment charge of £25.7 million was recognised in the first half of 2019 by the parent company in respect of its investment in This followed the regular review of the carrying values of subsidiary companies and a review of the long-term strategy of, and reflects an impairment to the current net asset value of the business to reflect the considerable uncertainty over the timing and level of future profitability of the business. The impairment charge is recognised in the income statement of the parent company and has no impact on the Group’s consolidated profit for the period or the Group’s current regulatory capital position.

Preminen continues to explore the potential of comparison in new markets overseas, in partnership with Mapfre. Current operations include in Mexico, in Turkey, and in India.

The combined result for International Comparison was therefore a loss of £1.3 million (H1 2018: loss £2.3 million) – driven by an improvement in the performance of the European comparison businesses.

Share scheme charges relate to the Group’s two employee share schemes (refer to note 9 in the financial statements). The increase in the charge is driven by an improvement in the vesting assumptions for variable awards in general due to strong financial performance and shareholder return, and a higher share price period on period. 

Other interest and investment income in H1 2017 included a £5.4 million realised gain from the sale of investments held by the Group which was not repeated in H1 2018 or H1 2019. The increase in income in H1 2019 compared to H1 2018 relates to a lower level of unrealised losses on forward contracts in H1 2019.

Business development costs include costs associated with potential new ventures. The costs associated with Preminen have been included within the Comparison segment above for the first time in 2019, explaining the decrease in business development costs in the period.

Other central costs consist of Group-related expenses, and include the cost of a number of significant Group projects, such as the development of the internal model, the Brexit restructure and IFRS17. The increase in the period is due to a higher adverse impact of foreign exchange movements.

Finance charges of £5.5 million (H1 2018: £5.6 million) primarily relate to interest on the £200 million subordinated notes issued in July 2014 (refer to note 7 to the financial statements).

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, with loan balances increasing to £421 million in the first half of 2019 (H1 2018: £214m, H2 2018: £300 million). The Group continues to expect the business to make 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 continues to be encouraged by the performance of the business and the credit quality of the loans portfolio.

Admiral Loans is currently funded through a combination of internal funding and further external funding. The external portion funds approximately 60% of the current loans balance through the securitisation of certain loans via transfer to a special purpose entity (“SPE”) which remains under the control of the Group. The securitisation and subsequent issue of notes does not result in a significant transfer of risk from the Group.

Admiral’s capital-efficient and profitable model led to a return on equity of 47% (H1 2018: 54%) with the reduction in the ratio due to the impact of the Ogden change.  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 2020. The Group’s net retained share of that business is 22%. Munich Re will underwrite 40% of the business (through co-insurance and reinsurance arrangements) until at least the end of 2020.

Similar long-term arrangements are in place in the Group’s International Insurance operations and UK Household and Van 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 continues to develop its partial internal model to form the basis of calculation of its capital requirement in the future, although does not expect to submit the application during 2019 and possibly not in 2020. In the interim period before submission, the Group will continue to use the current standard formula plus capital add-on basis to calculate its regulatory capital requirement.

The estimated (and unaudited) Solvency II position for the Group at the date of this report was as follows:

The Group maintained a strong solvency ratio at 190% (post-dividend), which has reduced from 194% at 2018 year end (H1 2018: 196%). Whilst the surplus over the regulatory capital requirement has increased since 31 December 2018, increases in both Own Funds and SCR of a similar order result in a modest reduction in solvency ratio. The increase in Own Funds is the result of the strong generation of economic profit, in particular due to favourable movements of ultimate outcomes on prior underwriting years. The SCR increase is primarily due to the implementation of the new leasing standard, IFRS 16 as well as an increase in the capital requirement for the loans business.

The Group’s capital includes £200 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.

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.

Total investment return in the first half of 2019 was £18.3 million (H1 2018: £17.2 million), which includes unrealised losses of £4.9 million (H1 2018: £1.4 million). The underlying rate of return, excluding unrealised losses, on the Group’s cash and investments was 1.4% (H1 2018: 1.3%). Some rebalancing has taken place across some items to maximise portfolio outcomes in line with the investment strategy.

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.

The tax charge reported on a statutory basis is £37.0 million (H1 2018: £34.8 million), which equates to 16.9% (H1 2018: 16.5%) of profit before tax.

Admiral adopted a prudent approach to Brexit and has set up new entities in Europe under which the European operations have traded since 1 January 2019. All of the Group’s European insurance business is now underwritten by a regulated entity in Spain, Admiral Europe Compania Seguros (AECS). The Group’s European comparison businesses Rasterator and LeLynx have successfully been merged into comparison companies established in Spain (Comparaseguros Corredia de Seguros) and France (LeLynx SAS) respectively.

Brexit continues to bring risks, particularly the possibility of a ‘no deal’ Brexit, to the Group including:

At present, the Group does not foresee a material adverse impact on day-to-day operations (including customers or staff). The Group recognises the potential economic disruption that may arise from a ‘no deal’ Brexit. Whilst the Group is comfortable that it is able to manage potential outcomes following the review of the stress testing noted above, it recognises the uncertainties that exist in relation to Brexit and the potential for adverse impacts to the Group’s capital position and future dividend payments. Sensitivities to the Group’s regulatory solvency ratio are presented earlier in this report, including a number of specific market risk sensitivities. The cost of the restructuring activity has not been material to the Group.

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 2018 Annual Report and Accounts, pages 52-57.

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.


Admiral Group plc (the “Company”) is a company incorporated in the United Kingdom and registered and domiciled in England and Wales. Its registered office is at Tŷ 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 2019 and the comparative periods for the six-months ended 30 June 2018 and the year ended 31 December 2018. This condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the EU, and should be read in conjunction with the Group’s last annual consolidated financial statements as at and for the year ended 31 December 2018 (“last annual financial statements”).  They do not include all of the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements.

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 2018, 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 2018 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:

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.

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 2018, other than for the adoption of IFRS 16 as outlined below.

A number of other IFRS and interpretations have been endorsed by the EU in the period to 30 June 2019 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 withthat reported on page 129 of the Group’s 2018 Annual Report.

The accounts have been prepared on a going concern basis. In considering this requirement, the Directors have taken into account the following:

regulatory capital surpluses and levels and sources of liquidity;

performance, levels of liquidity and solvency over the next 12 months; 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 2018 Annual Report. An update tothe Group’s principal risks and uncertainties since the 2018 year end is included in the review preceding these financial statements. In addition, the Governance Report in the 2018 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 £0.1 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.

During the year the Group has adopted IFRS 16 with a date of initial application of 1 January 2019.

IFRS 16 introduced a single, on-balance sheet accounting model for lessees.  As a result, the Group, as a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligations to make lease payments.  

As permitted by the transitional provisions of IFRS 16 the Group has elected to use the modified retrospective approach, and as such has not restated prior year comparatives (which are presented, as previously reported, under IAS 17 and related interpretations). 

The adjustments arising from transition are recognised in the opening balance sheet on 1 January 2019, and are set out below along with details of the changes in accounting policies relating to IFRS 16 as applied in the period.

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4   The Group now assesses whether a contract is or contains a lease based on the new definition of a lease, which under IFRS 16 is where a contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

The Group has also used the following practical expedients permitted by the standard:


On adoption of IFRS 16, the Group recognised additional right-of-use assets, and additional lease liabilities in relation to leases which were previously classified as ‘operating leases’ under IAS 17 The liabilities were measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate as of 1 January 2019. The weighted average incremental borrowing rate (discount rate) applied is 2.4%.

A reconciliation of the Group’s lease liabilities to the operating lease commitment at 31 December 2018 as disclosed in the Group’s consolidated financial statements is shown below.

*Following a review of lease extension options and variable lease payments during the IFRS 16 transition process, the operating lease commitments disclosed as at 31 December 2018 have been amended to reflect the impact of a different treatment of inflation and VAT within lease agreements, and lease extensions that had occurred before the transition date but were not previously disclosed.

The associated right-of-use assets have been measured retrospectively, at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued payments relating to that lease recognised in the statement of financial position as at 31 December 2018. There were no onerous lease contracts that would have required an adjustment to the right-of-use asset at the date of initial application.

All right-of-use assets relate to property leases held by the Group.

The following adjustment was recognised on the date of initial application:

The Group leases various properties, with rental contracts typically for fixed periods of 5 to 25 years although these may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. 

Under IAS 17, all Group leases were classified as operating leases. Operating lease payments, including the effects of any lease incentives, were recognised in the income statement on a straight-line basis over the lease term.

From 1 January 2019, for each lease a right-of-use asset and corresponding lease liability are recognised at the date at which the leased asset becomes available for use by the Group.

The lease liability is initially measured at the present value of remaining lease payments, which include the following:

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of a similar value in a similar economic environment, with similar terms and conditions.  Generally, the Group uses its incremental borrowing rate as the discount rate.

Subsequently, lease payments are allocated to the lease liability, split between repayments of principle and interest. A finance cost is charged to the profit and loss so as to produce a constant period rate of interest on the remaining balance of the lease liability.

The right-of-use asset is measured at cost, which comprises the following:

The right-of-use asset is subsequently depreciated over the shorter of the lease term and the asset’s useful life on a straight-line basis.

The Group does not have any significant leases which qualify for the short term leases or leases of low-value assets exemptions.

The Group’s 2018 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.

The Group has four reportable segments; UK Insurance, International Car Insurance, Comparison and Other, as set out on page 132 of the Group’s 2018 Annual Report.

An analysis of the Group’s revenue and results for the period ended 30 June 2019, by reportable segment, is shown below. The accounting policies of the reportable segments are consistent with those presented in the notes to the 2018 Group financial statements.

Revenue and results for the corresponding reportable segments for the period ended 30 June 2018 are shown below.

Revenue and results for the corresponding reportable segments for the year ended 31 December 2018 are shown below.

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 Comparison revenues from transactions with other reportable segments is £9.7 million (H1 2018: £10.5 million, FY 2018: £19.3 million) which has been eliminated on consolidation, along with £1.2 million of intra-group interest charges (H1 2018: £0.3 million, FY 2018: £0.7 million).  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.

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 four International Comparison businesses; Rastreator, LeLynx, and Preminen are not yet material enough to be presented as a separate segment.

The Group’s share of its insurance business was underwritten by Admiral Insurance (Gibraltar) Limited, Admiral Insurance Company Limited, Admiral Europe Compania Seguros, and Elephant Insurance Company. All contracts are short-term in duration, lasting for 12 months or less.

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.

Releases on the share of reserves originally reinsured but since commuted are analysed by underwriting year as follows:

The table below shows the development of UK Car Insurance loss ratios for the past five financial periods, presented on an underwriting year basis.


Finance costs include interest payable on the £200 million (30 June 2018: £200 million, 31 December 2018: £200 million) subordinated notes and other financial liabilities.

Interest payable on lease liabilities represents the unwinding of the discount on lease liabilities under IFRS 16, and does not result in a cash payment. Further detail on the transition to IFRS 16 is included in note 2.

Interest expense represents the interest payable on funding for the Admiral loans business, in the form of a credit facility of £200 million, of which £25.0 million (H1 2018: £200 million; FY 2018: £71.5 million) was drawn down at 30 June 2019 and loan backed securities issued by an SPE with funding up to £400 million, of which £253.4 million (H1 2018: £nil; FY 2018: £168.3 million) was drawn down at 30 June 2019.

The Group’s financial instruments can be analysed as follows:

All investments held at fair value at the end of the period are invested in AAA-rated or 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 2019.

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 £83.0 million (H1 2018: £130.0 million; FY 2018: £100.0 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 2019 is £219.8 million (H1 2018:£219.3 million, FY 2018: £211.3 million).

Loans and advances relate to the Admiral Loans business.  The table below shows the gross carrying value of loans in stages 1 – 3 and the corresponding credit loss allowance.  There have been no significant changes to the expected credit loss methodology since the 2018 Annual Report.

In the following tables, other revenue is disaggregated by major products/service lines and timing of revenue recognition. The total revenue disclosed in the table of £269.2 million (HY 2018: £253.0 million, FY 2018: £542.4 million) represents total other revenue and profit commission and is disaggregated into the segments included in note 4.

Instalment income and profit commission from reinsurers is not within the scope of IFRS 15 due to the nature of the income.

The £44.3 million (H1 2018: £43.2 million, FY 2018: £93.7 million) administration and marketing costs allocated to insurance contracts is principally made up of salary costs.

Analysis of other administration and other marketing costs:

Refer to note 13 for a reconciliation between insurance contract expenses and the reported expense ratio.

Analysis of share scheme costs (per income statement):

The total share scheme charges of £40.5 million (H1 2018: £33.8 million; FY 2018: £76.9 million) can be analysed between share scheme charges calculated in line with IFRS 2 of £28.7 million (H1 2018: 25.1 million; FY 2018 £57.3 million) and other share scheme related costs of £11.8 million (H1 2018: £8.7 million; FY 2018 £19.6 million).  Net share scheme charges are presented after allocations to co-insurers and reinsurers in line with contractual arrangements.

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.

Factors affecting the total tax charge are:

The outstanding corporation tax payable as at 30 June 2019 was £43.0 million (HY 2018: £38.4 million; FY 2018: £49.3 million).

The deferred tax asset at 30 June 2019 has been calculated based on the rate at which each timing difference is most likely to reverse.

At 30 June 2019 the Group had unused tax losses amounting to £229.0 million (H1 2018: £173.7 million, FY 2018: £217.5 million), relating to the Group’s US businesses Elephant Auto and, for which no deferred tax asset has been recognized.

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 2018 financial statements for further information.

Of amounts owed to reinsurers, £963.7 million (H1 2018: £873.7 million, FY 2018: £1,022.7 million) is held under funds withheld arrangements.

Rastreator Comparador Correduria Seguros (“Rastreator Comparador”), the Group’s Spanish  Comparison business, has recently undergone a tax audit in respect of the 2013 and 2014 financial years.  As a result of the audit, the Spanish Tax Authority has denied the VAT exemption relating to insurance intermediary services which Rastreator Comparador has applied.  Rastreator Comparador will appeal this decision via the Spanish Courts and is confident in defending its position which is, in its view, in line with the EU Directive and is also consistent with the way similar supplies are treated throughout Europe. 

The potential liability for the financial years currently subject to audit is approximately €5m, and, as identified in note 7, a bank guarantee has been provided to the Spanish Tax Authority for this amount.  If the exemption is also disallowed in respect of later years, the liability could increase to €19m.  No provision has been made in these financial statements in relation to this matter.

Dividends were declared and paid as follows.

The dividend declared in March 2018 represented the final dividend paid in respect of the 2017 financial year (August 2018 - interim dividend for 2018). The dividend proposed in March 2019 was the final dividend paid in respect of the 2018 financial year.

An interim dividend of 63.0 pence per share (£179.5 million) has been declared in respect of the 2019 financial year.

The difference between the basic and diluted number of shares at the end the period (being 666,932; H1 2018: 621,306, FY 2018: 648,598) relates to awards committed, but not yet issued under the Group’s share schemes.

447,143 (30 June 2018: 526,851; 31 December 2018: 988,475) of these were issued to the Admiral Group Share Incentive Plan Trust for the purposes of this share scheme.

No shares (30 June 2018: nil; 31 December 2018: 2,300,000) were issued to the Admiral Group Employee Benefit Trust for the purposes of the Discretionary Free Share Scheme.

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 financialposition.

Details relating to the remuneration and shareholdings of key management personnel are set out in the Directors’ Remuneration Report within the Group’s 2018 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 2018 Annual Report.

The following tables reconcile significant KPIs and Alternative Performance Measures included in the financial review above to items included in the financial statements.


The financial information set out above does not constitute the company's statutory accounts. Statutory accounts for 2018 have been delivered to the registrar of companies, and those for 2019 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.

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’scompetitors. They should be considered as a supplement rather than a substitute for GAAP measures.

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:

We confirm that to the best of our knowledge:

By order of the Board,

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 2019 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 14. 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.

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.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. 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 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.

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.

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 2019 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.


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