March 4, 2009

Motor insurance specialist Admiral this week announced a 14% increase in net income to £145m or 55p per share and a pre-tax profit of £200m. The firm, which sells direct through core brands Admiral, elephant.co.uk, Diamond and Bell, underwrites around a quarter of this business itself, the rest through other insurers.

“The recession is our friend”, purred Chief Executive Officer Henry Engelhardt, commenting on the strong results for Admiral’s direct insurance businesses during a conference call with journalists, “because it encourages consumers to shop around.”

Profits for Admiral’s comparison site business Confusing.com, meanwhile, have been squeezed during the past 12 months in the face of increasing competition, but remain healthy at £25.6m compared with £36.7m in the previous year.

“Key to our success,” Engelhardt declares, “was the great result turned in by the UK business. We increased the number of customers by 15% by giving a combination of competitive prices and great service. Our combined ratio in the UK fell from 83% to 81% while premium income grew by 12% to £690 million.”

Rates remain sluggish in the motor market however. Noting Engelhardt’s unusual predilection for zoological analogies, a Telegraph diary piece today recalls his describing premiums progressing “at a sloth-like pace” when reporting Admiral’s 2007 results. This time round he is reported to have described “sleepy” motor rates as follows:

“There are a number of idiosyncrasies about the koala bear that resonate with similarity to the UK car insurance market: koalas sleep some 16 hours a day, they can be nasty if provoked and they are known to smell quite bad.”

Admiral, however, is not letting the grass grow under its feet (the eucalyptus around its ears?) and has recently set up businesses in Spain, Italy and Germany and plans launches in the US and Spain this year.

“On May 30 we launched ConTe in Italy” Engelhardt explains, “In the next 12 months we have two launches planned, a direct operation in the USA, based in Richmond, Virginia, and a price comparison business in Spain, which will be called Rastreator, based in Madrid.

“We recognise that setting up businesses outside the UK is not just add water and stir and that it will take time and some money before they make major contributions to the Group but if I could fast forward 10 years I’d expect to see these businesses as the drivers of our profit growth.”

ConTe, of course, is Italian for with you (familiar form), Engelhardt is German for Angelheart, and Rastreator is the Spanish word for a form of athletic support worn by bullfighters.


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