Admiral Group plc Results for the Six Months En...
25 August 2010
Admiral announces another record half-year profit and continued strong growth.
Profit before tax at £126.9 million was 21% ahead of H1 2009, whilst turnover
rose 33% to £720.5 million. The Board is declaring a record interim dividend
payment of 32.6p per share.
H1 2010 Highlights
* Group profit before tax up 21% at £126.9 million (H1 2009: £105.3 million)
* Â Interim dividend up 18% at 32.6p per share (2009 interim: 27.7p)
* Group turnover* up 33% at £720.5 million (H1 2009: £540.1 million)
* Group net revenue up 22% at £296.4 million (H1 2009: £243.1 million)
* Group customers up 23% to 2.37 million from 1.92 million at 30 June 2009
* UK ancillary income per vehicle increased 5% to £74.50 (H1 2009: £70.80)
* Non-UK car insurance turnover up 51% to £37.1 million and customers up 53%
to 154,100
* Balumba, the Spanish car insurance operation, made a profit for the first
time (of €25,000)
* LeLynx.fr and Chiarezza.it, the French and Italian price comparison sites
launched in early 2010
* Employee Share Scheme - over £6 million of shares will be distributed to
over 4,000 staff based on the H1 2010 result
* Turnover is defined as total premiums written (including co-insurers' share)
and other revenue
Comment from Henry Engelhardt, Group Chief Executive
"2010 is shaping up to be a year of great opportunity and I'm extremely proud of
how everyone at Admiral has stepped up to the challenge. Their hard work has
resulted in a decent set of numbers: turnover was up by a third, profits have
grown by over 20% and we will soon be paying a record dividend.
"The UK car insurance business continues to be the driving force behind our
success and in the first half of 2010 we shifted up yet another gear. We
increased premium rates by around 14% in the first half and increased customer
numbers by 23% year-on-year. The combined effect was an increase in total
premiums written of 37%. These results demonstrate the strength of our UK model,
which combines competitive prices with great service.
"Of course there are challenges; our operations outside the UK and the Confused
price comparison business are not as strong. Yes, Balumba, our insurance
operation in Spain, made its first half-yearly profit (€25,000), but it still
has work to do as an underwriter to build a sustainable, profitable, growing
business. In sum we now insure more than 150,000 vehicles outside the UK
covering four countries. In the first part of next year we plan to launch an
insurance operation in France as the final part of our five-year strategic plan.
We also have three fledgling price comparison businesses outside the UK, two of
which launched this year.
"All in all we're pleased with the numbers for the first half of 2010. As a
result, every member of staff will receive £1,500 of free shares in the Group,
worth over £6 million in total."
Comment from Alastair Lyons, Group Chairman
"With a further advance in first half profits we are delighted once again to be
able to declare an increase in our interim dividend, up 18% to 32.6 pence per
ordinary share. This represents 97% of after-tax earnings for the first six
months of 2010, testament to the strength of Admiral's business model of strong
growth, profitability and a high return on capital."
Interim dividend
The interim dividend of 32.6p per share will be paid on 20 October 2010. The
ex-dividend date is 6 October 2010, the record date 8 October 2010.
Management presentation
Analysts and investors will be able to access the Admiral Group management
presentation which commences at 9.00am on Wednesday 25 August 2010 by dialling
+44 (0)20 3059 5754 and using participant password "Admiral". A copy of the
presentation slides will be available at www.admiralgroup.co.uk.
A pdf version of this interim results announcement is also available at
www.admiralgroup.co.uk.
Business Review
Group financial highlights and key performance indicators
+---------+
 H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Turnover £463.4m £540.1m | £720.5m |  £1,077.4m
| |
Net revenue £204.0m £243.1m | £296.4m |  £507.5m
| |
Number of customers 1.63m 1.92m | 2.37m | Â 2.08m
| |
Loss ratio 65.0% 67.0% | 67.8% | Â 69.0%
| |
Expense ratio 20.8% 22.0% | 21.5% | Â 23.1%
| |
Combined ratio 85.8% 89.0% | 89.3% | Â 92.1%
| |
Profit before tax £100.3m £105.3m | £126.9m |  £215.8m
| |
Earnings per share 27.3p 28.5p | 33.7p | Â 59.0p
+---------+
Turnover comprises total premiums written and other revenue
Driven predominantly by the UK Car Insurance business, the Group has seen
significant growth in the first half of 2010. Turnover grew by over 33% to £721
million, whilst the number of customers served across the Group increased by
23% to nearly 2.4 million.
Profit also grew strongly, rising at the pre-tax level by 21% to £126.9
million. Earnings per share rose 18% to 33.7p.
Total premiums written outside the UK rose to £34 million (50% higher than H1
'09) and the number of customers grew at a similar rate (to 154,100). Balumba,
the Group's Spanish car insurer made its first half-yearly profit, and whilst
the result was less than £0.1 million, this is an encouraging step.
Two new price comparison businesses were launched in the first half of the
year:Â Based in Paris, LeLynx.fr began trading in January and Chiarezza.it
launched the following month in Milan.
The main highlights of the first half of the year however were in the UK Car
Insurance business. These (set out in more detail below) included: a 23%
increase in vehicles insured, a 37% rise in total premiums written, material
increases in premium rates and increasing ancillary profit (both in total and
per vehicle).
The proposed dividend for the first half of the year of 32.6p represents 97% of
post-tax profits and is 18% higher than the interim 2009 dividend.
UK Car Insurance - Financial Performance
Non-GAAP(*1) format income statement
+---------+
£m H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Turnover(*2) 407.2 470.1 | 639.4 | Â 939.1
--------------------+---------+ ----------
Total premiums written(*3) 350.1 404.6 | 555.8 | Â 804.7
--------------------+---------+ ----------
   |  |
| |
Net insurance premium revenue   |  |
73.5 94.6 | 117.2 | 199.1
| |
Investment income 8.9 5.7 | 3.2 | Â 7.5
| |
Net insurance claims (48.0) (63.6) | (81.0) | Â (138.7)
| |
Net insurance expenses (10.9) (14.2) | (16.1) | Â (30.3)
--------------------+---------+ ----------
   |  |
| |
Underwriting profit 23.5 22.5 | 23.3 | Â 37.6
| |
Profit commission 14.3 22.7 | 36.9 | Â 54.2
| |
Net ancillary income 44.1 51.5 | 65.5 | Â 106.3
| |
Other revenues 4.1 4.5 | 5.8 | Â 8.8
--------------------+---------+ ----------
   |  |
| |
UK Car Insurance profit 86.0 101.2 | 131.5 | Â 206.9
| |
   |  |
+---------+
*1 GAAP = Generally Accepted Accounting Practice
*2 Turnover (a non-GAAP measure) comprises total premiums written and other
revenue
*3 Total premiums written (non-GAAP) includes premium underwritten by
co-insurers
Key performance indicators
+---------+
 H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Reported loss ratio 62.0% 64.2% | 65.9% | Â 66.9%
| |
Reported expense ratio 18.1% 17.9% | 17.0% | Â 18.0%
| |
Reported combined ratio 80.1% 82.1% | 82.9% | Â 84.9%
| |
   |  |
| |
Written basis expense ratio 17.2% 16.7% | 14.6% | Â 16.9%
| |
   |  |
| |
Claims reserve releases £18.4m £18.4m | £17.3m |  £31.3m
| |
Releases as % of premium 25.0% 19.4% | 14.8% | Â 15.7%
| |
Profit commission as % of premium   |  |
19.4% 24.0% | 31.5% | 27.2%
| |
Vehicles insured at year-end 1.48m 1.73m | 2.12m | Â 1.86m
| |
Ancillary income per vehicle £71.1 £70.8 | £74.5 |  £72.0
+---------+
UK Car Insurance - Co-insurance and Reinsurance
Admiral retains a net 27.5% of UK premiums in 2010 (in line with 2009). 45% of
total UK premium is underwritten by the Munich Re Group (specifically Great
Lakes Reinsurance (UK) Plc) under a long-term co-insurance agreement (running
until at least the end of 2016), whilst 27.5% is proportionally reinsured to
Hannover Re (10.0%) New Re (10.0%) and Swiss Re (7.5%).
The nature of the co-insurance is such that 45% of all motor premium and claims
for the current year accrues directly to Great Lakes and does not appear in the
Group's income statement. Similarly, Great Lakes reimburses the Group for its
proportional share of expenses incurred in acquiring and administering the motor
business.
The profit commission terms in all the agreements allow Admiral to participate
to a large extent in the profitability of the total underwriting, and the most
recent reinsurance contracts allow for a significant proportion of the profit to
be remitted back to Admiral.
UK Car Insurance Financial Performance
The core UK business grew significantly in the first half of the year, ending
with 2.12 million vehicles insured - 23% higher than a year earlier and 14% up
on the end of December 2009. As a result of rising rates, total premiums
written increased by the faster rate of 37% to £556 million.
Although estimations of the extent vary, it seems clear that market prices are
increasing as car insurers react to very poor results and reported increases in
losses arising from bodily injury claims. Admiral's rates in the first half of
the year increased by around 14%, making rates around 22% higher than a year
earlier. The continued development in price comparison as a distribution
channel (we estimate around 17% year-on-year growth) accounts for the majority
of the growth in the first half of the year.
The market combined ratio for 2009 was the worst result (122%) since the late
1990's. Based on external actuarial projections, Admiral's combined ratio for
the 2009 accident year is estimated at 91% - over 30 points better than the
market, with the outperformance split evenly between the loss and expense ratio
components.
A number of insurers have reported an unexpected surge in bodily injury claims
costs as a key reason for the worsening results. Admiral's claims experience
over the past 18 months has not included any unusual trends in bodily injury or
damage claims. Claims frequency overall has continued a long-term downward
trend, though bodily injury frequency being relatively flat has led to these
claims constituting a larger proportion of the total than historically.
Admiral's reported loss ratio for the first half of 2010 is 65.9% (H1 '09:
64.2%), improved by positive prior year development of around 14.8% or £17.3
million (H1 '09: 19.4%, £18.4 million). The loss ratio with the effect of prior
year movements excluded, improved to 80.6% in H1 2010 compared to 83.6% in H1
2009.
Admiral's policy is initially to reserve conservatively, above independent
actuarial projections of the ultimate outcomes. This results in a significant
margin being held in reserves to allow for unforeseen adverse development in
open claims and creates a position whereby Admiral makes above industry average
reserve releases.
In determining the quantum of releases from prior years, we seek to maintain a
consistent level of prudence in reserves, taken together with 'reserves' of
profit commission based on actuarial projections of ultimate loss ratios that
are yet to be recognised at the balance sheet date.
The expense ratio (on both a reported and written basis) improved in the first
half of 2010. This was partly a benefit of increasing average premiums, but
also due to continued focus on cost control through the business. For
reference, Admiral's written basis expense ratio for the current period was
around 15%, compared to 29% for the market in 2009.
Admiral's UK underwriting result was broadly flat at around £23 million in H1
'10 compared to H1 '09, reflecting a slightly higher reported combined ratio and
lower investment income offset by a significant (24%) increase in net earned
premium.
Profit commission income from co-insurance and reinsurance partners continues to
develop as a significant contributor to profit. In H1 '10 profit commission
(all of which was earned on premium earned in prior years) amounted to £36.9
million, or 31.5% of earned premium. This compares favourably to £22.7 million
in H1 '09 (24.0% of premium). The increasing contribution is due to the
materially more favourable commission terms on more recent underwriting years.
Ancillary profit also grew in the first half of the year - both in total (to
£65.5 million, up 27%) and per vehicle (to £74.5 from £72.0 in 2009 as a
whole). There were no notable changes in the component parts, and the
improvement was largely due to increased margins on certain products.
The strong performance across the core business led to a significant 30%
increase in pre-tax profit to £131.5 million (£101.2 million in H1 '09).
Price Comparison - Financial Performance
Non-GAAP format income statement
+---------+
£m H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Revenue: Â Â | Â |
| |
Motor 29.8 31.3 | 29.9 | Â 62.2
| |
Other 6.8 8.9 | 8.1 | Â 18.3
--------------------+---------+ ----------
Total 36.6 40.2 | 38.0 | Â 80.5
| |
   |  |
| |
Operating expenses (21.0) (29.2) | (30.9) | Â (55.6)
--------------------+---------+ ----------
   |  |
| |
Operating profit 15.6 11.0 | 7.1 | Â 24.9
| |
   |  |
| |
Confused.com (UK) 15.6 11.0 | 8.8 | Â 25.7
| |
Non-UK Price Comparison - - | (1.7) | Â (0.8)
+---------+
UK Price Comparison - Confused.com
As the results suggest, Confused endured a tough start to 2010, with falls in
revenue, profit and margin.
The key factor behind the disappointing results was an unsuccessful TV
advertising campaign which ran during the first half of the year. Success in
price comparison depends heavily on marketing (predominantly TV), with consumers
responding to the best campaign. Confused moved from being the leading price
comparison site for car insurance (by market share) in 2009 to being second in
H1 '10.
Revenue at Confused in H1 '10 reduced by around 10% to £36.6 million (from £40.2
million in the first half of 2009), whilst pre-tax profit fell by around 20% to
£8.8 million. The operating margin also fell to around 25%. Non-car insurance
revenue was stable in H1 '10 compared to H1 '09 as a proportion of total
revenue.
Confused has responded quickly, pulling back on TV spend in the middle of 2010
in advance of rolling out a new campaign in the second half of the year. There
is also increased focus on cost control in the business.
Non-UK Price Comparison - Rastreator.com, LeLynx.fr and Chiarezza.it
Total revenue from price comparison operations outside the UK continues to grow,
albeit as would be expected on a modest scale in the Group context. H1 '10
revenue reached around £1.4 million compared to practically nothing in the first
half of 2009, whilst operating losses from the three combined businesses
totalled £1.7 million in the first half of the year.
Rastreator.com had a positive start to 2010, and continues to grow the number of
visitors to the site, quotes generated and revenue earned. Rastreator also
added home insurance to its offering late in the period, and now offers car,
motorcycle and household comparison services.
Two highlights of the first half of 2010 were the successful, on-time and
under-budget launches of two new European price comparison businesses:
LeLynx.fr, our French aggregator is based in Paris and began trading in January,
advertising on TV for the first time in June. The following month,
Chiarezza.it, our Italian price comparison site launched in Milan.
As should be expected, the results for these two brand new businesses are not
yet significant.
Non-UK Car Insurance - Financial Performance
Non-GAAP format income statement
+---------+
£m H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Turnover 14.7 24.5 | 37.1 | Â 47.2
--------------------+---------+ ----------
Total premiums written 13.0 22.6 | 34.0 | Â 43.0
--------------------+---------+ ----------
   |  |
| |
Net insurance premium revenue   |  |
3.5 5.9 | 8.1 | 12.8
| |
Investment income 0.2 0.1 | 0.1 | Â 0.2
| |
Net insurance claims (4.5) (6.5) | (7.8) | Â (13.0)
| |
Net insurance expenses (2.7) (5.2) | (7.1) | Â (13.0)
--------------------+---------+ ----------
   |  |
| |
Underwriting result (3.5) (5.7) | (6.7) | Â (13.0)
| |
Net ancillary income 1.3 1.4 | 2.4 | Â 3.3
| |
Other revenues 0.1 0.2 | 0.2 | Â 0.2
--------------------+---------+ ----------
   |  |
| |
Non-UK Car Insurance result (2.1) (4.1) | (4.1) | Â (9.5)
| |
   |  |
+---------+
Note - Pre-launch costs excluded
Key Performance Indicators
+----------------------------------------------------------------------+
|H1 2010 Balumba AdmiralDirekt ConTe Elephant Auto Total|
| |
|Â Â Â Â Â Â |
| |
|Total premiums (£m) 10.6 8.6 12.6 2.2 34.0|
| |
|Vehicles insured 61,400 31,300 57,900 3,500 154,100|
| |
|Result (£m) - (1.6) (1.7) (0.8) (4.1)|
+----------------------------------------------------------------------+
H1 2009
Total premiums (£m) 8.1 11.4 3.1 - 22.6
Vehicles insured 48,100 37,500 14,900 - 100,500
Result (£m) (1.0) (2.2) (0.9) - (4.1)
FY 2009
Total premiums (£m) 17.8 14.0 11.1 0.1 43.0
Vehicles insured 50,300 35,000 35,500 200 121,000
Result (£m) (1.3) (5.2) (2.4) (0.6) (9.5)
Note - Pre-launch costs excluded
Non-UK Co-insurance and Reinsurance
The risk sharing model that has been a feature of the UK business since 2000 is
also used in Europe and the USA. As well as providing the capital for the
majority of the underwriting, in return for a share of future profits, our
co-insurance and reinsurance partners bear their proportional share of the
post-launch expenses as well as the underwriting in all non-UK operations.
The arrangements in each market in Europe are similar and involve Admiral
retaining 35% of the risks, the majority share of 65% being underwritten by
Munich Re.
In the USA, Admiral's US insurer retains one third of the risks generated from
January 2010, with the remaining two thirds split equally between Hannover Re
and Munich Re. Both reinsurers bear their proportional share of expenses and
underwriting, subject to certain caps on the reinsurers' total exposures.
All contracts have profit commission terms that allow Admiral to receive a
proportion of the profit earned on the underwriting once the business reaches
cumulative profitability.
The contracts in place for Germany, Italy and the USA include proportional
sharing of ancillary profits.
Non-UK Car Insurance Financial Performance
The Group now has four operational car insurance businesses trading outside the
UK - three in mainland Europe and one in Virginia in the US. Balumba (Spain),
the oldest, having launched in October 2006, achieved its first half-yearly
profit in H1 '10, and although the result was less than £0.1 million, this is a
significant and encouraging milestone in our international plans.
Total premium written outside the UK rose by 50% to £34.0 million from £22.6
million in H1 '09. The number of vehicles insured rose at a similar rate, to
over 154,000 from 100,500 a year earlier (and grew 27% compared to 31 December
2009).
In total, the four businesses made a loss of £4.1 million, which is in line with
the first half of 2009. To put this result into context, it equates to only 3%
of the profits in our UK car insurance business and demonstrates our cautious
approach to expansion.
Balumba (Spain)
Balumba continued to grow its customer base in the first half of the year and
ended with 61,400 vehicles insured - 28% more than a year earlier, and 22% above
31 December 2009. Excluding currency effects, total premiums written grew by
around one third to £10.6 million.
As noted, Balumba made a small profit in the first half of the year, with a net
underwriting loss of £2.1 million being slightly more than offset by ancillary
profits. Ancillary profit remains strong, with over €80 per vehicle being
earned over the period (up over 10% on H1 '09).
There continues to be significant focus on the loss ratio, and whilst bad
weather has contributed to the 2010 year loss ratio being higher than 2009 at
the same (very early) point in time, management are satisfied with developments
in this area, hence the decision to continue to grow the business.
Balumba - loss ratio development triangle
 Underwriting year
 2007 2008 2009 2010
After 6 months 149% 108% 79% 95%
After 18 months 136% 108% 91% -
After 30 months 134% 110% - -
After 42 months 133% - - -
The focus in Spain remains on continuing to grow the portfolio at an acceptable
acquisition cost, whilst remaining focussed on achieving an acceptable loss
ratio.
AdmiralDirekt (Germany)
Having experienced a very tough year in 2009, management pulled back on new
business acquisition in Germany by raising rates substantially before the busy
season in Q4 2009. This has led to a 25% fall in premiums written, to £8.6
million, from £11.4 million. The number of cars insured has also fallen, by
17% to 31,300.
One effect of this has been to significantly rebalance the portfolio in favour
of renewal business, which tends to bring a notably better loss ratio. This is
seen in the loss ratio development below.
AdmiralDirekt - loss ratio development triangle
 Underwriting year
 2008 2009 2010
After 6 months 118% 124% 85%
After 18 months 134% 104% -
After 30 months 124% - -
The lower customer count and associated net premium revenue, combined with a
significantly better combined ratio (largely loss ratio driven) have meant
AdmiralDirekt made a smaller loss of £1.6 million in H1 '10, compared to £2.2
million in the first half of 2009.
Management's current focus is to continue developing a low cost operation,
whilst striving to further improve the loss ratio.
ConTe (Italy)
ConTe has grown significantly over the period, reaching almost 58,000 vehicles
insured at the end of June 2010 - 63% more than at the 2009 year-end and making
the business nearly four times bigger than at the end of June 2009. At the same
time ConTe has (in line with the Italian market) increased its premium rates
significantly (around 22% in cumulative terms over the past two years), which
should further benefit the loss ratio.
ConTe's loss ratio development below shows that for the 2008 and 2009 years,
initial reserving did not fully reflect the outcomes, with notable late claims
reporting an important factor. Management have made significant changes to
estimating techniques for claims incurred but not reported (IBNR), and the loss
ratio recorded for 2010 below includes a significantly greater allowance for
this element.
ConTe - loss ratio development triangle
 Underwriting year
 2008 2009 2010
After 6 months - 59% 83%
After 18 months 98% 103% -
After 30 months 121% - -
The substantial increase in the size of the business, combined with a focus on
cost control have contributed to a positive expense ratio for the period -
around 50% on a written basis (the best of all the non-UK operations).
ConTe made a loss of £1.7 million in the period.
Elephant Auto (USA)
Having only started advertising at the start of 2010, Elephant's results are not
yet significant, with only 3,500 cars insured at the end of June, and just over
£2 million in written premiums. The loss ratio for the 2010 year at the end of
June appeared to be developing satisfactorily (at 70%), albeit on very small
earned premium.
Elephant currently underwrites in Virginia only, though is actively researching
expansion into another state.
France
The Group plans to launch a French car insurer in early 2011. Further
information on this launch will be provided in the 2010 Annual Report.
Other Group Items
+---------+
£m H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Gladiator operating profit 1.5 1.4 | 1.5 | Â 2.4
| |
Group net interest income 3.5 1.1 | 0.3 | Â 1.1
| |
Share scheme charges (3.0) (3.4) | (7.5) | Â (9.2)
| |
Expansion costs (0.4) (1.0) | (0.9) | Â (2.0)
| |
Other central overhead (0.8) (0.8) | (1.0) | Â (1.7)
+---------+
Gladiator
Gladiator is the Group's commercial vehicle insurance broker offering van
insurance and associated products.
Non GAAP income statement and key performance indicators
+---------+
£m H1 2008 H1 2009 | H1 2010 |  FY 2009
| |
   |  |
| |
Revenue 4.9 5.3 | 6.0 | Â 10.6
| |
Expenses (3.4) (3.9) | (4.5) | Â (8.2)
--------------------+---------+ ----------
   |  |
| |
Operating profit 1.5 1.4 | 1.5 | Â 2.4
| |
   |  |
| |
Operating margin 31% 26% | 25% | Â 23%
| |
Customer numbers 75,800 89,400 | 95,500 | Â 93,400
+---------+
The business has delivered stable profits over the past few periods, achieving a
result of £1.5 million in H1 '10 on modestly higher revenue and customer
numbers. The operating margin was also in line with H1 '09.
Other income statement items
Other notable items in the income statement are:
* Significantly increased share scheme charges (£7.5 million in H1 '10 v £3.4
million in H1 '09) - reflects a number of factors including: increased staff
numbers, a higher share price driving higher accounting charges on recent
schemes and higher vesting assumptions
* Net interest income - continued substantial fall in interest income,
reflecting significantly lower cash returns available
Investments and Cash
Investment strategy
There has been no notable change in the Group's investment strategy, though
there has been a continued move into fixed-term cash deposits and away from
money market funds in order to generate some additional return without
materially altering risk. A large proportion of our funds continue to be highly
liquid.
The key element of Group-wide investment strategy is capital preservation, with
additional priorities focussing on low volatility in returns and high levels of
liquidity.
Cash and investments analysis
  30 June 2010
---------------------------------------------------------------
 Non-UK Car
UK Car Insurance Price Comparison Insurance Other Total
 £m £m £m £m £m
Liquidity money  233.5 -  27.6 - 261.1
market funds
Long-term cash  249.0 -  3.9  39.0 291.9
deposits
Cash  102.5  7.3  23.0  32.6 165.4
---------------------------------------------------------------
Total  585.0  7.3  54.5  71.6 718.4
 30 June 2009
---------------------------------------------------------------
 Non-UK Car
UK Car Insurance Price Comparison Insurance Other Total
 £m £m £m £m £m
Liquidity money 324.3 - 25.0 41.0 390.3
market funds
Long-term cash 100.0 - - - 100.0
deposits
Cash 52.6 15.0 17.6 11.0 96.2
---------------------------------------------------------------
Total 476.9 15.0 42.6 52.0 586.5
 31 December 2009
---------------------------------------------------------------
 Non-UK Car
UK Car Insurance Price Comparison Insurance Other Total
 £m £m £m £m £m
Liquidity money 208.5 - 29.2 - 237.7
market funds
Long-term cash 178.5 - 5.0 - 183.5
deposits
Short-term cash - - - 20.0 20.0
deposits
Cash 112.9 9.0 21.3 48.6 191.8
---------------------------------------------------------------
Total 499.9 9.0 55.5 68.6 633.0
As experienced in 2009, the Group's investment strategy will inevitably generate
very low investment returns when benchmark interest rates are also very low.
Across the Group in H1 '10, total investment and interest income amounted to
£3.6 million, compared to £6.9 million in the first half of last year. The
annualised rate of return on sterling funds was around 1%.
Cash inflow continues to be strong, and the Group continues to be able to
distribute the vast majority of post-tax profits as dividends. There is no
debt.
Other financial items
Taxation
The taxation charge reported in the income statement is £36.9 million (H1 '09:
£29.9 million), which equates to 29.1% (H1 '09: 28.4%) of profit before tax.
Earnings per share
Basic earnings per share increased by 18% to 33.7p from 28.5p. This rate of
growth is below the rate of growth in pre-tax profit (21%) in part due to
increased issued share capital and part to the higher effective tax rate noted
above.
Dividends
The Directors have declared an interim dividend of 32.6p. This comprises a
15.1p normal element (based on 45% of post-tax profit for the period) plus a
17.5p special distribution, and represents an increase of 18% on the interim
dividend paid in respect of 2009. The Group's approach to dividends is to
distribute available surplus funds, after taking account of required solvency,
provision for expansion plans and a margin for contingencies.
The payment date is 20 October 2010, ex-dividend date 6 October and record date
8 October.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group's operations remain
consistent with those disclosed in the 2009 Annual Report.
Condensed consolidated income statement
  6 months ended Year ended
  30 June 30 June 31 December 2009
 2010  2009
 Note £m £m £m
Insurance premium revenue 3 244.1 178.9 386.4
Insurance premium ceded to reinsurers 3 (118.8) (78.4) (174.5)
----------------------------------
Net insurance premium revenue  125.3 100.5 211.9
Other revenue 4 130.6 113.0 232.6
Profit commission 5 36.9 22.7 54.2
Investment and interest income 6 3.6 6.9 8.8
----------------------------------
Net revenue  296.4 243.1 507.5
Insurance claims and claims handling
 expenses (174.1) (129.4) (283.1)
Insurance claims and claims handling
 expenses recovered from reinsurers 85.2 59.2 131.4
----------------------------------
Net insurance claims  (88.9) (70.2) (151.7)
Expenses 7 (73.1) (64.2) (130.8)
Share scheme charges 20 (7.5) (3.4) (9.2)
----------------------------------
Total expenses  (169.5) (137.8) (291.7)
Profit before tax  126.9 105.3 215.8
Taxation expense 8 (36.9) (29.9) (58.9)
----------------------------------
Profit after tax  90.0 75.4 156.9
Profit after tax attributable to:
Equity holders of the parent  90.3 75.4 156.9
Non-controlling interests  (0.3) - -
----------------------------------
  90.0 75.4 156.9
Earnings per share:
Basic 9 33.7p 28.5p 59.0p
Diluted 9 33.7p 28.4p 59.0p
+---------------------------------------------------------------------------+
|Dividends paid (total) 10 78.3 69.6 142.4|
| |
|Dividends paid (per share) 10 29.8p 26.5p 54.2p|
+---------------------------------------------------------------------------+
Condensed consolidated statement of comprehensive income
  6 months ended Year ended
  30 June 30 June 31 December 2009
 2010  2009
  £m £m £m
Profit for the period  90.0 75.4 156.9
Other comprehensive income
Exchange differences on translation
 of foreign operations  (2.6) (6.5) (5.3)
---------------------------------
Other comprehensive income for the
 period, net of income tax  (2.6) (6.5) (5.3)
---------------------------------
Total comprehensive income for the 87.4 68.9 151.6
period
Condensed consolidated statement of financial position
  As at:
  30 June 30 June 31 December 2009
 2010  2009
 Note £m £m £m
ASSETS
Property, plant and equipment 11 11.7 11.5 12.1
Intangible assets 12 79.1 78.2 77.0
Reinsurance assets 14 283.0 195.7 212.9
Financial assets 13 827.7 688.2 630.9
Deferred tax 17 1.2 - -
Trade and other receivables 15 45.9 36.2 32.7
Cash and cash equivalents 16 165.4 96.2 211.8
---------------------------------
Total assets  1,414.0 1,106.0 1,177.4
EQUITY
Share capital 20 0.3 0.3 0.3
Share premium account  13.1 13.1 13.1
Other reserves  2.4 3.8 5.0
Retained earnings  306.3 264.4 281.8
---------------------------------
 Total equity attributable to equity
holders of the parent 322.1 281.6 300.2
Non-controlling interests  0.3 - 0.6
Total equity  322.4 281.6 300.8
LIABILITIES
Insurance contracts 14 643.8 491.2 532.9
Deferred tax 17 - 12.2 5.7
Trade and other payables 18 407.8 293.1 306.8
Current tax liabilities  40.0 27.9 31.2
---------------------------------
Total liabilities  1,091.6 824.4 876.6
Total equity and total liabilities  1,414.0 1,106.0 1,177.4
 Condensed consolidated statement of cash flows
  6 months ended Year ended
  30 June 2010 30 June 2009 31 December 2009
  £m £m £m
Profit after tax  90.0 75.4 156.9
Adjustments for non-cash items:
- Depreciation  2.5 2.4 5.1
- Amortisation of software  1.0 0.8 2.2
- Change in unrealised gains on 0.2
investments (1.7) (1.0)
 -Other gains and losses  0.3 - 2.9
- Share scheme charge  9.9 6.4 13.7
Change in gross insurance contract 110.9 51.6 93.4
liabilities
Change in reinsurance assets  (70.2) (25.1) (42.3)
 Change in trade and other
receivables, including from (80.5) (33.3) (41.1)
policyholders
 Change in trade and other
payables, including tax and social 101.1 22.6 36.5
security
Taxation expense  36.9 29.9 58.9
-------------------------------------------
 Cash flows from operating
activities, before movements in 200.2 129.7 286.4
investments
Net cash flow into investments held (130.5) (78.5) (10.5)
at fair value
-------------------------------------------
 Cash flows from operating
activities, net of movements in 69.7 51.2 275.9
investments
Taxation payments  (32.2) (18.1) (49.1)
-------------------------------------------
Net cash flow from operating  37.5 33.1 226.8
activities
Cash flows from investing
activities:
 Purchases of property, plant and
equipment  and software (2.9) (5.7) (11.8)
 Proceeds from the disposals of
property, plant, equipment and
software - 0.2 -
-------------------------------------------
Net cash used in investing  (2.9) (5.5) (11.8)
activities
Cash flows from financing
activities:
Capital element of new finance  (0.1) 0.7 1.4
leases
Repayment of finance lease  - (0.3) (1.2)
liabilities
Equity dividends paid  (78.3) (69.6) (142.4)
-------------------------------------------
Net cash used in financing  (78.4) (69.2) (142.2)
activities
 Net decrease in cash and cash
equivalents (43.8) (41.6) 72.8
Cash and cash equivalents at 1 Â 211.8 144.3 144.3
January
Effects of changes in foreign  (2.6) (6.5) (5.3)
exchange rates
-------------------------------------------
 Cash and cash equivalents at end
of period 16 165.4 96.2 211.8
Condensed consolidated statement of changes in equity
 Share Foreign Retained
Share premium exchange profit and Minority Total
capital account reserve loss interest equity
 £m £m £m £m £m £m
At 1 January 2009 0.3 13.1 10.3 251.8 - 275.5
Profit for the - - - 75.4 - 75.4
period
Other
comprehensive
income
Currency - - (6.5) - - (6.5)
translation
differences
---------------------------------------------------------------
 Total
comprehensive
income for the
period - - (6.5) 75.4 - 68.9
---------------------------------------------------------------
Transactions with
equity-holders
Dividends - - - (69.6) - (69.6)
Share scheme - - - 6.4 - 6.4
credit
 Deferred tax
credit on share - - - 0.4
scheme charge - 0.4
---------------------------------------------------------------
 Total
transactions with
equity-holders - - - (62.8) - (62.8)
---------------------------------------------------------------
As at 30 June 0.3 13.1 3.8 264.4 - 281.6
2009
At 1 January 2009 0.3 13.1 10.3 251.8 - 275.5
Profit for the - - - 156.9 - 156.9
period
Other
comprehensive
income
Currency - - (5.3) - - (5.3)
translation
differences
---------------------------------------------------------------
 Total
comprehensive
income for   the
period - - (5.3) 156.9 - 151.6
---------------------------------------------------------------
Transactions with
equity-holders
Dividends - - - (142.4) - (142.4)
Share scheme - - - 13.7 - 13.7
credit
 Deferred tax -
credit on share
scheme charge - - - 1.8 1.8
 Sale of non 0.6
controlling
interest - - - - 0.6
---------------------------------------------------------------
 Total
transactions with
equity-holders - - - (126.9) 0.6 (126.3)
---------------------------------------------------------------
As at 31 December 0.3 13.1 5.0 281.8 0.6 300.8
2009
Condensed consolidated statement of changes in equity (continued)
 Share Foreign Retained
Share premium exchange profit and Minority Total
capital account reserve loss interest equity
 £m £m £m £m £m £m
At 1 January 2010 0.3 13.1 5.0 281.8 0.6 300.8
Profit for the - - - 90.3 (0.3) 90.0
period
Other
comprehensive
income
Currency - - (2.6) - - (2.6)
translation
differences
---------------------------------------------------------------
 Total
comprehensive
income for the
period - - (2.6) 90.3 (0.3) 87.4
---------------------------------------------------------------
Transactions with
equity-holders
Dividends - - - (78.3) - (78.3)
Share scheme - - - 9.9 - 9.9
credit
 Deferred tax
credit on share - - -
scheme charge 2.6 - 2.6
---------------------------------------------------------------
 Total
transactions with
equity-holders - - - (65.8) - (65.8)
---------------------------------------------------------------
As at 30 June 0.3 13.1 2.4 306.3 0.3 322.4
2010
Notes to the condensed interim financial statements
1. General information and basis of preparation
Admiral Group plc is a Company incorporated in England and Wales. Its
registered office is at Capital Tower, Greyfriars Road, Cardiff CF10 3AZ 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 2010 and the comparative periods for the 6-month period ended 30 June 2009
and the year ended 31 December 2009. This condensed set of financial statements
has been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU. As required by the Disclosure and Transparency Rules of the
Financial Services Authority, 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 2009.
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 2009 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 (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.
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, including cash flow forecasts
and regulatory capital surpluses. The Group has no debt.
Accounting policies
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 2009. A number of other IFRS and interpretations have been endorsed by
the EU in the period to 1 June 2010 and although they have been adopted by the
Group, none of them has had a material impact on the Group's financial
statements.
Critical accounting judgements and estimates
The Group's 2009 annual report provides full details of significant judgements
and estimates used in the application of the Group's accounting policies. There
have been no significant changes to these judgements and estimates during the
period.
Estimation techniques used in calculation of claims provisions
Estimation techniques are used in the calculation of the provisions for claims
outstanding, which represents a projection of the ultimate cost of settling
claims that have occurred prior to the balance sheet date and remain unsettled
at the balance sheet date.
The key area where these techniques are used relates to the ultimate cost of
reported claims. A secondary area relates to the emergence of claims that
occurred prior to the balance sheet date, but had not been reported at that
date.
The estimates of the ultimate cost of reported claims are based on the setting
of claim provisions on a case-by-case basis.
These provisions are compared with projected ultimate costs using a variety of
different projection techniques (including incurred and paid chain ladder and an
average cost of claim approach) to allow an actuarial assessment of their likely
accuracy and to include allowance for unreported claims.
The most significant sensitivity in the use of the projection techniques arises
from any future step change in claims costs, which would cause future claim cost
inflation to deviate from historic trends. This is most likely to arise from a
change in the regulatory or judicial regime that leads to an increase in awards
or legal costs for bodily injury claims that is significantly above or below the
historical trend.
The claims provisions are subject to independent review by the Group's actuarial
advisors.
Refer to note 14 for an analysis on the changes in estimates of claims
provisions for each underwriting year.
2.    Operating segments
The Group has four reportable segments, as described below. These segments
represent the principal split of business that is regularly reported to the
Group's Board of Directors, which is considered to be the Group's chief
operating decision maker in line with IFRS 8, operating segments.
UK Car Insurance
The segment consists of the underwriting of car insurance and the generation of
ancillary income in the UK. The Directors consider the results of these
activities to be reportable as one segment as the activities carried out in
generating the income are not independent of each other and are performed as one
business. This mirrors the approach taken in management reporting.
Price Comparison
The segment relates to the Group's price comparison websites Confused.com in the
UK, Rastreator.com in Spain, LeLynx.fr in France and Chiarezza.it in Italy.
LeLynx and Chiarezza launched in early 2010, and are therefore included in this
Price Comparison segment for the first time in 2010.
Non-UK Car Insurance
The segment consists of the underwriting of car insurance and the generation of
ancillary income outside of the UK. It specifically covers the Group operations;
Balumba.es in Spain, AdmiralDirekt.de in Germany, ConTe.it in Italy and Elephant
Auto in Virginia, USA. None of these operations are reportable on an individual
basis, based on the threshold requirements in IFRS 8.
Other
The 'Other' segment is designed to be comprised all other operating segments
that do not meet the threshold requirements for individual reporting. Currently
there is only one such segment, the Gladiator commercial van insurance broking
operation, and so it is the results and balances of this operation that comprise
the 'other' segment.
Taxes are not allocated across the segments and, as with the corporate
activities, are included in the reconciliation to the Consolidated Income
Statement and Consolidated Statement of Financial Position.
Segment income, results and other information
An analysis of the Group's revenue and results for the period ended 30 June
2010, by reportable segment are shown below. The accounting policies of the
reportable segments are consistent with those presented in note 3 for the Group.
30 June 2010
  UK Car Price Non-UK Car Segment
Insurance Comparison Insurance Other Eliminations total
  £m £m £m £m  £m
Turnover* Â 639.4 38.0 37.1 6.0 - 720.5
 Net insurance
premium revenue 117.2 - 8.1 - - 125.3
 Other revenue
and profit
commission 120.3 38.0 3.1 6.0 - 167.4
 Investment
and interest
income 3.2 - 0.1 - - 3.3
-----------------------------------------------------------------
Net revenue  240.7 38.0 11.3 6.0 - 296.0
Net insurance
claims (81.0) - (7.8) - - (88.8)
Expenses  (28.2) (30.9) (7.6) (4.5) - (71.2)
-----------------------------------------------------------------
Segment
profit /
(loss) before
tax 131.5 7.1 (4.1) 1.5 - 136.0
Other central revenue and expenses, including share scheme charges (9.4)
Interest
income     0.3
---------
Consolidated profit before tax    126.9
Taxation expense       (36.9)
---------
Consolidated profit after tax    90.0
 Reportable
segment assets 1,319.6 18.9 104.4 15.5 (111.8) 1,346.6
--------------------------------------------------------------
Unallocated assets and liabilities    67.4
Consolidated assets     1,414.0
*Turnover is a non-GAAP measure and consists of total premiums written
(including co-insurers share) and other revenue.
Revenue and results for the corresponding reportable segments for the period
ended 30 June 2009 are shown below.
30 June 2009
  UK Car Price Non-UK Car Segment
Insurance Comparison Insurance Other Eliminations total
  £m £m £m £m  £m
Turnover  470.1 40.2 24.5 5.3 - 540.1
 Net insurance
premium revenue 94.6 - 5.9 - - 100.5
 Other revenue
and profit
commission 88.3 40.2 1.9 5.3 - 135.7
 Investment
and interest
income 5.7 - 0.1 - - 5.8
-----------------------------------------------------------------
Net revenue  188.6 40.2 7.9 5.3 - 242.0
Net insurance
claims (63.6) - (6.6) - - (70.2)
Expenses  (23.8) (29.2) (5.4) (3.9) - (62.3)
-----------------------------------------------------------------
Segment
profit /
(loss) before
tax 101.2 11.0 (4.1) 1.4 - 109.5
Other central revenue and expenses, including share scheme charges (5.3)
Interest
income     1.1
---------
Consolidated profit before tax    105.3
Taxation expense       (29.9)
---------
Consolidated profit after tax    75.4
 Reportable
segment assets 1,019.5 29.4 86.7 10.1 (89.6) 1,056.1
--------------------------------------------------------------
Unallocated assets and liabilities    49.9
Consolidated assets    1,106.0
Revenue and results for the corresponding reportable segments for the year ended
31 December 2009 are shown below.
Segment revenues
The UK and Non-UK 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 £7.3 million (H1 '09: £6.7 million). These amounts have not been
eliminated in order to avoid distorting expense and combined ratios which are
key indicators of insurance business. 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 are shown within the Non-UK Car Insurance reportable segment
shown above.
3.    Net insurance premium revenue
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Total motor insurance premiums before co- insurance 589.8 427.1 847.7
Group gross premiums written after co-insurance 335.1 222.2 439.9
Outwards reinsurance premiums (172.9) (105.0) (207.4)
-------------------------
Net insurance premiums written 162.2 117.2 232.5
Change in gross unearned premium provision (91.0) (43.3) (53.5)
Change in reinsurers' share of unearned premium
 provision 54.1 26.6 32.9
-------------------------
Net insurance premium revenue 125.3 100.5 211.9
The Group's share of the UK, Spanish, German and Italian private motor insurance
business was underwritten by Admiral Insurance (Gibraltar) Limited (AIGL) and
Admiral Insurance Company Limited (AICL).
The Group's share of the US motor insurance business was written by Elephant
Insurance Company, registered in Virginia, USA.
All contracts are short-term in duration, lasting for 10 or 12 months.
4.    Other revenue
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Ancillary revenue 80.6 62.8 129.5
Price Comparison revenue 38.0 40.2 80.6
Other revenues 12.0 10.0 22.5
---------------------------
Total other revenue 130.6 113.0 232.6
Ancillary revenue is primarily made up of commissions and fees earned on sales
of insurance products (underwritten by external parties) and services
complementing the motor policy.
5.    Profit commission
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Underwriting year:
2004 & prior 0.4 0.7 0.4
2005 (0.5) 1.9 1.4
2006 (0.5) 3.1 4.2
2007 7.6 12.5 33.1
2008 18.4 4.2 13.5
2009 11.5 0.3 1.6
2010 - - -
--------------------------
 36.9 22.7 54.2
6.    Investment and interest income
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Net investment return 3.3 5.8 7.7
Interest receivable 0.3 1.1 1.1
-------------------------
Total investment and interest income 3.6 6.9 8.8
7.    Expenses
 30 June 2010  30 June 2009
 Insurance Other Total  Insurance Other Total
contracts contracts
 £m £m £m  £m £m £m
Acquisition of insurance
 contracts 10.1 - 10.1 8.2 - 8.2
Administration and
 marketing costs 13.1 49.9 63.0 11.2 44.8 56.0
----------------------- ----------------------
Sub-total 23.2 49.9 73.1 Â 19.4 44.8 64.2
Share scheme charges - 7.5 7.5 Â - 3.4 3.4
----------------------- ----------------------
Total expenses 23.2 57.4 80.6 Â 19.4 48.2 67.6
  31 December 2009
  Insurance Other Total
contracts
  £m £m £m
Acquisition of insurance contracts  17.3 - 17.3
Administration and marketing costs  26.0 87.5 113.5
----------------------------
Sub-total  43.3 87.5 130.8
Share scheme charges  - 9.2 9.2
----------------------------
Total expenses  43.3 96.7 140.0
The £13.1 million (H1 '09: £11.2 million Full year 2009: £26.0 million)
administration and marketing costs allocated to insurance contracts is
principally made up of salary costs.
Analysis of other administration and marketing costs:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Ancillary sales expenses    12.6    9.9    20.0
Confused.com operating expenses    30.9    29.2    55.6
Other expenses 6.4 5.7 11.9
Total 49.9 44.8 87.5
The gross amount of expenses, before recoveries from co-insurers and reinsurers
is £157.8 million (H1 '09: £125.9 million; Full year 2009: £265.0 million).
This amount can be reconciled to the total expenses and share scheme charges
above of £80.6 million (H1 '09: £67.6 million; Full year 2009: £140.0 million)
as follows:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Gross expenses    157.8    125.9    265.0
Co-insurer share of expenses    (46.4)    (37.7)    (80.6)
------------------------------
Expenses, net of co-insurer share 111.4 88.2 184.4
Adjustment for deferral of acquisition costs (4.1) (2.5) (6.1)
------------------------------
Expenses, net of co-insurer share (earned basis) 107.3 85.7 178.3
Reinsurer share of expenses (earned basis) (26.7) (18.1) (38.3)
------------------------------
Total expenses and share scheme charges 80.6 67.6 140.0
Reconciliation of expenses related to insurance contracts to reported expense
ratio:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Insurance contract expenses from above 23.2 19.4 43.3
Add:Â claims handling expenses 3.8 2.8 5.5
---------------------------
Adjusted expenses 27.0 22.2 48.8
Net insurance premium revenue 125.3 100.5 211.9
Reported expense ratio 21.5% 22.0% 23.0%
8.    Taxation
 30 30 31
June June December
2010 2009 2009
 £m £m £m
UK Corporation tax
 Current charge at 28% (comparative periods, 28.5%) 40.9 27.6 63.0
Over provision relating to prior periods -
 corporation tax 0.1 - (1.2)
--------------------
Current tax charge 41.0 27.6 61.8
Deferred tax
Current period deferred taxation movement (4.1) 2.3 (2.8)
Over provision relating to prior periods - deferred tax - - (0.1)
--------------------
Total tax charge per income statement 36.9 29.9 58.9
Factors affecting the tax charge are:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Profit before taxation 126.9 105.3 215.8
 Corporation tax thereon at 28% (comparative   periods
28.5%) 35.5 29.5 60.4
 Adjustments relating to prior periods 0.1 - (1.2)
 Other differences 1.3 0.4 (0.3)
---------------------
Tax charge for the period as above 36.9 29.9 58.9
The planned reductions in UK corporation tax rates will impact the current and
deferred tax charge of the Group in the future. As the initial 1% reduction was
not substantively enacted at the balance sheet date, deferred tax balances have
been measured at a rate of 28%.
9.    Earnings per share
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Profit for the period after taxation 90.0 75.4 156.9
Weighted average number of shares - basic 267,070,286 265,074,506 265,712,457
Earnings per share - basic 33.7p 28.5p 59.0p
Weighted average number of shares - diluted 267,434,687 265,524,506 266,062,457
Earnings per share - diluted 33.7p 28.4p 59.0p
10.   Dividends
Dividends were declared and paid as follows:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
March 2009Â (26.5p per share, paid May 2009) - 69.6 69.6
August 2009 (27.7p per share, paid October 2009) - - 72.8
March 2010Â (29.8p per share, paid April 2010) 78.3 - -
-------------------------
Total dividends 78.3 69.6 142.4
The dividend declared in March 2009 represented the final dividend paid in
respect of the 2008 financial year (August 2009 - interim payment for 2009).
The dividend declared in March 2010 was the second interim dividend paid in
respect of the 2009 financial year.
11.   Property, plant and equipment
 Improvements to Computer Office Furniture Total
 short leasehold equipment equipment and fittings
buildings
 £m £m £m £m £m
Cost:
  At 1 January 2009 4.0 16.8 6.8 2.4 30.0
  Additions 0.2 2.1 0.4 0.3 3.0
  Disposals - (0.1) - - (0.1)
-------------------------------------------------------------
  At 30 June 2009 4.2 18.8 7.2 2.7 32.9
-------------------------------------------------------------
  Depreciation:
  At 1 January 2009 1.9 11.1 4.2 1.8 19.0
  Charge for the 0.4 1.4 0.5 0.1 2.4
year
  Disposals - - - - -
-------------------------------------------------------------
At 30 June 2009 2.3 12.5 4.7 1.9 21.4
-------------------------------------------------------------
Net book amount
At 30 June 2009 1.9 6.3 2.5 0.8 11.5
Cost
  At 1 January 2009 4.0 16.8 6.8 2.4 30.0
  Additions 1.2 3.6 1.0 0.8 6.6
  Disposals (0.2) (0.3) (0.1) - (0.6)
--------------------------------------
  At 31 December 2009 5.0 20.1 7.7 3.2 36.0
--------------------------------------
  Depreciation
  At 1 January 2009 1.9 11.1 4.2 1.8 19.0
  Charge for the year 0.9 2.7 1.1 0.4 5.1
  Disposals - (0.1) (0.1) - (0.2)
--------------------------------------
At 31 December 2009 2.8 13.7 5.2 2.2 23.9
--------------------------------------
Net book amount
At 31 December 2009 2.2 6.4 2.5 1.0 12.1
Cost
  At 1 January 2010 5.0 20.1 7.7 3.2 36.0
  Additions 0.3 1.2 0.4 0.2 2.1
  Disposals - - - - -
--------------------------------
  At 30 June 2010 5.3 21.3 8.1 3.4 38.1
--------------------------------
  Depreciation
  At 1 January 2010 2.8 13.7 5.2 2.2 23.9
  Charge for the year 0.5 1.3 0.5 0.2 2.5
  Disposals - - - - -
--------------------------------
At 30 June 2010 3.3 15.0 5.7 2.4 26.4
--------------------------------
Net book amount
At 30 June 2010 2.0 6.3 2.4 1.0 11.7
The net book value of assets held under finance leases is as follows:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Computer equipment 1.3 1.7 1.6
12.   Intangible assets
 Goodwill Deferred acquisition costs Software Total
 £m £m £m £m
Carrying amount:
At 1 January 2009 62.3 8.4 5.0 75.7
Additions - 6.3 2.7 9.0
Amortisation charge - (5.6) (0.8) (6.4)
Disposals - - (0.1) (0.1)
----------------------------------------------------
At 30 June 2009 62.3 9.1 6.8 78.2
At 1 January 2009 62.3 8.4 5.0 75.7
Additions - 8.6 5.2 13.8
Amortisation charge - (7.6) (2.3) (9.9)
Disposals - - (2.6) (2.6)
----------------------------------------------------
At 31 December 2009 62.3 9.4 5.3 77.0
Additions - 13.2 0.9 14.1
Amortisation charge - (10.8) (1.0) (11.8)
Disposals - - (0.2) (0.2)
----------------------------------------------------
At 30 June 2010 62.3 11.8 5.0 79.1
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. As described in the accounting policies within the
2009 annual report, 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. No
evidence has arisen during the 6 month period to 30 June 2010 to suggest that an
interim impairment review is required.
13.   Financial instruments
The Group's financial instruments can be analysed as follows:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Investments held at fair value 261.1 390.3 237.7
Held to maturity deposits with credit institutions 291.9 100.0 183.5
Receivables - amounts owed by policyholders 274.7 197.9 209.7
-----------------------
 Total financial assets as per consolidated balance sheet
827.7 688.2 630.9
Trade and other receivables 45.9 36.2 32.7
Cash and cash equivalents 165.4 96.2 211.8
-----------------------
 1,039.0 820.6 875.4
Financial liabilities:
Trade and other payables   407.8 293.1 306.8
All receivables from policyholders are due within 12 months of the balance sheet
date.
All investments held at fair value are invested in AAA-rated money market
liquidity funds. These funds target a 7-day LIBID return with capital security
and low volatility and continue to achieve these goals.
14.   Reinsurance assets and insurance contract liabilities
A)Â Â Â Â Analysis of recognised amounts:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Gross:
Claims outstanding 345.3 292.8 323.5
Unearned premium provision 298.5 198.4 209.4
---------------------------
Total gross insurance liabilities 643.8 491.2 532.9
Recoverable from reinsurers:
Claims outstanding 131.3 103.8 114.1
Unearned premium provision 151.7 91.9 98.8
---------------------------
Total reinsurers' share of insurance liabilities 283.0 195.7 212.9
Net:
Claims outstanding 214.0 189.0 209.4
Unearned premium provision 146.8 106.5 110.6
---------------------------
Total insurance liabilities - net 360.8 295.5 320.0
B)Â Â Â Â Analysis of net claims reserve releases:
The following table analyses the impact of movements in prior year claims
provisions, in terms of their net value, and their impact on the reported loss
ratio. This data is presented on an underwriting year basis.
 Six months ended
 30 31 December 2008 30 31 December 2009 30
June June June
 2008  2009  2010
 £m £m £m £m £m
Underwriting year:
2000 - 0.4 - 0.4 -
2001 - 0.5 0.5 - -
2002 - - 0.3 - -
2003 1.4 0.9 0.7 0.6 -
2004 2.9 3.5 (0.6) (1.0) 0.8
2005 7.1 3.9 2.4 (0.6) (0.9)
2006 4.9 5.6 5.1 2.8 (1.0)
2007 2.1 4.8 4.4 7.2 2.7
2008 - - 5.6 3.6 9.4
2009 - - - - 6.3
----------------------------------------------------
Total net release 18.4 19.6 18.4 13.0 17.3
Net insurance premium 77.0 92.8 100.5 111.4 125.3
revenue
Release as % of net premium 23.8% 21.1% 18.3% 11.7% 13.8%
revenue
 Financial year ended 31 December
 2005 2006 2007 2008 2009
 £m £m £m £m £m
Underwriting year:
2000 0.4 1.1 0.7 0.4 0.4
2001 5.0 1.9 1.5 0.5 0.5
2002 5.2 2.3 1.3 - 0.3
2003 4.6 5.1 3.2 2.3 1.2
2004 2.1 7.9 7.6 6.4 (1.6)
2005 - 2.6 12.6 11.0 1.8
2006 - - 2.6 10.5 7.9
2007 - - - 6.9 11.6
2008 - - - - 9.2
----------------------------------------
Total net release 17.3 20.9 29.5 38.0 31.3
Net insurance premium revenue 139.5 145.0 142.2 169.8 211.9
Release as % of net premium revenue 12.4% 14.4% 20.7% 22.4% 14.8%
C)Â Â Â Â Reconciliation of movement in net claims reserve:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Net claims reserve at start of period 209.4 178.5 178.5
Net claims incurred 85.0 67.4 146.2
Net claims paid (80.4) (56.9) (115.3)
-----------------------------
Net claims reserve at end of period 214.0 189.0 209.4
D)Â Â Â Â Reconciliation of movement in net unearned premium provision:
 30 30 31
June June December
2010 2009 2009
         £m £m £m
Net unearned premium provision at start of period 110.6 90.5 90.5
Written in the period 162.2 117.2 232.5
Earned in the period (126.0) (101.2) (212.4)
-------------------------
Net unearned premium provision at end of period 146.8 106.5 110.6
15.   Trade and other receivables
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Trade receivables 42.7 32.4 32.5
Prepayments and accrued income 3.2 3.8 0.2
-------------------------
Total trade and other receivables 45.9 36.2 32.7
16.   Cash and cash equivalents
 30 30 31
June June December
2010 2009 2009
         £m £m £m
Cash at bank and in hand 165.4 96.2 191.8
Cash on short term deposit - - 20.0
--------------------------
Total cash and cash equivalents 165.4 96.2 211.8
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.
17.   Deferred tax
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Liability brought forward at start of period 5.7 10.3 10.3
Movement in period - through income statement (4.3) 2.3 (2.9)
Movement in period - through equity (2.6) (0.4) (1.7)
---------------------
(Asset) / liability carried forward at end of period (1.2) 12.2 5.7
The net balance provided at the end of the period is analysed as follows:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Tax treatment of share scheme charges (5.0) (2.2) (4.4)
Capital allowances (1.5) - (1.6)
Other differences (1.4) (0.1) (0.6)
Unremitted overseas income 6.7 14.5 12.3
---------------------------
Deferred tax (asset) / liability at end of period (1.2) 12.2 5.7
The amount of deferred tax (expense) / income recognised in the income statement
for each of the temporary differences reported above is:
Amounts (charged) / credited to income or expense 30 30 31
June June December
2010 2009 2009
 £m £m £m
Tax treatment of share scheme charges (2.0) (0.6) 0.3
Capital allowances 0.1 - 1.6
Other differences 0.6 - 0.5
Unremitted overseas income 5.6 (1.7) 0.5
---------------------------
Net deferred tax credited / (charged) to income 4.3 (2.3) 2.9
18.   Trade and other payables
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Trade payables 10.8 6.6 10.7
Amounts owed to co-insurers and reinsurers 218.2 157.8 154.4
Finance leases due within 12 months 0.3 0.5 0.3
Finance leases due after 12 months - 0.1 0.1
Other taxation and social security liabilities 19.0 10.7 10.9
Other payables 44.3 28.9 29.1
Accruals and deferred income (see below) 115.2 88.5 101.3
---------------------------
Total trade and other payables 407.8 293.1 306.8
Analysis of accruals and deferred income:
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Premium receivable in advance of policy inception 66.3 50.6 53.9
Accrued expenses 45.7 33.8 35.3
Deferred income 3.2 4.1 12.1
--------------------------
Total accruals and deferred income as above 115.2 88.5 101.3
19.   Obligations under finance leases
 At 30 June 2010| At 30 June 2009
|
 Analysis of Minimum Interest Principal| Minimum Interest Principal
finance lease lease | lease
liabilities: payments | payments
|
 £m £m £m| £m £m £m
|
    |
|
Less than one 0.3 - 0.3| 0.5 - 0.5
year |
|
Between one and |
five    |
 years - - -| 0.1 - 0.1
--------------------------------+-------------------------------
    |
|
 0.3 - 0.3| 0.6 - 0.6
 At 31 December 2009
 Minimum lease payments Interest Principal
 £m £m £m
Less than one year 0.3 - 0.3
Between one and five years 0.1 - 0.1
------------------------------------------------
 0.4 - 0.4
All leases are on a fixed repayment basis and no arrangements have been entered
into for contingent rental payments.
The fair value of the Group's lease obligations approximates to their carrying
amount.
20.   Share capital
 30 30 31
June June December
2010 2009 2009
 £m £m £m
Authorised:
500,000,000 ordinary shares of 0.1p 0.5 0.5 0.5
Issued, called up and fully paid:
266,121,510 ordinary shares of 0.1p - 0.3 -
266,477,291 ordinary shares of 0.1p - - 0.3
268,267,222 ordinary shares of 0.1p 0.3 - -
-------------------------
 0.3 0.3 0.3
During the first half of 2010, 1,809,931 new ordinary shares of 0.1p were issued
to the trusts administering the Group's share schemes.
309,931 of these were issued to the Admiral Group Share Incentive Plan (SIP)
Trust for the purposes of this share scheme. These shares are entitled to
receive dividends.
1,500,000 shares were issued to the Admiral Group Employee Benefit Trust for the
purposes of the Admiral Group Senior Executive Restricted Share Plan (also known
as the Discretionary Free Share Scheme or DFSS). The Trustees have waived the
right to dividend payments, other than to the extent of 0.001p per share, unless
and to the extent otherwise directed by the Company from time to time. Rights
to dividends have now been waived on a total of 3,914,948 ordinary shares in
issue.
Staff share schemes:
Analysis of share scheme costs (per income statement):
 30 30 31
June June December
2010 2009 2009
 £m £m £m
SIP charge 2.3 1.5 3.6
DFSS charge 5.2 1.9 5.6
-------------------------
Total share scheme charges 7.5 3.4 9.2
The share scheme charges reported above are net of the co-insurance share and
therefore differ from the gross credit to reserves reported in the statement of
changes in equity (£9.9 million).
The consolidated cashflow statement also shows the gross charge in the
reconciliation between 'profit after tax' and 'cashflows from operating
activities'. The co-insurance share of the charge is included in the 'change in
trade and other payables' line.
Number of free share awards committed at 30 June 2010:
 Awards outstanding Vesting
 (*) date
SIP H1 07 scheme 353,444 September 2010
SIP H2 07 scheme 337,770 March 2011
SIP H1 08 scheme 352,732 September 2011
SIP H2 08 scheme 477,432 March 2012
SIP H1 09 scheme 396,200 September 2012
SIP H2 09 scheme 377,641 March 2013
SIP H1 10 scheme 364,401 September 2013
DFSS 2007 scheme - 2(nd) Award 26,350 December 2010
DFSS 2008 scheme - 1(st) Award 1,305,681 April 2011
DFSS 2008 scheme - 2(nd) Award 87,202 November 2011
DFSS 2009 scheme - 1(st) Award 1,311,344 April 2012
DFSS 2009 scheme - 2(nd) Award 126,740 August 2012
DFSS 2010 scheme - 1(st) Award 1,483,894 April 2013
----------------------
Total awards committed 7,000,831
* - being the maximum number of awards expected to be made before accounting for
expected staff attrition.
During the six months ended 30 June 2010, awards under the SIP H2 06 scheme and
the DFSS 2007 (1(st) award) scheme vested. The total number of awards vesting
for each scheme is as follows:
Number of free share awards vesting during the six months ended 30 June 2010:
  Original Awards Awards vested
SIP H2 06 scheme  277,387 234,352
DFSS 2007 scheme 1(st) award  1,210,781 1,067,414
21.   Financial commitments
The Group was committed to total minimum obligations under operating leases on
land and buildings as follows:
 30 30 31
 June June December
Operating leases expiring: 2010 2009 2009
                       £m £m £m
Within one years 0.2 - -
Within two to five years 13.0 3.6 4.1
Over five years 18.8 31.9 31.6
-------------------------
Total commitments 32.0 35.5 35.7
Operating lease payments represent rentals payable by the Group for its office
properties.
In addition, the Group had contracted to spend the following on property, plant
and equipment at the end of each period:
 30 30 31
 June June December
 2010 2009 2009
                       £m £m £m
Expenditure contracted to - - -
22.   Related party transactions
There were no related party transactions occurring during the six months ended
30 June 2010 that require disclosure. Details relating to the remuneration and
shareholdings of key management personnel were set out in the remuneration
report of the 2009 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 only the Board of Directors of Admiral Group plc are
key management personnel.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
* Â 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,
Henry Engelhardt Kevin Chidwick
Chief Executive Officer Finance Director
23 August 2010 23 August 2010
Independent review report to Admiral Group plc
Introduction
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
2010 which comprises the Condensed consolidated income statement, the Condensed
consolidated statement of comprehensive income, the Condensed consolidated
statement of financial position, Condensed consolidated statement of cashflows,
the Condensed consolidated statement of changes in equity and the related
explanatory notes. 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 the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this 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 reached.
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 DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the
EU.
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 Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, 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 Ireland) 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 2010 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK
FSA.
Chris Moulder
for and on behalf of KPMG Audit Plc
Chartered Accountants
Marlborough House
Fitzalan Court
Fitzalan Road
Cardiff
CF24 0TE
24 August 2010
[HUG#1439877]
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
All reproduction for further distribution is prohibited.
Source: Admiral Group PLC via Thomson Reuters ONE
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